A Q&A on Question 3, the Pine Tree Power referendum
This story was originally published by The Maine Monitor, a nonprofit civic news organization. To get regular coverage from the Monitor, sign up for a free Monitor newsletter here. The Monitor suggests reading its primer on how the grid works before reading this Q&A.
Question 3: Do you want to create a new power company governed by an elected board to acquire and operate existing for-profit electricity transmission and distribution facilities in Maine?
A “yes” vote supports creating the Pine Tree Power Company.
A “no” vote opposes creating the Pine Tree Power Company.
How would the new utility work?
Question 3 proposes replacing Maine’s two investor-owned utility companies — Central Maine Power and Versant Power — with a new company called Pine Tree Power.
Pine Tree Power would be run by a 13-member board, staff to support them, and a private third-party operator they would hire to manage the day-to-day operations of the grid.
Pine Tree Power would take over what CMP and Versant own now — the poles, wires, substations and other associated infrastructure through which electricity flows. If the ballot question passes, it would change who is responsible for delivering electricity to customers, but would not change who owns electricity production or supply, like wind turbines, solar farms or natural gas plants.
Seven board members would be elected by Maine voters. Each elected member would represent five state Senate districts. The seven board members would then appoint six additional members who would be required to have collective expertise in topics ranging from utilities to the environment and social justice. Mainers would vote every six years on the board seat in their district, according to Al Cleveland, deputy campaign manager for Our Power, the group running the Pine Tree Power campaign.
If passed, the measure would take effect Jan. 1, 2025, but the transition is almost certain to be delayed by a legal battle.
The board would hire professional staff — a director or manager, a financial officer, support staff and legal counsel — to assist in its administrative operations, in addition to the third-party grid operator, and the hundreds of line workers, tree workers, engineers and others who keep the system running.
CMP and Versant could not bid to be the third-party operator, but the new contractor would have to hire all employees subject to collective bargaining agreements at the outgoing utilities.
Those employees who stayed would get bonuses of between 6 and 8 percent in their first two years, and Pine Tree Power would have to maintain their collective bargaining agreements and retirement plans. The ballot measure says they would be private employees who would be allowed to strike.
Despite the bill’s language, union leaders representing CMP and Versant workers oppose the plan, saying they fear they would be “at risk of losing basic labor rights.”
Overall, Pine Tree Power would have roughly the same number of employees as CMP and Versant have now, said Cleveland, “then gradually more as operations that are contracted out by CMP and Versant are brought in-house.”
Other aspects of the current system would remain in place at least at first. Rooftop solar agreements, for example, would have to transfer from the current utilities to Pine Tree Power, and the new company would remain a part of the larger regional grid, from which Maine imports about 30 percent of its power.
How will this affect my rates?
This is the multi-billion dollar question, and one impossible to answer with certainty.
It’s important to remember we are talking only about changing who owns the poles and wires that deliver electricity, which accounts for roughly 40 percent of your bill. Utility companies (CMP and Versant) send out bills each month, but more than half of the money they collect (roughly 60 percent) goes to companies that generate electricity.
This will not change who owns the companies generating electricity. CMP and Versant distribute electricity but do not own any electricity producers.
The cost of delivering electricity is set by state and federal regulators. That would not change with a new utility; state regulators would oversee the price of distributing electricity for Pine Tree Power as they do now for CMP and Versant, while federal regulators would continue to set the price for transmission, the high voltage lines that cross state and federal boundaries.
Whether and when rates would be lower or higher depends on how much Pine Tree Power pays to acquire the assets, on how long the transition takes and how much court fees add to the price, how much it will cost to staff and run the new utility, what it would pay a third-party operator to manage the system, what kind of investments it makes in the grid, and whether that would offset the money CMP and Versant now send to their parent companies as profit.
The price of the assets will almost certainly be the subject of a legal battle. Pine Tree Power says it will cost around $5.6 billion to acquire the companies, a figure based on CMP and Versant’s own estimates of the value of their assets in recent regulatory filings. Opponents say it will be around $13.5 billion or more, arguing that legal fees and a later start date will add to the cost.
