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August 5, 2022

Versant Power's planned rate hike request draws concern from Mills, advocates

Courtesy / Versant Power Versant Power is Maine's second-largest electric utility, with 159,000 customers in northern and eastern Maine.

Consumer advocates, state politicians and Gov. Janet Mills are calling for Versant Power to shelve a newly announced request to raise its electricity distribution rates.

In a Thursday notice to the Maine Public Utilities Commission, the utility announced its intention to file a $30 million rate hike request in early October.

A company press release explained that the distribution rate increase would add $10.50 to the average monthly bill for residential customer, presuming they used 500 kilowatt-hours. A Versant customer using 750 kwh would result in a $15 to $16 increase, and for 1,000 kwh, an increase of about $21, the release stated.

The rate increase is essential to enable the utility to complete an advanced metering infrastructure project, shore up reliability on its distribution system and account for increased labor and material costs that utility pinned on inflation, according to the notice, filed by Versant Power’s vice president of legal and regulatory affairs, Arielle Silver Karsh.

The company did note that it “is completing a depreciation study and will propose new depreciation rates as part of its initial filing.”

Funds would also go to build a new substation in Machias and to replace deteriorating cables that provide power to islands off of Maine’s coast, according to the news release. Reliability projects in the Old Town-Orono area, as well as in northern Maine, would also be funded, in addition to investments in vegetation management, cybersecurity technology and retaining “quality employees in a competitive labor market.

“Versant does not plan to propose any increase to its currently authorized return on equity of 9.35%,” stated the utility in its filing. “The proposed rate of return on rate base will be approximately 8.29%.”

Judy Long, the utility’s spokesperson, said in an email Friday that the utility has worked “hard to manage our costs.”

“This request is not seeking anything fancy or ‘extra,’” she said. “We are merely calculating what we need to do to provide the level of service our customers deserve and how we can provide it in a cost-effective way. In recent years, we’ve taken steps to improve our inspection programs to identify more precisely where we need to do upgrades and where we can wait."

Lightning-rod issue

Nevertheless, the announcement that Versant Power will soon file a distribution rate hike immediately raised the hackles of consumer advocates, state politicians and Mills, who called on the utility not to file the request. She pointed to the region’s reliance on fossil fuel-based energy, for which supply costs are expected to rise this year, as part of her rationale.

“I do not believe now is the appropriate time for our utilities to seek further rate increases,” said Mills. “I ask Versant to not file this request but, if they do, I will direct my Energy Office to intervene in opposition and call on the Maine Public Utilities Commission to reject the request.”

Mills added that “improvements to our electric system are an important part of maintaining a strong grid, but the timing of such improvements — and the costs associated with them — must be weighed against the already high electricity prices that Maine people, like people across New England, are being asked to pay.”

A statement from Maine’s public advocate, William Harwood, said his office was doubtful and “skeptical of [the] need for Versant Power’s rate increase.”

“The timing of Versant’s proposed increase is unfortunate,” said Harwood in a statement. “Mainers are already struggling to pay high energy costs, including the January 1st increase in standard offer prices of more than 80%.”

Seth Berry, a former state representative and chair of the Maine Legislature’s energy, utilities and technology committee, released his own statement saying Mainer people and businesses should be “very afraid” of Versant’s plans to “boost its investments.” Berry recently declined to run for reelection to focus on the movement to create a statewide consumer-owned power utility.

“What they actually mean is they plan to boost future profits at your expense,” he wrote.

For its part, Versant Power claimed that “if this rate change is approved, Versant Power will still offer distribution rates and total average residential bills that are lower than most comparable New England utilities.”

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