The campaign for public power in Maine

In this episode, Maine State Senator Nicole Grohoski discusses an
upcoming ballot measure that gives Maine voters the opportunity
to replace the state’s unpopular for-profit utilities with a
nonprofit public utility.


(PDF
transcript)


(Active
transcript)


Text transcript:


David Roberts


Maine’s two big investor-owned power utilities — Central Maine
Power and Versant Power — are not very popular. In fact, they
boast among the lowest customer satisfaction scores of any
utilities in the country, perhaps because their customers face
some of the nation’s highest rates, suffer more and longer
outages than average Americans, and pay more to connect rooftop
solar than ratepayers in almost any other state.


This November, Mainers will vote on a radical alternative: a
ballot measure to replace the two for-profit utilities with a
single nonprofit utility that would be called Pine Tree Power.
Maine and many other states already have lots of small nonprofit
municipal utilities, but this would mark the first time a whole
state with existing private utilities decided to make them public
en masse.


Naturally the utilities are opposed and have dumped $27 million
and counting into a campaign to crush the measure; supporters
have mustered just under $1 million.


To discuss this David vs. Goliath fight, I contacted one of its
champions, Democratic state Senator Nicole Grohoski. We discussed
why she thinks a public utility would perform better, what it
would do for clean energy, how it would be governed, and what
other states can learn from the effort.


With no further ado, Maine State Senator Nicole Grohoski. Welcome
to Volts. Thank you so much for coming.


Nicole Grohoski


Thank you so much for having me. I'm thrilled to be with you
today.


David Roberts


I am super excited to talk about this issue. There's a lot of ins
and outs I want to cover, but maybe let's just start with a brief
history of this thing. So the idea here is, as I said in the
intro, to replace Maine's two big investor-owned utilities,
Central Maine Power and Versant Power, with a single publicly
owned main utility called Pine Tree Power. Tell me who first had
that idea? Where did it first pop up? I know it was legislation
and then it got vetoed. Just tell us a little bit about how we
got to where we are now.


Nicole Grohoski


The history is really interesting, and I'll try to not spend too
much time on it, but I think it's really important to start with
the reality here in Maine as a backdrop. So a couple of things
that are important to know for listeners is that we, as Mainers,
find that our electricity isn't really affordable or reliable and
our utilities aren't trustworthy. So we have, for many years
running now, the worst customer satisfaction in the country, some
of the highest rates in the country for electricity, and those
just keep going up. We have experienced a 20% increase this
summer, with another increase coming in January.


And we also have the most frequent outages in the country. And
there are a couple of other reliability metrics that we're not
doing so well on, including the length of outages and how long it
takes to restore power. So basically what we see here in Maine is
that the status quo of these for-profit multinational
corporations is just not working for us. About a tenth of our
residents in Maine received disconnection notices earlier this
year because they just couldn't afford to pay their bills. And
it's not working for companies or big corporations that really
rely on low cost and reliable electricity to compete.


So that's kind of the background. So a number of us were
wondering, does it have to be this way? Is there an alternative
to worst of the worst? We are Maine, we are very proud and
independent, and we like to be leading, but this is not the way
that we wanted to be leading. So there was a lot of grassroots
pressure. In 2017 we had a big storm, and the power was out for
days. But at the same time, there was a billing fiasco, which
resulted in billing errors for over 100,000 customers, which is
in a state of 1.3 million people, that's a very big percent.


So there was a lot of pressure, a lot of phone calls to
legislators, to the Public Utilities Commission, to the public
advocate about these utilities. And so I think that really
planted a seed for a number of folks. Specifically, Maine's first
public advocate pointed out to some members of the legislature,
including Representative Seth Barry at the time, myself, and a
few others, that there were other options and that the financial
and local control aspects of those options might be really
helpful for Maine. So we started meeting in 2019 with the
previous public advocate, economists, labor, legislators, people
that were part of a group called CMP Ratepayers Unite.


And that's when we formed this idea of creating a consumer-owned
utility for Maine that would be non-profit and similar to the ten
other consumer-owned utilities we have in Maine. I don't know
that we had a name for it at that time, but we do now call it the
Pine Tree Power Company. So those were the early days. And then
to sort of fast forward, the Legislature commissioned a study
which was done by London Economics International in 2019 to learn
more about the economics and also legal pathway here. Then, of
course, 2020, everybody knows what happened then, things kind of
went on pause. And then in 2021, we wrote a bill. And that bill
passed in both chambers in Maine with bipartisan support. As you
mentioned, the governor did veto that bill.


David Roberts


And that bill was to create the utility or to put the question to
voters.


Nicole Grohoski


That bill put the question to voters, and it's very similar to
the language that we'll be voting on this November. So we did
revise the language based on some feedback from the governor, and
that is the language that is now in front of us to vote on this
November, November 7. And in order to get the question on the
ballot we had hundreds of volunteers working together to collect
around 80,000 signatures in total, which is a little bit above
the requirement needed to get a question on the ballot in Maine.


David Roberts


I'm a little curious why — this is a Democratic Governor Mills.
What was her rationale? I mean, I guess I can imagine her
rationale for opposing the public utility, but what was her
rationale for opposing asking voters what they thought? Did she
have a good rationale?


