“Public power” sounds great, but the policy behind it is anything but. If passed, it would represent one of the most expensive and risky steps ever taken by the state of Maine. That is why cooler heads must prevail.

Fifty years ago, Maine voters soundly rejected a referendum question to create a state power authority to operate new power plants built in Maine. Today, the Legislature is being asked to adopt a bill even more sweeping — L.D. 1646 — that would direct the state of Maine to take over Central Maine Power and Emera Maine and hire a private company to operate the electric grid. Since the takeover must meet the constitutional requirement of “just compensation,” many expect the price tag to range from $7 billion-$9 billion after many years of expensive litigation. The cost of the government takeover would be borne by Maine electric customers in their rates.

When this bill was presented last spring, the Maine State Chamber of Commerce stood in strong opposition. On behalf of the men and women who make up our membership, we believed passage of this bill would raise electric rates, politicize the operation of the electric grid, and risk disinvestment in critical infrastructure needed to power our homes and businesses.

As a former commissioner of Maine’s Department of Transportation, I understand the importance of investing in critical infrastructure. The Maine DOT does a fantastic job making the best of the insufficient resources they are provided by state government. But, the reality is that our political process has not yielded the resources needed to keep up our roads and bridges, and every day, the potholes grow. Is there any doubt that an electric system subject to similar political pressures will face the same resource constraints? Can we afford more and longer outages, or fall behind on grid modernization to meet the needs of tomorrow, all because political leaders in Augusta cannot agree on whether to make necessary investments?

The fact is, the electric industry in this country is perhaps the most capital-intensive industry in America, and the system relies on investment, particularly private investment. The same is true in Maine where private electric companies continue to invest hundreds of millions of dollars into our electric system under the watchful eye of state regulators at the Maine Public Utilities Commission. The PUC is there to ensure that any dollars invested are prudent, and if the investments are found not to be prudent, Maine customers don’t have to pay for them. By contrast, if a state-owned power authority — which has no shareholders — made a bad investment, Maine customers would have no option but to pay the full tab. There would be no one else to pick up the costs.

Economically, good things are happening in Maine, and we want to attract private investment. However, what kind of message do we send to businesses when the state of Maine passes a law to take over private companies by eminent domain? Will investors continue to have confidence in Maine?

Now, some government-run power supporters say “Maine, not Spain” — Mainers should own their local electric grid. But, let’s hit pause on such nationalistic fervor. The reality is that many wonderful Maine companies are not locally owned, and foreign investment has re-invigorated paper mills and communities in all corners of our state. Maine can ill-afford to reject private capital flowing into our state.

Private ownership also means stable ownership. By contrast, state ownership of the electric grids means ever-changing policies depending on who sits in the Blaine House. Governors who support carbon reduction goals will appoint like-minded directors, and governors with different priorities will appoint a different set of directors. So, for those who think government ownership assures better progress on climate change goals, think again, because priorities could easily shift away from these goals as the political winds shift in Augusta.

Some “public power” supporters also point to the success of Maine Employers Mutual Insurance Company in the workers’ compensation market as an example of why government-run power can also succeed. I certainly agree that MEMIC is a terrific company, but the analogy is misplaced. MEMIC is a private company in a competitive market, whereas a public power authority means a government agency in a monopoly market. These are completely different things.

In the end, “public power” is a catchy phrase, but Maine simply cannot afford it.

 

Dana Connors is president and CEO of the Maine State Chamber of Commerce.


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