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Maine Lawmaker's Bill Raises Consumer Bar on Utility Mergers
11/27/2013  

Before an electricity provider, telecom or other utility can merge with, or acquire, another, it first has to convince state regulators that it won't harm consumers. But that standard would change under a measure that goes before Maine lawmakers in January. As Mal Leary reports, supporters of the change say it would raise the bar to assure that consumers actually benefit.

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The sponsor is Democratic Rep. Barry Hobbins, of Saco, who co-chairs the Legislature's Energy, Utilities and Technology Committee. Hobbins says the bill is designed to assure any merger or purchase of a utility with more than $50 million a year in revenues will advance the economic development goals of the state, and improve access to information.

Hobbins says it would also have to result in economic benefits to ratepayers.

"You're talking about a major utility, and really a lifeline for many people in Maine," Hobbins says. "And it's important there be checks and balances in place that go beyond what the scope of the present law is."

Hobbins points out that the state grants the utility a monopoly to provide important services for Mainers, and regulates those utilities to make sure they have adequate, but not excessive, revenues to operate, with a profit for shareholders. Public Advocate Tim Schneider says he likes the idea of changing the law in favor of consumers.

"The reorganization statute is the primary way that we ensure consumers interests are protected whenever Maine utilities change ownership," Schneider says. "So, we have seen reorganizations in the past that have been approved under the current standard where the benefits never arrived, or consumers are harmed."

The director of Gov. Paul LePage's energy office says taking a look at the standards for reviewing utility ownership changes is a good idea. But Patrick Woodcock say it's an exercise that is fraught with difficulties.

"It becomes subjective on how you balance benefits, costs, uncertainties. What's the time horizon that you look at? Or do you look at a discount rate?" Woodcock says. "These are things that are really important because we clearly don't want to have a new standard prevent a company from kind of looking at Maine who could have those benefits."

Woodcock says he is concerned about making the approval process overly complex, as it seeks to measure how a particular utility ownership would provide benefits to the state, and to ratepayers.

"I think making it as clear and as simple as possible is always better than creating that we're trying to achieve A through Z," Woodcock says.

Public Advocate Tim Schneider says the legislation is a good starting point to discuss ways to improve the standard for approval of utility ownership transfers. It would be up to the PUC - the Public Utilities Commission - he says, to establish the new criteria through the rulemaking process.

"The standard right now is 'no harm,' and this just shifts the balance to give the consumers the benefit of doubt - we want to show there are clear benefits for consumers," he says. "And that balancing will ultimately be done, not, I don't think, in the legislation but by the commission, and that is what the bill is designed to achieve."

Sponsor Barry Hobbins says the final shape of the bill would be hammered out in committee, which he says has traditionally been a good way to craft specifics.

"The final version of the bill, I am sure, will look much differently than the present version," he says. "But the overall intent, I think, is very important that we take and re-look this whole issue."

Similar legislation was considered in 2007 but failed in the state Senate. Hobbins says that was because the measure had a retroactive clause that wuold have affected the sale of Verizon's landline phone service to FairPoint that was already before the PUC.

Hobbins says looking back now, he wishes the bill had been approved-- given the problems that arose since FairPoint acquired that phone service.



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