Experts that the Monitor consulted said the cost of the assets might fall somewhere in the middle, but it would depend on how long the court battles last, and likely would be years before the final cost is determined. The Maine Office of the Public Advocate did not attempt to parse the debate, saying only that the uncertainties “make it difficult to predict with certainty whether the acquisition will result in net savings to ratepayers.”
The effect on rates also depends on whether we’re talking about the price of delivering electricity next year or 15 years from now. Mainers’ overall electricity bills might be lower this winter, but that has nothing to do with CMP and Versant or the referendum — it’s because the price of natural gas, which we depend on to produce most of our electricity in New England — has fallen.
An independent analysis commissioned by the Maine Public Utilities Commission in 2020 in response to a similar bill (ultimately vetoed by Gov. Janet Mills) and conducted by London Economics International estimated that if Maine transitions to a publicly owned utility, it would raise rates for the short term, which is considered the next 10 years but lower them in the long term (over the next 30 years).
Both sides have also conducted analyses and come to vastly different conclusions. Maine economist Richard Silkman, who backs the Pine Tree Power ballot initiative, said the 2020 study underestimates savings to ratepayers by a factor of 3.7, and they’ll start saving much sooner. A study funded by CMP’s parent company Avangrid estimates it will cost ratepayers far more than the estimate over 30 years.
Pine Tree Power advocates say they will be able to borrow money at much lower interest rates to finance the takeover and they will save ratepayers money by not sending profits back to shareholders.
“The biggest savings, honestly, is the fact that there are no stockholders or shareholders that a profit has to go to,” said Ursula Schryver, a vice president with the American Public Power Association, which advocates for community-owned utilities nationwide. “All the revenue generated by the utility goes back into the utility or into the community, directly to the citizens.”
Abraham Silverman, director of the Non-Technical Barriers to the Clean Energy Transition initiative at Columbia University, who has studied energy policy for decades, said policy experts “vehemently disagree” on whether consumer-owned utilities can deliver power more cheaply or effectively than investor-owned utilities, and it is “very difficult to answer that question.”
While public entities typically can borrow money at lower interest rates, and have access to grant funding and disaster relief money not available to private companies, said Silverman, investor-owned utilities have access to services and pools of money from their parent companies and there is “some trade-off there.”
There’s another important factor: The electric grid in both Maine and nationally is old and unprepared to handle the influx of use predicted over the next five to 15 years, which means whoever owns it will have to spend a lot of money on upgrades and new power lines.
“You’re looking at something like two to three times as much electricity being transmitted and delivered by utilities to customers by 2030,” said Silverman. “We’re about to go through a supercycle of investment on the distribution grid.”
There are technologies that can be added to make the system more efficient, but there’s no getting around the significant amount of money that will need to be put into the grid over the next 10 to 15 years to make sure it can handle all that power, no matter who owns the poles and wires. Some money will come from the federal government — the Biden administration recently said it was putting $3.5 billion into grid improvements in 44 states — but experts agree the bulk will likely come from ratepayers.
“Unless the fundamental solution to climate change changes, I don’t think you’ll see a need in the change for those investments,” said Jennifer Kallay, a principal associate at Synapse Energy Economics and a commissioner on the board of the Wakefield Municipal Gas & Light Department in Massachusetts.
Will Pine Tree Power be better at meeting the state’s climate goals?
As we become more reliant on electricity to charge our cars, and heat and cool our homes and businesses, the state’s grid operators (whether CMP and Versant or Pine Tree Power) will have an increasingly important role to play in transitioning from fossil fuels, because we are going to need many more miles of power lines and other infrastructure upgrades to accommodate all that electricity use.
By some estimates, including a report from Princeton and another from the National Renewable Energy Laboratory, reaching a zero-carbon grid by 2035 will mean increasing its capacity between two and five times above what it was in 2020.
