AUGUSTA — The city attorney plans to file a formal complaint with the Public Utilities Commission alleging Central Maine Power is improperly using its influence on behalf of sister company Maine Natural Gas because the gas company didn’t win a major contract with the city.
The complaint stems from Central Maine Power’s support of a proposed bill that would change where vehicle excise taxes from utilities are paid.
Currently, utilities pay excise taxes on their fleets in the municipality where the company headquarters is.
That means Augusta, as home to CMP, gets excise taxes on CMP’s approximately 500 vehicles to the tune of $314,000 a year in revenues, according to Ralph St. Pierre, finance director and assistant city manager.
A proposed bill, L.D. 1754, which sponsor Rep. Lance Harvell, R-Farmington, said he was asked to submit by CMP officials, would change the law so utilities would pay excise taxes on company vehicles to the municipality where they are kept.
CMP garages vehicles in Skowehgan, Fairfield, Farmington and Portland, with about 100 parked in Augusta.
St. Pierre said the change could cost the city more than $200,000 a year in lost revenue from CMP vehicle excise taxes.
Mayor William Stokes and city councilors, through a resolve they approved Thursday, allege CMP’s motivation for backing the bill is retribution on behalf of Maine Natural Gas, which, like CMP, is owned by Iberdrola, USA.
Stephen Langsdorf, city attorney, plans to file a formal, 10-customer complaint with the PUC Monday alleging CMP is improperly using electricity ratepayer money to fight a battle on behalf of Maine Natural Gas.
“If you’re a customer of a utility, you should only be paying for those costs directly associated with the utility you are a customer of,” Langsdorf said Friday. “In this case, what we see is CMP has been improperly using its influence on behalf of its sister corporation, Maine Natural Gas. CMP isn’t supposed to be spending money and resources on behalf of its other sister utility.”
â€˜Penalize the city’
City officials suspect CMP wants to penalize the city because of the company’s dissatisfaction with how the city treated Maine Natural Gas when the city was seeking bidders to distribute natural gas to city and school buildings in Augusta.
The resolve, approved in a 6-0 vote, with one abstention, notes, in part, “it appears that CMP’s motivation in advancing L.D. 1754 is to penalize the city of Augusta for the manner in which the city handled the process of procuring natural gas supplies for city facilities, as evidenced by, among other things, direct comments during that process from the president of CMP to the mayor, city manager and Augusta Parking District chairman.”
“It is surprising a city would take such a critical position against a company like CMP,” Iberdrola, USA spokesman John Carroll said Friday. He couldn’t respond to specific allegations because the complaint hasn’t yet been filed.
Carroll said CMP’s motivation in backing the bill is not retribution, but a desire to be fair to other communities where CMP keeps its vehicles but doesn’t pay any excise tax.
“We’ve explained why we’re doing this, it’s an issue of fairness, which we think is important,” Carroll said. “What the city is saying sounds like a political position, because they don’t like the legislation. The facts are that we are a good corporate citizen and the principle is one of fairness.”
Langsdorf said there is a process by which utilities may share resources with other utilities, but they must document such sharing and attribute costs for both properly.
“We don’t know that CMP is doing that,” Langsdorf said of the process. “We just know the president of CMP (Sara Burns) has been very actively involved in this situation, and now CMP is seeking to extract revenge by heavily lobbying on this bill which would deprive the city of excise tax revenues.”
He said the city wants the PUC to look into whether CMP “is trying to influence individuals on behalf of another company.”
Stokes said he got a call at home from Burns Feb. 14 of last year.
“She expressed her displeasure at the city manager and city, over natural gas,” he said. “I don’t want to get into details of the conversation, but it had nothing to do with electricity. It was all about natural gas.”
Last year, Maine Natural Gas and Summit Natural Gas of Maine both submitted bids to deliver natural gas to city and school buildings in Augusta.
Summit was awarded the work in July of last year after Maine Natural Gas officials withdrew their bid and accused the city of allowing Summit to change its prices after both companies submitted their proposals.
Carroll said if the bill passes, CMP will still pay excise taxes on 110 vehicles in Augusta, and is about to make its second of two $25,000 donations to the proposed Lithgow Library renovation project.
“We’re the second largest taxpayer in the city and probably one of the largest employers,” Carroll said. “I think by any measure people would say CMP is a good corporate citizen in the city of Augusta, and the city doesn’t seem to want to acknowledge that.”
City officials said identical legislation was submitted, also by Harvell, in 2011, and both the city and CMP spoke strongly against the change.
Carroll said CMP is now in favor of the change because changes in technology have made it easier for vehicles to be registered in multiple municipalities, and it’s easier to keep track of vehicle fleets.
The city’s resolve states, however, “nothing related to the technology nor manner in which utility vehicles are registered or excised in Maine has changed in the intervening three years.”
The PUC will investigate complaints against utilities filed by at least 10 aggrieved parties, according to spokesman Harry Lanphear.
In this case, the city could be one of the aggrieved parties, as a CMP customer. Langsdorf said city councilors may also sign on to the complaint, and he is confident the complaint will have at least 10 signatures.
City councilors are aware Langsdorf is pursuing the complaint, Stokes said, and that the city will have to spend money to pay for Langsdorf’s time.
“I think we have no choice,” but to use city resources to pursue the complaint, Stokes said. “I think CMP has chosen to do this, and I think we’d be derelict if we did not defend the city from what is, clearly in our view, a retaliatory attempt by CMP.”
Lanphear said once the PUC receives a complaint, the utility is given a chance to respond and address the issues raised. If the commission agrees the utility has adequately addressed the complaint, that could be as far as the complaint goes.
However, if the commission doesn’t accept that the complaint has been adequately addressed, it would open an adjudicatory proceeding to fully explore the matter, which could include hearings and intervention by other potentially impacted parties, Lanphear said.
Lanphear said he couldn’t comment on the specifics of the complaint because the PUC has not received it yet.
The bill goes to the state Legislature’s Taxation Committee for a public hearing at 1 p.m. Wednesday.
Rep. Matthew Pouliot, R-Augusta, said he plans to fight the bill.
“I take it very seriously when the city council believes a major company like CMP is using its influence to penalize the residents of Augusta,” Pouliot said. “Regardless of the motives, I will be doing everything I can to protect Augusta taxpayers and stop this bill because it’s extremely bad for our city.”
Peter Thompson, executive director of the Kennebec Valley Chamber of Commerce, said he was disappointed with the city council resolve.
“I certainly hope this blast isn’t a precedent of how our good friends in local government will begin to treat other businesses,” he said.
Thompson said it is fair for the city to lobby the Legislature to retain the benefit of all CMP’s vehicles being registered in Augusta, but said he’s looking “for a more unified approach to our community’s future.”
“Resorting to castigating one of the city’s largest taxpayers and employers in this fashion is a bad precedent, not only for CMP and its hundreds of employees here, but also for other businesses,” Thompson said, noting both CMP and the city are members of the chamber.
Keith Edwards – 621-5647 [email protected]