Our Power is an elegant solution that adapts a proven business model to today’s compelling needs.
By Dr. Richard Silkman, David Vail, and Dick Woodbury
As Maine economists deeply concerned for our children’s future, we write to share our view of Our Power’s referendum to create the Pine Tree Power Company, a not-for-profit, customer-owned utility for Maine.
We strongly support the Our Power referendum. It is an elegant solution that adapts a proven business model to today’s compelling needs. It will save Maine people and businesses billions; will better align our utility’s incentives with those of its customers as we seek to electrify and decarbonize our economy, and will chart a promising pathway for others to follow.
First, it is apparent the investor-owned electric utilities that are supposed to serve Maine have failed the state for a long time. For many products and operations, ownership by massive conglomerates involves some loss of Maine identity and corporate citizenship but does not fundamentally alter the marketplace, its efficiencies, its employees or its customers. The same cannot be said for Maine’s investor-owned utilities, as demonstrated by both Central Maine Power and Versant ranking last and third from last in customer satisfaction in J.D. Power’s authoritative 2020 nationwide survey of electricity users. Maine’s utilities also ranked last for reliability, with the most frequent and second-longest outages in the nation.
Second, bringing Maine’s electric transmission systems up to date will require capital investments of several billion dollars. Like our roads, these cost real money and are vital to Maine’s prosperity. The question is whether Maine ratepayers should finance these investments at 2 to 3 percent interest through a ratepayer-owned entity or pay 8 to 10 percent interest through an investor-owned utility. We estimate that Pine Tree Power Co. would save Mainers $9 billion on our electric bills over 30 years and enjoy net savings from year one. Testimony and an analytic report by one of us lay out the compounded costs and benefits of these alternative ownership structures.
Third, the only way Maine can lower its carbon footprint is to use more electricity and less petroleum products. This “beneficial electrification” is the key to Maine reducing its climate-changing emissions. It will require a huge leap to supply energy for electric vehicles, electric space heating and industrial and commercial processes. The grid of the future is not just one that supports more electricity use; it must be a grid where the production and distribution locations and functions are different from today’s grid.
To accommodate this transition, our electric grid has to change from one that looks like today’s public water systems, where water flows one-way from storage facilities to the customer, to one that looks like the internet, supporting multiple, bidirectional flows of information. Rebuilding our electric utility system to make this transition will mean doing things very differently, but our current utilities are not built for this task.
Utilities are necessarily monopolies and exist solely to serve the public. This is what distinguishes utilities from other private corporations. If Maine citizens wish to revoke the monopoly privilege, purchase utility assets at fair market value and change the structure of our public utilities, we have every right to do so. Roughly one-third of all people and businesses in our country – including those in such major metropolitan areas as Sacramento, Austin, Jacksonville and Chattanooga – already enjoy the benefits of consumer ownership of their electric utilities.
Further, where this has been done elsewhere – Winter Park, Florida; Jefferson Country, Washington, and Pittsburgh, in the case of water – it has worked very well. It is no surprise that, where American communities have already decarbonized their electricity supply, consumer ownership has been a key driver of the transition.
Based on a bill enacted by bipartisan majorities of both the Maine House and Senate, Our Power’s referendum provides a thoughtful, well-designed path to transition Maine’s large electric utilities to ownership by the Maine businesses and residents they serve.
As concerned Maine economists – one Republican, one Democrat and one independent – we enthusiastically support this referendum.