Representatives for Green Mountain Power say an attempt by the Vermont Legislature to require a cash payback as a result of a utility merger could sour the deal.
Earlier this week, four representatives proposed an amendment to House Bill 468 that would require Central Vermont Public Service to pay ratepayers $21 million in cash rebates as part of a windfall sharing mechanism.
House Speaker Shap Smith said the amendment was not relevant to the bill, which dealt with a renewable energy mandate, so the house never debated it.
Now they have their sights on House Bill 718, an act relating to miscellaneous matters involving the Public Service Board and Department of Public Service.
Gaz Metro, Green Mountain Power’s parent company, would acquire CVPS if a pending merger goes through. A stipulation of that merger, as required by the Vermont Public Service Board, is that the utility return $21 million to ratepayers as a result of a bailout in the early 2000s when CVPS was on the verge of bankruptcy as a result of bad contracts with Hydro-Quebec.
The utilities propose investing the money in an efficiency fund instead of a direct cash payment to current ratepayers. The Department of Public Service generally supports the efficiency fund idea.
Dorothy Schnure, a spokeswoman for Green Mountain Power, said legislative meddling in the process could scuttle the merger.
“Intervention from the Legislature of this magnitude would likely kill the deal and the opportunity to deliver hundreds of millions of dollars to Vermonters,” Schnure said.
The utility proposes that it will achieve $144 million in savings for ratepayers in the first 10 years of the merger as well as transfer $1 million annually to a low-income trust.
Schnure said it is a very complex process, and changing one aspect of the merger “would have a significant adverse effect on the deal.”
The AARP, which has intervened in the Public Service Board docket, has pushed for direct cash payments to all CVPS customers based on usage and rate class.
Now four representatives are pressing for the same thing and conditioning the board’s approval of the merger on this type of payback.
Cynthia Browning, D-Arlington, Patti Komline, R-Dorset, Paul Poirier, I-Barre, and Chris Pearson, P-Burlington, proposed the amendment this week to the energy bill.
Now the coalition is pushing to add the amendment to the more general DPS and Public Service Board bill.
Pearson said the group had about 60 lawmakers on board with the idea based on conversations Friday.
Browning said there are a lot of unknowns surrounding the future of the bill. For one, she said, some lawmakers may sign on to the idea, then change their minds once utility lobbyists catch their ear. She is also skeptical that it will reach the House floor for debate.
Browning said she thinks the cash payback is important in that the utilities need to keep their word.
“It’s really a question of honoring the deal,” she said. “A promise is a promise.”
Browning said a cash payment would be an infusion of cash for town governments, ski areas, farms and struggling businesses.
“It’s like a little stimulus package,” she said.
The utilities and the Department of Public Service contend investing the money will yield far greater benefits to the state as a whole from decreased usage due to weatherization and other measures.
House Bill 718 is currently in the House Committee on Appropriations.
House Speaker Shap Smith said he had not looked at the specific sections of the proposed amendment or the underlying bill, but he said his general sense is that it probably is germane.
Smith said the lawmakers would have to propose the amendment on the House floor.
He said there are concerns in the House about whether the Legislature should intervene in an ongoing administrative proceeding.
“Many people have some concerns about whether it’s appropriate to interfere in an open docket while testimony is ongoing,” Smith said. “There are a number of people who wonder whether this particular vehicle is the best way to return value to ratepayers.”
Personally, he said, he would rather the Legislature did not get involved in the proceeding.
“I prefer that we not pass legislation that interferes with open dockets with the Public Service Board,” he said. “If at some point in time if you continue to do that you begin to question whether we should have a Public Service Board at all.”
Smith said lawmakers have other means to express their opinions to the Public Service Board. For example, they could write a letter.
Next week will determine whether the Legislature even discusses the amendment proposed by the four lawmakers.
Meanwhile, technical hearings in the Public Service Board docket continue. Utility lawyers representing the various intervenors will continue to question witnesses and press them on the finer details of the merger.
While the utilities argue legislative intervention is a deal breaker, James Dumont, the attorney representing the AARP in the docket, said that is nonsense.
Dumont said cross examination of CVPS CEO Larry Reilly and email exchanges obtained through discovery show Gaz Metro already committed to paying back the money.
A highly-redacted email of May 25, 2011 from Gaz Metro CEO Sophie Brochu to Reilly states, “We also confirm that this revised offer reflects the application of the Vermont Public Service Board’s order, reflected in docket numbers 6460 and 6120 entered on June 26, 2001, to share profit from a Transaction (above book value) up to a total of $16 million, adjusted for inflation (currently $21 million), with ratepayers.”
Dumont said Gaz Metro accounted for the windfall through a reduction in the purchase price.
Now Dumont claims the utility is trying to invest ratepayer money instead of windfall money.
“They said they were going to pay it, now ratepayers have to,” he said. “It’s crazy.”