There was a London Economics report done a few years ago to look at the effects of LD 1646 which was a similar idea to Pine Tree Power, consumer owned T&D services in Maine. The funding is a little different structure in this proposal but the report shows that even if it’s funded by tax-exempt revenue bonds, utility rates are likely to stay higher until the loans are paid off down the road. The interest rate on the bonds would likely be cheaper than CMP or Versant’s allowed return on their rate bases, but the assets will need to be bought out at a higher market value, not their current book values, which could offset the difference in interest and return rates. On the flip side if they were not subject to state taxes that would help lower utility rates. I don’t know if financial projections have been done yet for Pine Tree but it’s hard to really see these effects without a laid out plan.
The report also argues that at the very least taxes will likely go up, not to fund the new company, but to offset lost tax revenue from the privately owned T&D companies.
Another interesting point is that if they were consumer owned they would not be subject to the same PUC rate scrutiny, and the board would likely be made up of the governor’s choosing, so transmission and delivery rate structure could be influenced more by board members.
I’m not sure where I stand on this yet, but it seems like there are a lot of questions still to be asked and this London Economics report at least helps walk through the areas to keep in mind.
its_randy t1_jbx4wm8 wrote
Reply to Pine tree power question by respaaaaaj
There was a London Economics report done a few years ago to look at the effects of LD 1646 which was a similar idea to Pine Tree Power, consumer owned T&D services in Maine. The funding is a little different structure in this proposal but the report shows that even if it’s funded by tax-exempt revenue bonds, utility rates are likely to stay higher until the loans are paid off down the road. The interest rate on the bonds would likely be cheaper than CMP or Versant’s allowed return on their rate bases, but the assets will need to be bought out at a higher market value, not their current book values, which could offset the difference in interest and return rates. On the flip side if they were not subject to state taxes that would help lower utility rates. I don’t know if financial projections have been done yet for Pine Tree but it’s hard to really see these effects without a laid out plan.
The report also argues that at the very least taxes will likely go up, not to fund the new company, but to offset lost tax revenue from the privately owned T&D companies.
Another interesting point is that if they were consumer owned they would not be subject to the same PUC rate scrutiny, and the board would likely be made up of the governor’s choosing, so transmission and delivery rate structure could be influenced more by board members.
I’m not sure where I stand on this yet, but it seems like there are a lot of questions still to be asked and this London Economics report at least helps walk through the areas to keep in mind.