Question 3: What you need to know about the Pine Tree Power referendum
Stephen Singer, Portland Press Herald, Maine
Updated 5 min read
Oct. 2—First in a series
Question 3: 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?
What would Question 3 do?
Question 3 proposes creating a new publicly owned and controlled power company by taking over the assets of Central Maine Power Co. and Versant Power, which together distribute 97% of Maine's electricity.
The new utility, called Pine Tree Power, is the focus of the most prominent of the eight ballot measures facing voters Nov. 7 and is at the center of a multimillion-dollar political fight played out at forums and ads on the internet and elsewhere.
How would the new utility operate?
Pine Tree Power would be regulated by the Maine Public Utilities Commission and governed by a seven-person board of directors, who would be elected by Mainers and then would appoint six others. The board would hire a third-party operator to oversee the day-to-day management of the grid — the power lines that bring electricity from transmission stations to homes and businesses. Neither CMP nor Versant would be eligible to bid on the third-party contract.
As regulated utilities, CMP and Versant are subject to PUC oversight over setting performance standards and how much profit they can earn. But they also are beholden to their corporate governance and shareholders as for-profit companies. They currently perform all the day-to-day management functions of the grid.
How would Pine Tree Power get the CMP and Versant assets?
The plan calls for Pine Tree Power to buy the assets — the network of lines, wires, trucks, facilities and other possessions — of the two companies. Backers and opponents disagree strongly on the cost. Supporters say it would be between $5 billion and $6 billion; opponents say it would be more than $13 billion. Both sides agree the sale price is likely to be disputed in court and could take years to settle. Taking the assets by eminent domain also is an option.
What are the main arguments of the Question 3 advocates?
Supporters say the arrangement ensures local control over the new utility. That would be in contrast to CMP, a subsidiary of Avangrid that's part of Iberdrola, a multinational electric utility company based in Spain, and Versant Power, part of ENMAX, which is headquartered in Canada.
They also say Pine Tree Power, as a government operation, could borrow money at much lower interest rates that could be directed to upgrade and expand the grid. A ratepayer-owned utility could borrow at 3% or 4% interest and investor-owned utilities face borrowing costs of 8% or more. They say the state will save $9 billion over 30 years.
They also say that they will improve reliability by reducing outages and lower rates.
What are the main arguments of the opposition?
Opponents reject the notion that there would be great savings overall. Purchasing the assets at even a $10 billion price tag at a 5% interest rate would saddle the state with $500 million in interest payments per year just to cover the transaction.
Maine's two-year budget is $9.8 billion.
They also say an elected group of board members would make the new utility a political entity and possibly subject policy decisions to political whims. In an effort to keep rates down, directors could postpone or sideline improvements to the reliability and expansion of the grid, opponents say.
Because there are so many unknowns — the purchase price, the third-party operator, the potential for legal delays — opponents say it is disingenuous for Question 3 backers to promise better reliability and lower rates.
What happens to the CMP and Versant workers if Question 3 passes?
Pine Tree Power would be required to contract with one or more companies to operate the utility. The third-party operator contracted by the new utility would be required to hire most non-executive CMP and Versant employees. Retention bonuses would be paid as incentives to keep employees with the new operator. CMP employs about 1,000 workers and Versant has more than 530 employees.
The two sides also disagree about whether employees of the third-party operator would be considered private employees or public employees. Private workers who belong to a union have the right to strike while public employees do not. That distinction is why most of the state's labor groups oppose Question 3.
What is the timeline?
If approved by the voters, the measure will take effect Jan. 1, 2025.
William Harwood, the state's Public Advocate, said transitioning to a publicly owned utility from an investor-owned utility could take five to 10 years. The new utility must be established, the board selected by the voters and litigation over the constitutionality of using eminent domain to seize CMP and Versant's private assets is possible, he said. Harwood also cautioned that the parties may sue over the acquisition price.
What are some of the other issues connected to this question?
Climate change is a factor in efforts to establish a new utility. Supporters of Question 3 say a nonprofit utility could borrow money at a lower cost than investor-owned utilities to raise capital to build out Maine's grid to adapt to electrification. They say CMP has been slow to modify the grid to accept more renewable energy, such as solar or wind.
Opponents say the cost to buy the assets of CMP and Versant, hobbled by litigation and politics, threatens to delay changes to bolster the grid for greater electrification.
Will any of this lower my electric bill?
Your monthly electric bill is divided into two parts: one charge for power supply and another for delivery. Question 3 only addresses the delivery part of your bill. The supply part has increased because of the rising price of natural gas that powers generators and turbulence in global markets following Russia's invasion of Ukraine. Increases in the delivery part of your bill have to be approved by the Maine Public Utilities Commission. The outcome of Question 3 won't affect that.
This story was updated at 1 p.m. Tuesday to clarify that interest payments on a $10 billion debt would be annual.
