BANGOR, Maine, Feb. 21 (UPI) — According to energy experts, the challenges posed by climate change warrant a greener, smarter, decentralized electrical grid — a grid better able to accommodate a diversity of renewable energy sources.
In Maine, public power advocates agree. But the key to a modern, sustainable and resilient electrical grid, they argue, isn’t a regulatory tweak or leadership change — it’s a structural overhaul and consumer control.
That’s the end game for Our Power, a group of lawmakers, conservationists and business leaders aiming to transfer control of Maine’s two largest shareholder-owned utilities, Central Maine Power and Versant Power, to a consumer-owned non-profit.
Buoyed by the referendum result last year that saw Maine voters nix Central Maine Power’s planned power line corridor through part of the state’s North Woods, public power advocates aim to put public seizure of Maine’s two largest utilities to a popular vote.
Though it’s not yet clear whether One Power will get the signatures they need in time for a referendum vote in 2022, or if they’ll wait until 2023, the group says they’re making progress.
“We’re about two-thirds of the way there and we’re finding that there is incredible bipartisan and nonpartisan support for this initiative,” Maine state Rep. Nicole Grohoski, of Ellsworth, told UPI.
“We’re very optimistic from the polling and just being out in the streets that people recognize the problems with foreign government control of our grid and a lack of commitment to our local needs.”
Inspired by the climate
Reports from climate scientists — at the United Nations and elsewhere — on the world’s progress at kicking its fossil fuels addiction have grown increasingly dour in the last few years.
As such, the call to ditch coal, oil and gas in favor of renewable energy sources, like wind and solar, in addition to demands for a more adaptable, multidirectional power grid, have become louder and more urgent in Maine and several other states.
The nation’s electric grid, capable of delivering on-demand energy to millions of Americans, is a wholly 20th century machine, experts say, optimized for one-way flow from large power sources to centralized transmission hubs and on into homes.
Policymakers say that new technologies and management strategies are needed to create a power grid of renewables, batteries and other eco-friendly energy solutions
That grid, they say, should be able to move energy in multiple directions, bringing in excess power from rooftop solar installations, even as it offloads electricity to charge the iPhones next door.
“The grid is going to have to be more accommodating to small-scale energy assets and resources,” Maine state Sen. Rick Bennett, a Republican who also opposed the CMP Corridor, told UPI. “The old model is the electrons all moving in one direction, but the new model will be electrons moving all directions.”
More green energy
Public power advocates insist a grid owned by Mainers — and “governed by an independent Board of Directors made-up of Mainers elected to staggered terms by the people of Maine,” according to Our Power — will embrace, not constrain, renewable energy projects.
Last year, a group of solar industry leaders complained that Central Maine Power was sabotaging renewable projects by slow-walking interconnection studies, which are reviews required by the non-profit regional transmission organization ISO-New England, and asked Maine’s Public Utilities Commission to investigate.
Under pressure from regulators, CMP admitted it had “failed to meet its obligations.”
For their part, Central Maine Power says it is working to bring major renewable projects online.
“CMP has brought nearly 600 MW of solar power onto the grid — 100MW just last year. Enough to power about 82,000 homes,” Catharine Hartnett, manager of corporate communications at Avangrid, told UPI in an email.
CMP’s parent company, Avangrid, is a major investor in renewable energy projects around the world. That’s an asset CMP claims can help them accelerate the decarbonization process in Maine.
“While there is no market overlap, the corporate industry expertise and experience that can be shared between practices helps utility companies plan and prepare to bring renewables of all kinds onto our systems,” Hartnett said.
Currently, shareholders cover the costs of investing in green technologies. Should Mainers assume ownership of the state’s utilities, she said taxpayers will shoulder that risk.
“Significant grid and substation upgrades and improvements, energy storage solutions and other novel investments are made by shareholders — so any risk falls to them,” Hartnett said. “A consumer-owned utility would have to bond or distill this kind of investment into rates and customers assume all the risk.”
Our Power and its allies counter that the ability to borrow at low rates and redirect profits currently flowing to foreign shareholders will allow a consumer-owned utility to invest more aggressively in grid modernization and green technologies.
Our Power’s takeover plan calls for a non-profit company, Pine Tree Power, to purchase the infrastructure of Central Maine Power and Versant using tax-exempt revenue bonds at 2% to 3% interest rates.
Electric utilities don’t make money like most businesses.
They don’t exactly sell a product, and usually don’t compete — there aren’t rival power lines running down most city blocks. Instead, utilities make money by controlling the infrastructure that carries electricity from producers to consumers.
Without a competitive market dictating the price of this infrastructure, most places have public utility commissions that set guaranteed rates of return. While commissions have some discretion, they’re significantly handcuffed by legal precedents guaranteeing regulated monopolies a sizable return on equity.
In the United States, regulated electrical monopolies earn an average of 10.1% return on equity.
Maine state Rep. Seth Berry see this legally bound economic arrangement as one of the major problems with investor-owned utilities.
“Investor-owned utilities really make their money by buying stuff,” Berry told UPI. “More poles, more trucks, more computers.”
“And because they have a total bias towards buying stuff, and not toward hiring people to do smart things, every time you come up with a problem that they need to solve, say like new technology that can save time and money and allow the grid to operatively smartly, their solution is always, rather than a smart grid, something really big, really dumb and really expensive.”