Maine’s utility companies generally can’t build or own any type of electricity production (like wind turbines, solar farms or hydroelectric dams), a rule that also would apply to Pine Tree Power. But they are responsible for figuring out where new power lines get built and upgrading infrastructure to handle the increase in electricity that comes with adding solar panels to a roof, or building wind turbines on a ridgetop.
Pine Tree Power would be required to help Maine meet its climate goals, which include hitting 80 percent renewable generation in the state by 2030 and adding more heat pumps and electric vehicles.
In 2021, 72 percent of Maine’s in-state electricity net generation came from renewable resources (mostly hydroelectric dams, wind turbines and burning of wood products), down from 79 percent in 2020, in part because of an increase in reliance on natural gas-fired power plants.
Advocates for Pine Tree Power say CMP and Versant have been slow to connect new wind and solar to the grid, a process known as “interconnection,” and slow to engage publicly in climate change planning. CMP acknowledged last year that it had fallen short on solar interconnection efforts and agreed to add staff to help deal with the backlog. The utility has also lobbied in the past against incentives for rooftop solar.
“We see (utilities) actively blocking renewable energy interconnection, forming no visionary plans to transition our grid to the grid of the future and actively lobbying against progressive legislation,” said Johannah Blackman, executive director of A Climate To Thrive, a group working to transition Mount Desert Island off fossil fuels. The nonprofit, which has endorsed Pine Tree Power, dropped plans for a community solar array after struggling to work with Versant Power on the project.
The current utilities are required under a law passed last year and spearheaded by Gov. Mills, a Democrat who opposes Pine Tree Power, to file new 10-year plans for adapting the grid to climate change. Those are due every three years to the PUC starting this December.
But proponents of Pine Tree Power say regulation has not been enough to spur utilities into action.
“The regulatory system hasn’t worked,” said John Brautigam, chair of OurPower, the organization that put the Pine Tree Power initiative before the legislature, in a recent debate on the referendum question.
But connecting new energy generators like solar and wind to the grid is a nationwide problem with no simple fixes. The process was fairly straightforward when utilities were tasked with connecting a few power plants each year.
Hooking up thousands of smaller, scattered projects to the grid is far more complicated. And the sheer volume of new generators — incentivized by federal subsidies, falling costs and renewable energy targets — has overwhelmed utilities everywhere.
Across the country, there are thousands of projects waiting in line to connect, and the costs to do so have skyrocketed.
It now takes an average of five years for an energy generator to get fully hooked up, and the high cost and long wait times have resulted in most developers pulling the plug on their plans — only about 21 percent of projects in the line ultimately get built, according to an analysis from the Lawrence Berkeley National Laboratory.
“It’s just an abysmal failure of public policy at all levels,” said Silverman, who worked on the first rules around interconnection at the Federal Energy Regulatory Commission two decades ago. “I think this is one of those cases where the entire class gets detention.”
Adding a wind or solar farm or any electricity generator to the grid in Maine involves not just the local utility company, but regional grid operators, and state and federal regulators, who may need to conduct studies to make sure the energy flowing from electricity producers to homes and businesses is balanced throughout New England.
Adding more energy generators will also require building more high-voltage, long-distance transmission lines — by some estimates, as many as 91,000 miles of them — between and across states.
“The solution to the interconnection debacle is to plan and build out the transmission system to meet the anticipated need for clean generation,” said Silverman. “There is no substitute.”
That’s not as simple as it sounds. Proposals to build new transmission lines have run into fierce opposition, like the bitter $100 million fight over the New England Clean Energy Connect project, a 145-mile transmission line designed to bring power from dams in Quebec to the New England grid.
A jury unanimously voted to allow the corridor to continue this spring, nearly two years after Maine voters rejected the plan, but delays mean the project is expected to cost $1.5 billion, 50 percent more than originally predicted. A new proposition for a 150-mile long transmission line cutting through Aroostook County is already facing headwinds from some neighbors.
Whether a publicly owned utility would be more successful at building transmission lines and faster at hooking up renewable generators to the grid is unclear. An American Public Power Association spokesperson said in an email that the group wasn’t aware of “anything unique to public power” that made those types of utilities more or less efficient at hooking up new generators.
