Utility Merger May Lead To Slightly Higher Rates For WEC
08/20/12 5:50PM By John Dillon  Download MP3
The merger between the state's two largest power companies may cause rates to rise slightly at one of Vermont's smallest utilities.
The cause is a higher transmission charge levied by the new company.
The new charges are one of the unintended consequences stemming from the sale of Central Vermont Public Service Corporation and its merger into Canadian-owned Green Mountain Power.
The newly merged company wants to impose a new, single transmission rate for the electricity it carries on its lines for other companies. For the Washington Electric Co-op, the change could mean a slight increase in its own retail rates. Avram Patt is the co-op's general manager.
"All other things staying the same, what they're asking for would be an increase of something like 1.25 percent," he says.
Patt explains that GMP's transmission charges are going up for two reasons. The first is to update the charge to reflect the cost of the service. The second stems from a blending of the two companies transmission rates to reflect to the single, system-wide charge.
Patt says it's this second part of the increase that the co-op really objects to.
"We will pay legitimate increases," he says. "We just don't believe that we should also be paying for increases that are caused simply by the fact that they decided to merge."
Green Mountain Power recently announced it would cut rates for its own customers by point .4 percent. Patt says the merger will have the opposite effect on the 10,500 member co-op. He says if you isolate the merger portion alone of the GMP transmission charge, it translates into a .5 percent increase for Washington Electric.
GMP says that the higher charges for the co-op will be phased in over five years. Dorothy Schnure is the utility's spokeswoman. She says the company hasn't filed for new transmission rates since 1996. She says the rates have been under-market for years.
"So the costs have gone up a lot over the last 16 years. So it's really time for us to make a filing to bring the rates to actually reflect the actual costs," she says.Schnure says federal regulators also want the company to file one transmission rate for the entire service territory.
"That does have an upward pressure on rates. So that is part of the reason rates are going up, but the larger reason they're going up is that we haven't changed them in 16 years," she says.
Washington Electric Co-op has moved to intervene in the GMP rate review now before the Federal Energy Regulatory Commission.