“I’m not casting blame — it is their fiduciary duty to prioritize profits,” Berry said. “The incentives are fundamentally perverse and rigged against our interests.”
Berry likens the power grid to a road system for electricity.
“If we were to turn over our road network to a foreign for-profit monopoly, would we have an efficient road network and would it work in the best interest of citizens?”
Though plenty of the utilities’ revenue pays the salaries and wages of Mainers, the profits guaranteed to Central Maine Power and Versant don’t stay in the Pine Tree State.
That’s because the two utilities are owned by foreign companies: Versant by Emera, a Canadian Crown corporation; and Central Maine Power by Avangrid, a company in which Spain-based energy giant Iberdrola holds a majority stake.
Our Power wants to buy back the electric system’s roads and keep Mainers’ money in Maine.
“We want to own the infrastructure,” said Grohoski. “It’s like buying a house at an affordable interest rate instead of renting forever.”
Public power isn’t a panacea
According to the American Public Power Association, of the 114 U.S. cities with the stated goal of going 100% renewable, six have already met their aim: Aspen, Colorado; Burlington, Vermont; Georgetown, Texas; Greensburg, Kansas; Kodiak Island, Alaska; and Rockport, Missouri.
Of those six, five are served by publicly owned and controlled utilities. That’s not a coincidence, according to public power advocates.
“The bottom line is that public power communities can exercise local decision-making to drive the utility’s priorities — whether they are related to renewables, affordability, reliability/resilience, or anything else,” Tobias Sellier, senior director of communications at the American Public Power Association, told UPI in an email.
But public control doesn’t guarantee a greener, smarter grid, according to John Farrell, co-director of the Institute for Local Self-Reliance and director of the Energy Democracy Initiative.
“Institutional change is hard,” Farrell told UPI. “Any institution, public or private, is generally resistant to change. We have crappy municipal-owned utilities, investor-owned utilities — institutional change is hard.”
In Nebraska, the only state serviced entirely by a publicly owned electrical utility, ratepayers enjoy relatively cheap energy, but not a particularly green grid. A majority of the state’s electricity is still supplied by coal plants.
While Farrell, who advocates for a more democratic and decentralized power grid, said consumer-owned utilities are typically more respondent to the needs of citizens, he also said public utilities can have perverse incentives because they come to count on the revenues generated by captive consumers.
Efficiency programs, efforts to bring distributed energy resources online and other cost-saving strategies often translate to less money heading to a city’s bank account.
“There are some 2,000 municipal utilities in the U.S., but still only a handful have gone 100% renewable,” Farrell said. “Many more continue to drag their heels, even in cities like Los Angeles, where clean energy is really popular.”
Unhappy customers are everywhere
For years, Maine’s two largest utilities have been plagued by abysmal consumer satisfaction ratings, as well as regular and lengthy outages — all while charging some of the highest rates in the country.
Last year, a survey of residential energy consumers across the country, conducted by J.D. Power, revealed Central Maine Power as the country’s worst rated utility. Versant wasn’t much more popular, receiving the fourth lowest consumer satisfaction rating.
What’s more, Mainers fork over a premium for their dissatisfaction, paying the 11th highest electricity rates in the country, according to data from the U.S. Energy Information Administration.
And with newly approved rate hikes, the average household can expect to see their electricity bill increase by roughly $30 a month in 2022.
The conditions for frustration are present across the country, with energy prices rising and the threat of climate change and extreme weather exposing unprepared utilities.
In Boulder, Co., where voters are more environmentally conscious than most, frustrations with the region’s private utility — and its reluctance to go green — motivated citizens to vote for a public takeover of the local power grid.
Those plans were tabled after the pandemic constrained the city’s budgets, and the city’s government is once again working with the utility to shrink Boulder’s carbon footprint.
The newest agreement between the city and Excel Energy is characterized by a stronger commitment to the renewable energy and energy efficiency programming.
“What we were able to build in were some guarantees in emissions reductions, in addition to some exit ramps that are built in to allow us out of the franchise if Excel isn’t meeting emissions reductions or if the community decides that we are not getting what we want out of the partnership,” Jonathan Koehn, director of Boulder’s Climate Initiative, told UPI.
“The municipalization effort kind of gave us a seat at the table and allowed us to negotiate more effectively with the utility,” Koehn said.
Elsewhere, state lawmakers and concerned citizens are considering taking up the fight for public power.
In New York, a pair of bills backed by labor and climate activists — one already introduced and another on the way — call for the expansion of green energy infrastructure by the New York Power Authority, as well as the elimination of for-profit utilities.
In New Mexico, regulators recently rejected Avangrid’s proposed multi-billion-dollar acquisition of the state’s largest electric provider, with commissioners claiming the energy giant was not the right partner to help the state shift toward more renewable energy production.
Now, the state’s Public Regulation Commission, at the request of legislators, is preparing to assess the pros and cons of publicly owned electric power.
The fight ahead
One in seven Americans gets their power from a publicly owned utility, but most public utilities have always been public. Public takeovers are rare, and most successful ones have involved modestly sized municipalities.
The largest public takeover occurred in the 1980s, when New York’s state government turned a bankrupt Long Island power company into a consumer-owned utility.
Despite the dearth of precedents, One Power say they’re committed to public ownership of Maine’s power grid.
“We have looked at other options, but this is the only real remedy,” said Berry. “We’ve done the math here in Maine, and both through the blended economics study and subsequent review of it, we know this makes the most sense and that rate payers will save money.”