Nicole Grohoski


Not in my opinion. I'm sure in her opinion it was great. But we
read the veto letter for the most part. There was very little in
there that was substantive. Some of those minor changes that we
made are all things that we would have happily made in advance
had we had outreach from her office about them. You know, the
unfortunate thing with governors in Maine is that we have yet to
elect one that has campaigned using our clean elections, publicly
funding campaign option, which is something that most legislators
use. So you can draw your own conclusions there about the — money
in politics may have been at play.


I can't say for certain.


David Roberts


Yeah, we should just make a note here because a couple of
podcasts we've done here on Volts are about state laws
prohibiting utilities from using ratepayer money to lobby and pay
off politicians. Maine does not have one of those laws.


Nicole Grohoski


Well, we actually did just pass a law. We were one of four states
earlier this year to be sure that ratepayer dollars are not going
for lobbying. You know, industry membership, group memberships.


David Roberts


Oh, interesting.


Nicole Grohoski


You know, Edison Electric, for instance, Chambers of Commerce, et
cetera. So that is a new law. It will be in effect in about a
month. So we'll see if that improves things.


David Roberts


Just in time or actually just a smidge too late. So the bill of
particulars here then, against these two utilities, as you say,
they have really low ratepayer satisfaction scores, lots of power
outages, more than usual, higher rates, some of the highest rates
in the country. Like every state, Maine has a Public Utility
Commission that is meant to regulate its utilities. That has
members appointed by the governor or elected? I'm not sure how it
goes in Maine.


Nicole Grohoski


In Maine, the commissioners are appointed and then subject to
Senate approval.


David Roberts


So why not just use the PUC to sort of get these utilities in
line? That seems like it would be the sort of first order of
business.


Nicole Grohoski


It's a great question. I mean, I think everyone kind of wants to
default to using the systems we have in place, but I have a
couple of thoughts about that. Our Public Utilities Commission I
do think is full of folks who are hardworking and really trying
to get under the hood with utilities. But there's a lot of
information there that the utilities really understand best. And
so when you have questions, you're going to ask the utilities and
there is sort of a long term back and forth relationship there.
Some people might call how that turns into regulatory capture
sometimes.


Additionally, we do have the ability to fine the utilities if
they're not performing up to snuff and that has happened. It
doesn't happen that often, and the most recent fine, I think was
around $10 million. At the same time they had a significant rate
increase and are pulling out over $100 million in profit every
year. So it's not really proportional and we could theoretically
increase those fines a bit. But there is hesitance. I think the
legislature has interest in doing some of that but the utilities
are of course not interested and I think we would see another
veto pen action is my guess.


But all that being said, this effort to create a consumer utility
has led to a lot of us just digging down into what is the history
of utilities in this country and regulation. And what we found is
that utilities are natural monopolies so it makes sense for there
to be regulation because there isn't competition. But the folks
who sort of started the effort to create public utilities
commissions were those who were going to be regulated. And so
there has been this hand in glove relationship since the start
around the regulators and the regulated.


David Roberts


It's not ideal.


Nicole Grohoski


That's probably a subject of a whole other podcast but —


David Roberts


It doesn't work quite like you would want it to.


Nicole Grohoski


Exactly. And additionally, I would say I have recently been
talking to folks in other states and other people have served as
public advocates. And what I find remarkable is the backflips and
cartwheels that we go through with regulation to try to outfox
the utilities when, by no fault of their own, the investor owned
utilities are created with their number one mission to be
maximizing repair profit. So it's like we could keep trying to
think of creative and clever ways to balance this out. But at the
end of all of it, I keep coming back to the fact that we don't
have our roads, which are critical to our economy and our safety
and our way of life in the private sector; and nor are our
schools, nor is our military.


Why does it make sense for something as important as our
electricity grid to be subject to for-profit motivations?


David Roberts


Listeners will be rolling their eyes right about now because this
is something I say I find a way to say it almost every episode no
matter what we're talking about. But utilities, they are
structured such that they make money insofar as they spend money.
So all they really want to do is deploy more big infrastructure.
And so as you say, like PUCs find these elaborate Rube Goldberg
mechanisms to sort of beg and plead with them to do things like
efficiency or distributed energy, know on and on, inter, regional
transmission, name it, all of which are sort of just counter to
the basic incentive.


So as you say, you can spend the rest of your life coming up with
more and more elaborate ways to try to trick them into doing
something against their interests. But at a certain point you
just got to grapple with the central issue which is that they're
set up wrong, they're set up badly, they're set up to not want
things that are in the public interest and at a certain point you
got to just deal with the root cause. Anyway, sorry to go off on
my standard canned rant there. So then a skeptic will say these
two utilities, just so people are clear about this, these are not
vertically integrated utilities.


These are just distribution utilities. They just have wires, they
just distribute power. They do not own generation. They're
dealing with a certain set of supply issues, a certain set of
power plants, a certain geography. Maine is very heavily forested
which is a nightmare for transmission lines for all the obvious
reasons. So it just has a sort of set of things that it's dealing
with. And so I guess the skeptic is going to ask what reason do
we have to believe that given the sort of same resources that
Pine Tree, a public utility, would perform any better?


Nicole Grohoski


Well I think we have a lot of evidence that it would because we
already have ten consumer owned utilities in Maine. Just for an
example, there is one that's called Eastern Maine Electric Co-op.
That's a traditional co-op. It is more rural than most of Maine.
You might find it interesting that it is serving about 1.2% of
the state's load in kilowatt hours but it is in an area that's
twice the size of Rhode Island. Now EMAC, which is in rural
downeast Maine is directly adjacent to the territory of Versant
that I live in and the cost for delivery in EMAC is nine cents
and the cost for delivery in Versant is 13.1 cents per kilowatt
hour.


