Editor’s note: This op-ed is by Avram Patt, general manager of Washington Electric Cooperative, a consumer-owned utility serving 10,500 member households and businesses in 41 Vermont communities.
The Vermont Public Service Board has opened a proceeding to consider the proposed acquisition of the state’s largest utility, Central Vermont Public Service, by Gaz Metro, the Montreal-based company that already owns Green Mountain Power and Vermont Gas Systems. If approved, GMP and CVPS would be merged into one company serving over 70 percent of the state’s electricity consumers.
Every so often in the history of the utility industry in Vermont, a major event happens that shapes Vermont’s energy future for generations to come, often in ways that cannot be predicted at the time. Approval of the proposed merger of CVPS and GMP into a single foreign-owned company would certainly be such an event. This is a big deal, and why we should all pay attention and care about the outcome.
Washington Electric Co-op has asked to intervene in the PSB docket, as have other utilities and a number of other parties who feel they have a stake in the outcome. WEC is involved in several significant joint long-term relationships with GMP and CVPS for power supply, transmission and other matters. We have our own specific interests in how those relationships will be affected.
What happens to VELCO?
The issue that may be the hardest for most Vermonters to grasp, but which may be among the most significant, is VELCO, the statewide company that is owned by all of Vermont’s electric utilities. VELCO manages Vermont’s high-voltage transmission system. The ownership structure of VELCO and its affiliate, Vermont Transco (which actually owns the system), is unique in the country. It has given local utilities and state regulators a greater degree of control over the transmission grid within our borders than is found elsewhere. It has also given our small state a stronger voice in regional and national transmission issues than we might have had were the transmission system owned by a conventional for-profit company, as is usually the case.
CVPS and GMP together own a substantial majority of the shares in this system. What would happen to VELCO if it were now to be controlled by a private Canadian energy company and its investors? What happens if Gaz Metro is in turn sold or its ownership changes? How would this affect decisions about where transmission is built, who pays for it and who benefits? GMP has acknowledged concerns about this is in its proposal and has suggested a mechanism so that the new merged company does not immediately have a controlling share in VELCO. Whether this proposal provides sufficient long-term assurance that Vermont will retain control of this critical energy resource will likely be investigated and debated in the PSB proceeding.
We can’t foresee the future. Why care about this now?
That’s exactly why Vermonters should care. The present customers of CVPS and GMP will of course want to know how this might affect the quality of their service and their rates. But let’s assume for now that the Public Service Board determines that those customers will either benefit, or not be harmed, by the merger. Utility mergers are not that uncommon, after all. What makes this merger different?
The history of Vermont’s electric utility industry stretches back to the late 1800s. Over those many years, there have been a few major turning point moments that, for better or worse, set the course of Vermont’s energy future for generations to come. Those decisions determined not only what Vermont’s major power supply sources would be, but also who would own and control them and for whose benefit. This is one of those moments.
Vermont has not always made the right decisions at those moments, although we’ve made some good ones, too. Sometimes decisions were far too influenced by those who stood to gain financially from them. Sometimes, Vermont leaders passed on opportunities, perhaps not even realizing that a turning-point moment was upon them, to be regretted many years later with the wisdom of hindsight.
The global energy industry is changing dramatically. In Vermont, we have a strong desire for a cleaner energy future. Who will decide what to invest in? How much local renewables can we develop? Can we build a grid that will move massive amounts of renewable energy over great distances? How can we be sure that energy efficiency and conservation always come first? Transmission infrastructure decisions, at VELCO and beyond Vermont’s borders, will affect anyone making energy choices down the road. How can we assure that little Vermont does what’s best at home, and speaks up for what’s right as even bigger decisions get made at the regional, national and continental level?
Well, we can’t assure that, because we don’t even know exactly what major choices will actually be before Vermont, its utility managers, regulators and elected leaders, in five years or generations from now.
Who will be calling the shots, and on whose behalf?
What we can have some say about, today, is how a vital organization like VELCO is governed. VELCO manages Vermont’s transmission grid and its relationship to the regional grid system and beyond. Some will argue that in the big energy industry picture, tiny Vermont has little clout. Maybe that’s true, maybe not. But the real question is: who looks out for Vermont’s energy interests with whatever clout we do have? Who will be calling the shots when those decisions get made in the future? Depending on how far into the future we’re looking, we can’t even say which people will call those shots. What we can influence, today, is how those people will be chosen, whether they will be looking out for our interests and for those that come after us.
The proposed merger of CVPS and GMP into a single utility owned by a Canadian company that also owns Vermont’s natural gas utility is a big deal. There’s more at stake than simply who will be selling electricity to most of Vermont’s ratepayers or restoring their power during storms. That’s why all Vermonters should pay attention to this proposed change in ownership in Vermont’s energy industry.
