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.