Central Maine Power to pay $4M in penalties due to service complaints

Source: Maine Public Utilities Commission

The Maine Public Utilities Commission unanimously approved a settlement agreement between Central Maine Power (CMP) and the Office of the Public Advocate (OPA) to modify the service quality benchmarks of the company’s approved rate plan (Alternative Rate Plan-ARP). According to the agreement, CMP will pay a $4 million penalty for inadequate service quality which resulted in elevated customer complaints in 2009—most of the penalty fee will flow through to Maine ratepayers with a portion going to certain eligible low income customers who were unable to pay bills as a result of the economic downturn. CMP’s penalty could have been as high as $5 million based on the customer complaint ratio. The settlement agreement took into consideration CMP’s filing that severe economic conditions caused complaints to rise. 

“Approving this penalty strikes the right balance,” stated Commission Chair Jack Cashman. “We’ve taken into consideration the economic downturn, while at the same time recognizing that the bulk of the service quality violation is the company’s responsibility.” 

Background: CMP has operated under an Alternative Rate Plan (ARP) since 1995. The purpose of an ARP is to provide incentives for efficiency savings since any savings above the predicted rate can be passed on to consumers and shareholders. CMP’s ARP includes a service quality index which is intended to ensure that its service does not deteriorate under this rate plan. The service quality penalty mechanism is triggered if CMP’s performance falls below established baselines for any of the six separate service quality indicators. One of those indicators is the Complaint Ratio which measures the number of customer complaints received by the Commission’s Consumer Assistance Division (CAD) in a 12-month period. The Commission Complaint Ratio is set at 1.00 complaints per thousand customers. The maximum penalty under CMP’s current ARP in any year is $5 million. 

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