Senators Scrutinize Utility Merger And Refund
04/02/12 5:50PM By Bob Kinzel
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(Host) More attention is being focused by legislators on the proposed Central Vermont Public Service-Green Mountain Power merger.
The question is whether CVPS should rebate $21 million directly to ratepayers.
And, as VPR's Bob Kinzel reports, it's become an issue involving the complex world of utility rate making and the relationship between the Legislature and the Public Service Board.
(Kinzel) There's no dispute that CVPS ratepayers are owed $21 million because they helped the company avoid bankruptcy in 2001. The question is - what's the best way to return this money.
While a coalition of several dozen House members are fighting to have the funds rebated directly to ratepayers, the company wants to return the money by putting it into weatherization and efficiency programs that would benefit ratepayers.
Now a group of senators is getting involved because they learned that under the merger plan, the utility will be allowed to recoup the 21 million through its rates in future years. Mary Powell is the president of Green Mountain Power:
(Powell) "I'm not arguing with how the $21 million is counted in terms of our ability to earn a return on it. We will, yes, when we take the $21 million and we invest it, there's a return that is paid."
(Kinzel) Essex-Orleans Senator Vincent Illuzzi chairs the Senate Economic Development Committee. He says, under the utilities' plan, ratepayers would end up paying for the investments in the efficiency programs and the merged utility would profit from it. He says he was shocked when he heard about this aspect of the merger.
(Illuzzi) "The utility then gets to reclaim that $21 million in the form of increased electric rates. And that, in my judgment, is not how you repay a loan. You don't simply advance what you owe back and then take it back again."
(Kinzel) CVPS argues that it's inappropriate for lawmakers to get involved in an active case at the Public Service Board. Illuzzi strongly disagrees.
(Illuzzi) "I think it's appropriate to review this on behalf of - not only ratepayers but - all Vermonters. And I think it's appropriate for us to express the intent of the General Assembly that this is not in accordance with what we all understood to be the agreement back when CVPS was bailed out, essentially kept out of bankruptcy. And that is, you repay the $21 million."
(Kinzel) GMP spokesperson Dottie Schnure says the board approved a very similar plan when GMP was sold in 2007. Schnure says that while CVPS will get its $21 million back, she says the net benefit to consumers will be much larger because they would save money by using less energy. And she says this provision is a key part of the overall $700 million merger.
(Schnure) "We have come in and done a very Vermont-style merger where we are saying no layoffs, other than some executive teams. So we're doing no layoffs and we're sharing savings with customers. We are giving customers great value from the entire proposal. So you can't just take one part of it and say, ‘Do it differently,' and have it still work."
(Kinzel) House members who support the direct rebate approach want to add their plan to any legislation that deals with utilities or the board. But they're concerned that House leaders will keep these bills in committee in order to prevent the amendment from coming to a vote on the House floor.
For VPR News, I'm Bob Kinzel in Montpelier.