A proposal by the state’s two largest utilities to create a $21 million efficiency program to pay ratepayers back for a bailout 11 years ago does not pass muster, the AARP says.
In 1991, CVPS locked into a deal with Hydro-Quebec that went south, putting the company’s financial health in doubt. The utility asked the Public Service Board to approve higher electricity rates that required ratepayers to cover the cost of the utility’s imprudent financial decision. The board approved the rate increase on the condition that if there was a disposal or acquisition of CVPS assets or merger at above book value, that CVPS stockholders and ratepayers would share equally in those profits up to $16 million for ratepayers, adjusted for inflation.
Now, CVPS and Green Mountain Power are petitioning the Public Service Board to approve their merger by this summer.
AARP intervened in the proceeding and asked the board to determine that the utility give $21 million (that’s the $16 million adjusted for inflation) back to ratepayers. The organization has also embarked on an ad campaign to push the utility to pay back this amount in addition to the $144 million in savings the utilities claim will occur as a result of the merger.
Last week the utilities announced plans to dedicate $21 million to a fund that will invest in customer efficiency measures, community-based renewable energy, weatherization and other improvements.
AARP had asked for a direct payback for all current CVPS customers. The utilities’ proposal, it says, doesn’t cut it.
David Reville, communications director for AARP Vermont, said the fund will help some folks who have yet to weatherize their homes, but that is not adequate compensation for the CVPS customers who bailed out the utility in the late 1990s.
“It’s pretty clear they’re not putting money back in ratepayers pockets that they loaned to the utility,” Reville said.
A statement issued Monday by AARP Vermont State Director Greg Marchildon calls the proposal a “double whammy” and “no payback at all.”
“They are spending money on efficiency that is not coming from shareholders, so ultimately it comes from ratepayers,” the statement says. “Furthermore, it is not a payout in any form, but a loan program for those customers who might apply for efficiency improvement funds.”
Proposals in other states like Maryland and Massachusetts for utility mergers, Reville said, include efficiency programs as part of the deal absent a windfall sharing requirement.
According to testimony by the utilities, the fund will provide more benefits to ratepayers in excess of what is required under the windfall sharing mechanism. The utilities claim investing $21 million in the fund will result in $40 million in energy efficiency benefits. Under the AARP proposal, ratepayers would be reimbursed based on their usage. Average residential ratepayers would receive around $76 in a one-time payment.
Dorothy Schnure, a spokeswoman for Green Mountain Power, said the proposal is a better deal for ratepayers.
The proposal includes a “but for” test to show that the utility would not invest in a project if it wasn’t for the fund. The idea is to make sure the company would not be making the investment anyway.
The fund is modeled after a program initiated when Canadian utility Gaz Metro purchased Green Mountain Power. In that case, AARP accepted a pilot program as a result of a settlement.
“Basically, we’re investing $21 million that will yield $40 million,” Schnure said. “That’s a clear and distinct benefit for customers. That’s what matters. It’s far more value than a one-time payment.”
A problem with the one-time payment, according to the utilities is that many of the ratepayers who bailed out CVPS in the 1990s are not the same ones who would receive the payback.
The Department of Public Service expressed concerns in its testimony before the Public Service Board that the $21 million refund to ratepayers be added to the $144 million in proposed savings. At first the utilities proposed that the $144 million accounted for the windfall.
DPS issued a statement last week announcing preliminary support for the proposal.
