GMP Study Says Utility Prices Will Drop

02/15/02 12:00AM By John Dillon



(Host) Wholesale power prices over the next decade are expected to drop in New England. That's according to a new economic study commissioned by the Green Mountain Power utility.

GMP says the new price forecast bolsters its case for buying power from the Vermont Yankee nuclear plant after the plant is sold. But critics of the deal say electricity from other sources should be much cheaper.

VPR's John Dillon reports.


(Dillon) Energy price forecasting can be an imprecise art. Power prices are affected by the number of plants online, world oil prices and even a summer heat wave that increases demand.

Green Mountain Power recently hired a Boston consulting firm to predict market prices through 2012. The study shows prices will drop as new natural gas plants come online.

GMP got the report just before state regulators began their review of the proposed sale of the Vermont Yankee nuclear plant to the Entergy Corporation. GMP and other utilities want to sell the plant for $180 million. The deal requires them to buy back the power for ten years.

Critics of the deal, like Mark Sinclair of the Conservation Law Foundation, say this new study offers a persuasive argument that the sale is bad for ratepayers:

(Sinclair) "The sale of Vermont Yankee to the Entergy company involves a ten-year power buy back deal. And under this new forecast of prices, it shows that Vermonters will be paying hundreds of millions of dollars in excess prices over what power is available for in the regional market."

(Dillon) But a Green Mountain Power spokeswoman strongly disputes Sinclair's conclusion. Dorothy Schnure says the Yankee contract has a provision that protects consumers from up and down swings in the power market:

(Schnure) "If it is true that energy price costs will be lower in the future than we had thought, that makes the case for the sale of Vermont Yankee even substantially better than we had thought. Remember, under the purchase sale agreement we would purchase power from the plant and there is a low market adjuster, where if the price is low, the price that we purchase power from the plant is automatically adjusted downward."

(Dillon) But Sinclair says that adjustment clause doesn't kick in for three years. And Sinclair says GMP's new study predicts that market prices will drop during that time. And after the three years are up, he says Vermonters would still pay more than they should.

(Sinclair) "You have to look at that closely. It still adds 15% on whatever the New England market price is. So it guarantees that in the last seven years of this power contract, Vermonters will always have to buy power for 15% more than you could buy it on the market."

(Dillon) But GMP believes the contract sufficiently protects ratepayers if prices drop.

Hearings resumed this week on the Yankee sale. Sinclair says the Vermont utilities have just agreed to analyze various options in light of the new price forecast. The options could include shutting down the plant, or selling it and buying power elsewhere.

For Vermont Public Radio, I'm John Dillon.

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