The state of Vermont’s energy landscape shifted dramatically in 2011, and industry experts say the merger of the state’s largest utilities and the shutdown of Vermont Yankee Nuclear Power Plant will have an impact on electricity costs for a generation.
Entergy Corporation sued the state of Vermont over a Senate vote in 2010 to scuttle a 20-year license renewal for Vermont Yankee, an aging nuclear plant on the banks of the Connecticut River. In March of this year, the Nuclear Regulatory Commission approved the license extension. The legal battle came to a head in September during a trial that hinged on federal preemption — whether the state has the authority to pass legislation that could supercede the Nuclear Regulatory Commission’s decision. U.S. federal court judge John Garvan Murtha is expected to issue a ruling before the end of 2011.
Central Vermont Public Service entertained two competing bids from Canadian companies — Fortis and Gaz Metro — and ultimately shareholders decided to merge with Gaz Metro’s subsidiary Green Mountain Power to form the state’s largest utility, which would provide power to about 70 percent of Vermonters. The deal has yet to be approved by the Public Service Board, and critics of the merger who are concerned about the impact of Gaz Metro’s ownership stake in VELCO, the state’s transmission utility, have demanded that the board hire an independent counsel to present evidence about the merger in light of an appearance of a conflict of interest involving the commissioner of the Department of Public Service. Gaz Metro, doing business as Green Mountain Power, has also embarked on a controversial, 21-turbine wind power project on Lowell Mountain. In addition, the Montreal-based corporation’s subsidiary, Vermont Gas Systems, has proposed an extension of a gas pipeline from Chittenden County to Addison County. The Public Service Board approved a proposal from Vermont Gas that will allow the company to use ratepayer revenues to pay for the capital expenditure.
In this selection of top stories, we’ve brought you the defining moments in an action-packed year on the energy front.
State, Entergy continue arguments over Vermont Yankee in post-trial briefs
Google Earth image of the Vermont Yankee plant in Vernon, Vt.
Entergy and Vermont’s post-trial briefs hit U.S. District Judge J. Garvan Murtha’s desk last week.
The corporation, which wants three state statutes overturned so it can continue operating the Vermont Yankee Nuclear power station, also asked that its Certificate of Public Good case return before the Public Service Board.
In its brief, the state asked the federal court to hold Entergy’s feet to the fire.
Entergy Corp. attorneys filed suit against Vermont in federal court in April. The corporation claimed the state’s regulation of VY strode into the territory of the Nuclear Regulatory Commission (NRC) by attempting to regulate nuclear safety. Entergy purchased the 38-year-old nuclear plant in Vernon in 2002. The plant needs a federal-issued license and a state-issued Certificate of Public Good (CPG) to operate in Vermont. VY’s current operating license expires March 2012. In March, the NRC renewed VY’s operating license so it can run until 2032. Last year, however, under Act 160, the state Senate voted 26-4 to deny VY a CPG hearing, effectively closing the plant’s docket before the PSB.
Entergy claims that the Vermont Legislature regulated the plant on nuclear safety grounds through a careful and planned use of “code words.”
Lawmaker questions impact of CVPS, Fortis deal on VELCO
Power lines cut across a Vermont hillside. VTD/Josh Larkin
Rep. Tony Klein, the chair of the House Natural Resources and Energy Committee, says the planned sale of Central Vermont Public Service to Fortis, Inc., Canada’s largest investor-owned utility, calls into question the governance structure of VELCO, Vermont’s electric transmission utility.
Klein said he wants the Vermont Public Service Board to restructure the VELCO, Vermont’s electric transmission utility. He would like to see each utility have an equal say on the VELCO governing board; he proposes a one vote, one utility governance structure.
“I would like to see the PSB restructure the governance of VELCO away from the bigger you are the more control you have, to having it be more equitable,” Klein said. “Right now as it stands, two companies owned by foreign ownership will be the controlling decisionmakers of VELCO. It was one thing when these companies were owned by Vermonters; it’s another thing when they’re owned by foreign nationals.”
Vermont Transco, LLC, and Vermont Electric Power Company, which are together known as VELCO, owns 660 miles of high voltage transmission lines in Vermont. The state’s 20 utilities, including three investor-owned utilities, two cooperatives and 17 municipal electric departments, hold a stake in VELCO and its governance based on the percentage of ratepayers each utility serves. CVPS, Vermont’s largest electric utility, provides power to 40 percent of the ratepayers in the state; Green Mountain Power distributes electricity to 30 percent of Vermont households; and Vermont Electric Co-op holds 10 percent of the market.
