Sen. Randy Brock, left, a member of legislative council and Sen. Vince Illuzzi look at draft legislation. Photo by Taylor Dobbs
After a long evening debate followed by a raucous early morning caucus, the Vermont Senate found a way on Thursday to communicate its displeasure with Green Mountain Power’s $21 million windfall payment plan for ratepayers.
The Senate overwhelmingly approved a new policy that requires any utility company that has been bailed out by ratepayers to return the borrowed money — without recovering the payout, whatever form it takes, in higher rates.
A last-minute change to the amendment made the repayment policy effective on passage and applicable to “any board orders pertaining to windfall-sharing mechanisms.”
Green Mountain Power, the No. 2 electric company in the state, is in the process of buying out CVPS, the state’s largest utility. The Vermont Public Service Board is reviewing the deal. Once the merger is consummated the new utility will serve eight out of 10 Vermonters.
At issue is $21 million in ratepayer money. Senators accused Green Mountain Power, a subsidiary of Montreal-based Gaz Metro, of hoodwinking ratepayers who bailed out CVPS when the company was on the verge of bankruptcy after it bought power from Hydro-Quebec at “imprudent” rates. In arguments on the floor of the Senate, lawmakers said the company had offered to repay ratepayers through weatherization and efficiency programs, then they said the company planned to recover the investment through rate hikes.
Green Mountain Power has said the merger deal will return $144 million in guaranteed savings to ratepayers over the next 10 years, and today released a statement projecting that operational and other efficiencies would save ratepayers $500 million over 20 years.
A Senate resolution that had the governor’s tacit, if reluctant, approval, asking the Public Service Board to consider the “full range of concerns and issues raised by the general public” about the deal was effectively killed when it was sent to back to the Senate Finance Committee.
Sen. Ginny Lyons asked to have her name struck from the Galbraith amendment when she saw that the policy change included language that in her view interferes with the Public Service Board’s deliberations on the CVPS-Green Mountain Power merger docket.
“We shouldn’t be passing any bill into law that affects a current docket or judicial process,” Lyons said. “This in my view, violates that policy.”
In a rare show of solidarity on one of the most contentious issues of the session, the Senate approved the new policy amendment 27-3 on Thursday afternoon after a brief debate. Sens. Hinda Miller, Diane Snelling and Dick Mazza voted against the amendment to the budget bill.
Gov. Peter Shumlin, who has been a proponent of the bill, chastised the Senate in a statement minutes after the decision.
“The appropriate avenue for legislators to express their views on this proposed merger is through the Public Service Board, which has taken countless hours of testimony and received input from a wide range of stakeholders and experts,” Shumlin said. “This matter is now in the hands of the board. The Senate’s action today interferes with an open PSB docket, undermines the credibility of the regulatory process, and is an extreme overreach of legislative jurisdiction.”
Shumlin then took aim at the Senate’s slow progress on major legislation.
“The Senate should be wrapping up its work and adjourning this week,” Shumlin wrote. “Instead, adjournment has been pushed back at least a week, and Vermont taxpayers are now on the hook for another $275,000 thanks to the Senate’s inability to complete its work on time. The Senate should focus on the real issues under its jurisdiction, like passing the budget that should have passed days ago, and bringing the session to a close.”
Former lawmaker Robert Dostis, who is now head of external affairs and customer relations for Green Mountain Power, said the provision “reaches into an open docket and intervenes in Public Service Board proceeding.”
Dostis says the state has for 40 years wanted to merge CVPS and Green Mountain Power, which have overlapping customer territories. “We’ve finally gotten to a place where we can do that,” he said.
He points to an exhaustive Public Service Board process — 17 intervenors, 34 witnesses, eight days of hearings — as evidence that the merger and the $21 million windfall-sharing mechanism is being fully vetted.
“Our hope is the House won’t go along with the Senate decision,” Dostis said. “The House has has been clear so far that it does not want to interfere in an open docket.”
Sen. Randy Brock, a Republican candidate for governor, defended the Senate’s proposal.
“The Legislature provides policy guidance all the time,” Brock said. “Public Service Board dockets are open all the time. Does this mean the state has to wait for every docket to close before it can establish policy guidelines?
“We’ve made it clear, from a legislative perspective, that when you promise to pay money back, you have to pay it back under the terms the Public Service Board finds appropriate,” Brock continued. “We’re not micromanaging. The Legislature’s job is to establish policy. We do it all the time. Part of the problem in all this is the question about whether there was real candor from the utilities to the public about what this deal is all about. All we hear about is the $144 million in savings. We heard nothing about the $21 million. In my judgment, it’s been a contingent liability from day one and should have been treated as such.”
