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February 18, 2022

Maine regulators open investigation into CMP's management, rate setting practices

The Maine Public Utilities Commission said Friday it has opened an investigation into the management practices of Central Maine Power and its parent, Avangrid.

The investigation will focus on "how earnings considerations drive decision-making by CMP and Avangrid, the potential consequences for CMP’s customers and how to better align incentives through regulatory oversight." 

CMP is Maine's largest provider of electricity.

In September 2021, the Commission initiated a summary investigation of management issues concerning CMP. The commission directed CMP to file a plan for addressing the matters and concerns raised in that report by Nov. 30, 2021. CMP filed the report, which included significant changes in its management structure.

“CMP is directly impacted by Avangrid’s decision-making and investment planning. While we have seen improvement in CMP’s performance, we want to be sure that it is sustainable,” said PUC Chairman Philip L. Bartlett II. “Central to that question is whether decision-making by Avangrid about how to direct resources to CMP is misaligned with ratepayer interests and whether regulatory changes are needed to protect CMP’s customers.”

Central Maine Power is based in Augusta. Its parent, Avangrid (NYSE: AGR), is based in Orange, Conn.

In a prepared statement shared with Mainebiz, CMP said it will cooperate with the investigation: 

"While we have the same name, CMP is a different company than we were four years ago, and these changes are evident. CMP has demonstrated consistent improvement in customer service, an earnest commitment to safe and efficient storm response and has consolidated operations under Maine-based leaders, including the creation of a new community relations organization.

"We have consistently met service performance standards for two years, generally agree that performance standards are good for customers, and we will cooperate with this additional area of inquiry from the Commission while we remain focused on meeting- and exceeding- our customer needs every day. The Maine PUC focus on future regulatory strategies will better serve Maine customers and support clean energy goals."

Two members of the state Legislature's Energy, Utilities and Technology Committee applauded the PUC's action. 

“It does not take a regulator or a rocket scientist to see that the monopoly management of CMP is fundamentally flawed,” said state Rep. Seth Berry, D-Bowdoinham, who is the House chair of the Energy, Utilities and Technology Committee.

Another member of that committee, Rep. Nicole Grohoski, D-Ellsworth, added: "Maine people are struggling to pay their electricity bills, with recent massive rate hikes both to supply and delivery charges.

“It is a travesty that the PUC would increase CMP's guaranteed profits from 8.25% to 9.25% at this time, adding millions to their corporate coffers, particularly based on largely self-reported performance data. As of January 2022, CMP and Versant's delivery charges already averaged 49% more than Maine's consumer-owned utilities, per kWh delivered."

In a separate case, the PUC ordered the conditional removal of a substantial reduction to CMPs return on common equity of 100 basis points.

Under the prior Order, CMP could seek to have the disallowance lifted once it met all service-quality metrics for at least 18 consecutive months, which commissioners agreed today the utility had. The PUC noted that CMP would still be required to report on Service Quality Metrics on a quarterly basis and that the penalty could be reimposed should the utility fail to meet the standards. This disallowance, totaling  $12.5 Million, was the largest ever imposed by the PUC on a transmission and distribution utility due to poor management. 

All documents related to these cases can be found online under docket #2018-00194, #2021-00303 and #2022-00038. 

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1 Comments

Anonymous
March 7, 2022

How can it cost so much for delivery? It’s unreal. The bill is now more like a mortgage payment.

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