CVPS to merge with Green Mountain Power
GMP CEO Mary Powell, right, and CVPS CEO Larry Reilly. VTD/Anne Galloway
Central Vermont Public Service has accepted Gaz Metro’s purchase offer.
On Monday night CVPS board members voted to recommend the bid from the Montreal-based utility over the offer from Fortis, Inc., a large holding company headquartered in St. John, Nova Scotia. Gaz Metro offered $702 million for CVPS, just $2 million more than Fortis’ bid.
The deal, if it is approved by shareholders and the Vermont Public Service Board, will result in the consolidation of CVPS and Green Mountain Power, which is already owned by Gaz Metro. The merger will create one large electric utility from the state’s two biggest power companies. The new entity, which will undergo a name change, will serve 70 percent of Vermont’s ratepayers, or 250,000 households.
The two Canadian firms were in a bidding war over CVPS. Fortis had offered to pay $700 million for Vermont’s largest utility on Memorial Day weekend. The buyout would have enriched stockholders by about $10 per share.
In June, Gaz Metro upped the ante with a slightly higher purchase price for shareholders and deal-sweeteners for Vermont ratepayers, including a promise to lower power costs by $144 million over 10 years. The offer also included a pledge to give 30 percent of Green Mountain Power’s share of VELCO to the state of Vermont. The VELCO shares are to be put in a public trust and the proceeds will be used to defray utility costs for low-income Vermonters.
Gaz Metro, owner of Green Mountain Power, part of large international energy conglomerates
Green Mountain Power CEO Mary Powell. VTD/Josh Larkin
Green Mountain Power is based in Colchester, and company officials often emphasize the 200-employee utility’s local operations. Green Mountain Power has its own management structure, with its own CEO and senior executives, and for all intents and purposes, it operates independently. The company, however, is part of a complicated family tree of multi-national holding companies that have global reach.
Gaz Métro is the titular owner of Green Mountain Power, and Vermont Gas Systems, Inc., the only natural gas company in the state. The Montreal-based company acquired Green Mountain Power in 2007 and Vermont Gas Systems in 1986. It has a hands-off approach to management of the two Vermont companies, and it has deep ties and positive track record in the state.
Through a web of holding companies, tax-advantaged spin-offs, and general partners, the corporate genealogy of Gaz Métro links Vermont to a global network of energy companies jockeying for markets from New England to the Asian Pacific. At the top sit co-owners Enbridge, Inc., a $30 billion (Canadian) dollar energy transmission corporation, and The Caisse, a $151 billion (Canadian) investment firm that manages Quebec’s public pension funds, according to 2010 annual reports from the companies.
Last month Gaz Métro made a hostile takeover bid for ownership of Central Vermont Public Service, the state’s largest utility.
Before the PSB: State senator leverages fight over independent counsel for Gaz Metro merger
Sen. Vince Illuzzi. VTD/Josh Larkin
Sen. Vincent Illuzzi has struck an uneasy truce with the Shumlin administration over the way it will handle its review of the biggest utility merger in the state’s history.
In exchange for holding his fire in the latest round of legal parries with regulators and the players in the utility industry, Illuzzi has asked that the Department of Public Service demonstrate it will vigorously defend the public interest in a merger case involving Green Mountain Power and Central Vermont Public Service.
The department’s plan for the case will be filed on Dec. 20 with the Vermont Public Service Board (PSB), a quasi-judicial entity, which will ultimately decide whether to approve Montreal-based Gaz Metro’s proposed purchase of Central Vermont Public Service and merger of the company with Green Mountain Power.
If the $702 million deal goes through, Gaz Metro will own about 70 percent of the state’s retail electric market and will hold the majority share of Vermont Electric Power Company (VELCO), the state’s transmission utility.
Green Mountain Power offers buy-out, warns of lawsuit to stop obstruction at Lowell turbine site
Don and Shirley Nelson. Photo by Chris Braithwaite, the Barton Chronicle.
With a one-two punch, Green Mountain Power launched a campaign Tuesday to buy out the most vocal opponents of its 63-megawatt wind turbine project on Lowell Mountain, and warned legal action will follow if work on the project continues to be obstructed.
Don and Shirley Nelson, owners of a 580-acre farm abutting the wind project, have allowed protesters to camp on the site, complicating construction.