So I don't think that's just some kind of magical happenstance
that when you take profit out of the equation you're just paying
less. We know that together CMP and Versant are sending out about
— was last year was $187 million a year in profit. So I think if
Mainers are in charge of our utility we can decide do we want to
use that money to lower rates? Do we want to use it to reinvest
in the grid to increase reliability? And I think it would
probably be a mix of both of those things.


David Roberts


And that amount of money you think is material enough that it
would show up as improved performance, show up as measurably
improved performance?


Nicole Grohoski


I do think so. I mean I think for your listeners, while Maine is
large and rural we do have 1.3 million people. So, when you sort
of divide those numbers out it does make a difference. And we've
had some independent economic analysis that shows us that Mainers
would be saving on average $367 a month, excuse me, a year,
because of the fact that we're basically going from expensive
rent for the grid to a lower cost mortgage. So I think it's easy
to explain it to folks in terms of, like, "What's better when
you're looking for housing, dropping your money down a rent hole,
black hole for the rest of your life, or swapping out to a
mortgage where you've got a lower interest rate than what we see
now with the guaranteed return on equity that happens for our
for-profit utilities."


David Roberts


Yeah, this was another piece I wanted to ask about. So part of
why you think this will be cheaper for ratepayers is just you
take that huge slice of profits that are going, as you say, out
of state to the owners of these utilities and keep that in state
and that alone will buy you some better service. There's also the
issue of investor-owned utilities expect and want and are
guaranteed relatively high rates of return on their investments
and often resist making investments if the rate of return is
lower than that. But as you say, a public power utility can be
more patient with its capital, right?


Can make investments with lower returns as long as they pay off
eventually, right?


Nicole Grohoski


Yeah. So we see here in Maine that the utilities are getting a
ROE of 8% to 12%. And we know that firstly that's kind of
astounding because it's not all that risky. Most people are
paying their bills.


David Roberts


Crazy. It's guaranteed. It's huge and it's guaranteed. It's wild
what it is. This is like the safest business on the planet as
being a regulated utility.


Nicole Grohoski


Couldn't agree more. And on the flip side, the Pine Tree Power
Company can access low-cost capital through revenue bonding at
3-5%. So when we think about paying off that debt over many years
with compounding interest, when we think about the fact that our
grid really isn't ready to electrify our economy and experts
expect it's going to need to be, increased two to three times.
Now is the right moment in time, I think, to move away from high
cost, low-risk investment to low cost, low-risk investment before
we literally triple our grid.


David Roberts


Tell us a little bit about how the utility would be governed or
structured and what implications you think that might have.


Nicole Grohoski


I love this question. I am a public servant and so I believe in
local governance and people getting to vote and go to public
meetings and have a say and all that is built into the ballot
question. So the Pine Tree Power Company would have elected board
members and there are seven of them, one for each grouping of
five Senate seats, state Senate seats. And those members then
turn around and appoint six members who have specific expertise
in things like utility law and management, concerns of workers,
concerns of economic, environmental and social justice, things
like that, that we really want to make sure those folks are at
the table.


And this group of 13 people, they serve six-year terms each of
them. And of course, there's like a little bit of a lead-in time
because they'd all be elected at once, where some of them served
shorter terms at the start. But point is, they are people in our
communities. They have to be living in Maine. They have open
meetings that are subject to freedom of access laws. And in order
to best serve the public, I think they would be doing a lot of
public outreach. And that's something that in talking to managers
and board members from other consumer utilities in the country,
I've been really impressed with how much local engagement they
have. I think Sacramento Municipal Utility District, they said
they're hosting 1300 community meetings a year.


David Roberts


Good grief.


Nicole Grohoski


A couple a day on average. But they have, I think they said 95%
customer satisfaction. So people feel like they're valued, their
experience matters and they also have a plan to get to 100% clean
energy by 2030. So our Pine Tree power governance is very much in
the spirit of "It's a public good. It should be publicly
governed."


David Roberts


There's a little bit of a controversy in Maine a few years ago. I
don't remember all the details, but it was about a big
transmission line that would have brought hydro from Canada down
through the woods of Maine. It was fought and I believe killed by
popular resistance. And there was a lot of, at least nationally
there was a lot of talk of like here again we have
environmentally minded locals blocking things for environmental
reasons, but in a short-sighted way that's going to be worse for
the environment overall. In the long term, they're NIMBY's. We've
got to figure out a way of dealing with this problem, et cetera,
et cetera.


So this leads to my question, which is: if you have a governing
board that is elected by local people, and it is the local people
who are often the source of the NIMBYism, do you not have some
fears? That this would lead to a more NIMBY rather than less
NIMBY operation of the utility, which is going to be difficult
when, as you say, this is the time when every state everybody
needs to be increasing and bolstering their transmission systems.
Do you worry that local control is going to translate into more
rather than less NIMBY opposition to new lines?


Nicole Grohoski


I'll put it in a way that I think makes sense to me as a person
in Maine who's intimately familiar with what you laid out, which
is at the root of that decision, was a fundamental lack of trust
in Central Maine Power. A trust that it would be doing anything
in our best interest, that it would be giving us appropriate
benefits, that it was really after anything more than profits.
And so I think it wouldn't be true that as soon as Pine Tree
Power was created that everyone would immediately trust the
company. But I do think it would be a fresh start.


