The Maine Public Utilities Commission voted Wednesday morning to open an investigation into Central Maine Power Co.’s rates, saying the utility’s returns on investment exceed its allowable amount.
The ruling came in response to a complaint filed May 29 against CMP by Herbert C. Adams of Portland and 16 other individuals holding a total of 10 separate accounts. It asks the commission to investigate whether CMP and its parent companies are capitalizing on excessive returns on investment.
Other parts of the complaint asked the PUC to investigate whether CMP benefited from the inordinate costs associated with the October 2017 windstorm.
CMP responded in a June 8 filing that, among other things, asked for the requests by Adams and the other individuals to be dismissed.
In their ruling, PUC chairman Mark Vannoy and commissioners R. Bruce Williamson and Randall Davis agreed to deny two of the three requests. They said they already ruled on the October windstorm damages. They also ruled that CMP’s parent, Avangrid, doesn’t fall under the state regulatory commission’s auspices as a public utility.
However, they did grant the request for a general rate investigation.
“We direct CMP to make a Chapter 120 filing on October 15,” Vannoy said. A Chapter 120 filing explains a utility’s rates, terms and conditions.
CMP spokeswoman Gail Rice said the utility’s last regulatory rate review was filed in 2013 with new distribution base prices set in September 2014.
“CMP has been operating under those prices for nearly four years, and as the Commission noted, our returns have fluctuated substantially during that period. In accordance with the Commission Order, CMP will file a Chapter 120 rate filing in October 2018,” she said in an email.
Vannoy said it had been several years since CMP’s last rate case and that it’s appropriate to conduct another case now.
One issue that emerged is the difference in the way CMP and the PUC calculate return on equity. CMP used a ratio that is higher than the 50 percent rate used by the PUC, according to Vannoy.
That resulted in CMP saying its average return on equity was 9.43 percent over the last four years. The PUC, however, calculated the return on equity at 10.53 percent over the past four years, which Vannoy said is too high.
“It is impossible to determine the causes for these results, which are significant,” he said. “You can’t determine those results outside the context of a full rate examination.”
He said the results of a rate case are uncertain, and may actually result in higher rates.
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