In exchange for ‘major concessions,’ utilities win big endorsement for proposed merger

Huge news this morning fromVermont’s top utility regulator, who says her department will formally endorse a proposed merger between the state’s two largest electric utilities.

In a Memorandum of Understanding signed by the Department of Public Service, Green Mountain Power and Central Vermont Public Service Corp., the parties have come to agreement on some of the most controversial provisions in the merger deal, including windfall protection and ownership of VELCO.

Commissioner of Public Service Elizabeth Miller said the department signed on to the deal only after winning “major concessions” from the utilities. The proposed agreement now goes to the Public Service Board, the three-person independent panel ultimately responsible for approving the merger.  

Miller said in a statement that the concessions “significantly increase (the merger’s) value to customers and to Vermontas a whole.”

Negotiations over the merger have centered largely on three issues: ownership of VELCO, the state’s electric transmission company; a windfall-sharing provision to compensate CVPS ratepayers for bailing out the utility in 2001; and how to split projected savings associated with the merger between shareholders and ratepayers.

Miller said the deal will prevent Green Mountain Power from wielding majority control over VELCO by requiring the consolidated utility to give up seats on the transmission company’s governing board, and by transferring about one-third of its VELCO ownership to a nonprofit public benefit corporation.

Miller said the utilities will satisfy the windfall-sharing provisions by investing $21 million in weatherization and efficiency programs, including $12 million in the first year and another $6 million by the end of 2013.

Pending legislation inMontpelierwould require the utility to satisfy the windfall provision by sending checks totaling $21 million directly to CVPS’ 137,000 customers.

The deal also hastens the rate at which projected savings are used to reduce rates for customers. The deal is expected to shave $144 million from operating costs over the next decade, though, under the utilities’ initial proposal, ratepayers wouldn’t have seen any substantial benefit until years six-through-10 of the merger.

3 Responses to In exchange for ‘major concessions,’ utilities win big endorsement for proposed merger

  1. John McClaughry has been smelling the vapors for some time,but we Vermonters still get a chuckle reading him from time to time.
    The Green Mountain Care (GMC) that he is talking about is Vermont self insuring about 1/3 of it’s those not on medicare, medicaid, military or those in ERISA(corporate self insurance programs)  etc.  We hope to see the Insurance company burden costs on policies drop from the 30 to 45% range to around 10%..just like the big business (GE, IBM etc) enjoy.  A tidy savings for Vermonters.  The insurance companies don’t like this so we are getting to see some pretty strange TV ads.  If we can get this done GMC will be a “single payer” for 1/3 of Vermonters.   The saving diverted from insurance company coffers will fund the costs of covering all the currently uninsured Vermonters, allow the state to increase the medicaid rates to Doctors and Hospital to levels that could cover costs.  The goal also is to increase the income of General Practitioners so more Doctors will take that roll.  We feel that having a good personal Doctor is very important for everyone to have so has a personal advisor for health.  The will be a bigger emphasis of preventive care and general wellness to improve quality of life and costs.
    We think we can get this done and save money.  The proof of meeting GMC goals in the next few years will be if some of the big self insured companies move their employees to GMC.   I’m betting they will.

  2. How can Elizabeth Miller be taken seriously as an advocate for the interests of Vermont’s ratepayers when she is literally in bed with the industry:  she is married to a member of the firm which represents GMP and which persumably stands to make a fortune in legal fees  from the merger.   This is a howling conflict of interest and just as corrupt as in other states, less civilized than Vermont,  where actual envelopes of cash are handed out in capitol parking lots.    
    As has been pointed out elsewhere, allowing the utility to off-load the $21 million liability from its balance sheet, instantly improves its net worth.  That is probably why industry flacks have warned that immediate repayment of this obligation would kill the merger.  
    It should be noted also that the $144M number used for “cost savings” is a bit of a scam in that it included the $21M bailout repayment which was by no stretch of the imagination cost savings.
    I’d love to know how long the $144M benefit will take to reach the ratepayers under the MOU that Miller negotiated.  It had been 6 years before the first very hypothetical dollar was to reach the ratepayer.  By that time, who would even remember or care?  
    I think this merger stinks.  The new monopolistic Frankenstein is inevitably going to swallow up the rest of the state’s utilities.  Worse yet,  Gaz Metro will attain unchallengable political clout on any issue it finds important to its interests and that could cover a lot of ground.  

  3. Pingback: In exchange for ‘major concessions,’ utilities win big endorsement for proposed merger | Vt Today