AUGUSTA — Gov. Janet Mills vetoed a bill proposing a forced buyout of Maine’s two largest electric utilities on Tuesday, calling the measure “hastily drafted” and predicting the plan could create more problems than it solves.

Absent a seismic shift in votes, Mills’ veto will further delay the years-long campaign to create a consumer-owned utility to supply electricity to more than 90 percent of Maine’s homeowners and businesses. Supporters already have begun laying the groundwork for a separate, statewide referendum on whether to force Central Maine Power and Versant Power to sell their assets to a new Pine Tree Power Co.

In her veto message, Mills called the recent performance of Maine’s utilities “abysmal” as she accused the companies of inexcusable billing errors, rate increases, unacceptable delays following power outages and confusion over solar projects. Mills also suggested said she was open to the concept outlined in the bill, saying “it may well be that the time has come for the people of the State of Maine to retake control over the (utilities’) assets.”

“But L.D. 1708, hastily drafted and hastily amended in recent weeks without robust public participation, is a patchwork of political promises rather than a methodical reformation of Maine’s complicated electrical transmission and distribution system,” Mills wrote.

The bill’s chief sponsor, Democratic Rep. Seth Berry of Bowdoinham, said he was disappointed by the veto following years of work by legislators, energy and utility experts, and others to craft the bill. Backers had picked up additional support by giving Maine voters the final say this fall on whether to create a consumer-owned utility and requiring Pine Tree Power to still pay local property taxes.

But Berry said he would be “very shocked” if supporters can muster the two-thirds majorities needed to override Mills’ veto next week

“The governor today chose not to trust the people on this important decision, but the majority of the Legislature does trust the people and wants the people to weigh in,” Berry told reporters Tuesday afternoon.

Those changes were not enough to convince Mills, whose administration has been voicing concerns about the bill for weeks.

“If I were simply to pass along this major measure, one that I believe from research and analysis is deeply flawed regardless of the good intentions of the sponsors and proponents … I would not be doing my job,” Mills said during a news conference. “Instead, I would be shirking my responsibilities as governor.”

Maine Legislature Public Utility

Standing in front of a bust of the late Gov. Percival Baxter at the Maine State House, state Rep. Seth Berry speaks Tuesday in Augusta about the governor’s veto of a bill he sponsored to replace the state’s privately owned electric utilities with a consumer-owned utility. David Sharp/Associated Press

Late last month, lawmakers gave final approval to the bill supporters contend would result in a consumer-owned utility that prioritizes Maine ratepayers rather than shareholders in two utilities owned by foreign companies. Proponents also said a consumer-owned utility would be better positioned – and more responsive – to implement the grid-scale changes needed to help speed the state’s transition to more renewable energy as part of ambitious climate-related goals set by Mills and the Legislature.

Opponents, meanwhile, warned that the forced buyout could ultimately cost upward of $13 billion in acquisition and legal fees, thereby saddling ratepayers with massive amounts of debt with no guarantees of lower rates in the future. They also said the new utility’s 11-member board – seven of whom would be elected – could be more subject to political influence.

During her news conference, Mills outlined a litany of issues with a bill that she said “is just not the appropriate vehicle to do what it aims to do.” She described the legislative process as rushed, a statement strongly refuted by Berry, who has been working on the issue for more than two years.

Mills raised concerns about whether the proposed consumer-owned utility would truly be eligible for tax-exempt status to allow it to take advantage of billions of dollars in low-interest loans to finance the purchase. Mills said the bill leaves too many specifics about a business plan and management of the new utility to the board of directors, while also failing to set limits on how much money the board could spend to purchase the assets or set up the new utility.

“There are no brakes on the entity and there are no guardrails here in this bill concerning how they can organize and how much they can spend,” Mills said. “But it will all be passed onto the ratepayers, which seems a little counter to one of the main purposes of the bill.”

The governor said the Maine Public Utilities Commission already has tools to hold utilities accountable, including potentially forcing the divestiture of a public utility’s assets if it is found to be unfit to provide safe, reliable and affordable service. Mills said she would support exploring ways to strengthen the authority of the PUC, including potential penalties on utilities, adding that she believes her two appointments to the commission are willing to take on such a task.

“I think we are well beyond the point of debating whether our utilities can do better,” Mills said. “They can and they must.”

Asked about using existing PUC authorities, Berry replied: “We can nibble around the edges but that will not address the immense challenges that rapid decarbonization requires.”

Both CMP and Versant strongly oppose the measure and have predicted a costly and protracted legal battle should it become law. Opponents repeatedly cast the bill as a “government takeover” or even a “socialist takeover” of private companies.

“Governor Mills listened to both sides, read the bill carefully, and came to the same conclusion that many of us have come to – the proposal to seize CMP and Versant Power to create a government-run electric utility raises a lot of questions that don’t have any good answers,” Willy Ritch, spokesman for the group Maine Affordable Energy, said in a statement. “The governor is not alone in seeing the fundamental flaws in this proposal. Labor unions, the business community, mayors from across the state, and former Public Utilities Commissioners all spoke out against this bill.”

Voters, however, might still have an opportunity to weigh in despite Mills’ veto.

Supporters are already gearing up for a statewide referendum on the issue, likely next year. And unlike the bill to create a consumer-owned utility, Mills cannot not block a citizen’s initiative on the issue.

Stephanie Clifford, campaign manager for the Our Power group that has been advocating for Berry’s bill, said organizers are confident they can collect enough signatures to qualify for the ballot.

“We are disappointed, but more energized than ever,” Clifford said.

The fight over a consumer-owned utility sprang from broader frustration – much of it directed at CMP, the state’s largest utility – over electric rates and extended power outages in Maine. On Monday, an independent audit ordered by the PUC found that CMP’s management system – which was plagued by billing errors and other problems – had substantial room for improvement but was not “irredeemably flawed.”

Additionally, CMP is embroiled in a high-profile, multimillion dollar public relations and regulatory battle over the New England Clean Energy Connect. That project, which would involve building a 145-mile high-voltage transmission line through western Maine to allow Hydro-Quebec to sell renewable energy to Massachusetts, also is the focus of a ballot question campaign this year.

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