And on top of that, with elected and appointed leaders spending
time in communities and just energy literacy, I think in general
would increase because it's something we would be talking about
more if we had to elect the board. I'll say I think that people's
interest in energy policy has gone through the roof this year
compared to where it was in the past. And people are asking just
really great questions, a new curiosity around electricity that I
hadn't seen before growing up here. So I think that the outcome
would actually be that folks would feel like they had a say in
how the transmission was cited, who was benefiting if we remove
the profit motive.


Imagine if that money that would have gone to profit was actually
going to community benefits. That might really change how people
feel. And I think that here in Maine we are sort of skeptical of
what's being pushed on us by people from away, quote unquote, is
a saying we have. I don't always love it, but it is accurate in
this case. You've got Central Main Power, owned by Avangrid, then
owned by Iberdrola, based in Spain, telling us, "Oh, we've got
this great deal for you." And people are skeptical of that. So I
think we have a greater chance actually of doing transmission
right and in a way that people can accept if there was this
broader community process and a lack of for-profit skepticism
that comes naturally to us here.


David Roberts


One of the criticisms of the two existing utilities is that
they're kind of slow-walking clean energy in particular. So I
wonder if you could just say a word about what that means and why
and how we think Pine Tree would be better on that score. Because
it's not obvious. These are just wires utilities, right? So
they're not dealing directly with clean energy generation. So
what are the issues around clean energy and how will Pine Tree be
an improvement?


Nicole Grohoski


So, historically, we have seen that the utilities do spend a lot
of time and money in the State House, not just behind the scenes,
but also right out publicly testifying against clean energy
bills. Now, that has slowed in recent years, but certainly in the
previous gubernatorial administration, that was a very common
practice.


David Roberts


If I could just pause there, I guess I just don't fully
understand why, like, if you're a company that's just running
wires, what's it to you?


Nicole Grohoski


Right back to the return on equity question. So, these utilities
make more money when they build transmission lines than when they
upgrade the distribution system. They get a higher rate of
return, right? So it is in their best interest to continue with
the model of large far-off generation facilities compared to
local rooftop solar type solutions or microgrids or battery
storage. So that's the first part of the problem, I think. And
secondly, I think some of these utilities just really are not
very nimble. They're sort of in the business that they've been in
for a long time and thinking about how to create a dynamic grid
that has time of use rates that actually work, for instance, or
bidirectional power.


We have had smart meters in this state for over a decade and I
can't see how they're being used in any kind of smart way. I
mean, people are still calling the utilities to let them know the
power is out.


David Roberts


It's just baffling to me. Like, if I'm in the utility business,
this is like my time to be a hero, you know what I mean? After
100 years of sleepy operation in the background, all of a sudden
the world is calling upon me to be cutting edge and be the hero
and save the world and instead, I'm just going to "I just want to
keep doing things the way I've been doing." I don't know, people
are disappointing.


Nicole Grohoski


No comment.


David Roberts


Yeah. So I read in one of the stories about this. One of the
opponents of this measure said, quote, "The people behind this
proposal have no actual plan to lower rates, improve reliability
and enable a swifter energy transition." The implication being
that the fans of this measure just think that making the utility
public is going to be sort of automagically, make everything
easier and cleaner and cheaper, but there's no actual plan to do
so. Is there a specific plan for how Pine Tree would operate and
how it would do these things? Has anyone modeled out sort of you
know what I mean?


Is there more than just hope that the structure will do the work
for you?


Nicole Grohoski


Well, I think that the person who said that spent some time
cherry-picking certain things in the ballot language but missed
the bigger picture here, which is we have to start by saying yes
on November 7 and then at that time then we have an election for
the board of directors and it goes on from there. But until that
time the Maine Public Utilities Commission cannot compel the
utilities to give over their very private data to do that kind of
in-depth modeling that is going to be the very next task for the
Pine Tree Power Board once it exists and that is spelled out in
the ballot question. You know, these utilities, I'm just going to
be level about it: They don't have a plan either.


And I can tell you that because the legislature last year had to
pass a law requiring them to do integrated grid planning and
think about how is it going to work to increase renewables on the
grid, to increase demand as people install more heat pumps and
use electric vehicles. They're not doing that or if they are
doing it they're not doing it in any kind of way that is
transparent or subject to review. So I think it's like a great
bait and switch tactic.


David Roberts


Aren't they supposed to create integrated resource plans? I
thought that was something that all utilities had to do.


Nicole Grohoski


I think they have some planning, but it is clear from the way
that the interconnection queues are looking, the very high cost
they're pushing onto developers for even just what turns out to
be basic grid maintenance, there isn't really — maybe they have
something that says "plan" at the top, but I'm not sure that all
the nuts and bolts are actually there.


David Roberts


Yeah, I meant to hit on interconnection before because that's one
of the critiques also is that they are slow-walking
interconnection of distributed resources, etc. Presumably they're
doing that, or at least they say they're doing that to protect
the grid. Do we have reason to believe they're slow-walking that
on purpose such that Pine Tree could substantially speed up the
interconnection queue?


