The Maine Public Utilities Commission voted Thursday to penalize Central Maine Power by cutting its earnings by nearly $10 million over 18 months, citing the company’s longstanding customer service failings and mismanagement of its new billing system.

The penalty could be increased if CMP fails to meet specific service quality benchmarks each month during the 18-month period, the commission said.

“The message I want customers to hear is that we’re holding CMP accountable,” said Phil Bartlett, the PUC’s chairman.

The $9.9 million earnings reduction is the largest single financial penalty ordered for a utility and its shareholders by the PUC in recent history, Bartlett said. Earnings are reduced by lowering customer rates.

The earnings cut is the largest ever imposed by the PUC on an electric utility to penalize poor management. As a result, CMP likely will have the lowest earnings of any electric utility in the country until its performance improves.

At the same time, however, regulators agreed that CMP was entitled to what it termed “a modest rate increase” to pay for reliability upgrades to its electric grid and to hire more staff to improve customer service. Taken together, the penalty and rate increase will translate to a roughly 2 percent net hike to the average residential customer’s monthly bill starting March 1.

Bartlett said CMP customers ultimately will benefit from better customer service and a more reliable electric grid during storms. He also noted that the impact will be offset by this year’s decrease in the standard offer electricity supply rate, so that overall, rates for most home customers will fall this year by roughly 7 percent.

The PUC’s decision drew varied responses from interested parties that include Gov. Janet Mills. Through her media relations office, the governor declined an interview with the Portland Press Herald but issued a statement.

“The PUC was right to penalize CMP for the mismanagement of its billing system rollout, to require an audit of the company’s management and to implement service metrics,” Mills said in the statement.

Mills also said she wants to work with the Legislature to examine how CMP is regulated and make sure the state and the PUC “have the right tools to hold utilities accountable and answerable to Maine, not Spain or some other foreign nation.”

Mills reference to Spain was to note CMP’s Spanish parent, Iberdrola. The company’s detractors have lamented the loss of local control at Maine power companies, including CMP and Canadian-owned Emera Maine, brought on by corporate mergers over the years.

The PUC also ordered several other actions as part of Thursday’s decision. They include:

• New performance standards and increased accountability: Citing problems with CMP’s customer service practices dating to 2016 and its mismanagement of the billing system launch, the agency ordered CMP to conduct additional testing of SmartCare at its own cost and to fix outstanding defects, to set up an independent process to investigate and resolve open customer complaints about high usage, and to hire an independent third party to monitor and evaluate call center performance.

• Management audit: An independent audit of CMP and its affiliate service companies will be conducted to evaluate the management structure and make recommendations to improve the overall quality of CMP’s customer service. The goal is to address concerns about fundamental problems with the company’s management structure.

• High usage concerns:  Remaining high usage complaints will be addressed on a case-by-case basis. The PUC’s consumer division will investigate all customer complaints about high energy usage and, if necessary, refer cases for an independent energy audit.

• Refunds and credits: CMP customers on the Electricity Lifeline Program will receive a total $358,600 in credits because of a billing defect. In total, CMP customers who reported and filed complaints from Nov. 1, 2017, through Dec. 31, 2019, have received more than $5 million in credits and refunds from CMP. Any customer who has experienced a billing error that has been verified will be made whole, the PUC said.

• Interim payment plan: All customers using the interim payment plan will continue to be protected until their individual case is resolved, as long as they continue to pay the undisputed portion of their bills. The commission will contact each customer individually and work to resolve each customer’s individual concern.

More than two years have passed since state regulators began looking into customer complaints about inexplicably high bills. Thursday’s decision settled some key issues but failed to bring full closure to the controversy that spawned an unprecedented state investigation into billing and metering problems that have defied clear explanations. For one thing, no so-called “root cause” has been identified to satisfy customers who feel their bills are inaccurate.

In their decision, the three commissioners built upon the recommendations and findings in early January of the agency’s career attorneys and consultants. In exhausting detail over several months, these experts had scrutinized the technical workings of the billing system upgrade and cross-examined the managers responsible for it.

CMP has been under fire for billing practices and other customer service issues for more than two years. A Portland Press Herald investigation last year revealed that the utility mismanaged the rollout of a new billing system and then sought to downplay its own mistakes.

The PUC staff, introducing its staff recommendations in early January, summed up the scope of the case this way:

“The commission has not in recent history – and probably never before – seen complaints against a utility reach the numbers they have here, nor seen the kind of public skepticism of customers’ utility bills that has been raised against CMP in the last two years.”

That may be because of seeming discrepancies that continue to challenge public understanding of the findings.

One example: The staff found CMP mismanaged the rollout of its SmartCare billing system, resulting in late or inaccurate bills for tens of thousands of customers. But it also concluded there was no “systemic” problem with the metering and billing systems and that the high bill complaints that triggered the investigation were linked to high electrical use during a cold snap in the winter of 2017-18. The commissioners largely agreed with that finding.

Another example: Despite concluding the system is basically fine, the staff recommended that CMP at its own cost conduct additional testing of SmartCare.

The PUC’s action was welcome by Barry Hobbins, the state’s Public Advocate, who represents consumers.

“It’s important that CMP is being held accountable for acting in an imprudent manner,” he said.

But Rep. Seth Berry, D-Bowdoinham, who is the lead advocate of a bill that would create a public power authority in Maine, remained critical. Mills so far has declined to weigh in on that proposal.

“My committee will be reviewing today’s PUC decision next Wednesday morning,” he said. “We will have questions for the commission, particularly regarding the approved rate increase. I applaud aspects of this decision. But if this were a free market, CMP would have gone bankrupt long ago.”

Central Maine Power said it was still examining the impacts of the decision, but called the penalties “significant” and in line with the intense scrutiny given by the PUC. It noted that it had begun the process of taking “meaningful steps” to recommit to Maine customers and regain trust.

“We have heard loud and clear that our business as usual is not enough and we must do better,” the company said in a statement.

Thursday’s decision marks the end of one protracted battle for CMP and its parent company, Avangrid, but the utility remains under assault on several other fronts.

CMP has come under new scrutiny from the PUC for its practices around sending shut off notices during the winter to customers with past-due bills. CMP has belatedly admitted that it made mistakes on how it communicates with customers. And while that issue is outside of the billing and metering dispute, it feeds a public perception of CMP as a mismanaged monopoly that treats its customers with disregard.

Some customers aren’t waiting for PUC action on the disconnection notices. Lawyers announced Tuesday that they’d seek a class-action lawsuit against the utility, charging that the notices were deceptive and misleading.

Another group of customers who have organized around the billing complaints are waiting for judge to rule on their request to file a class-action suit. That ruling has been held up until the PUC finished the billing case.

And in the Legislature, Berry’s proposal to set up a public power utility in Maine is in play, now awaiting a feasibility study at the PUC. CMP and Emera Maine, which serves eastern and northern regions, have vowed to fight any effort to dissolve their investor-owned utilities.

CMP also is seeking regulatory approval to construct a 145-mile transmission corridor from the Canadian border through western Maine, to bring hydropower to Massachusetts. The New England Clean Energy Connect project is opposed by many residents and environmental groups, although it has the support of some business and labor interests, as well as Mills. It has spawned an effort to bring a ballot question aimed at killing the project to Maine voters this November.

For its part, CMP has pledged to do better with customer service, recently setting up a new management team and announcing its “Power On” campaign, in which the company will focus on instituting internal changes that reflect its commitment to customers and to regaining their trust.

Recently, the PUC has highlighted information on its home page with four web links to help customers navigate billing issues, CMP payment plans and disconnection notices.

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