Next steps in the House
The House leadership has supported a nonbinding resolution that would send a message to the Public Service Board but not require any action. The House Commerce and Economic Development Committee took testimony from Galbraith on the Senate amendment on Thursday afternoon.
Galbraith explained to the panel that the Senate was setting broad policy “that when companies get bailed out, the people who bailed them out should be repaid.”
Bill Botzow, chair of the House committee, was skeptical. “Forgive me if I’m trying to be too careful, but I’m concerned if you develop a board policy you may capture things you didn’t anticipate.”
According to Legislative Council the law would take effect upon passage. In theory, the board could issue an order before then, but it would be unlikely. Aaron Adler said the Senate amendment would not affect costs that utilities can’t help, like an ice storm. It would affect bad business decisions, like the imprudent Hydro-Quebec contract, in the future.
Sarah Hofmann, deputy commissioner of the Department of Public Service, explained to the House panel why the administration can’t support the bill.
“We can’t really distinguish it in any way from other bills we have seen where it is a reach-in to the Public Service Board process,” Hofmann said. “Despite the fact that this is maybe couched a little differently it is a reach in to the process — an active process. It’s very clear it’s trying to capture an active case that’s right in front of the board. Our basic concern is it really is no different from other bills we have seen, and it is reaching in to an open docket.”
While the Senate voted on its merger amendment vote, Rep. Cynthia Browning floated a provision regarding the merger between the state’s two largest utilities on the floor of the House.
First alone, then with a small coalition of lawmakers, Browning pressed for a bill that would require Central Vermont Public Service Corp. to pay ratepayers $21 million to account for a windfall the utility received when ratepayers bailed it out in the early 2000s.
“This is a matter of economic justice and corporate accountability,” Browning said.
After numerous procedural sidetracks, Browning’s amendment finally made it to the House floor. She offered it on a bill that addresses miscellaneous issues with the Department of Public Service and Public Service Board.
Hours of debate ensued before Browning withdrew her amendment. Browning and her contingent opted to hold off another day to decide whether to push the original proposal or make it comply with the Senate bill.
While the House postponed a vote on the amendment, lawmakers offered a flavor of their opinions throughout the lengthy debate.
Rep. Margaret Cheney, vice chair of the House Committee on Natural Resources and Energy, called the amendment “radical.”
“The amendment is radical because it reaches into an open docket,” she said.
The Public Service Board is the decision-maker on these issues, Cheney said, and the Legislature should not intervene.
Rep. Tony Klein, who chairs that committee, told the Democratic Caucus Thursday morning that the amendment that Browning initially proposed would disrupt the Public Service Board process.
“It is not about whether grandma gets 76 dollars or not,” Klein said. “It’s about unraveling a regulatory process that’s worked well for 55 years.”
He said neither he nor his committee has close ties to Green Mountain Power or CVPS.
“It’s not about me or my committee being in bed with these two utilities,” he said. “It’s about respecting leg process that’s so complicated you can’t do this.”
Supporters of the bill say the Legislature has intervened in open dockets before, and the fact that utilities plan to recoup the $21 million investment in weatherization through rate increases warrants going there again.
Chris Pearson, a Progressive, who has championed directing the board to require a cash payment or rebate to customers, said this is the time to get involved.
“We have intervened in the past, and I believe we have reached a point where we should take this uncomfortable step again,” Pearson said.
Browning said the coalition may offer the Senate bill as an amendment in the House. “Considering the Senate vote, we thought there might be people who didn’t support intervening who would support it.”
Editor’s note: Alan Panebaker contributed to this report. The story was updated between 6 a.m. and 6:45 a.m.
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This is BS. Refund the money like you promised.
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Way to go, Senate.
The extra time and money are thanks to the Governor’s intransigence about getting out of bed with GazMet. This takeover no sideshow but in fact the most important issue facing the state at the moment. Take your time, give it your best shot.
Or else put the takeover on hold and wait til after the election to see whether the citizenry will even return such a governor and his allies in the House.
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It’s unfortunate that it came to this, for reasons expressed in my comment to Anne’s “In Green Room” article of today on same subject.
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The Govenor is such a baby! People were owed this money. These companies must also fund his campaign. How many more ignorant statements are we going to allow this Govenor and his administration make towards the people of Vermont? Vermonter’s open your ears and eyes and vote this shelfish clown and his administration out. It is time to TAKE BACK VERMONT!
