VELCO Debate Moves To Ownership Study
02/10/12 5:50PM By John Dillon
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(Host) An effort to gain public ownership of the statewide transmission grid has stalled in the face of strong opposition from the governor and utility lobbyists.
As VPR's John Dillon reports, lawmakers are now debating whether to study the idea:
(Dillon) For Windham Democratic Senator Peter Galbraith - VELCO, the company that manages the Vermont electric grid - is the real prize in a planned merger of the state's two largest utilities.
(Galbraith) "There is no alternative to that transmission system. It is like owning a toll road that everybody has to use but there is no alternative path."
(Dillon) Galbraith gave an impassioned speech on the Senate floor this week explaining why he thinks the state should move to acquire an ownership stake in VELCO. He said the half-billion dollars needed to acquire a majority interest is a fail-safe investment. Galbraith said Vermont should seize the opportunity before it loses control of the grid to a foreign-owned corporation.
(Galbraith) "If we do not consider this and indeed if we do not acquire the asset, who will own it? GazMetro, a Canadian company."
(Dillon) GazMetro is the Montreal-based company that owns Green Mountain Power and wants to buy Central Vermont Public Service Corporation. If the deal goes through, the merged company would own 70 percent of VELCO.
Governor Peter Shumlin says state ownership of VELCO is neither wise nor risk-free.
The governor joined utility lobbyists in arguing that the Legislature should leave the decision about VELCO in the hands of the Public Service Board, which is reviewing the utility merger.
(Shumlin) I do not want Vermont taxpayers to be on the hook for liabilities, for economic challenges when a transmission company gets into trouble. They happen to be in good financial shape today. We don't know where they'll be in 10 years. I do not want Vermont taxpayers on the hook for hundreds of millions of dollars of liabilities should things go wrong at our transmission company.
(Dillon) Shumlin says a better solution is to appoint new public members to the VELCO board as a way to protect the public interest.
That proposal from his administration is now before the Public Service Board as it considers the utility merger.
The timing of the PSB review was clearly on the minds of legislators who support public ownership of VELCO. Essex-Orleans Republican Vince Illuzzi has sponsored a bill that calls for a study to look at the pros and cons of the state acquiring a 50 or 51 percent stake in the electricity grid. He hopes it passes the Senate within a few weeks. But Illuzzi says the study bill faces opposition.
(Illuzzi) GazMetro, CVPS, Green Mountain Power and VELCO have 11 or 12 lobbyists directly in the building. And they will do their best to delay consideration of the bill, and in this case delay is defeat.
(Dillon) Illuzzi says Vermont faces critical choices in power planning, including the location of new high-voltage transmission lines. Without a public stake in VELCO, Illuzzi has this warning:
(illuzzi) We will be bystanders in those decisions. How big the lines should be, where they should go, what the tariffs should be, what the environmental impacts will be, will all be footnotes in the discussion about how the shareholders of GazMetro will be able to get their electricity from Quebec and in Canada to southern New England.
(Dillon) But business lobbyists said state ownership of VELCO is a bad solution to a non-existent problem. They said VELCO profits already flow back to customers in the form of lower rates. William Driscoll represents Associated Industries of Vermont. He worries about VELCO's future being caught up in Statehouse political debates.
(Driscoll) And the potential downside of politicizing either the operations or project development would seem to outweigh any proposed benefit of public ownership.
(Dillon) The Senate Finance Committee is expected to take up the VELCO study bill next week.
For VPR News, I'm John Dillon in Montpelier.