Editor’s note: This op-ed is by Rep. Oliver Olsen, R-Jamaica, a member of the House Ways and Means Committee.
Fortis, a large energy company based in Newfoundland, Canada recently made a bid to acquire CVPS, Vermont’s largest retail electric company – and now today, Gaz Metro, the owner of Vermont’s second largest retail electric utility, Green Mountain Power, announced that it will also be bidding for CVPS. Like Fortis, Gaz Metro is a Canadian company, but is based in Quebec.
Under casual observation, we can see that a few Canadian companies will have a major stake in Vermont’s electricity market (including Hydro Quebec which accounts for one-third of the power purchased by Vermont’s retail electric utilities). But if we peel back a few layers, we will find that the situation is a bit more complex – with regional implications. Today’s announcement of a counter-offer by Gaz Metro to purchase CVPS just made things even more interesting. If this proposal was accepted, it would consolidate two of Vermont’s largest retail electric utilities.
But what may be more significant is the impact all of this might have on Vermont’s transmission network.
As retail electric utilities, CVPS and Green Mountain Power are responsible for delivering electricity to our homes and businesses. In addition to the meters, they own the small power lines that we see most often along our roads and streets. The transmission network – the high voltage lines that move large amounts of power into, out of, and across the state – is owned by Vermont Electric Power Company (VELCO). Together, CVPS and Green Mountain Power own 86 percent of VELCO, with other, smaller, utilities owning the remainder. Thus, if one entity secures ownership of CVPS and Green Mountain Power, it could end up with significant control of the transmission network in Vermont – a significant asset considering the border we share with Quebec and our proximity to major metropolitan markets in the northeast.
Now, just as we would differentiate Vermont from other states, it is important to look at Gaz Metro, Hydro Quebec, and Fortis in a provincial context. Hydro Quebec is owned by the Government of Quebec. Gaz Metro, based in Quebec, is a partnership of various investors, including a Quebec pension fund. Fortis is a publicly traded company based in the neighboring province of Newfoundland and Labrador. While not directly related to all of these companies, the two provinces have had a strained relationship – of significant import – when it comes to the transmission of electricity.
The province of Newfoundland and Labrador has significant hydroelectric assets, including the 5,400MW Churchill Falls plant in Labrador (equal to nine times the generating capacity of Vermont Yankee). But to move this power to major markets, Newfoundland and Labrador are dependent on the transmission network in Quebec, which is owned by Hydro Quebec. Back in the 1960s, Hydro Quebec was able to leverage this strategic advantage, and secured a long-term contract to purchase power from the Churchill Falls plant on extremely favorable terms. Since then, Quebec has reaped most of the financial benefit, which has engendered hard feelings within Newfoundland and Labrador. As a consequence, there have been a number of political and legal challenges to the status quo, and relations remain tense between the provinces.
Whether any of this background has bearing on the power play over CVPS is anyone’s guess. But given the history between the provinces of Quebec and Newfoundland and Labrador, its not hard to imagine that Quebec could be uncomfortable with a Newfoundland company owning part of Vermont’s transmission network – given the strategic significance of Vermont’s geographic position.
Needless to say, the bidding between Gaz Metro and Fortis over CVPS will be worth watching – closely.
