Maine legislator advises NM to reject merger

Copyright © 2021 Albuquerque Journal

A 17-year veteran of Maine’s House of Representatives says energy giant Avangrid’s business practices in his state demonstrate a systemic pattern of “greed and mismanagement” that should raise red flags in New Mexico.

Seth Berry, a Democrat in his seventh term in the Maine Legislature, provided written testimony in behalf of Santa Fe-based New Energy Economy, which opposes the proposed merger between Avangrid and PNM Resources. New Energy filed Berry’s testimony last week with the New Mexico Public Regulation Commission.

Maine Rep. Seth Berry

If the PRC approves the merger, Avangrid would acquire PNMR and its two utility subsidiaries – Public Service Co. of New Mexico and Texas New Mexico Power – in an all-cash transaction valued at $4.3 billion.

Berry, chairman of Maine’s House Committee on Energy, Utilities and Technology, is a longtime critic of Avangrid. He contends Avangrid and its parent firm, Iberdrola SA, have had a “deeply detrimental impact” on his state.

“Based on our experiences in Maine and my direct knowledge of Avangrid/Iberdrola I do not believe that the merger/acquisition would be beneficial to PNM ratepayers or New Mexicans,” Berry said. “… The commission should reject the proposed merger acquisition as inconsistent with the public interest.”

Berry outlined a series of state regulatory actions against Avangrid’s local subsidiary, Central Maine Power, that resulted in $11 million in penalties, forced profit reduction and other costs imposed on the company. Regulators enforced the penalties in response to extensive billing problems and poor customer service that affected tens of thousands of consumers, as well as delivery of illegal disconnect notices to CMP consumers last winter.

Avangrid customer service issues scrutinized

Avangrid executives, however, say Berry is leading a legislative initiative for the state government to take over all electricity service in Maine. He also is an outspoken opponent of Avangrid’s clean energy project that would provide energy from Canada to Maine customers.

Avangrid Deputy CEO Robert Kump questioned the legislator’s objectivity.

“He’s been an advocate of government-controlled power generation for several years,” Kump told the Journal.

Billing problems

CMP’s billing problems began in late 2017, after the utility installed a new billing software platform called Smartcare. Shortly afterward, 16% of the company’s 620,000-plus customers received bills at least 50% higher than the same billing period a year earlier. Others received no bills at all until after their eventual balance proved much higher than they could afford.

An investigation by the Maine Public Utilities Commission found 59 distinct types of billing errors affecting more than 100,000 customers, Berry said. Customers struggled to get their issues addressed by the utility, eventually leading to a class-action lawsuit brought by about 600 ratepayers that continues today.

The Public Utilities Commission imposed an 18-month profit allowance reduction against CMP in response to the billing problems that, when it ends in two months, will total $9.9 million in penalties against the company.

After its investigation, commission staff said the breadth and scope of CMP’s billing and customer service problems were unprecedented.

“The commission has not in recent history – and probably never before – seen complaints against a utility reach the numbers they have here, nor seen the kind of public skepticism of customers’ utility bills that has been raised against CMP in the last two years,” commission staff said.

In a separate case this year, CMP sent thousands of disconnect notices to Maine residents during the 2020-2021 winter months in the midst of the coronavirus pandemic and despite state law that prohibits utilities from turning off residential customers’ power before April 15 without regulatory approval to do so, Berry said. That resulted in a $500,000 penalty against CMP – the maximum allowed under state law.

Avangrid executives said the billing debacle reflected the complexity of installing the new software, aggravated by a severe winter storm shortly after installation that knocked out power to most CMP customers for several days.

While acknowledging multiple problems with timing and some details on the bills, they pointed out that no customers were actually overcharged.

And the company has since resolved the billing issues, Kump said.

“We hired 50 more folks for the CMP call center and a new manager,” he said.

In addition, the utilities commission attached four customer metrics to the 18-month profit reduction penalty that CMP must meet.

“We’re going on 16 months now, and we’re meeting all four metrics,” Kump said. “We feel like we’ve gotten to where we need to be.”

Still, CMP has ranked last among all large and midsize electric utilities for customer satisfaction for the past three years in a row in surveys by JD Power and Associates.

“In 2013, prior to Avangrid’s acquisition of CMP, it was ranked among the highest in the nation,” Berry said.

Opposition

Meanwhile, Avangrid continues to face opposition to its planned 171-mile clean power transmission line, which will run from the Canadian border to Massachusetts to supply about 1.2 gigawatts of electricity to customers there. About 53 miles will cut through what Berry calls pristine national forests in Maine. The project has generated community and environmental opposition and referendums to stop development.

Company officials say the project has the support of Democratic Gov. Janet Mills, and they stress the benefits of bringing much-needed clean energy to Maine residents.

But opponents gathered 66,000 petition signatures for a ballot measure to reverse the state’s project approval. And Avangrid acted in “nefarious” ways to stifle public involvement, Berry claimed.

Avangrid has spent more than $9 million on anti-referendum propaganda, plus $730,000 paid to four firms to legally challenge the referendum and certification of petition signatures, and to investigate the records of organizations and individuals opposed to the project.

No initiative has passed that would halt the project.

Avangrid says competitor energy companies, particularly NextEra Energy Inc., are behind much of the transmission line opposition because the clean energy delivered from Canada could suppress electricity prices and damage profitability of generating plants they operate in New England.

NextEra is the top donor to a PAC working to support anti-transmission line ballot initiatives in Maine, according to a Bloomberg report.

And Avangrid officials dispute that the transmission line is going through pristine forests, saying much of the area already is developed for logging and other uses.

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