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Extended BBRC 2023 Ballot Positions on Questions 1, 2 & 3 with Supporting Information (2,200 words)

November 1, 2023

Extended BBRC 2023 Ballot Positions on Questions 1, 2 & 3 with Supporting Information
(2,200 words)

BBRC Urges Business Leaders to Vote No on Question 3; Questions 1 & 2 Position Suggestions Included

Question 3
The Board of Directors of the Bath-Brunswick Regional Chamber with support from the Chamber’s Government Liaisons committee, is urging Maine Voters to reject Pine Tree Power, and vote No on Question 3 on November 7. 

The spirit of what Pine Tree Power wants to do is admirable- they want to lower electricity bills for Mainers, create more clean energy investment and get better service in terms of outages and reactivation times.  The problem is this proposal doesn’t guarantee any of those things and there are just too many uncertainties in this proposal for our organization to support it.

Cost & Ethics of a Forced Buyout & Re-Paying the Acquisition Bond
The first obstacle is the cost and ethics of the forced buyout of CMP and Versant. Proponents of Pine Tree Power say the cost will be $5B, and opponents say is closer to $13.5B.  The difference in those amounts is based on the valuation of the assets (meaning the poles, wires, trucks, and infrastructure) with the biggest variable being when the buyout would happen. As each year passes the assets increase in value due to inflation and other factors. Proponents think this will be tied up in court for 2-3 years. Opponents are thinking closer to 10 years.  In looking at other takeovers of this nature, such as one from Long Island and other cases, we feel like the longer estimates are more accurate. With that in mind, we’re operating under the assumption that the buyout would cost no less than $10B and would not take place until around 2032.  

How that bond for $10B will be paid back is a big unknown, as well as what the interest on that borrowing would be.  For perspective, the State of Maine’s 2-year budget is $9.2B.  To borrow more than it costs to run all departments of the State of Maine for two years is too much to borrow in our opinion.  Also, without knowing if these will be general obligation bonds that get factored into taxes, or Pine Tree Power specific bonds that need to be paid back through ratepayers, makes us very leery of how this will affect our electricity delivery bills.

Few Mainers would sign a contract without knowing the price or when the work would be done.  None of us would buy a vehicle if the dealer said, “we don’t know what it costs or when we can deliver it, but why don’t you sign this contract, anyway.”  We shouldn’t do that here. 

A final point on this buyout is that we don’t support setting the precedent that the government can commit forced buyouts of companies whenever they think they can do it better. Forced buyouts of the electric utility leads to the obvious question of ‘which companies will the government execute forced buyouts on next, so they can take over?’ That way lies a slippery slope. 

This is Only for Energy Delivery- The Smaller Part of Your Electricity Bill
Secondly, a key point for us is that CMP and Versant do not generate the energy- Question 3 only covers the electricity delivery costs.  The cost of energy is dependent on world markets, the price of natural gas that feeds the generators for the grid and so much more.  Question 3 does not address the energy generation costs, only the delivery.  Again, without knowing how the bonds will get paid back for the estimated $10B, we can’t see how anyone can claim they know this will lower their electricity bill.  The Maine Office of the Public Advocate (https://www.maine.gov/meopa ) addresses this question specifically in their down-the-middle analysis of the Pine Tree Power proposal in what is called the Pine Tree Power Fact Sheet.  They hired an analysis of the proposal, and a key finding was:

‘There is significant uncertainty related to the acquisition price, the operator’s management fee, the actual financing costs of PTP, and the future rate of growth in utility capital assets. These factors make it difficult to predict with certainty whether the acquisition will result in net savings to ratepayers’  - Pine Tree Power Fact Sheet, Page 4

And if the bonds become general obligation, then yes maybe your electricity bill will go down, while your taxes go up because even 5% interest on $10B over ten years is $500 million dollars that taxpayers will need to come up with in one way or another before the principle gets touched.  The debt obligation won’t go unpaid, so it’s really a matter of where we will be hit with that $10B and how long we will have to pay that off, which simply no one knows at this time.    

Partisan Leadership Structure
Another concern is the potentially partisan structure of Pine Tree Power.  If Pine Tree Power passes, it will be an elected 7-person board of directors, who will then appoint 6 other directors.  We don’t know what the qualifications will be for these people, if there are any, and we imagine these elections and appointments will become very political and likely highly partisan as certain interested parties will fund the elections of candidates they prefer.  We don’t need partisan politicians overseeing our utilities when we don’t even know what expertise they have in running it.  We know CMP and Versant have experienced people who know the industry- we feel much more comfortable having them in control. 

Is there a Third-Party Vendor Who Will Do This?
A fourth concern is the third-party vendor that will run the grid, as proposed, and it cannot be CMP or Versant.  So, after Pine Tree Power gets their 7-person board elected and selects their 6 other directors, they then need to go out to bid for a company to actually do the work of managing the grid day-to-day and hour-to-hour.  This new entity will also need to take on the employees of CMP and Versant.  How exactly will that work?  We’ve heard talk of retention bonuses for the employees, but we have yet to hear if there is any entity that would agree to these terms.  How would seniority in the company work or would everyone reapply for the positions they want?  Would they honor the union contracts that are in place?  There is huge uncertainty about the employees, which is why IBEW and Maine AFL-CIO both oppose Question 3 (https://finance.yahoo.com/news/two-maine-labor-groups-oppose-224600564.html )

This piece of it sounds like a nightmare, and in our research we have yet to find a company who will manage a system that they don’t own the poles and infrastructure for on a statewide scale.  We’re not convinced that a viable 3rd party vendor exists that would agree to these terms, and if they did exist, we can’t believe it would be a competitive bid process with many bidders, so whomever bids may get the contract for whatever price they want.    