Some advocates say ratepayers might be more open to a publicly owned utility proposing major transmission line projects if they saw the utility as more trustworthy. The company would have to get the same permits, conduct the same studies and go through the same regulatory process, but could face less of a fight to get there.
The state’s public advocate, which hasn’t taken a position on the issue, said it’s “conceivable that (Pine Tree Power) would be more aggressive in pursuing climate-related policies.” But the board of the new utility might also feel political pressure to keep rates low, the office added, which could hamper its ability to put money into grid upgrades necessary to add more renewable energy.
Environmental groups have been mixed in their endorsements on Pine Tree Power. Most agree that the status quo or “business as usual” has been a problem for climate action, but differ on whether this is the solution. Some echo the utilities’ claims that spending years arguing over the issue in court will distract from and delay progress toward the state’s climate goals.
Others argue that local ownership and the ability to elect utility leaders within Maine, along with the explicit climate-related provisions of the law governing the new utility, will help it focus on transitioning away from fossil fuels. The nonprofit nature of the new potential owner is also cited as a plus for lowering the cost of the massive investments that will be needed to modernize the power grid.
Will this affect how often my power goes out?
Last year Mainers were out of power for roughly 16 hours over the course of the year — three times longer than the U.S. average, which was 5 1/2 hours. Among New Englanders, only Vermont residents were out of power for a similar amount of time (15 hours). Florida, West Virginia, Virginia and Alaska had similar total power outage times.
Maine residents also lost power more frequently (three times a year, on average) than anywhere in the U.S. other than Alaska. CMP customers were out of power for roughly 15 hours over the course of 2022, while the average Versant customer was out of power roughly 21 hours total over the course of the year.
The only other Maine utility that reported numbers last year was Eastern Maine Electric Cooperative, which serves roughly 13,000 people on the eastern Canadian border. EMEC’s customers lost power an average of 10 times and were out of power for 33 hours total in 2022.
Maine is the most heavily forested state, with roughly 89 percent of its land covered by trees, and the most sparsely populated state east of the Mississippi. Utilities say most of their outages are caused by falling branches or trees, and it takes more time to restore power because people live far apart.
Pine Tree Power proponents point to the state’s poor reliability statistics as a primary reason for replacing the utilities, saying they haven’t moved fast enough to add technologies and redundancies like microgrids to reduce outages.
A Pine Tree Power vision statement says the new utility will increase reliability in part by installing “insulated wire upgrades and hardening lines with tree wire or spacer cable systems,” as well as by implementing microgrids and adding battery storage.
Representatives for the utility companies say they use insulated wire in certain areas, and are constantly trimming trees, and upgrading poles and wires, but argue they must balance reliability with keeping rates down.
A recent Versant proposal to replace older copper wire with insulated wire was partially rejected by the PUC, said Versant spokesperson Judy Long, because it would have raised rates too quickly. Long said the company is “exploring microgrids and battery storage, and other tools to manage the grid.” (Whether utility companies are allowed to own battery storage is an open question that lawmakers are exploring.)
Every utility company must strike a balance between reliability, affordability and sustainability, said Schryver, with the American Public Power Association.
“I think the industry as a whole is trying to find the sweet spot there,” said Schryver. She pointed to California as an example of the tricky balancing act, where Pacific Gas and Electric’s plan to bury 10,000 miles of power lines underground has faced pushback from the state’s public utilities commission, which has decried it as too expensive.
That’s where the leadership “has to decide what the real concerns are … you can’t obviously have everything, you’ve got to find some sweet spot in the middle.”
Across the United States, customers of large publicly owned utilities (those serving more than 100,000 customers), lost power about the same number of times last year as those owned by investors (1.35 compared to 1.4), according to a Monitor analysis of Energy Information Administration data.
But customers of large publicly owned utilities were out of power for less time last year than customers of similarly sized investor-owned utilities (4 hours over the course of the year compared to 5 1/2).