Nicole Grohoski


We do have reason to believe that specifically because of all the
complaints that we've received as legislators. We did ask the
Public Utilities Commission to look into this and they hired the
Interstate Renewable Energy Council, or IREC, to do a study. And
the IREC findings were basically especially around Versant, which
is in eastern and northern Maine. These guys are some of the
worst actors we've ever seen in the United States. They are
requiring things that they can't justify why they're requiring
them, and we can find no reason from an engineering perspective
to require them. And your listeners might find it fascinating to
know that for Versant customers, the average cost of
interconnecting your rooftop solar to the grid is $10,000.


David Roberts


Jesus.


Nicole Grohoski


That is not normal is what I'm told. Another great story that
I've heard from a couple of constituents is that they need a
transformer upgrade to interconnect their rooftop solar. Okay,
that might be true, and that upgrade is going to cost you $1,000
- $1,500. But we can't get the parts for two years.


David Roberts


Oh my goodness.


Nicole Grohoski


Now the same solar installers that are working in my area are
also working in CMP's area Central Maine Power. Because I live my
district includes both, and the installers are saying "CMP says
they can get it in two months." So then I asked my constituents
"Can you file a formal complaint at the PUC using this process we
had to create because this is such a rampant issue?" And when
they do that and go through the whole process, then that
transformer has arrived and been installed within two to three
months time. So I don't know what to say about it.


I can only say what I see from the outside and the experience
that I have heard about from people that pick up the phone and
call me. But it seems shady to go from two years to two months.


David Roberts


Let's grapple here with what is probably the biggest and most
difficult issue around all this, which is say Maine voters say
yes to this, and it goes forward. Basically, it would involve the
state of Maine buying these two utilities assets from the
utilities, and depending on who you believe those assets are
worth anywhere from $5 to I think CMP is now saying it could get
up to $13 billion. So that's a big public expense. So how's that
going to get financed? Who's going to pay it? How long is it
going to take to pay it? Have we thought through in any detail
how that process works?


Nicole Grohoski


Yes, definitely. And that was a big part of what the London
Economics analysis included was that legal analysis of what that
purchase price process would look like. We also have been able to
look at this transition as has happened in other communities in
the country, and we created an expedited and refereed process to
determine the purchase price. And all told, from this fall to
switch over to Pine Tree Power, we expect it to take three to
four years. What we know from the LEI study is that this is a
completely legal and constitutional effort. It's helpful to
remind folks that because these are actual monopolies, they only
have the right to be doing business because we give it to them.


And in the Maine statutes, it literally says the PUC can take it
away.


David Roberts


Yeah, I mean, of course, again, this drives me crazy. I'm reading
articles about this and of course, just once I'd like there to be
a good argument had in public instead of idiots. But all the
Republicans are now saying "This is a communist takeover of
private business by the state. It's Communists. Why don't we call
it Chinese electricity?" I've read, some of the dumbest quotes.


Nicole Grohoski


Are you in the comments section?


David Roberts


No, these are legislators. This is not even I mean, there's
barely a distinction anymore. But like, the Republican
legislators are saying this now. So it's worth just emphasizing
the point that you just made, sort of drawing a line under it,
which is these businesses have been granted a monopoly by the
state and granted guaranteed returns by the state. So of course
the state can take that back. Of course this is legal. Like if
the state grants, the state can take away if the state is
granting it on the grounds that it will be of service to the
state's residents and it's not anymore, then of course the state
can take that monopoly back.


It's just crazy viewing. It's not like Maine is going to go take
over the potato chip industry.


Nicole Grohoski


We have no interest in that.


David Roberts


This is not a normal business. Utilities are not normal private
businesses. They are state basically state created entities. And
so of course, the state can uncreate them if it wants to. Sorry,
I know that will not have any effect at all on the dumb things
Republicans say about this.


Nicole Grohoski


Well, I do want to clarify. We do have some really strong
Republican support, from certain legislators as well as just
regular folks. I mean, that was the greatest thing about
collecting signatures for this initiative, which I did and my
family did and many other people I know was that when you remove
it from a debate in a state house, regular people just get it.
They get that this is really important to our economy to have an
electricity grid that works for us and for our health and safety.
And they also understand that maybe this is not a place for
profits.


And I've had folks wearing Birkenstocks and folks wearing MAGA
hats sign the petition because I think Maine people are really
resilient. We are proud of our ability to solve problems and I
think the majority of us believe this is something that we can do
and that we probably could do it better than some far-off foreign
monopoly.


David Roberts


Anyway, I interrupted you. You were talking about how these giant
bills are going to get paid. Basically you say it's going to take
about four years to do all the work, to transfer everything over.
Would the $5 billion or however much it turns out to be, be paid
off over those four years or how will it be financed?


Nicole Grohoski


No. So we did meet with some municipal bond banks. This sort of
acquisition, like in the case of Long Island, has been paid off
over a long period of time. And that's how we're able to see the
rate reduction. You know again, similar to renting versus owning.
I was able to buy a home. My mortgage is less than my rent would
be, but I am still paying it off. And even with the interest,
it's still less. So we have the ability through revenue bonding
to borrow that money backed by the ratepayers, not actually by
the state government and the general fund, but by the ratepayers.


We have the ability to borrow that money, and then pay it off
over time, and borrow more as we need to build out the grid.


David Roberts


Would it being a public utility enable it to draw on state money?
Because one of the points a few pods ago we were talking about a
new offshore wind bill that would draw money from state coffers
rather than from ratepayers. And one of the sort of arguments and
defense of that is taking tax money from state taxpayers is much
more progressive than taking it from ratepayers. Basically you're
getting a much more progressive source of funding. Is there any
talk of Pine Tree being able to draw on state money or would it
still just operate as a utility and get all its money and revenue
and stuff from ratepayers the same way a private utility would?


