A proposal to have Central Maine Power Co. set up a $500,000 fund to help residential customers harmed by the coronavirus pandemic pay their electricity bills was rejected Tuesday by state regulators, who said the plan was well intended but not well targeted.

The fund, which would have been paid for by CMP shareholders, was part of a settlement reached between the utility and the Maine Public Advocate’s Office regarding the way CMP notified customers about its winter disconnection practices since 2015.

But during deliberations at the Public Utilities Commission on Tuesday, the two attending commissioners said the proposal fell short of public-interest legal requirements. They questioned whether earmarking the money for customers who were financially impacted by the pandemic would actually help the same people who received the disconnection notices.

“It is not clear what the overlap is, if any, between customers who received improper discount notices and those impacted by COVID-19,” said Phil Bartlett, the PUC’s chair.

It’s now up to the PUC lawyer overseeing the case, known as the hearing examiner, to decide how to proceed.

CMP reacted to the development by again acknowledging that it sent out improperly worded notices and that it remained committed to the idea of providing financial assistance.

“We respect the result of the commission’s deliberations and await further direction from the commission and its staff on the additional procedural steps necessary to bring the investigation to a close,” the utility said in a statement.

Allegations that CMP used incorrect or misleading information in warning notices sent to customers with past-due bills led to an investigation by the PUC last winter. The proposed settlement was an outgrowth of that case.

Under the terms of the now-rejected plan, CMP would have paid into a fund, in lieu of an administrative penalty. The money would have been distributed through the Energy Crisis Intervention Program and administered by a state agency, possibly the Maine State Housing Authority.

The fund recipients would have been selected by the Public Advocate’s office. The PUC commissioners also took issue with that idea. Bartlett noted the PUC was required by law to have oversight over such things.

As part of the initial agreement, CMP also would send a letter to customers who received improper disconnection notices acknowledging that it violated PUC rules. CMP would clarify that it can only disconnect customers between Nov. 15 and April 15 with approval of the PUC’s consumer assistance division. The company also would issue a public statement of clarification and apology.

Going forward, CMP would revise its customer communications regarding winter disconnects and be subject to an annual review of its practices.

The coronavirus pandemic has led the PUC to order all utilities to suspend disconnections until further notice.

In another case, the PUC is asking the state’s electric utilities and natural gas distribution companies to provide an accounting of how the pandemic is affecting the ability of customers to pay their bills. The agency is worried that unpaid bills will push rates higher for other customers.

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