Question 3 is the highest-profile referendum of the eight ballot measures up for a vote this fall, with voters set to decide whether the state should buy out the infrastructure of its two largest investor-owned utilities, Central Maine Power Co. and Versant Power, and create the Pine Tree Power Co. overseen by an elected board and experts.
Some of the ads on TV, radio and social media from both sides of the Pine Tree Power debate are pushing the boundaries when it comes to the veracity of their claims. Here’s an overview of a few repeated talking points in recent ads related to costs, rates and taxes.
A takeover will cost ‘$13.5 billion’
This has been one of the most oft-repeated claims in ads, in news releases and at public forums on Pine Tree Power.
It comes here from Maine Affordable Energy, a political group funded by CMP owner Avangrid, which itself is owned by the Spanish firm Iberdrola. It led the pack in spending more than $14 million to oppose the takeover effort as of June 30.
A new Facebook ad began running Monday that features an animated version of famed lineman Jim Wright saying a takeover will cost $13.5 billion. A CMP consultant, Concentric Energy Advisors, also cited that figure to oppose a similar 2021 bill to take over the utilities.
But that is just one side of the story. Both opponents and neutral third parties have said the cost could be lower and the acquisition could result in long-term savings for Maine ratepayers.
If voters approve the referendum, then Public Advocate William Harwood said the takeover process could take five to 10 years to elect the board, acquire the CMP and Versant infrastructure and resolve expected litigation between Pine Tree Power and the utilities over the real value of their assets.
So Maine Affordable Energy’s consultants looked ahead to 2030 and estimated the value of the two utilities’ assets would equal $6.75 billion by then. They cited smaller utility takeovers in Oregon, and Washington, where courts used multipliers of 2.1 and 2.3, respectively, to account for additional business value in determining acquisition costs.
Maine Affordable Energy assumed a multiplier of 2.0 and net book value of $6.75 billion to reach its $13.5 billion acquisition estimate. But Harwood noted the uncertainty of costs in his office’s fact sheet that takes no position on the referendum.
The Maine Public Utilities Commission requested a 2020 report that found although ratepayers may see initial increases in transmission and distribution rates, Mainers will ultimately see savings over 30 years with the public utility model when using a multiplier closer to 1.5 to reflect what Versant’s parent paid to acquire what was then Emera Maine in 2020.
Richard Silkman, a Portland-based energy economist who supports Pine Tree Power, also previously found long-term savings with a new utility. Silkman told the Bangor Daily News in August that Maine Affordable Energy’s $13.5 billion estimate was “complete hogwash” and the acquisition cost will likely fall closer to $7 billion.
Our Power, the group supporting Pine Tree Power, has pointed to Silkman’s analysis in arguing the new utility will lead to $9 billion in savings over 30 years, or $367 annually for each Mainer.
CMP and Versant have enacted ‘constant rate hikes’
Our Power put up a digital ad Tuesday bashing CMP and Versant for “constant rate hikes.” The utilities have routinely asked for rate hikes on the delivery side of Maine electric bills. Both CMP and Versant had new ones take effect this year that will continue in phases.
But the biggest rate increases have come on the supply side of electric bills. Most of Maine is connected to the New England power grid. The utilities do not control those rates, which are set by state regulators and based on energy prices that fluctuate due to broader market forces. Mainers can expect more rate hikes that are driven by solar subsidies.
CMP and Versant could point to U.S. Energy Information Administration data noting Maine has the lowest average residential electricity rates in New England, although they are high on the national scale and rising overall.
‘Higher taxes’ will come with Pine Tree Power
CMP’s political group has argued the acquisition costs will come with higher taxes. One recent Facebook ad said higher taxes were a certainty, although other ones have more carefully said it “could” bring higher taxes or cuts to services.
But the new utility would be set aside from state government and would borrow against future revenue to fund its infrastructure buyout. Interest payments could be large, but tax increases would only come if policymakers sign off on them.
Harwood, the public advocate, said Pine Tree Power could use tax-exempt bonds to finance future improvements and projects, likely at a lower cost than what CMP and Versant pay for compensating shareholders or borrowing money themselves. The two utilities also pay about $13 million in federal income taxes and $3.4 million in state income taxes. Pine Tree Power would be exempt from those taxes but would pay municipal property taxes.
The Pine Tree Power initiative language includes a reference to not using any “state funds or tax dollars.” A separate referendum that will be Question 1 on the November ballot and is being pushed by CMP would require a consumer-owned utility like Pine Tree Power to receive voter approval for borrowing more than $1 billion.
That serves as another reminder of the likely court battles should voters create a new utility.