Nicole Grohoski


The enabling statute has it separate. I think that that is really
important, especially to our union workers because they had
concerns about becoming public sector workers and what that would
mean for their right to strike, for instance. So we have ensured
that they are private sector workers.


David Roberts


Oh, interesting.


Nicole Grohoski


Whether or not a future legislature might say we're able to
maintain that and have the utility doing efficiency programs that
are paid through the taxpayer dollars versus ratepayer dollars, I
can't predict. To your point about regressivity, one of the
things that is required in the bill language for the Pine Tree
Power Company is to establish lower rates for low income
residential customers in the first five year plan. So we are
trying to address that challenge that you're absolutely correct.
It's the regressive funding structure, unlike taxation.


David Roberts


Also, one of the criticisms of these utilities is that they're
sending all these cutoff notices, they're cutting off people from
power, which is bad for all obvious reasons. But is Pine Tree
going to pledge not to do that? And if it doesn't do that, where
does that money to cover those people's rates come from? Because
that would seem like an additional expense because whatever you
might say about cutting people off, it does save the utilities
money.


Nicole Grohoski


Right. Well, we do have what's called the Arrearage Management
Program here in Maine and that does help folks get out of arrears
and that is ratepayer funded program. So that is a somewhat
fiscally progressive approach to that. You know the details of
that program are probably more than you'd want to know. But the
long and short is if you get back on track then some of your debt
will be just forgiven. But it's not forgiven by the utilities,
it's forgiven by your neighbors.


David Roberts


Right. Well, would Pine Tree pledge not to cut people off? Like,
is that part of the campaign here or how would it treat cutoffs ?


Nicole Grohoski


You know, it's a good question that surprisingly I don't know if
anyone has posed to me it is not in the legislation one way or
the other. I'm of the belief that if rates go down and we could
have rates that were income stratified to some extent, that the
amount of disconnection notices that we saw earlier this year
would go way down just economically. But I think it would be
really a decision of the board. And then I'm also not sure if the
Public Utilities Commission if there are any rules on the books
because this utility, unlike a lot of consumer utilities in the
country, is regulated by the Public Utilities Commission as if it
were an investor owned utility.


So, there may be specific rules about that already.


David Roberts


Yeah, I would just think though, if you're trying to sell this,
making this public rather than private, one of the things you
could sell is like we think this is a public right to have
electricity on some level.


Nicole Grohoski


The one other thing about it that just comes to mind is that a
couple of years ago during COVID, people were especially
concerned about the disconnection notices, not knowing if they
were going to be receiving a next paycheck but we were told that
the disconnection notices were necessary in order to provide
certain assistance. So the utilities said, "Oh don't worry, we're
not actually going to disconnect anyone but we have to do this to
get them into this next program." So, I don't know if that would
come into play here but I'm not convinced that the utilities
wouldn't have ultimately shut the people off but that was a way
that they spun it at least.


David Roberts


One more kind of semi-technical question that's a little bit of a
side thing but is of interest, I think, to Volts listeners. One
of the provisions in the IRA, the Inflation Reduction Act, is
that it makes some of the tax credits direct pay, which means you
don't have to pay taxes to get it back. You can get it back
directly as a check and one of the categories of entities that
would qualify for this is tax-exempt entities. So I wonder, has
anyone done any thinking, and maybe this is too in the weeds but
done any thinking about what advantage it might pose for Maine to
have its utility be tax-exempt, whether it will benefit from the
IRA through that.


Nicole Grohoski


It is something we're thinking about because we were excited to
see that direct pay provision sort of leveling the playing field
for publicly owned generation which is another topic I'm very
interested in, but I think it remains to be seen. In the case of
Pine Tree Power, it is not allowed to own generation and it may
be permitted to own some storage as is necessary to maintain the
grid functioning. So I'm not entirely sure that that direct IRA
provision would help in this case but what I think it does is
sort of change the paradigm a bit there that may then also shift
to other things. If the federal government says let's have an ITC
or PTC for transmission lines, the next step might be —


David Roberts


Praise be.


Nicole Grohoski


Well, let's make sure we set it up the same way we've just done
with generation. Yes, I think it's a really important
conversation even if it doesn't have a direct immediate effect on
the Pine Tree Power Company.


David Roberts


Interesting. As I think anyone could predict just from what we've
said so far, even knowing nothing else about it but what we've
said so far, I'm sure people could predict that the private
utilities in question are not excited about this happening and
have mobilized to prevent it from happening. So tell us a little
bit about the campaign against this. Is it as hysterical as one
would predict?


Nicole Grohoski


Yeah, I mean hysterical is one word for it. Deeply troubling is
another phrase that comes to mind. But these are utilities, like
I mentioned, about the amount of profit that they make and that's
just off of their Central Maine Power and Versant holdings. But
Central Maine Power is just a small, small fraction of the entire
Iberdrola conglomerate. So, yeah, we have seen them spending a
lot of money against the campaign. They've put $27 million toward
the campaign, both utilities, as of the end of June. So we expect
to see more of course.


David Roberts


Not a small amount in a small state.


