Spanish energy company Iberdrola’s office in Madrid in 2012. The company is seeking full ownership of Avangrid, Central Maine Power’s corporate parent. Andres Kudacki/Associated Press

Maine’s public advocate and an influential environmental group are urging regulators to review a $2.5 billion deal that would put Central Maine Power’s parent company under the full control of Spanish energy giant Iberdrola.

The company based in Bilbao, Spain, wants to buy the remaining 18.4% of shares of Avangrid Inc. that it doesn’t own, making it privately held.

CMP has asked the Maine Public Utilities Commission to waive a state law requiring a review of the transaction. It said the deal would have no impact on the electricity supplier’s roughly 636,000 Maine customers.

But the Office of the Public Advocate, which represents utility customers, and the Natural Resources Council of Maine disagree and on Aug. 12 asked the commission to not grant an exemption. They say the takeover would harm ratepayers by limiting the information available to them about Avangrid’s finances, investments and oversight.

It also would make Maine “a bit of an outlier” with both of its dominant electric utilities owned by foreign entities, Andrew Price, president and CEO of a Portland energy consulting firm, said in an email in response to a question about the transaction. Versant Power Co., which serves 165,000 households and businesses in northern and eastern Maine, is owned by Enmax Corp. in Calgary, Alberta.

CMP said the acquisition of less than 20% of its parent company will not result in a change in control “and instead will only modestly increase Iberdrola’s ownership share of Avangrid.” Maine regulators already authorized Iberdrola’s full ownership of CMP nearly two decades ago when the energy company acquired Avangrid’s predecessor, Energy East Corp., in 2008, CMP said.

The utility’s argument that the deal will not have an impact on ratepayers is a “factual question that should be resolved after carefully weighing the evidence to be gathered in the case … (and) should not be assumed at the outset by way of exemption,” the public advocate told the commission.

The PUC has not said when it will decide the case.

Iberdrola, which has a market value of about $85.5 billion, has ownership stakes in Brazil, Mexico and Europe. As of Dec. 31, 2023, Iberdrola listed as significant shareholders the Qatar Investment Authority, the Mideast nation’s state-owned investment fund; New York investment fund Black Rock Inc.; and Norges Bank, Norway’s central bank.

Iberdrola is traded on Spanish stock exchanges, and Avangrid, which is based in Connecticut, also is publicly traded. That will end if the Spanish parent company, as it promises, takes Avangrid off the New York Stock Exchange.

TRANSPARENCY CONCERNS

If the deal goes through, Avangrid will no longer be required to submit public reports on its financial performance to the U.S. Securities and Exchange Commission.

The move “will reduce transparency, obfuscate information that is currently available to the public and regulators, and make it harder to know how the interests of Maine ratepayers may or may not get taken into account by a vast $80 billion foreign corporate parent,” the Natural Resources Council of Maine told state regulators.

Avangrid would not file an annual report detailing the company’s financial condition, competitive pressures and regulatory relationships; information about lawsuits and acquisitions; reporting on stock purchases and sales by company executives, board members and major shareholders; and details about risks and benefits of mergers and other transactions, said Georgetown University law professor Scott Hempling.

“Without the information provided by these forms, the (PUC) will have no ready way to know how Avangrid’s actions are changing the risks and costs that affect the Maine utilities,” Hempling wrote in a filing.

Hempling was hired by the Our Power advocacy group, a frequent critic of CMP and Versant that promoted last year’s unsuccessful ballot measure for a publicly owned utility.

In its filing, CMP says Iberdrola, Avangrid and CMP itself will remain subject to the public utilities commission’s “prior conditions and requirements.”

“Similarly, all the existing external and internal service quality standards applicable to CMP … will remain in place,” it said.

PRIVATE UTILITIES

The U.S. Energy Information Administration and Federal Energy Regulatory Commission do not collect data on holding companies and the number of privately held utilities.

Mike Doyle, senior equity analyst for utilities at Edward Jones, said Avangrid is “on the bigger side of utilities” that propose to become privately held. Iberdrola owns the “vast majority” already and would not need to spend a lot of capital on the transaction, he said.

Natural gas companies have recently gone private as a way to raise capital, he said. The tactic is preferable to selling stock, which alarms investors who worry their shares will be devalued as a result of stock sales.

A spokeswoman for Edison Electric Institute, a utility industry trade group, said several energy companies such as Berkshire Hathaway Energy, Cleco Corporate Holdings in Louisiana, El Paso Electric and Puget Sound Energy in Washington state are owned by investment firms or holding companies and are not publicly traded.

Price, the CEO of Portland consulting firm Competitive Energy Services, believes most U.S. electric utilities, whether private or public, are domestically owned.

The Iberdrola-Avangrid arrangement is comparable to how one of Massachusetts’ largest utilities, National Grid, is structured Price said. The company is headquartered in London and operates gas and electric utilities in Massachusetts, New York and Rhode Island. Unlike Iberdrola, though, it trades on the New York Stock Exchange.

WEB OF FOREIGN OWNERSHIP

The deal highlights the complicated web of foreign ownership surrounding CMP, an issue that figured prominently in last year’s attempt to establish a Maine-based, publicly owned power company.

Iberdrola has said its objective is to increase its exposure to Avangrid’s network of electricity and gas utilities in the U.S. and expand into markets with high credit ratings and regulated businesses. Avangrid owns eight electric and natural gas utilities in New England and New York with a rate base – the value of property on which a public utility is permitted to earn a rate of return – of $11.7 billion and 3.3 million customers. In addition to CMP, it also owns Maine Natural Gas, which has about 6,000 customers in the state.

The Office of Public Advocate told regulators that it’s a mistake to focus solely on the percentage change in Iberdrola’s ownership of Avangrid under the proposed transaction.

“There is a difference in kind, not just degree, in 100% ownership of a privately held company vs. majority, or even supermajority, ownership of a publicly traded corporation with minority shareholders,” the public advocate said. “There is inherently a greater degree of control held by the single owner of a private corporation because there are no constraints over that control.”

State regulation of public utilities was developed when electric and gas service was generally provided in one or a few states and was directly owned by their shareholders, Our Power said. “It was possible for state commissions to achieve an understanding of the utility’s operations and finances, and the opportunity for inter-corporate deals and shenanigans was absent,” it said.