Proponents of a controversial proposal to replace Central Maine Power and Emera Maine with a single consumer-owned, nonprofit electric company have pointed to Nebraska as the example of how to keep local control over power while also lowering electricity rates.
Nebraska is the only U.S. state that fully relies on consumer-owned utility companies rather than for-profit corporations for electricity. It has 162 public utilities.
Public ownership of utilities is increasingly being turned to as a viable option as power companies across the country struggle to keep electricity rates competitive, to weather disasters and to stay in business.
But whether Nebraska’s success with low rates and local power companies could work in other states isn’t clear.
“Our model works very well, but we implemented it decades ago,” said Tim Texel, executive director and general counsel for the Nebraska Power Review Board, one of the regulators of the state’s publicly owned electric utility industry.
“Maine is more similar to Nebraska in population and geography, so it could lend itself for public power to work,” Texel said. “It would be a lot harder in a populous state like Florida.”
Both Maine and Nebraska have sparse populations spread over a largely rural landscape.
The Nebraska Power Association, an industry group, said that residential customers of private power companies in other states pay an average of 1.4 cents per kilowatt hour more than in Nebraska.
Nationally, 2,000 public electric companies provide power to 49 million people in 49 states, with the exception of Hawaii, according to the American Public Power Association.
The case for Maine
Rep. Seth Berry, D-Bowdoinham, co-chair of the Legislature’s energy committee, in January floated the idea of wresting control of CMP and Emera Maine from their parent companies. Berry is a sponsor of LD 1646, a bill to restore local ownership and control of Maine’s power delivery systems.
Berry, a vocal critic of the utility companies over their rates, bills and renewable energy policies, backs an effort to create the Maine Power Delivery Authority, a consumer-owned transmission and distribution company. He contends that Maine Power would keep money in the state and not return it to the shareholders of foreign companies.
The energy committee heard testimony from the public and other parties on May 14 and scheduled a work session Wednesday to discuss specifics of the proposal.
Representatives from CMP and Emera Maine spoke against the proposal to create Maine Power at the May 14 public hearing, citing high costs to start the new entity and concerns about a stable power supply for consumers, among other concerns.
Powering Nebraska and Maine
Nebraska and Maine have many commonalities, including being sparsely populated states subject to weather extremes that may affect the flow of electricity.
Nebraska has 1.9 million people spread over 77,358 square miles. That compares with Maine’s 1.3 million people living on 35,385 square miles.
Both states have four distinct seasons with cold, snowy winters and hot summers. While Maine gets hit with nor’easters, Nebraska’s weather worries are tornadoes and floods.
Nebraska has 162 electric utilities that can be seen on this service area map. There are 120 municipally owned utilities, 11 cooperatives, 30 public power districts and one public power and irrigation district.
The utilities each have their own board that sets rates, determines which meters are used, set the rate of return, establish cold weather shutoff policies and manage deposits. The board also handles complaints by local electricity consumers.
The utilities are regulated by the Nebraska Public Review Board, formed in 1963 and composed of five people appointed by the governor and confirmed by the Legislature.
The review board acts as a referee between utilities to control service areas or handle rate disputes. It also needs to approve transmission and generation projects.
The Nebraska Public Service Commission regulates the safety and authority to construct high voltage electric transmission lines. It is loosely comparable to the Maine Public Utilities Commission. There is no public advocate’s office in the state.
The Nebraska Public Power District, which sells primarily wholesale electricity, and Omaha Public Power District, which sells mostly retail electricity, are the largest utilities. Lincoln Electric System is the third largest. Each of the three also generate electricity, while the other power companies do not.
The Nebraska Public Power District, formed in 1970 by the merger of four public power entities, is Nebraska’s largest electric utility by territory. It has more than 600,000 retail and wholesale power customers in 86 of Nebraska’s 93 counties, according to the utility’s website. It uses coal, wind, nuclear and natural gas to generate electricity. About 48 percent of its power generation is from nuclear.