Nicole Grohoski


No. And honestly, talking to my neighbors, people are very upset
by it. They're kind of irate that they're the people whose power
goes out and doesn't come back on for a couple of days. They're
the folks who had to spend $10,000 for a generator which isn't
part of a clean energy solution last I checked. And there go the
utilities putting $27 million toward just running ads.


David Roberts


Yeah, I mean, are they experiencing it as a flood of ads? I mean,
$27 million must allow you to kind of dominate the airwaves.


Nicole Grohoski


Yes, the airwaves are definitely bought up, as far as we can
tell. And they have just their two donors, which are the utility
parent companies, which are Avangrid and Enmax.


David Roberts


Are they funding 100% of this?


Nicole Grohoski


100%, yes. And these utilities, lest they tell you how amazing
and green and climate-friendly they are, they are gas utilities,
Avangrid and Enmax anyhow. And then on the flip side, we are a
smaller organization. We don't have Mainers' pockets to
pickpocket on a regular basis.


David Roberts


I'm guessing you guys haven't hit $27 million yet. How much money
have you have?


Nicole Grohoski


You're closer to around a million, I think. And that's over 1000
donors, most of whom are just regular donors giving what they can
because they understand these differences. And also I think the
big difference is the utilities are putting out a lot of fear,
doubt, scare tactic type ads. And on the flip side, what we're
offering people is something different and something positive,
something that we can all lean into and make sure that it
succeeds because it would actually be ours. So I think that's
resonating with folks.


David Roberts


What are the scare tactics specifically? Are they saying this
will be expensive or what?


Nicole Grohoski


Yeah, expensive. I mean, you quoted some of their numbers and
it's laughable. They're like, "Oh, we're going to get $13.5
billion." Well, they're worth $5.4 billion. That's what they pay
taxes on. That's what they filed their official paperwork saying.
So I think especially as we learn more and more about how
decrepit certain portions of this grid are, they'd be lucky to
get a little bit over that. So that's one of them. "Is there a
plan? We don't have a plan, but do they have a plan?" is another
one. You know what, a lot of it is just to my sensibility is a
little insulting to Maine people.


You don't know what you're doing, that kind of thing. Meanwhile,
we're going to keep the line workers who are doing the work and
we're giving them a retention bonus because we value their
expertise, because they're the ones that actually know how the
grids work, not the CEOs and the CFOs.


David Roberts


Yeah, it is historically pretty easy though just to I mean, when
you're fighting against change, you barely even need arguments.
You know what I mean? You can just say "Booga booga booga change"
and you're halfway there, it seems like.


Nicole Grohoski


Well, I think that's why we're in such a unique position in Maine
because while that can be kind of an initial gut reaction, I
think people here are curious. We've certainly seen plenty of
campaigns where one side was outspent a lot by the other and it
didn't make a difference. We have led in other policy areas.
Ranked choice voting could be one recent example. Clean elections
one of the only states that splits our electoral college votes.
So I think Maine people, I think we're interested in things that
are different if they make sense to us.


David Roberts


Where is the public on this? Do we know do we have enough polling
or survey data or what have you to know kind of what the level of
support is or where the public is on this? Do we have a
barometer? Do we have a measure here?


Nicole Grohoski


Yeah, I think the most recent public polling was probably a
couple of months ago. But what it showed was there were people
that were solidly in each camp but a lot of undecided voters and
it really put us in a dead heat in terms of the people that were
decided. And what I think is interesting is folks are not being
swayed by Central Maine Power and Versant ads mainly because we
don't trust them. They have not been good faith actors.


David Roberts


Are they creating fake groups like "Mainers for puppy dogs and
grandma"?


Nicole Grohoski


Yes, Maine Affordable Energy is one of them. Yeah, so they sound
pretty good, but all you have to do is google that and you find
out pretty quickly, because of our disclosure rules, that's 100%
utility funded.


David Roberts


To the extent that the public supports this, are they viewing it
as primarily a green thing, a thing about clean energy? Or is it
primarily " Screw these out of state —," you know what I mean?
Like a Maine pride kind of thing. Is it a reliability? Do you
know what it is about this that the public has taken from it?
What it is the public is supporting when the public supports it?


Nicole Grohoski


That's a great question and it does vary depending on the person
and their interest and maybe even where they live in the state
because the utility rates are the worst where I live compared to
all the other districts in the state. So it depends. I think if
you're a person who tried to interconnect and you got told you
have to wait two years and $10,000, then it might be about
greening the grid. But I think for a lot of folks underlying
whatever their specific reason might be, it is that question of
trust. I think about this all the time we have aggressive clean
electricity goals, but 50% of our carbon emissions in this state
are coming from vehicles and we are the most heating oil
dependent state in the country.


So we've got to get people onto the electricity grid in order to
have any hope of cleaning it up. But it's really hard for me to
knock on someone's door and say, "I really hope you'll consider
changing your whole house over to heat pumps, even though we have
below zero temperatures sometimes. Or I know that the power went
out for a week last year, but would you consider an EV?" So I
think that in order to make this transition work, we have to have
utilities that people trust and that are providing just basic
service. People should not have to think as hard as they're
thinking about if their electricity is going to be there for
them.


