Foreign ownership in the state’s biggest utility figures in two questions on the ballot next month, one that would limit non-U.S. companies from trying to influence Maine elections and another proposing to establish a publicly owned utility.

But there’s little consensus on what influence that ownership might hold.

Question 2 on the Nov. 7 ballot asks voters to consider barring foreign governments and entities they control or influence from spending money on state and local referendum campaigns. Federal and state election laws prohibit foreign nationals from contributing to candidates seeking office in Maine. But they do not ban foreign entities from spending money to influence state and local referenda or elections.

A foreign government-influenced entity is defined as any business or organization that is controlled by a foreign government or is partly owned by a foreign government. A government must own at least 5% of the entity for it to be prohibited from campaign spending under the proposal.

The ballot measure was a response to record spending in 2021 intended to stop construction of a power transmission corridor in western Maine. Hydro-Quebec, which is wholly owned by Quebec and would use the transmission line to dispatch power from Quebec into New England, spent more than $23 million to try to defeat the measure and allow it to advance the project.

Avangrid, the parent company of Central Maine Power Co., was part of a group that spent more than $42 million to oppose the measure. Avangrid is a subsidiary of the Spanish energy giant Iberdrola. Combined, it was the most expensive referendum campaign in Maine’s history.

Foreign ownership also is an issue to supporters of Question 3, which proposes creating a publicly owned and controlled power company by taking the assets of CMP and Versant Power, which distribute 97% of Maine’s electricity. Backers say one reason to support the measure is that money earned by a domestic company would stay in Maine rather than head to Spain, where Avangrid’s parent company, Iberdrola, is based, or Calgary, Alberta, the home of Versant.

Some industry executives push back against the notion that ownership affects governance when you’re talking about regulated utilities. An industry analyst agrees, adding that foreign ownership of utilities lags that of other private companies.

But to former Democratic state representative Seth Berry, the issue is clear. He supports both ballot measures, and his calculation of foreign ownership demonstrates that CMP has outsized influence in Maine, he says.

The Qatari government has a 3.7% stake in Avangrid and 8.7% in Iberdrola. And Iberdrola owns 81.5% of Avangrid. According to Berry’s calculation, an 8.7% stake of 81.5% is about 7.1%. Adding 3.7% establishes a 10.8% stake that Berry says is the correct way to understand the Qatari government’s stake in CMP.

He includes Versant, a subsidiary of Enmax, a Calgary-based utility, in his criticism of outside interests involved in Maine politics. Enmax has contributed $8.4 million to the campaign to defeat Question 3, which calls for the creation of a new utility called Pine Tree Power.

“Once again, CMP is showing why they are the most mistrusted company in Maine,” he said in a text message. “The last thing they want is for Mainers to see that oil-rich governments like Qatar and Calgary are pocketing our hard-earned cash.”

UTILITIES’ GOVERNANCE DIFFERS

R. Scott Mahoney, Avangrid’s general counsel, called Berry’s calculation a “disservice.”

“I don’t know what he’s getting at,” he said in a phone interview.

The Qatar Investment Fund purchased shares in Avangrid in 2021 as the utility sought to finance an acquisition of PNM Resources, an energy holding company in Albuquerque, New Mexico, Mahoney said. The New Mexico Public Regulation Commission has rejected the $8 billion deal, which Mahoney said is being appealed.

He said Qatar has no control over the utility’s operations.

“That’s where I wish the focus was,” he said. “We have a very robust governance structure at Avangrid.”

A typical, for-profit business tries to maximize shareholder return. But that dynamic is constrained in a utility because the state regulates how much ratepayers can be charged and how much a company can earn from its ratepayers.

John Quackenbush, a former Michigan energy regulator, industry analyst and now president of JQ Resources LLC, which provides regulatory and financial information, said how a foreign ownership stake in utilities is calculated is not critical because it does not affect governance.

“I don’t think it matters,” he said.

An overseas government investing in a utility is a passive investment, he said, referencing a strategy of holding investments for long-term gains. “It does not have governance responsibilities,” Quackenbush said.

In addition, he said, regulators must sign off on ownership deals that typically follow extensive research and public comment. The Maine PUC approved Iberdrola’s acquisition of Energy East, then the parent company of CMP, in January 2008.

SOVEREIGN FUNDS SEEK SAFE INVESTMENTS

And sovereign funds looking for places to put their money are not scouting “big, high-tech investments with huge returns.” They’re instead seeking safer investments such as highway infrastructure and utilities that may yield smaller returns, he said.

For example, a portfolio manager investing in a high-risk, high-return stock such as Apple profits from a return on equity of 161%. For Iberdrola, the return is 8.9%.

That may help account for utilities being “underrepresented” in foreign ownership. Overseas investment accounts for 10% to 15% of a utility, compared to 30% to 40% for other companies, Quackenbush said, noting that “utilities are slower to the game than other companies.”

BJ McCollister of Maine Energy Progress, a political action committee formed by Versant Power and Enmax, which is the group’s sole funder, said it has focused its spending on Question 3 rather than Question 2. But it doesn’t support Question 2, either.

“We believe that it is not in the best interest of northern and eastern Maine to prohibit the electric utility from speaking on behalf of its 530-plus employees and 165,000-plus customers,” he said.

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