YARMOUTH — The Maine Employers Mutual Insurance Co., MEMIC, is among the most spectacular success stories of Maine business and policymaking history. Since its formation in 1993, workers compensation premiums have declined by 60 percent, workplace injuries have dropped by half and $285 million in dividends have been returned to its policyholder owners, including $22 million last year.
In a bill before the Maine Legislature, we have an opportunity to match and even exceed what MEMIC achieved, using the identical model but in a different industry: electricity distribution.
MEMIC originated from a blue-ribbon commission established by the Legislature in 1992 to address a marketplace crisis. At the time, the workers compensation insurance rates paid by Maine employers and mandated by workers compensation laws were two to five times higher than in other states, leading some companies to move their operations away. Among its recommendations, the commission proposed a new, privately run mutual company in the workers compensation marketplace.
With a mutual company, it is the customers or policyholders who own the company and share in any efficiencies or profits. A mutual company is still a private enterprise, neither government-run nor taxpayer-funded. It’s just that the company’s owners are its customers, rather than outside investors.
Electricity distribution is the ideal industry to replicate MEMIC’s success. First, it is a public utility that should operate in the public interest. Second, it is a monopoly industry. Third, it is the custodian for an intricate network of transmission corridors that are intended for public benefit, not entrepreneurial gain. Fourth, it is an industry integral to the public policy challenges of averting climate change and revolutionizing renewable-energy production and distribution for the future.
Over the last several decades, many Maine companies have sold to multinational conglomerates, Hannaford to Ahold Delhaize, Poland Spring to Nestle, Bath Iron Works to General Dynamics, Central Maine Power to Avangrid/Iberdrola. For most products, ownership by massive conglomerates involves some loss of Maine identity and corporate citizenship, but does not fundamentally alter the marketplace, its efficiencies, its employees or its customers.
The same cannot be said for Central Maine Power, as demonstrated by its not-even-close last-place ranking in J.D. Power’s survey of business users of electricity around the country, or by the ongoing and heated controversies surrounding billing, reliability and a western Maine transmission corridor. None of these issues will be effectively resolved by a multinational conglomerate, whose primary accountability is to non-Maine shareholders.
In its 2020 session, the Maine Legislature will consider a bill, L.D. 1646, that would lay the groundwork for a new consumer-owned private enterprise, the Maine Power Delivery Authority. The bill was introduced by state Rep. and Energy Committee Chair Seth Berry to address what many of us feel is a failing yet critical public utility. Its timing is particularly important as we plan for the foundational reinvestments in the electricity transmission grid that will be required for our renewable energy future.
Just like MEMIC, the Maine Power Delivery Authority would be a private enterprise, neither government-run, nor taxpayer-funded. Just like MEMIC, any operational efficiencies or profits would be returned to ratepayers in dividends. Just like MEMIC, it would be managed by industry professionals, and overseen by a board of Maine-based, consumer-concerned citizen ratepayers. And just like MEMIC, it would be capitalized by private borrowing, not government borrowing, collateralized by the future stream of ratepayer revenues.
We are facing two big CMP-related decisions right now. One is the transmission corridor across western Maine. I’m not at all opposed to a redefined and potentially expanded transmission network as part of a comprehensive renewable energy development plan. But I’m firmly opposed to giving the CMP-Avangrid-Iberdrola monopoly one iota of additional clout in Maine’s energy landscape.
The other decision is about L.D. 1646, an inspiring first step toward a consumer-owned electricity distribution company, modeled brilliantly on the creation of MEMIC in the 1990s. I can’t wait for the new Maine Power Delivery Authority to become the MEMIC of the 2020s.
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