Huge Potential for Lack of Clean Energy Investment During the Court Battle for Ownership
Our final major concern is an environmental concern about the potential lack of investment in the grid during the court battle which could last 7-10 years. We cannot afford to not have investments in our grid whether that be through new clean energy projects or updating the current system for peak efficiency.  We would all hope that investments would continue during this time, but realistically with the uncertainty of who will ultimately run the grid until the courts settle the matter, what clean energy company is going to step forward to make a large infrastructure investment not knowing if the agreement will still be valid in a few years?  We can’t lose time right now in keeping our grid efficient and up-to-date and we can’t dissuade any clean energy investments as our climate is too important to our Maine way of life.

Bottom Line
For us it comes down to this, even if we were okay with setting the precedent of supporting forced buyouts of private companies by the government, which most assuredly we are not, in order to garner our support this proposal would need to live up to its claims and offer some guarantee that there would be a demonstrable overall cost savings to Mainers, and increased investment in our energy system over what is already planned by our current providers. 

With the incredible uncertainty outlined here we simply cannot support this plan- there are just too many unknowns. For example, no one knows for sure what the cost will be, or even what year we can expect to know what the cost will be, among many other uncertainties.

We cannot afford to make a $10,000,000,000 (10 billion dollar) gamble on the belief that the series of unresolved issues will all work out in the most favorable and cost-effective way. It’s too irresponsible to sign a contract this big without knowing the price and thus we cannot support this proposal. We urge Maine voters to vote No on Question 3.   

Question 1 & Question 2

BBRC Does Not Take a Full Stance but Has a Suggested Consideration on Both Questions
As an addendum to this Q3 stance, and in support of Q3, we are urging voters to consider voting Yes on Question 1, and No on Question 2, and No on Question 3.

Question 1 is a failsafe should Question 3 pass.  Essentially by voting yes, you’re saying that no quasi-governmental entity or consumer-owned utility (which is what Pine Tree Power would be), can put Mainers on the hook for over $1B in debt without specific voter approval for that expense.  Certain entities like the Finance Authority of Maine are exempt from this provision as it is written, but Pine Tree Power would not be exempt.  Without knowing if the cost will be $5B, $10B, $12B or more, if this question passes, Pine Tree Power would need to come back to the voters to get that debt obligation approved since it would be over $1B.  A yes vote becomes that failsafe.    

Question 2 is a broadly written question meant to stop international companies from having a say in projects they may be a part of in Maine.  It’s intentionally worded in a way that makes it sound like ‘foreign interference in our elections’ but it is written so broadly saying any company ‘influenced by a foreign government’ is ineligible to support candidates and ballot initiatives which eliminates basically any company who is international because even a customs stamp on a product can be considered ‘influence’.  Candidates aside, our concern is the ballot initiatives.  If there is a Canadian logging company who works with dozens of Maine woodsman who has a project up for voter approval, we want them to be able to buy ads to inform us about it, and not only allow the opposition to fund their disapproval of it.  If a hydropower project, a solar panel project, an international grain producer, solar battery producers, or hundreds of other potential companies want to invest in the future of Maine because they have workers who work in Maine, but they happen to be an international company, we want them to be able to contribute to support their own investments in Maine. 

A prime example is the Hydro-Quebec clean energy project- a clean energy investment that was opposed by a natural gas company in Florida and a natural gas company from Texas.  Those companies invested in the opposition materials to block it because if less clean hydro gets on the grid, then the grid will need to buy more natural gas from their companies.  One month after the clean hydro-power line got blocked, an announcement came out about a double-digit percentage increase in the cost of natural gas that winter, which benefited those exact companies who opposed the clean hydro project.  So those U.S. companies who are not at all a part of the project, and have few if any employees in Maine, could gain from opposing it because they are U.S. based, but a foreign company that has hundreds of Maine employees and wants to make an investment in Maine, cannot support their proposal because at some level they are vaguely ‘influenced’ by doing business internationally?

According to Global Business Alliance, international companies in Maine employ 38,100 U.S. workers and there are 386 international companies in the Pine Street State.  Passing this would mean that initiatives could be proposed that could affect the livelihood of these 38,000 workers, but since they work for an international company, their company can’t have a say in how it affects these workers. It also means that if a company does grow to become international and a foreign government ‘influences’ their operation by, let’s say, approving a new building or permit, that they no longer have a say in the political arena because they have globalized. 

This will hurt investments in Maine in the long run as companies are continuing to merge into larger international entities to have the capital to make worthwhile investments.  Our chamber is in favor of all of the investment in Maine we can get.  Additionally, there is a considerable concern about whether this question is even constitutional in that it’s unclear if any entity can limit the speech of someone who is a Maine voter, because of who they work for.  If an employee asks their employer to support an issue that will affect them, constitutionally can someone ban that business from supporting it because they have dealings internationally or because the entity that owns the Maine entity, is part of a larger globalized conglomerate?  This sounds an awful lot like limiting speech, and in the Citizens United Supreme Court case, the court held 5–4 that the freedom of speech clause of the First Amendment prohibits the government from restricting independent expenditures for political campaigns by corporations, including nonprofit corporations, labor unions, and other associations.

Thus, on November 7 we are urging you to:
Vote No on 3, and in support of that
Yes on Question 1 and
No on Question 2. 

 

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