A CMP crew works to restore power on Gray Road in Cumberland in December. The utility says regulators already authorized Iberdrola’s indirect ownership of CMP when it was acquired in 2008 by a predecessor to Avangrid, its current corporate parent. Bonnie Washuk/Staff Writer

Central Maine Power moved a step closer Monday to avoiding state regulatory review of a $2.5 billion transaction that would make its parent company a privately held business, raising concerns that transparency could be lost in the deal.

A hearing examiner’s report to the PUC commissioners on Monday supported CMP’s request to exempt it from state review. CMP argued that Maine regulators had already authorized Spanish energy giant Iberdrola’s indirect ownership of CMP and Maine Natural Gas in 2008, when Iberdrola acquired Energy East Corp., a predecessor of Avangrid Inc., CMP’s parent company.

“An exemption is warranted based on the commission’s prior approval of the corporate structure that petitioners now seek to resurrect along with the plethora of conditions on that approval that remain in effect and continue to serve ratepayers’ interests,” the hearing examiner wrote.

The Maine Office Public Advocate, Natural Resources Council of Maine and Our Power, an advocacy group and frequent critic of CMP and investor-owned utilities generally, urged regulators to review the deal.

Seth Berry, co-founder of Our Power and former co-chair of the Legislature’s Committee on Energy, Utilities and Technology, said the recommendation suggests the PUC “should accept only the facts claimed by CMP, MNG and their distant owners, and should simply refuse to take evidence of any kind from others.”

The Office of Public Advocate and NRCM did not respond Monday to requests for comment about the PUC staff report.

The three parties have until Sept. 3 to file objections and the PUC commissioners will make the final decision at an unspecified date.

Iberdrola, which owns 81.6% of Connecticut-based Avangrid, says it will pay $2.5 billion to shareholders for the remaining 18.4%. As part of the deal, Avangrid, which is traded on the New York Stock Exchange, will become a privately held company and no longer be required to file financial and other operational details with the U.S. Securities and Exchange Commission.

The deal brought into public view issues of utility control, changes in ownership and shifts in how corporations seek financing to upgrade electricity grids, transmission systems and natural gas networks.

The public advocate, NRCM and Our Power highlighted a provision of the deal that would make Avangrid a privately held company and no longer required to file financial and operational details with the SEC.

“The reorganization 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 NRCM said in its filing with Maine regulators.

“Iberdrola does not seek to increase its ownership interest in Avangrid merely as a passive investment but to consolidate its control over the company so that it has unfettered ability to pursue investment opportunities,” the Office of the Public Advocate told the PUC.

CMP told the PUC that ending Avangrid’s reporting requirements to the SEC will not restrict access by regulators to its financial records or those of Iberdrola and Avangrid. As a result, the PUC does not have grounds to deny the utility’s request to waive review of the deal, CMP said.

CMP: DEAL WON’T AFFECT CONSUMERS

The Augusta-based utility says the deal would have no impact on its roughly 636,000 Maine customers and will not result in a change in control, but will instead modestly increase Iberdrola’s ownership share of Avangrid.

The PUC staff report said the matter is a “rare case” in which the PUC “has previously approved the very same corporate organizational structure” proposed by CMP and Avangrid. That case was “thoroughly litigated” and included 59 conditions requiring extensive reporting requirements and standards intended to protect Maine utilities from possible financial harm, the hearing examiner said.

Iberdrola said in March when it announced its intention to buy the remainder of Avangrid that it wants to increase its exposure through Avangrid’s network of electricity and gas utilities in the U.S. Avangrid owns eight electric and natural gas utilities in New England and New York with a rate base of $11.7 billion and 3.3 million customers.

Ignacio Estella, a senior vice president at CMP, said at a PUC meeting in July that Iberdrola’s acquisition of the remaining shares will “support tolerance for volatility in the company’s businesses.” He also pointed regulators to Avangrid’s proxy statement that said becoming privately held will provide “greater operational flexibility” and relieve it of public reporting requirements.

Kimberly Harriman, CMP’s senior vice president for state government affairs and corporate communications, told regulators last month that the utility must raise capital to pay for increasingly frequent and destructive storms and “also think smarter on the investments that we need to make going forward” to minimize the impact of climate change.

“Having the ability to access Iberdrola and the capital markets with that strength behind it, it’s not just about today,” she said. “It’s going to be about the next five and 10 years that we’re going to have to make investments in the system.”