Hey, public power weenies, stop acting so sad and sickly. What you need is a healthy dose of my magic elixir that will enable you to reassess your landslide loss at the polls in November and even celebrate the overlooked upside. Sure, Maine’s foreign-owned electric utilities, Central Maine Power and Versant Power, crushed your weak-ass plan to set up a consumer-owned company called Pine Tree Power. They did so by spending nearly $40 million (enough to finance a couple weeks of Donald Trump’s legal defenses). But that doesn’t mean all is lost.
Gather round, have another shot of elixir and listen up. The triumph of these much-loathed, marginally incompetent enterprises can still be cause for whooping it up, because it just might mean an enormous windfall for the state’s cities and towns in their property tax collections. The major argument behind CMP’s bullying barrage to kill public power was that if that proposal passed, the new utility would have had to take on excessive debt to pay for the electric companies’ land, buildings and equipment.
CMP repeatedly claimed it would cost $13.5 billion to wrest the two systems from their cold, dead hands. Even the most ardent supporters of private utilities didn’t believe that figure, but it was offered in the heat of a political battle, when almost nothing that’s being said bears any relationship to the truth. Predictably, the vast majority of voters bought that argument, whether due to ignorance, stupidity or some combination of the two, so the $13.5 billion figure is now a matter of factoid in Maine’s political mythology.
Sort of like claims that term limits, public campaign financing and ranked-choice voting have improved the state’s governance.
But back to CMP. In 2022, the Maine Public Utilities Commission (PUC) estimated CMP and Versant had assets worth $5.4 billion. That’s the property value on which the companies pay taxes. But the consultant CMP hired to dream up its extravagant buyout number decided the utilities would be worth a lot more by the time the sale was completed, after years of legal delays, because everyone knows complicated court cases always boost the sales price due to … uh… complex stuff only consultants understand.
CMP embraced that inflated estimate like it was inscribed on stone tablets and brought down the mountain by Moses. And if that’s the way the creepy corporate suits want to set their numbers, who are we peons to say nay? We’re woozy on magic elixir, and we should be thankful no one pays attention to our carping and whining.
Because if the utilities’ real value is $13.5 billion, they should be paying property taxes based on that amount. But they’re not. Last year, CMP and Versant coughed up about $85 million to municipalities where they have facilities. But that’s based on that old $5.4-billion figure, which has now been grossly inflated by the political geniuses they hired to run their anti–public power campaign. If we take the higher figure as gospel (and why wouldn’t we, because it comes from entities that can literally throw lightning bolts), then the tax bill should be something approaching $250 million per year.
Once it becomes clear that’s the case, I trust that assessors across the state will begin frantically conducting revaluations of transformers, maintenance garages, power corridors and corporate offices to set the new levies that will be due in 2024. And councilors and selectpersons in the roughly 400 municipalities where CMP and Versant have property will be preparing budgets that reflect dramatically lower tax rates for homeowners and small businesses.
Now I can guess what the more cynical among you are about to point out: If CMP is forced to pay higher taxes, won’t it just pass that cost on to its customers? All the money those poor suckers save on their property tax bills will just get sucked up by the increased monthly light bill.
Not necessarily.
Regulated monopolies such as CMP and Versant are allowed by state law to earn a “reasonable rate of return” on their investments. The institution that decides what’s reasonable is the aforementioned PUC. If the noble commissioners find the companies have been lowballing their property value for years in order to keep their tax bills from reflecting reality, they could deem the new higher taxes to be payback for all that time the power companies weren’t paying their fair share. In which case, the heavier tax expense would fall on the foreign shareholders (who could take some solace in knowing their investment is now immensely more valuable than seems reasonable — or possible).
There’s probably a lesson here for all concerned. But it probably has nothing to do with being careful about what lies you tell, lest those fibs come back to bite you in the ass. More likely, it’s a warning against drinking my magic elixir, because without it you would have realized that none of what you’ve just read is even remotely likely to happen.
Maybe you should strive to be less gullible.
Shock me by e-mailing aldiamon@herniahill.net.
