Maine Public Utilities Commission

MPUC docks CMP shareholders $10 million

Bartlett: All customers will be ‘made whole’
Fri, 01/31/2020 - 11:15pm

Completing its examination into Central Maine Power’s high billing and metering issues from late 2017 to date, Maine Public Utilities Commission on Jan. 30 found no systemic metering or billing problems.

 

However, the commission found CMP bears full responsibility for sporadic and random problems. MPUC Chair Phil Bartlett said the examination was one of the most thorough, exhaustive reviews in MPUC history. “There were an unacceptably high number of billing errors. Delayed and estimated bills added to the confusion, compounded by inadequate customer service. This led to public skepticism and mistrust.”

 

As a result, CMP will undergo a complete management review and a third party will oversee the SmartCare billing system that went live in November 2017, just as a windstorm knocked out power for nearly a week in many communities CMP serves. The storm caused the smart meter network to fail, Bartlett said. And shortly after the billing system went live, customers began complaining about unexplained high bills. This coincided with a cold snap in December and January that CMP maintained caused higher than normal energy use.

 

Wiscasset Newspaper viewed the meeting at http://puc-rss.maine.gov/

 

Bartlett said, in its haste to go live, CMP did not do adequate testing on the SmartCare system; after the system went live, CMP failed to ensure adequate customer service. “This was imprudent,” he said. A decision that an action was imprudent means the utility may not recoup its expenses with ratepayers. “Any additional costs will be borne by CMP shareholders,” Bartlett said. “They must remedy all defects and reimburse customers for overbilling.” The projected cost to shareholders is $10 million.

 

CMP was also ordered to restore credits to customers on the Electricity Lifeline Program who had their credits “clawed back” by CMP.  “All customers will be made whole,” Bartlett said.

 

CMP has 45 days to submit the name of a third party to oversee its SmartCare system. MPUC said the third party will closely monitor SmartCare and the plan must include a timeline for defect resolution. CMP must file quarterly progress reports.

 

The issue of some smart meters registering greater than normal energy use due to a fast clock problem should have been fixed with a firmware upgrade. During the last review, CMP said 94% of the meters with this defect had been upgraded. MPUC ordered that meters that cannot be manually upgraded must be replaced.

 

The Liberty audit, which concluded CMP’s metering and billing systems were accurate and found no root cause for systemic high use complaints, will be the subject of a followup proceeding to determine how much of the audit CMP will bear and how much can be shifted to ratepayers, Bartlett said. “This is not to say that individual high usage complaints are not legitimate. Each customer with a high usage complaint is entitled to an independent evaluation of their complaint.”

 

CMP must address each high usage complaint, with the costs borne by the company, Bartlett said. He said he was ordering bi-monthly reports on the issue.

 

Any customer whose billed usage was 25% higher than the year before had the disputed amount deferred. Everyone currently using the interim payment policy remains protected, as long as they continue to pay the undisputed portion of their bills, he said. He ordered CMP to provide a list of all participants; and MPUC will manage the complaint management process. “Any customers with concerns about high usage should contact MPUC,” he said. MPUC will work with those customers and reach a resolution individually. Their cases will be transferred to a resolution process managed by the Commission’s Consumer Assistance and Safety Division.

 

Then, the commission turned to the issue of CMP’s requested rate increase. There are two parts to a rate increase. Bartlett said the first is recovery of operating expenses; the second is investors’ return on rate base. Bartlett said the MPUC could not deny a rate increase based on operating expenses, however, CMP’s customer service record led commissioners to decrease the amount of the increase requested.

 

The Commission ordered a rate increase less than half of the requested one and which will result in a 2% increase in an average residential monthly bill. The increase in distribution rates will more than offset this for the average bill, due to the Jan. 1 decrease in the standard offer price of electricity supply. The net effect should be a 7 to 8 % decline in the average electric bill from CMP compared to last year, Bartlett said. 

 

Bartlett said CMP’s customer service is “woefully inadequate.” The commission has been sending letters to CMP since 2016 to request CMP improve its system, and CMP failed to. Based on the customer service problems, the commission agreed to order a management audit and decided on a 75 basis point reduction in its return on investment request, over 24 months, which could be extended if CMP’s customer service and management problems do not improve. That would be the difference between a 9.25% return on investment for shareholders, and an 8.5% return on investment, a $10 million difference.

 

During that 24 months, Service Quality Indices (SQI) on both service quality issues and billing errors must be resolved. The company must show 18 months of compliance rather than the usual 12. Once all metrics have been met, MPUC will decide whether or not to continue oversight. The commissioners also ordered an audit on call quality, for every call.

 

“CMP must make additional investments in vegetation management and staffing,” Bartlett said. “This is the largest driver of the increased revenue requirement.” They refused to allow a change in the affiliate charges, companies that CMP uses for labor, mostly, to do work due to inadequate CMP staffing, saying a management audit was necessary before there would be any increase in the affiliate charge cap. CMP had requested another $5.3 million. Accounting issues related to the legacy billing system were also disallowed, saying they would be part of the management audit.

 

CMP’s new rates take effect March 1, instead of the October 2019 date requested. Bartlett warned CMP,  its disregard for past commission orders such as a request for a market rate study, is problematic. “What drives this behavior and how the public, legislature and regulators choose to respond is in CMP’s hands,” he said, noting CMP had argued that MPUC was responsible for its customers’ confidence.

 

CMP spokesperson Catherine Hartnett said CMP appreciates that this process has been going on over a year. “The commission staff has put in a great deal of time, which we acknowledge. These are a unique set of circumstances, and they are highly complex.”

 

Hartnett said CMP heard customer complaints loud and clear. “We’ve been working for months to recreate trust with our customers. It’s up to us, we know. We are taking the interactions one at a time,” she said.

 

She said she could comment more fully when the written orders are received for the management audit and followup activities.