Opponents of merger windfall earn suprise victory in House

Opponents of a controversial windfall provision in the proposed merger between Central Vermont Public Service and Green Mountain Power will have their day in court, as it were.

In a surprise move this afternoon, House leaders allowed a regulatory housekeeping bill to move from the House Committee on Appropriations to the House Committee on Economic Development.

This kind of arcane procedural move wouldn’t generally warrant much notice, but the bill, known as H.718, is one of only two pieces of legislation to which opponents of the $21 million windfall proposal can attach an amendment that aims to nix the utilities’ plan.

Rep. Bill Botzow, chairman of the committee to which bill has been referred, said he plans to convene hearings on the issue early next week. The issue of how $21 million is returned to CVPS ratepayers, he said a few moments ago, is one that deserves an open, robust debate.

“Out of respect for the body, for members and for the people of the state ofVermont, I think it’s appropriate to consider this important issue,” Botzow said.

Rep. Patti Komline, one of the lead proponents of the amendment, said she’s grateful to House Speaker Shap Smith for releasing the bill. Leadership had, until this afternoon, been sitting on the only two bills to which her amendment could be attached.

“I’m cautiously optimistic,” Komline said.

The hearings, she said, will offer “an opportunity to explain to people a proposal that I think a lot of people still don’t understand.”

The back story by now is familiar to most everyone: pushed to the brink of insolvency by an ill-fated power deal with HydroQuebec, CVPS in 2001 asked the Public Service Board to stave off bankruptcy by forcing customers to pay above-market costs for electricity.

The three-person board granted the request, under one condition: if CVPS ever became financially healthy enough to attract a takeover bid, the utility would have to somehow compensate ratepayers for keeping the company afloat.

The board left open the question of precisely how that compensation should be administered, a vagueness that has sparked an intense debate 11 years later.

Controversy in Montpelier initially sprang from a disagreement over how the $21 million windfall would be returned to ratepayers. Utilities proposed allocating it to a seed fund for efficiency programs; lawmakers, emboldened in part by a well-funded campaign by AARP of Vermont, wanted $76 checks in the pockets of CVPS ratepayers. 

The drama intensified on March 27, when the Department of Public Service unveiled a Memorandum of Understanding between the state and GMP and CVPS.

Only then did lawmakers find out that not only would the $21 million be used for weatherization programs, but that the ratepayers themselves would be billed back, in the form of higher rates, for any money deposited by the utilities into the efficiency fund.

Shock and outrage ensued.

Komline says the “claw back” by utilities effectively requires ratepayers to subsidize their own payback.

The amendment would force the Public Service Board, as a condition of any merger approval, to force utilities to send checks back to ratepayers, and prevent them from recapturing the $21 million in rate base.

Komline has 72 sponsors on the amendment, and says she has at least another 10 reps committed to voting ‘yes.’

Smith, however, is stridently opposed to legislative intervention in an open Public Service Board docket, meaning it’s unlikely he’d allow the hearings on the amendment if he was at all worried that it might pass on the House floor.

Whatever happens, the strategic calculus has changed on both sides of the debate. If nothing else, the move ensures that merger issues will hold center stage in Montpelier for at least another week.

One Response to Opponents of merger windfall earn suprise victory in House

  1. In laying out the background it’s fine to call the CV investment in Hydro Canada “ill-fated” but more to the point, it was deemed by the PSB to be downright “imprudent” and therefore not due from the ratepayers  but to be borne by the stockholders.  
     
    If we’re going to continue with our the weird system of regulated monopoly utilities, then there have to be real repercussions for screw ups, sanctions that have to be taken seriously.  What we’re seeing is a utility giant using its political clout to worm out of a sanction and bill the ratepayers instead.  This is an instructive introduction to how this monopolistic utility will continue to function–using its full spectrum dominance over the political classes to maintain and enhance its economic power.