The state House of Representatives rejected legislation Wednesday that would take a first step toward authorizing regulators to gauge a utility’s performance when setting rates.

The measure, criticized by a Democrat as “permissive,” and a Republican as redundant, was defeated 67-75 as 11 Democrats joined unanimous Republican opposition. It now heads to the Senate.

The legislation, L.D. 2172, amended a previous version proposing a framework to improve performance-based metrics already in state law.

The original bill said the Public Utilities Commission may establish performance-based metrics and rate adjustment mechanisms as part of rate-setting. It was meant to address complaints by customers of Central Maine Power and Versant Power over rising rates and storm-related outages after voters defeated an effort to create a publicly owned utility in November.

The amended legislation would still authorize performance-based metrics, but also require the PUC to schedule a proceeding every three years to “examine regulatory tools based on performance.”

The revised bill would direct the PUC to establish goals for utilities consistent with Maine’s climate action plan and address elements of the utilities’ filings on grid planning. Regulators also must consider goals for cost-effective utility operations, increased planning and preparation for storms and “climate hazards,” increased affordability and other objectives.

Rep. Sophia Warren, D-Scarborough, spoke against the legislation during House debate.

“Though I share every goal the bill’s supporters champion, I fear there is sufficient uncertainty and confusion about this bill’s goals and its potential outcome to vote against this measure today,” she said.

Warren characterized the bill as “extremely radical and permissive.” It requires a study that would take a year to produce results and calls for “no particular metric” that ties performance to climate change, she said.

The defeat of performance-based rate setting in the House “does not mean that Maine people are happy with our utilities,” said Rep. Valli Geiger, D-Rockland.

She urged passage of the legislation. She said it will build on a 2022 law by supporting a transition to clean energy and rewarding utilities “for moving in the direction we choose.”

The 2022 law established a “report card” for utilities and rules adopted by the PUC to establish minimum requirements for a utility in terms of planning and operating standards for reliability and timely responses to customer requests for service, information, billing and restoring service.

Rep. Steven Foster, R-Dexter, an opponent, urged his colleagues to give that law a chance “before creating more legislation.”

The Governor’s Energy Office cited the law in February in testimony to the Energy, Utilities and Technology Committee. It neither favored nor opposed performance-based ratemaking legislation. A key part of the 2022 law was establishing standards for utility service providing “clear rules and expectations” about improved performance and reliability, said legislative liaison Caroline Colan.

The Governor’s Energy Office asked how the goals of a utility’s performance, standards and metrics would take into account or “build off of metrics” established in the 2022 law.

Rep. Gerry Runte, D-York, a sponsor of the bill, said state regulation of utilities is outdated and fails to consider decarbonizing the environment, connections to local power generation and new technologies. “Is it any wonder that our utilities don’t meet expectations if the rules under which they operate don’t align with our goals?” he said.

The legislation directs the PUC to begin defining how policymakers want utilities to perform in the 21st century, Runte said. The process in the legislation is “deliberately flexible. It’s dynamic and it’s meant to give sufficient latitude to the PUC to adjust as we go forward.”

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