Why CMP is suing the state of Maine over a new revenue blocking law
Central Maine Power has asked a federal court to block a new state law that would strip the company of a $4.6 million federal investment‑profit incentive. The suit, filed on Friday, targets Maine’s LD 2038, a bill that requires the state’s transmission‑line owners to participate in ISO New England and in doing so would eliminate the 0.5 percent “return‑on‑equity” (ROE) adder that currently pays utilities for surrendering control of their lines.
The “adder” and the bill
Under a 2005 federal regulation, a utility that voluntarily joins ISO New England may receive an additional 0.5 percent return on equity. For Central Maine Power (CMP) that works out to roughly $4.6 million this year, while Maine Electric Power Co. (MEPCO) and Versant together are set to earn about $1.35 million. The incentive is paid from customer bills; Maine ratepayers were charged an extra $700,000 in 2024 to cover the adder.
Maine’s legislature passed LD 2038 in the spring on a mostly bipartisan line. The law would compel all state transmission‑line owners—including CMP, MEPCO and Versant—to join ISO New England. Because the utilities are already voluntary members of the regional system, the law’s effect would be to remove the ROE adder and, according to lawmakers, reduce the cost burden on customers. “It is long past time to eliminate this ROE adder, which adds millions of dollars to customer bills,” former Maine Public Utilities Commission Chair Philip Bartlett told a news release in September.
Why the utilities are fighting
CMP and MEPCO joined a lawsuit against the Maine Public Utilities Commission, the Public Advocate and the Department of Energy Resources. In a statement released with the complaint, CMP said the law was an “unlawful state statute in a naked attempt to interfere with FERC’s authority” over transmission rates. The company also argued that the statute violated its contractual right to withdraw from ISO New England and effectively stripped it of ownership of its own transmission assets.
“Congress intended the incentive to compensate utilities for surrendering operational control of their facilities and for maintaining the lines,” the lawsuit notes. CMP maintains that, without the adder, it will struggle to keep its infrastructure up to date, to attract outside investment and to meet growing demand caused by climate‑related power spikes, new data‑center construction and the rapid electrification of vehicles and home appliances.
Versant did not join the lawsuit, and the Public Advocate’s complaint to the Federal Energy Regulatory Commission (FERC) was filed on September 1, asking that utilities be barred from collecting the incentive. The complaint is joined by three other New England states that have enacted similar legislation.
The financial backdrop
CMP’s financial outlook has been under pressure. The company’s request for a $7‑per‑month rate hike was denied by regulators last month. In response, CMP said it would have to defer grid upgrades, pause hiring and consider workforce reductions. S&P Global Ratings downgraded the utility to “negative” this summer, citing a $100 million cash‑flow deficit and a lag in its rate case.
The adder has already contributed to higher bills for Maine customers. A 2024 audit found that the incentive had cost ratepayers an additional $700,000. When combined with similar laws in other New England states, officials estimate the law could save Maine consumers up to $5 million a year.
The broader context
Maine’s legislation mirrors actions in Maryland, Connecticut, California and Ohio. Several of those states have already petitioned FERC to remove the ROE adder, and in some cases federal courts have upheld FERC’s decisions to deny the incentive. The Maine law was designed as the first of two steps, the Public Advocate said, with the goal of reducing the inflated return on equity that is seen as a driver of high electricity rates.
Next steps
A federal judge will hear the case in the coming weeks. Meanwhile, FERC will continue to consider the complaint from the Public Advocate and the PUC. CMP’s state‑level rate case also remains in motion; regulators have rejected a smaller $7‑per‑month increase, but an $18‑per‑month hike that would raise the average household bill by that amount is still under consideration until the spring.
As the legal battle unfolds, Maine’s electricity customers will watch closely, hoping that the outcome will ultimately reduce their bills while ensuring the utility can maintain a reliable, modern grid.