The Omaha Public Power District, which has been operating since 1946, has 846,000 customers in 13 counties, according to its website. It uses coal, natural gas and renewables to generate electricity. Some 28 percent of its power generation is from wind.
In 2018, Nebraska generated 63 percent of its net electricity from coal, 15 percent from nuclear power and 14 percent from wind, according to the U.S. Energy Information Administration. Almost all of the rest was generated from hydropower at 4 percent and natural gas at 3 percent.
Nebraska also is among the top 10 states in per capita total energy consumption, partly because its industries use electricity heavily.
The state has the third-highest number of industrial electricity customers of any U.S. state. A large portion of Nebraska’s industrial consumption is seasonal demand from farms that use electricity to run irrigation systems.
The average retail price of electricity to residential customers in Nebraska was 9.54 cents per kilowatt hour in February 2019, ranking the state 44th overall in terms of its low price, according to the Energy Information Administration. That ranking includes the 50 states and the District of Columbia.
Maine was in the middle of the pack at 11.69 cents per kilowatt hour in February, ranking 29th in pricing.
In the full year of 2017, which is the most recent data available, Maine’s price was 13.02 cents per kilowatt hour, compared with Nebraska’s 9.08 cents per kilowatt hour, according to the Energy Information Administration. That means Nebraska’s rate was the 16th lowest that year. Maine’s rate was the 11th highest nationwide, yet it was the lowest among the six New England states.
Maine had the lowest average electricity price in New England in 2017, partly because of its low average industrial sector power price. That price reflects the use of less costly wood and wood waste as a generating fuel, according to the Energy Information Administration.
The five other New England states ranked in the top 10 nationwide in terms of cost per kilowatt hour, with Rhode Island ranking second, Massachusetts third, Connecticut fourth, New Hampshire fifth and Vermont ninth.
Hawaii was the most expensive and North Dakota the least expensive state in February 2019.
About three-quarters of Maine’s net electricity generation came from renewable energy resources in 2017, with 30 percent from hydroelectricity, 26 percent from biomass and 20 percent from wind, according to the federal government.
Nearly two-thirds of Maine households use fuel oil as their primary energy source for home heating, a higher share than in any other state.
CMP and Emera Maine are the two largest electric utilities in the state. There also are four public companies on the mainland: Kennebunk Light and Power District, Madison Electric Works, Houlton Water Co. and the Eastern Maine Electric Cooperative in Calais. Another five smaller utilities serve Maine islands.
It’s not all rosy in Nebraska
Nebraska’s electricity model does have some challenges. For one, power generation still is largely from coal, which helps keep electricity prices down.
“Coal is still king in Nebraska,” said Texel of the power review board. “One thing that keeps rates low is we have coal plants that were built long ago.”
The state is moving to adopt more renewables. However, the public utilities are not eligible for the federal renewable electricity production tax credit to help boost renewables development, Texel said.
“Customers can pay a premium to have a certain percent of their bill from renewables,” Crystal Rhoades, a commissioner on the Nebraska Public Service Commission, told the Legislature’s energy committee meeting Tuesday.
Rhoades said interruptions to power and rate rises can create a public outcry.
Omaha Public Power District moved to a flat rate and increased its distribution charge.
“There was a huge public backlash,” she said.
A big increase in rates in 2015 to 2016 also caused public discord, she said.
That increase stemmed from massive flooding in the state in 2011. The flooding resulted in the shutdown in October 2014 of Omaha Public Power District’s Fort Calhoun Nuclear Generating Station, which was both flooded and had an electrical fire in 2011.
Rhoades said the massive rate increase that followed the nuclear plant shutdown also resulted in widespread replacements of the public electric utility board members.
Nebraska still has one nuclear facility.
Despite some hiccups, Texel said the local power systems in Nebraska have worked well.
“Our system makes sure rural areas get pretty good service,” he said. “Nebraskans are very independent. They like local control.”
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