Firm that conducted key $500k energy study for Maine regulators rebukes bias claims

Natalie Williams | BDN
Natalie Williams | BDN
A redacted copy of a report created by London Economics International for the Maine Public Utilities Commission to assess the economic impact of Central Maine Power's proposed hydropower transmission line for western Maine.
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A Boston-based consulting firm told lawmakers Wednesday that it should have disclosed its work on another energy-related study to Maine regulators during a bidding process, but allegations that it had a conflict of interest are “groundless.”
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A Boston-based consulting firm told lawmakers Wednesday that it should have disclosed its work on another energy-related study to Maine regulators during a bidding process, but allegations that it had a conflict of interest are “groundless.”

“It was an oversight on our part to not reveal [work for Emera Maine],” Julia Frayer, managing director at London Economics, told the Legislature’s energy committee Wednesday. “We are an economic consulting firm without any embedded preference.”

London Economics researchers were in Maine to present their recent findings about the effects of a consumer-owned utility on Maine.

The research company has been under scrutiny for the study after the Bangor Daily News reported it won the $500,000 contract despite past work for Emera Maine that should have disqualified it under state rules.

Frayer acknowledged that London Economics has worked with Maine Public District in northern Maine to examine the financial conditions of several biomass facilities asking for a transmission rate discount. That study was paid by Emera Maine, which owns the Maine Public District.

She said it was a “clerical error” to not have revealed that contract to the public utilities commission during the bidding process for the consumer-owned utility study.

The firm also worked for a subsidiary of Hydro Quebec when it was hired to conduct a 2018 study on the economic impact of the proposed CMP hydropower corridor. That project would bring power from Hydro Quebec to the regional New England grid.

And in that case, London Economics did tell the commission about the work with HQ Energy Services, the U.S. subsidiary of Hydro-Quebec, according to commission spokesperson Harry Lanphear. He said regulators determined the simultaneous contracts did not create a conflict of interest.

Frayer said her firm has worked with Hydro Quebec from time to time “but not for anything that involves Maine, or for that matter anything involving specific New England matters.”

The London Economics report on the consumer-owned utility was commissioned by the Maine Public Utilities Commission in response to the energy committee’s request for an independent study on the costs and benefits of a consumer-owned utility proposed under LD 1646. The report also covered legal requirements, anticipated effects on the state and alternatives to address any issues with the proposal. The consumer-owned utility would replace Central Maine Power and Emera Maine.

LD 1646 came in response to frustration over high rates by CMP and Emera Maine, renewable energy policies and ongoing customer service issues.

The study on consumer-owned utilities was submitted to the Legislature on Feb. 15.

However, days before, on Feb. 10, the utilities commission’s legislative liaison Garrett Corbin informed the energy committee that London Economics also had worked on a study for Emera Maine in that timeframe.

On Feb. 13 energy committee co-chairs Mark Lawrence, D-York, and Seth Berry, D-Bowdoinham, wrote a letter to Maine Public Utilities Commission Chairman Philip Bartlett expressing concern about the contract, according to information first reported by the Beacon, the news arm of the progressive Maine People’s Alliance.

“Eligible bidders may not have been retained by a Maine [investor-owned utility] or any of its affiliates in the last five years,” they wrote.

That letter was followed on Feb. 15 by an email to all three utilities’ commissioners from Tina Riley, D-Jay; Nicole Grohoski, D-Ellsworth; Chris Kessler, D-South Portland; and David Miramant, D-Knox County.

“As we seek additional information on that matter in the coming days, we … write to ask the commission to take all necessary actions to preserve the state’s ability, if needed, to take corrective measures, included, but not necessarily limited to, withholding any future payment to [London Economics] until further notice,” they wrote in the email.

Corbin responded in an email dated Feb. 20 saying that to date, the commission has paid $158,923 to London Economics.

“We have not yet received any further invoices,” he wrote. “The commission is in consultation with the Maine Department of Administrative and Financial Services Division of Procurement Services about how to proceed when we do receive an invoice, and we will not issue payment without express guidance to do so.”

The selection process for the contract is not the only controversy surrounding the study. Some of its conclusions don’t sit well with proponents of the consumer-owned utility.

One of the stickier points is the report’s finding that LD 1646 as it stands does not guarantee improved customer service at no additional cost. It may require additional investment to improve the electric network’s reliability.

“There is no evidence that a change of ownership will in and of itself guarantee improved customer service,” Frayer said. “Improved reliability may come at a cost.”

The report also found that rates for consumers may be higher initially.

Berry said earlier that the report makes assumptions that significantly reduce benefits to Maine consumers.

 


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