Tuesday morning, CEO Mary Powell offered the Nelsons the list price for their farm — $1.25 million. Later that day, an attorney for Green Mountain Power sent a letter to the Nelsons threatening them with a lawsuit if they don’t ask activists camping within 750 feet of a disputed property line to leave.
Damages from the lawsuit could cost the Nelsons more than $1 million, according to Dotty Schnure, manager of corporate communications for Green Mountain Power. About 100 workers are on the site, and every day they can’t advance the project, the company loses money. The legal action is a way of “holding them responsible for the cost.”
Public Service Board uses rate-setting power to promote gas pipeline expansion into Addison County
Vermont Gas headquarters in South Burlington. VTD/Josh Larkin
The Vermont Public Service Board in September approved a request from Vermont Gas Systems to withhold $4.4 million annually from ratepayers in Franklin and Chittenden Counties. The money would be used to subsidize a pipeline that would be extended from Burlington to Middlebury and possibly as far south as Rutland County.
The money, to be placed in an interest-bearing escrow account over 20 years, is to reduce rate increases if and when the pipeline comes on line. If the pipeline is not constructed, Vermont Gas may use the money to cover their costs in planning the pipeline, but they must refund the rest to today’s ratepayers—if they can find them.
Board member John Burke argued against the two board members in the majority, saying that it’s “unfair and improper” to ask existing ratepayers to pay for the expansion and that Gaz Metro, which owns Vermont Gas, has hundreds of millions of dollars that are available for investment.
Vermont Gas is a subsidiary of Montreal-based Gaz Metro, which also owns Green Mountain Power and is in the middle of a merger deal with Central Vermont Public Service. If the utility merger goes through, Gaz Metro will be the biggest player in Vermont’s electricity market, supplying power to 72 percent of Vermonters.
Efficiency Vermont surcharge, a tax that benefits the many or the few?
Many of the features and rides in the new Jay Peak water park are heated by capturing waste heat from an ice arena. Photo courtesy of Jay Peak Resort.
Since 2000, Efficiency Vermont, the statewide efficiency utility has worked to help Vermonters lower their electric bills through technical assistance and rebates.
Every year, the entity, which is funded through an energy efficiency charge that is added onto customers’ electric bills, produces a report highlighting the savings it produces for the state.
While many cheer Efficiency Vermont’s efforts to save people money, some businesses that bear a heavy burden of the cost are not convinced that a mandatory charge tacked onto everyone’s bill is the best way to go about funding efficiency.
VTDigger.org set out to determine just how much larger businesses pay for the efficiency charge and if it is worth it for the state’s big energy users.
The Vermont Energy Investment Corp., a nonprofit, operates Efficiency Vermont under an appointment issued by the Vermont Public Service Board. Formerly, the organization operated on a contract basis. In 2010, the board granted the organization an order of appointment to serve as a regulated efficiency utility — something business groups opposed.
So whether they like it or not, everyone pays the charge, and Efficiency Vermont will be offering its services through 2021 with its current appointment.
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The VY lawsuit is indeed about preemption, but it is NOT about “whether the state has the authority to pass legislation that could supercede the Nuclear Regulatory Commission’s decision.” It can’t. What the State of Vermont, or any state, CAN do, however, is pass legislation OUTSIDE of the fields the NRC regulates, which are confined to the nuclear aspects of nuclear power and radiological health and safety. Thus, for example, land use, economic considerations, reliability and pricing, non-radiological health, employment, impacts on a state’s economy are all outside of the purview of the NRC and CAN be regulated by States. (In some instances, including this one, some aspects of pricing are regulated by the Federal Energy Regulatory Commission, and thus off limits to Stats as well).
As the Atomic Energy Act, NRC manuals, and the leading Court precedent all clearly state, nuclear plants are subject to DUAL regulation. The preemption issue arises only if the State has illegally entered the “field” of regulation which Congress intended to be solely occupied by the NRC. We’ll see what the judge decides.
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It is also not at all clear that “… the shutdown of Vermont Yankee Nuclear Power Plant will have an impact on electricity costs for a generation.” Vermont Yankee is a wholesale supplier of electricity into the ISO-New England market. As such, it constitutes about 2% of the total power, hardly enough to have much of an impact on prices. As it stands now, Vermont’s utilities appear to have replaced the electricity they were previously buying from VY at lower prices than those offered by VY going forward.