How long will the transition take?
The two sides disagree on this, with proponents saying a transition would be around four years and opponents saying it will be more like 10. The Maine Office of the Public Advocate has estimated it will take 5-10 years.
Nothing of this scale has been attempted in the United States, so it’s difficult to predict how long the transition would take, but it is almost certain the issue will end up in court if Question 3 passes.
Schryver said it has taken communities across the country four to six years on average to transition from investor-owned utilities to a model like Pine Tree Power, but it can take a decade or longer, particularly for complicated cases.
“Some public power utilities have been formed in a year or two, and in some of these cases the price was negotiated amicably,” Schryver said. “A few of the most hard-fought municipalization campaigns took eight to 10 years to complete. When it does take years, it is because the private utility continually wages a fierce fight in terms of PR campaigns and legal challenges.”
Taking over a utility is difficult — one study found that between 2000 and 2019, only 11 of the 60 communities around the U.S. that considered doing so succeeded, and two returned to their previous investor-owned structure.
Proponents of public power say even if a campaign eventually fails, advocates may be able to get concessions from utilities in the process.
How would the passage of Question 3 affect my taxes?
Utilities are funded by payments from their customers, not through taxes. That would not change under the new ownership structure. Pine Tree Power would not be allowed to fund the acquisition of CMP and Versant with taxes or general obligation bonds. It would buy the poles and wires and substations by taking out debt that would be paid back by ratepayers over time.
CMP and Versant pay around $17 million in state and federal income taxes. As a nonprofit, Pine Tree Power would not have to pay income tax.
The ballot measure requires the new utility to continue paying municipal property taxes, which represent a significant source of income for many communities — Central Maine Power paid about $68 million in property taxes last year while Versant paid more than $17 million, according to spokespeople for the two utilities.
Despite the language assuring communities the new utility will continue paying property taxes, a group of mayors recently issued an open letter saying they were concerned future lawmakers would change that.
There is an unresolved question regarding whether $850 million in tax benefit funds currently being held by utilities would be returned to ratepayers via Pine Tree Power or kept by CMP and Versant, according to the Maine Office of the Public Advocate, which has not taken a position on the referendum. This is money collected from current ratepayers under IRS tax benefit rules that companies don’t have to pay back for many years in the future.
Does this kind of utility exist elsewhere?
Roughly one in four Americans are served by some kind of consumer-owned utility, whether it’s a municipal power and light company or a rural electric cooperative. The management and ownership structure varies widely — some are run by boards elected by voters, others by boards appointed by political leaders, others by ratepayers themselves. Several contract daily grid operations out to a private operator, as Pine Tree Power proposes, while others keep operations entirely in-house.
Most publicly owned utilities are small, with some notable exceptions, such as the Tennessee Valley Authority (10 million ratepayers), the Long Island Power Authority (1.1 million) and the Puerto Electric Power Authority (1.5 million). Nebraska is the only state entirely served by consumer-owned utilities, under a legislative act decades ago.
The proposal in Maine is unique in scope and scale, and experts said it is difficult to compare utilities between states because they differ so widely in geography, politics and character.
“The truth is,” said Silverman, “it’s really specific to each state … I think it’s really hard to generalize.”
Kallay, who has served on the board of the Wakefield Municipal Gas & Light Department for six years, said she has seen publicly owned utilities that do well and ones that don’t, and success depends on civic engagement over time.
“It’s not a decision, it’s a journey. People need to know that they’re signing up for a journey and not a one-day vote.”
Who are the supporters?
U.S. Sen. Bernie Sanders (Independent)
Climate activist Bill McKibben
Natural Resources Council of Maine
Maine State Nurses Association
Bar Harbor Climate Emergency Task Force
Institute for Local Self Reliance
Maine Organic Farmers and Gardeners Association
Maine People’s Alliance
Maine Public Power
Maine Youth Action
Maine Youth for Climate Justice
Who is opposed?
Maine Building Trades Council
Maine State Chamber of Commerce
Portland Community Chamber of Commerce
