In November 2023, after being deluged by nearly $40 million in campaign advertising by Maine’s largest utilities, voters rejected a proposal to shift the state’s investor-owned utilities to a consumer-owned business model. Here, NRCM’s Climate & Clean Energy Senior Advocate Rebecca Schultz reflects on how we can best move forward to hold utilities accountable and deliver an affordable clean energy future that works for Maine.
The campaign to take over Maine’s investor-owned utilities happened for a reason: customers are deeply dissatisfied with the reliability, cost, and performance of their electric utilities—including the failure to rise to the climate challenge with the urgency it necessitates.
For years, the consumer-owned utility (COU) has been a divisive issue for Maine’s decision-makers, energy experts, and stakeholders. As we move away from our current system that is based on expensive and polluting fuels toward clean, renewable energy, high-efficiency heat pumps for our homes and businesses, and clean electric vehicles on our roads, electric utilities must be a partner to make this transition as affordable and speedy as possible. The debate has always been about how to engender this partnership.
NRCM supported Question 3 because public power would have aligned incentives to encourage innovation, saved ratepayers money as we build the grid of the future, and restored local control. The regulatory reforms we seek now need to correct for the same barriers to progress in the utility sector.
Here’s how Maine can move forward to hold utilities accountable for building a clean energy future that strengthens our communities and keeps costs as low as possible:
Independent Distribution System Operator
A distribution system operator or DSO would effectively wrest authority from Maine’s investor-owned utilities (IOUs) by separating the operations, market administration, and planning functions of the utilities from the ownership of the assets. Distributed energy resources (DERs) can save money, increase reliability, and substitute dirty fossil fuels.
Creating a DSO could help us to evolve the grid into an open-access platform that can serve high levels of DERs and enable the dynamic flexibility we need to do so cost effectively. Maine already has a foot planted in the right direction here, thanks to a law that went into effect this fall, LD 952, which NRCM supported, that resolved to study what a DSO model would look like in Maine.
Maine has an opportunity to lead the country here. With ownership separated from other utility functions, a DSO could help us correct for the misaligned incentives that stifle innovation and participation in the utility sector in a similar way to what we’d hoped to achieve through a COU. Creating a DSO would require a reconfiguration not just of the utilities’ functions, but also of the regulatory, planning, and market functions of the relevant government and quasi-government agencies, namely the Public Utilities Commission (PUC), the Governor’s Energy Office, Efficiency Maine Trust, and the Office of the Public Advocate. Once the study is underway, we will need to track closely opportunities for public comment to ensure that it is robust especially with respect to the implications for climate.
Strong Low-income Ratepayer Assistance Programs
The Office of the Public Advocate will soon release a survey of low-income ratepayer assistance programs in New England and other states that shows Maine falling short. We need to update these programs and put in place stronger financial assistance options to protect low-income Maine households from price shocks like we’ve seen in recent years due to natural gas on the regional electricity market. There will be at least two bills before the Legislature on these issues in the upcoming session.
We also need to make sure that climate and clean energy policies and programs are designed to ensure the manifold benefits of clean energy accrue directly to vulnerable populations. Maine’s application for the $7 billion federal Solar for All competition, submitted in October 2023, included many programs and policies that Maine needs whether or not we get awarded. These include initiatives like automatic enrollment in community solar subscriptions for low-income ratepayers and residents of affordable housing, as well as lease-to-own and preferential loan arrangements for low-income homeowners that want to save money through residential rooftop solar.
Government programs to advance the clean energy transition must be designed to serve low- and moderate-income Mainers. We should not hesitate in acting on the recommendations of the distributed generation stakeholder group in creating a successor program that channels the cost savings of combined solar and storage projects to benefit all Maine ratepayers.
Right now, utilities are financially rewarded by maximizing capital expenditures. That may have made sense in the last century when the goal was to bring electricity to every community, but it doesn’t make sense today. We can help correct misaligned incentives by decoupling utility revenue from capital expenditure and putting in place a system of financial rewards or penalties based on performance and outcomes.
Performance can be gauged, for example, relative to reliability, affordability, customer service, and facilitation of the state’s climate and clean energy goals. Performance-based regulation—or PBR for short—is a complicated regulatory maneuver to correct utility incentives. It requires creative cooperation by utility leadership and Commission staff, as well as transparent and rigorous information and reporting to determine appropriate metrics, baselines, and performance incentives. Ultimately, a form of performance-based regulation would have been required with a COU, as described in the petition language, and it will also be required to get the most out of an independent distribution system operator. We need to move in this direction, and the Legislature will have an opportunity to debate a bill on this subject in the coming legislative session.
However, we have options in the meantime. As an immediate and interim step we need to build on the service quality standards that are already in place to motivate improved performance in customer service, reliability, and billing accuracy. These service standards were strengthened in 2022 by LD 1959, legislation that NRCM supported. According to that law, the Public Utilities Commission must hold the utilities accountable with regard to efforts to interconnect distributed energy resources—and with this aspect of the law the Commission has yet to comply. Furthermore, nothing is preventing regulators from including additional categories of performance and reporting requirements to begin to develop metrics to monitor progress in other critical areas of the clean energy transition.
Strategic Long-Range Planning
LD 1959 also put in place integrated grid planning requirements to help ensure that near-term utility investments and operations are consistent with the state’s decarbonization goals. The initial planning iteration is in its early stages, with sporadic stakeholder meetings over the last year, but things are moving forward.
The next step will be for the Commission to finalize a guidance directive that specifies what the utilities must do for their strategic plans; this is expected early in 2024. (The public is encouraged to participate by following PUC Case Number: 2022-00322).
The effort must hold fast to a vision of a dynamic and participatory grid that serves distributed energy resources and customer-sited solutions to make efficient use of transmission and distribution infrastructure and save ratepayers money on the grid buildout. There is also an imminent opportunity in this proceeding for the Commission to impose reporting requirements to gather foundational baseline data for performance metrics that reflect progress toward Maine’s climate goals.
November 7th and the vote on the COU have come and gone, but the dysfunction of our electric utilities and the dissatisfaction of their customers persists. CMP and Versant were successful in throwing tens of millions of dollars at the existential threat to their businesses. Imagine if they mustered the same amount of funding to build a dynamic, flexible, clean energy electric grid that empowers Maine people and businesses to lead healthier lives.
We have a unique window of opportunity to pressure our utilities to bring to bear the leadership, resources, and creativity we need. Let’s not waste time.
—Rebecca Schultz, NRCM Climate & Clean Energy Senior Advocate