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“First alone, then with a small coalition of lawmakers, Browning pressed for a bill that would require Central Vermont Public Service Corp. to pay ratepayers $21 million to account for a windfall the utility received when ratepayers bailed it out in the early 2000s.”
Browning’s proposed amendment had 72 co-sponsors out of 150 representatives. That doesn’t sound like a “small coaltion” to me.
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The Senate finally did the right thing by not agreeing to a merger spiel, including fear-mongering about “the merger is dead without the $21 million” and standing up for rate payers and the rule of law and fair play. Enough is enough.
The Governor has GMP, the PSB and VT-DPS dancing to his politically-motivated tune and tried to hijack $21 million rightfully belonging to rate payers for his underfunded RE programs, such as the CEDF, a slush-fund for his politically-favored RE oligarchs.
He thought he could get away with hoodwinking CVPS rate payers out of $21 million via a tainted “MOU and a hearing process” of which the outcome was known beforehand.
Dostes, Lyons, Cheney, Klein, all RE mavens, objecting to “interfering with an open docket”, is like telling the police to stop investigating a crime; in a democracy Vermonters are the ULTIMATE power in Vermont, not appointed insiders making up politically-motivated MOUs.
It was a grave mistake to merge GMP with Gaz-Metro-Canada. It will be a graver mistake to add CVPS to this brew. This merger will significantly reduce Vermont’s home rule over the energy sector, a major part of Vermont’s economy.
The only beneficiaries of this merger will be:
- Gaz-Metro by means of its control of the energy sector of Vermont.
- Upper managements getting stock option wind falls of several million dollars each.
Already-struggling households and businesses will be paying higher rates than the would have been without the merger.
Such higher rates will increase the costs of goods and services, lower living standards, increase job losses.
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Finally! Someone is listening to the voice of the people, who have been calling for a full vetting of this issue for weeks. If it’s a last minute issue now, it’s only because the Legislature didn’t want to listen to Vermonters until the last minute. The Administration orchestrated this mess, so Shumlin’s remark that it will cost taxpayers over $200k to keep the legislature in for another week is disengenuous at best.
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A few pertinent facts:
In 2001, the PSB was concerned that CVPS shareholders not be enriched by their action. The Board therefore ordered: “To avoid such unjust enrichment, and in consideration of ratepayers who will pay higher rates than are justified by routine rate-making procedures, we find it essential that the rates approved today be accompanied by a mechanism by which ratepayers will share in the above-book proceeds of any future sale or merger of the Company ….” (In re Central Vermont Public Service Co., 211 PUR 4th 53, 84-85 (from AARP final petition, p.2) The merger MOU proposes precisely such a “mechanism:” namely, investments by the merged utility in energy efficiency which benefits all ratepayers. For those who express concern about inflation, the original amount ($16.9 million) HAS been adjusted for inflation.
It is perfectly legitimate to argue that this proposal is not the BEST mechanism, and that a cash refund would be a BETTER way to proceed, and those very arguments are pending before the Board. (Personally, I think they’re wrong, but that’s another matter for another day).
But yesterday’s Senate vote effectively overrules the Board’s 2001 decision by specifying that the “mechanism” required become “a credit or refund” — 11 years after the fact — without having taken ANY testimony and preempts its decision in the merger case. Still worse, it does so in the middle of a pending proceeding. This otherwise thoughtful body should be ashamed of itself for falling prey to this kind of mindless demagoguery.
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John,
Your comment: “……a mechanism by which ratepayers will share in the above-book proceeds of any future sale or merger of the Company ….” (In re Central Vermont Public Service Co., 211 PUR 4th 53, 84-85 (from AARP final petition, p.2) ”
The above mentions “a mechanism by which rate payers” The rate payers referred to in that bailout MOU are the ones who made the sacrifice, i.e., ONLY the CVPS rate payers.
Your comment: “The (CVPS/GPM) merger MOU proposes precisely such a “mechanism:” namely, investments by the merged utility in energy efficiency which benefits all rate payers.”
But not ALL rate payers made a sacrifice; those who did not will get something for free that belongs to ONLY the CVPS rate payers.
Your comment: “For those who express concern about inflation, the original amount ($16.9 million) HAS been adjusted for inflation”
The adjustment is grossly deficient, because CVPS borrowed at 0% interest rates when it would have had to borrow at junk bond rates, at least 10%, if the bailout had not occurred.
