Line workers from Central Maine Power Co. and arborists from Asplundh Tree Expert Co. remove an oak tree from power lines in Waterville in December 2022. Michael G. Seamans/Morning Watch

Central Maine Power Co. this year pledged to improve administrative procedures that support utility spending decisions when it agreed to cut $850,000 from what electric customers must pay for power restoration after 2022 storms.

The cost reduction was only a small amount $53 million that state’s Public Advocate William Harwood asked the Public Utilities Commission to back down. He accused CMP of overspending and failing to prove some expenses were justified, opening the door to a broader view of how the utility covers expenses related to storm restoration and many other operations.

CMP tries to recover $127 million, says it then spent it to restore power almost a dozen Storms in 2022 The public defender has no basis to accuse him of overspending, he said.

However, as part of a study settlement with state regulatorsA subsidiary of Connecticut-based Avangrid Inc. has asked the state for the so-called approval affiliate service agreements Along with six other Avangrid utilities in Massachusetts and New York and Maine Natural Gas, which detail a multitude of services such as HR, equipment and vehicle usage, legal expenses, staffing, building security and other functions.

Brian Marshall, senior attorney for the Office of the Public Defender, said tens of millions of dollars could be at stake for CMP taxpayers as state officials examine how Avangrid apportioned costs among its subsidiaries.

“If a company affiliated with CMP actually inflated costs, such as HR, does that cost make sense?” he said. “These are questions we are grappling with right now. “It can be quite difficult to track costs throughout this chain.”

Specific dollar amounts were not discussed, but “a big part” determines how costs are allocated, Marshall said. “It’s pretty thorny and complex.”

CMP says contracts are a framework for determining costs. The PUC ultimately approves or denies requests for storm restoration costs and is expected to decide whether to approve the agreements.

Affiliate service agreements are a “common tool” used by utilities to reduce the cost of servicing core business functions such as cybersecurity and IT, emergency preparedness and equipment in the supply chain, company spokesman Jon Breed said in an email. CMP recognizes that the “framework” of contracts by the PUC is a “valuable practice.”

CMP told regulators that services provided to a company are billed directly to it, and services are allocated to more companies based on “drivers” such as the number of vehicles, number of employees or equipment users.

At a recent PUC meeting between the public defender and CMP, the utility cited as an example an employee of an Avangrid subsidiary such as New York State Electric and Gas who was working on a CMP project and would bill CMP for time worked.

CMP is the first of Maine’s utility regulators to decide against Energy East Management Co., the predecessor company acquired by Iberdrola, the Spanish energy giant and Avangrid’s parent company. He said that he approved the agreements made with. CMP has updated its service agreements and submitted them to state regulators, it said.

In filings filed with regulators, CMP said the agreements benefit customers with cost efficiencies and economies of scale that provide CMP’s utilities’ specialized services. The utility’s subsidiaries restore electricity after storms at a lower cost than commercially available.

Harwood said the deals “aren’t actually for the services of the affiliates that are restoring power.” “We think this is a real problem.”

While contracts between utilities are generally “legitimate and unregulated,” “the potential for mischief is quite high,” Avangrid said.

As an example, Harwood said an appropriate function for corporate executives is to explore merger and acquisition opportunities. These costs should be borne by shareholders, he said.

“I want taxpayers to pay no part of this cost,” Harwood said. “There is no value to the Maine taxpayer.”

The apportionment of costs among out-of-state corporate subsidiaries raises a familiar issue regarding ownership of local electric transmission. Avangrid, along with subsidiaries in Connecticut, Maine and New York, is itself a unit of Iberdrola, which has come under fire for its remote control of Maine’s electricity.

“It’s a whole new world,” Harwood said. “We need to tear this apart.”

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