David Roberts


Yes, that's such an important point. And so generalizable too,
like if electrification is the thing, then people have got to
trust the institutions in charge of electrification and they do
not have much public trust these days. So that's an interesting
argument in favor, I think, of making utilities more accountable,
more public. What about the other big argument against one of the
big scare things is you have to buy all these assets, which is
like a big bill, a big one-time bill. The other scare story is
that utilities are going to immediately sue, that this is going
to get mired in the courts, and that it's going to take 4, 5, 6,
7 years to even get it all settled, and until then it will be
chaos and no one will know what's going on and blah, blah, blah.


So realistically, what's your view of, say, voters approve this
in November? What is your view of sort of how that plays out and
when and how the inevitable legal wrangling gets resolved?


Nicole Grohoski


Basically, the Pine Tree Power Board will offer a certain amount
for the utility infrastructure. I don't expect that the utilities
will accept that on first pass you're buying a used car, you
don't just take the first price. Right. So we would expect some
negotiation, but if that doesn't work, then it will go to the
courts. And there is a refereed process that's spelled out in the
legislation in the Superior Court that then can be appealed to
the Supreme Court in the state of Maine. But there are timelines
set up. So it cannot go on for years and years and years, because
at some point, if you lose or win a case, that's it.


You have one appeal. I think it's funny that this argument is
coming from the utilities because if there are any lawsuits and
if it got dragged out, as they say, even though we've protected
against that to the best of our ability, that's coming from them.
That is a choice that they are making.


David Roberts


"Don't make us do this."


Nicole Grohoski


Yeah, so it's kind of ironic but additionally, one of the things
that comes up is how do we know the utilities will continue to
invest in the meantime? And it's like the best parallel I could
say to that is if I'm going to sell my house, I don't just stop
fixing things before I sell it. I keep it up in really good
shape. And in fact, utilities would have an incentive to invest
more because usually they don't just sell it for exactly what
it's worth. There's usually a multiplier. We expect it to be like
1.5 times.


So we actually have increased the oversight capacity of the
Public Utilities Commission to ensure that there isn't any of
that sort of last-minute gold plating going on, because that is
actually what we'd expect, not the further disrepair scenario.


David Roberts


Oh, so you think if this goes through, they'll plow a bunch of
money into high dollar upgrades just to boost their price that
you have to pay for them?


Nicole Grohoski


That's what I would do if I were them. Fortunately, we're going
to keep an eye on that on behalf of Maine people. But if you are
able to invest a million dollars here and in two to three years
time make $1.5 million because that's the multiplier that the
courts assign, that's pretty good.


David Roberts


Yeah. So what's your timeline in your head then? What do you
envision? At what point is there just the one public utility
operating and all this is behind us? Were you willing to predict?


Nicole Grohoski


Yeah, we're looking at fall 2027, so four years from now, and
that includes having the elections for the board members next
year. So that's the first major hurdle, which I think is
exciting, especially because living in one of the more rural
parts of Maine, we don't always feel here that our interests are
represented at the Public Utilities Commission, which is folks
from southern Maine. And I think this geographic component is
really compelling to, you know, so that's our first step. And
then basically we have to get a lot of information. I mean, the
board would have to get a lot of information from the utilities
in order to know what purchase price they should put forward,
what's the business plan, what does the revenue bonding look
like, and make sure they can secure that financing through a
large municipal bond market.


So that takes time and we want to make sure we do it right. On
the other hand, doing nothing is also a risk that I think sets
people in my generation and folks younger than me behind
economically and environmentally for decades. So a couple of
years to do it right is definitely worth it.


David Roberts


Okay, final question then. I can see lots of Maine-specific
reasons why one might argue that this is a good deal; these
utilities are particularly bad, Maine has a particular set of
problems, it has a particular sort of public culture, a culture
of participation and a culture of civic engagement, et cetera, et
cetera. Lots of Maine-specific reasons why you could make the
case for this. I wonder, to what extent do y'all have your eyes
on other states and trying to make this the beginning of
something bigger? Like, do you believe that taking private
utilities public is a good idea across the board?


Is that something you'd like to see become a national trend or
are you just purely focused on Maine? How do you think about the
influence this may or may not have on other states?


Nicole Grohoski


I think that all the issues we've had in Maine are what led us to
looking around for solutions, but it is a structural imbalance
that we have with the regulated monopolies when they're for
profit. So, I do think it is something that is exportable to
other states. We people in our coalition have been working with
and talking to people elsewhere in the country who are looking to
make a similar transition also elsewhere in the world. It's kind
of interesting. The Scottish power is also owned by Avengrid,
which owns Central Maine Power, and they are looking to become a
public, truly public utility over there.


So, in doing this work, we've found a lot of interest for that
business model change. And I think as we become another case
study, we are standing on the shoulders of other case studies
that have happened in this country. And as we become another one
for folks, I think that we'll see some opportunities arise. And I
would like to see that because I want every American to be able
to afford their electricity and to be able to have clean energy
and not a lot of hurdles to getting there, because we are
literally all in this together as a country and as a world with
our climate crisis.


David Roberts


That seems like a wonderful note to wrap up on. Nicole Grohoski,
thanks so much for coming on and walking through this with us.
It's super fascinating and I think it will be an example to the
rest of the country one way or the other. However it plays out.


Nicole Grohoski


We're hoping that we're a positive "yes" example. We're working
every day toward that. And I want to thank you, David, for having
me on and talking about this topic, which is, I think, endlessly
important and fascinating.


David Roberts


Agreed, agreed. OK. Thanks, Nicole. Thank you for listening to
the Volts podcast. It is ad-free, powered entirely by listeners
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