AUGUSTA – A proposal to change state law regulating where utilities pay excise taxes, which could have cost Augusta $200,000 a year in lost revenue from Central Maine Power, was voted down following strong debate in the Senate Thursday.

Sen. Roger Katz, R-Augusta, said the bill to require utility companies to pay excise taxes in the community where their vehicles are kept was supported and requested by CMP purely as a way to punish the capital city because CMP’s parent company, Iberdrola USA, didn’t like how the city dealt with Iberdrola subsidiary Maine Natural Gas.

Currently, utilities pay excise taxes for all their vehicles in the community where their headquarters is located — in CMP’s case, that’s Augusta.

“Welcome to Senate TV, brought to you by Central Maine Power,” Katz said from the floor Thursday, suggesting the utility is using the state Legislature to gain ground in its dispute with the city. “And the name of the program is ‘Let’s Punish Augusta.’”

The Taxation Committee, after taking sometimes heated testimony and debating the bill in multiple work sessions, voted 12-1 last month to form a study group to look into issues such as what impact the change could have on utility ratepayers and report back to the next Legislature.

However Sen. Troy Jackson, D-Allagash, majority leader of the Senate, made a motion to amend the bill Thursday to remove the study requirement and implement the change as first proposed by sponsor Rep. Lance Harvell, R-Farmington.

Jackson said he did so because he believes municipalities where utility company vehicles are kept should be the ones getting the excise tax to help offset the cost of wear and tear on the roads. He said the change may cost Augusta and other municipalities where utility company headquarters are located in revenue, but that money would instead go to other Maine municipalities.

Sen. Mike Thibodeau, R-Winterport, agreed with Jackson, noting the fact utilities pay excise where their headquarters are has unfairly benefited the municipalities, at the expense of the municipalities where the vehicles are kept, for decades.

CMP parks vehicles in Fairfield, Farmington, Skowhegan and Portland.

“This amendment is about 40 years of bad public policy,” Thibodeau said. “Forty years of these communities getting millions of dollars in windfalls. It’s time for these other communities to get some of that windfall. It’s the right thing to do.”

Jackson’s amendment failed, 21-13, and the bill recommended by the Taxation Committee to study the issue passed.

Most other companies pay excise taxes where their vehicles are kept. Katz said the different rules for utilities were made about 40 years ago because regulators determined — and until recently utilities including CMP agreed — it is a cheaper, more efficient way for them to pay excise taxes. Paying in multiple municipalities could increase costs, which would then be passed on to ratepayers.

A CMP lobbyist told the Taxation Committee last month that because of changes in technology, it would not cost CMP, and thus ratepayers, much more money if the company paid excise taxes where the vehicles are kept.

Sen. Anne Haskell, D-Portland, co-chairwoman of the Taxation Committee, said the committee voted 12-1 to study the issue because it is not clear what the impact of the change could be on ratepayers and other utilities across the state.

“Let the dust settle, get some good information, and make good public policy,” she said.

Sen. Doug Thomas, R-Ripley, a Taxation Committee member, said he voted for the proposal to study the issue, but only “because I didn’t think we had votes enough to do the right thing, which is Senator Jackson’s proposal.”

Katz read the testimony of former CMP lobbyist David Allen in opposition to the same basic bill when it was proposed and rejected by legislators in 2011.

Allen’s testimony from 2011, read by Katz Thursday, argued having to pay excise taxes in multiple municipalities would be more time-consuming and costly for CMP, and those additional costs would be passed on to ratepayers.

The dispute between the city of Augusta and Maine Natural Gas, which is also owned by CMP parent company Iberdrola USA, began last year when the city put natural gas distribution to city and school property out to bid.

Mayor William Stokes and City Manager William Bridgeo have said they were called by CMP President Sara Burns, who urged them to choose Maine Natural Gas for the work without going out to bid. CMP spokesman John Carroll has said that the company’s involvement has been “mischaracterized.”

The city went out to bid, and selected Summit Natural Gas of Maine, after Maine Natural Gas withdrew its bid when the city allowed Summit to provide a new lower bid price after the initial bids were submitted by both companies.

Last month Stephen Langsdorf, Augusta’s city attorney, filed a 10-person complaint with the Public Utilities Commission alleging CMP improperly used its resources, potentially at ratepayer expense, to punish the city for its handling of Maine Natural Gas.

The PUC has not yet determined whether it will formally take up the complaint.

The bill directing the issue to be studied passed in the House of Representatives earlier this week, according to Rep. Matthew Pouliot, R-Augusta. The bill next goes back to the House of Representatives for another vote, and, later, to Gov. Paul LePage, for his signature if he approves.

Keith Edwards – 621-5647 kedwards@centralmaine.com Twitter: @kedwardskj