MONTPELIER, VT - Some Vermont lawmakers are outraged at a proposed utility merger that now has the backing of the Shumlin administration.
Gov. Peter Shumlin recently gave his support to an amended agreement that would merge Vermont's second largest electric utility, Green Mountain Power (GMP), with Central Vermont Public Service (CVPS). GMP is owned by Canada-based Gaz Metro.
Sen. Vince Illuzzi, who has opposed aspects of the merger since it was originally proposed, does not agree with the change in terms that the Department of Public Service (DPS) negotiated with GMP. The issue is whether CVPS ratepayers will receive refunds for monies used to keep the utility out of bankruptcy, or if the money will be used for energy efficiency upgrades.
Unlike Vermont Electric Coop, which is owned by the ratepayers and services much of northeastern Vermont, CVPS is owned by shareholders who make a profit that is paid for through dividends as negotiated with the Public Service Board. In 2001, following years of bad energy investments, CVPS was facing bankruptcy and could not find a financial institution to loan the utility money.
CVPS was able to negotiate an agreement with the PSB to raise rates, with the stipulation that the monies be repaid to the ratepayers with interest. The initial $16 million the shareholders “borrowed” is now valued at $21 million.
Repayment was not an issue until Gaz Metro, through its subsidiary GMP, offered a merger with CVPS. The advantage of the merger, as touted by Gaz Metro, is the increased savings in electric rates and lower energy use through energy efficiency programs that would provide a financial benefit to the ratepayers as well as the shareholders.
Last week, Gov. Shumlin agreed with the principal parties to use the $21 million on energy efficiency programs, which the administration argues will provide even greater benefits to the ratepayers as this will cut the cost of consumption leading to savings on monthly bills.
As the Chairman of the Senate Economic Development Committee, Illuzzi strongly disagrees with the change in plans. “Under the utilities plan, ratepayers will end up paying for the efficiency plans and the merged utility will profit from it.” Illuzzi said he was shocked when he heard about this aspect of the plan.
The Shumlin administration argues that the financial benefits of the merger - an expected savings of $114 million over the first ten years - more than offsets the $21 million refund due the ratepayers. The State of Vermont is expected to receive $950,000 less in federal funding for efficiency programs this next fiscal year. The administration would like to use the funds over the next three years to lower electricity usage.
Illuzzi has been a strong proponent of spending money on energy efficiency programs, but he disagrees with the Shumlin administration's support for the merger proposal.
“(Under the proposal) the utility will then get to reclaim $21 million in the form of increased electric rates. And that, in my judgment, is not how you repay a loan,” Illuzzi stated. “You don't simply advance what you owe back and then take it back again.”
GMP spokesperson Dottie Schnure said CVPS would get it's $21 million back, and the net benefit to the ratepayers will be much larger because they will save money by using less energy. And she said this provision is a key part of the $700 million merger.
Senator Illuzzi along with several state representatives are resorting to add riders to energy related bills in the house and senate to express opposition to the recently agreed upon merger.
The Department of Public Service will now hold hearings to determine if it will issue a Certificate of Public Good approving the merger.
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