Will Maine go for consumer owned Pinetree Energy?

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November 5, 2023

Voters in Maine are voting on a referendum to replace the state's two electric companies with consumer-owned Pine Tree Power Company.

The proposal goes to the polls on Tuesday.  It states:

The official ballot title is as follows:[12]

“ QUESTION 3: An Act to Create the Pine Tree Power Company, a Nonprofit, Customer-owned Utility. 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?

[13]

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Ballot summary

The official ballot summary is as follows:[14]

“ This initiated bill creates the Pine Tree Power Company, a privately operated, nonprofit, consumer-owned utility controlled by a board the majority of the members of which are elected. The company's purposes are to provide for its customer-owners in this State reliable, affordable electric transmission and distribution services and to help the State meet its climate, energy and connectivity goals in the most rapid and affordable manner possible.

The Pine Tree Power Company is not permitted to use general obligation bonds or tax dollars of the State. The company finances itself by issuing debt against its future revenues to purchase the facilities of investor-owned electric transmission and distribution utilities in the State. The fair market value of the acquisition is either negotiated or determined by a refereed process. The Pine Tree Power Company Board contracts a nongovernmental team to operate the facilities, and the operations team is required to retain all workers of the purchased utilities.

The company is subject to property taxation and must pay property tax in the same manner as an investor-owned transmission and distribution utility. The company is subject to ratemaking and other oversight by the Public Utilities Commission and is required to administer programs for net energy billing, nonwires alternatives, supply procurement and low-income assistance programs.

The company is governed by a board of 13 members, 7 of whom are each elected to represent State Senate districts, as well as 6 designated expert members. The board is subject to freedom of access laws and to laws preventing conflicts of interest.

The initiated bill also directs the Public Utilities Commission beginning January 1, 2025 to find a transmission and distribution utility unfit to serve and to direct the sale of the utility if the utility meets certain criteria. [13]

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Fiscal impact statement

The official fiscal impact statement is as follows:[14]

“

This citizen initiative creates the Pine Tree Power Company (PTPC), a privately operated, nonprofit, consumer-owned transmission and distribution utility. It establishes a process for the PTPC to purchase the assets of an investor-owned electric transmission and distribution facility operating in the State. The PTPC will be subject to oversite by the Public Utilities Commission (PUC) as a consumer-owned utility. It is important to clarify that this fiscal impact statement does not attempt to quantify or include the cost to the PTPC to purchase and operate a decertified utility. The purchase is anticipated to be financed through the issuance of bonds and the debt service costs of those bonds and the costs of operation will be funded through utility rates charged to the consumers.

The PUC has indicated that its additional regulatory authority will require 3 Staff Attorney positions and 6 Utility Analyst positions at a projected cost of $1,294,169 in the first year and $2,275,349 in subsequent years. Since the PUC is funded by an assessment set to produce sufficient revenue for the expenditures allocated by the Legislature for operating the PUC, the increased expenditures will require a corresponding increase in revenue from assessments on transmission and distribution utilities. These costs may be passed on to electric utility customers through scheduled rate cases in the future.

The initiative also requires that no earlier than January 1, 2025, the PUC shall decertify investor-owned electric transmission and distribution utilities operating in the State that fail to meet criteria established in this initiative. This action, combined with provisions designed to force the utilities subject to decertification to sell assets to the PTPC, may result in litigation. Any litigation costs may be passed on to consumers.

The 7 elected members of a 13-person governing board may participate in the Maine Clean Elections program. The Commission on Governmental Ethics and Election Practices estimates that up to 11 candidates may choose to use the program in the first election cycle after the PTPC is established for a cost to the Commission of $335,450 from April through June in the first fiscal year and $273,750 from July through October in the second fiscal year. Qualifying contributions from candidates are anticipated to generate additional revenue of $13,900 in the first year and $9,900 in the second fiscal year. Subsequent election cycles are estimated to require payments to candidates of $110,764 or $166,145, depending on whether 2 or 3 board members are being elected.

Additional costs to any state agencies and departments that provide assistance and counsel to the board, and to the Office of the Attorney General to make recommendations regarding a code of ethics for members of the board, can be absorbed within existing budgeted resources and will not require additional funding.

Since the PTPC will be exempt from income taxes, the State will see a decrease in General Fund revenue from the corporate income taxes that are currently being paid by the investor-owned utilities currently operating in the State. Confidentiality of tax records prevents disclosure of the amounts of tax paid by the existing utilities that will be decertified if this initiative is approved. However, some of this income tax revenue loss could be offset to the extent that the non-governmental entity contracted by the PTPC for certain operations has taxable income. The PTPC will still be subject to property taxes, so municipal property tax revenues are not expected to be significantly impacted unless there is a change in the location of facilities. [13]

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