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.