John,
You are very intelligent and ideology or bias in favor of other outcomes should not distort your reasoning.
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Willem –
First, I should note that I have not read the MOU and do not know the details of the mechanism that’s been proposed. I’m basing my comments on press reports, which can often be highly inaccurate, and which, in this case, provide almost no details.
To relieve some of the potential ambiguity, perhaps I should have added the word “its” in the sentence to which you object to now read: “investments by the merged utility in energy efficiency which benefits all its ratepayers.”
nvestments in efficiency lower the costs of power for all ratepayers within the service area of a given utility and thus provide them a direct benefit. THIS benefit would NOT be shared with ratepayers of utilities outside of the merger service area: e.g., Burlington Electric, WEC, etc. Depending on the details of the mechanism, it might well benefit former GMP customers as well as former CVPS customers. If that’s so, former GMP customers would be getting a benefit for which they did not pay. I see no problem with this, AS LONG AS CVPS customers are getting all of the benefits for which they DID pay. That will depend on the details of the mechanism in question. Similarly, I have no problem with the fact that those ratepayers who actually make use of the investments will reap greater benefits (in the form of reduced consumption) than those who don’t, AS LONG AS the benefits for the affected class gets at all the benefits for which they paid.
It’s worth adding that efficiency benefits everyone, regardless of their ratepayer status, by creating well-paid Vermont jobs and everyone on the planet by reducing environmental pollution. I fail to see why either of these additional benefits would be counted as a point AGAINST the plan, however.
As to your second objection, I’ve made no attempt whatever to analyze whether the adjustment made to the original $16.9 million is fair or as you state “grossly deficient.” I will, however, point out that, to my knowledge, no one else has raised this point. I was merely responding to those who falsely claimed that no adjustment had been made.
In any case, my real answer is that this is PRECISELY the kind of detail at which the PSB process excels, and I trust the Board to come up with a reasonable figure after hearing all of the evidence from the many participants in the case. This is not generally true of the legislative process, especially when, as in this instance, the Senate took no testimony before voting.
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John,
Your comments need to include a statement that ONLY CVPS rate payers must be fairly compensated for the sacrifice THEY made by saving CVPS from bankruptcy.
Your comment: “For those who express concern about inflation, the original amount ($16.9 million) HAS been adjusted for inflation” is a dismissive brush-off.
The adjustment is grossly deficient, because CVPS borrowed at 0% interest rates when it would have had to borrow at junk bond rates, at least 10%, if the bailout had not occurred.
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Reluctant to get on this right-wing bandwagon, I have to note this telling remark: Governor Shumlin criticized Senators, and by inference rebellious House members, for “pandering to voters”. Think about that for a minute. Interfering with an in-process PSB deliberation (which he would never do, right?) in order to apprise a board defiantly oblivious to its responsibility to its constituents, by the representatives of those constituents, is “pandering” to the constituents. If so, what shall we call running his mouth about how the legislature conducts its business? Shumlin affects a tone of righteousness that’s always annoying, but it turns downright offensive on the subject of “pandering”. This is happening because his ostentatious pandering has caused him to forget for whom he (supposedly) works. “Pandering to voters” – keep that phrase in mind, you naughty, meddlesome voters. You’re interfering with state connivance with utility machinations, serious business that doesn’t concern you; keep it up and Peter Shumlin might not let you stick around.
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Shumlin ought to be ashamed of himself for his “pandering” comment. Voters matter. It is Shumlin who is pandering – to the utilities.
That said, describing the PSB as defiantly oblivious makes no sense when it has not yet ruled on the case. The PSB is not and never has been a rubber stamp.
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Just two comments to add. One is that I would like to identify legislative council Maria Royle in the picture. She has done an amazing job doing research and drafting for all lawmakers on this topic this session. She and all the other legislative council staff deserve a great deal of gratitude and appreciation.
Second, the resolution that was approved in the House DOES NOT EVEN GET SENT TO THE PUBLIC SERVICE BOARD. This is because of not wanting to intervene in the open docket. I heard that the utilities did not want us to even do a resolution, so they must have reluctantly given permission as long as it wasn’t actually sent to the people who currently have the case.
So, this tells you who is running the statehouse.
I am so disappointed in the leadership of my party.
Rep. Cynthia Browning, Arlington.
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Fabulous and important “discussion” in the comment section here.
Now, if we could get it on VPR, in print media, and rally enough Vermont citizens to demand a one-year moratorium to any utility merger, as Browning attempted to initiate….
Thank you All!