The Maine House rejected a bill Wednesday that would direct regulators to explore performance-based ratemaking for Central Maine Power and Versant, which last year beat back a referendum to replace the companies with a consumer-owned model.
The House voted 75-67 against LD 2172, sponsored by Rep. Gerry Runte (D-York). Republicans largely opposed the legislation but a handful of Democrats also voted against it. The proposal then moved to the Senate on Thursday, where it was tabled, meaning it will be taken up at a later date.
Runte’s bill would require the Public Utilities Commission (PUC) to examine performance-based metrics that could be implemented for utilities and conduct that examination every three years thereafter. Generally speaking, performance-based ratemaking (PBR) creates specific benchmarks for utilities to meet. The utilities could then get rewarded if they meet the targets or be penalized if they don’t.
The performance of Maine’s primary investor-owned utilities, CMP and Versant, has been a frequent topic of discussion in recent years. The companies’ relative unpopularity with Mainers, frustration with their quality of service and concerns about their for-profit business model spurred the referendum last fall to replace CMP and Versant with a nonprofit, consumer-owned utility. However, Mainers voted down the measure amid a deluge of spending against the proposal.
During Wednesday’s debate in the House, Rep. Sophia Warren, a Democrat from Scarborough, argued there isn’t sufficient evidence that LD 2172 would benefit ratepayers and improve the utility system.
“We cannot with any guarantee know the outcome of this legislation, and I believe that is a potentially quite harmful consequence we must take seriously,” said Warren, adding that she would support a targeted study on PBR policies in Maine.
Warren — a critic of CMP and Versant who supported the referendum to replace the companies — also pushed back against proponents who have argued that the bill will hasten Maine’s clean energy transition. She said nothing in the legislation ties a utility’s performance to making the grid more sustainable.
Republican Rep. Steven Foster of Dexter also expressed opposition to the bill. Among other issues, Foster argued that some parts of the proposal are duplicative of a 2022 bill that requires the PUC to adopt rules for CMP and Versant. Specifically, the PUC was tasked under that law with creating quantitative metrics around service quality along with coming up with a report card to evaluate utilities.
Runte said LD 2172 is meant to build on that previous measure. And he added that if the state wants CMP and Versant to perform better, it needs to create rules that incentivize the companies to further Maine’s grid-related policy goals — which he argued is currently lacking.
“LD 2172 attempts to solve this problem by directing the PUC to begin a process to define how we want our utilities to perform in the 21st century, as well as consider modern models of utility regulation that better align a utility’s performance with these new goals,” he said.
Under Runte’s proposal, the PUC would have to establish goals and evaluate options for creating metrics to determine how well utilities meet certain criteria. In creating those goals, PUC would have to keep in mind the following: benefit to ratepayers, promotion of cost efficiency and affordability, increased planning for extreme weather and climate hazards, a comprehensive response to outages, and support of renewable resource and greenhouse gas reduction goals. The goals would also have to be consistent with the state’s climate action plan.
Runte said the process for coming up with goals for utilities to meet and metrics to evaluate them is kept deliberately flexible in the bill, giving appropriate latitude to the PUC to determine what will work best for Maine and to adjust policies as needed.
The bill would further require that the commission get input from various stakeholders, mandate that the PUC provide a summary of its performance-based ratemaking actions, task the organization with coming up with recommendations for forming a regulatory policy group within the commission, and require the PUC to implement emerging reforms if such changes better align with state goals.
Runte pointed out that 17 states have approved similar reforms, although Warren noted that just two states have moved to extensively implement PBR policies, and she argued the experience of one of those states — Connecticut — has not been positive.
But Rep. Valli Geiger (D-Rockland) said that although Mainers voted down the November referendum to replace CMP and Versant, that doesn’t mean they are happy with the service provided by the companies. She said implementing PBR would provide the state the tools to bring the utilities into alignment with important goals, particularly when it comes to the clean energy transition.
Both CMP and Versant have been tepid about the bill. During a committee hearing earlier this year, a representative from Versant said the company is willing to take initial steps toward performance-based ratemaking but called for the goals established by the PUC to be brought back to lawmakers for review. And CMP argued the time isn’t right for Runte’s bill because lawmakers should first see how recent regulations, like the 2022 bill, work out.
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