Public Service Commissioner Elizabeth Miller had been telling members of the State Senate for some 15 minutes about the “enormous savings” she thought Vermonters would realize from the impending merger of the state’s two largest utilities when Sen. Mark MacDonald interrupted her.
He agreed about the savings, the Williamstown Democrat said, “but that’s not why we’re here.”
Like most of the other senators listening to Miller during a quasi-formal hearing in the Senate chamber, MacDonald was there to hear about – and to talk about — what might be called the $21 million misunderstanding.
A misunderstanding which was threatening Thursday to blow up into a major political storm, perhaps pitting the Senate against both the House of Representatives and Gov. Peter Shumlin.
The $21 million is how much higher were the electric bills paid by customers of Central Vermont Public Service Corp., starting in 2001 to bail the company out of a mess that it had gotten itself into. That bitter pill was sweetened by a regulation that if CVPS ever got bought out for a premium price, those customers who had been paying the higher rates would somehow be recompensed.
The regulation did not specifically say that they’d get recompensed by getting a check from the company. But that’s clearly what many of them thought, and it seems to be what many of them want. So apparently, do most senators, many of whom who appeared to be decidedly unimpressed by Commissioner Miller’s repeated assurance that her alternative to sending those checks would “provide a significant benefit to Vermonters.”
Now that CVPS has agreed to be bought by Green Mountain Power (meaning by GMP’s owner, Gaz Metro of Montreal) the Shumlin administration is supporting the utility’s preferred alternative – to spend the $21 million on energy efficiency improvements for CVPS ratepayers.
That alternative would benefit the entire state, Miller said. It would create jobs and lead to “lower energy bills.”
But she really didn’t have an answer to the challenge posed by Mary Durfee of St. Albans.
Mrs. Durfee is a constituent of Republican Sen. Randy Brock, who read aloud a letter from her, in which she said she and her husband had been paying CVPS’s higher rates for years. He is now 80 and she 78, she said, and they “would never recoup what (energy efficiency investment) would cost us.”
Reached later by phone, Mrs. Durfee said she and her husband had already invested money and their skills into tightening their 150-year-old house so that it “stays cool in the summer and warm in the winter.” They would benefit more from a check from CVPS, she said, than from energy efficiency work.
Miller acknowledged that there was a “surface appeal” to the idea of a cash rebate to the CVPS customers, but she insisted that using the money to make homes and businesses more energy efficient would serve the state better.
For the most part, she and the senators spent their hour talking past each other more than to each other. She kept repeating her conviction that the energy efficiency investment would provide greater benefits to the state. Though a few senators, including Democrat Virginia Lyons of Williston, sided with her, most senators kept asking why the $21 million shouldn’t be refunded to the ratepayers.
The administration’s stance on behalf of the energy efficiency investment hit a public relations bump earlier in the week when officials acknowledged that if the newly merged utility company invested the $21 million, it would become part of its rate base. The profit of a regulated utility – its “rate of return” – is a percentage of its rate base. The higher the base, the higher the profit. So by using the money as an investment instead of refunding it to the ratepayers, the utility would be using the $21 million – effectively (if not officially) borrowed from the ratepayers to bail it out of a self-created dilemma – to earn more money to distribute to its shareholders.
That’s what annoyed most of the senators. Majority Leader John Campbell, a Quechee Democrat, compared the situation to one in which a teenager lends a friend five dollars to be paid back as soon as the borrower gets his allowance.
“When he gets that allowance, I want my five bucks, not a pair of shoelaces or something,” Campbell said.
At least in the Senate, and quite possibly among the general public, that attitude seemed to prevail. Contemplating the administration’s political problem just before Miller spoke to the Senate, one of the state’s shrewder political strategists speculated that, regardless of the merits of the case, the administration “has lost the communications battle” by not knowing how to explain itself to either the public or the lawmakers.
Miller clearly didn’t know how to explain it to the senators, and after leaving the senate chamber she headed quickly to the governor’s office, apparently not willing to try to explain it to reporters, either.
That does not necessarily mean the administration will lose the war. Campbell said though he was reluctant to interfere with a case before the quasi-judicial Public Service Board, “if we feel (the administration) is not doing what’s best,” the Senate would consider legislation to force the utility to rebate the money.
Other senators were more adamant. “There will be legislation,” said Sen. Peter Galbraith, a Democrat from Townshend.
But for legislation to be successful, it has to pass the House of Representatives, and House Speaker Shap Smith said he remained opposed to legislative interference with a Public Service Board case where there is “an open, contested, docket.”
That would be, he said, “like telling a court what to do in the middle of a trial.”
Advocates of a cash rebate, spearheaded by Vermont’s AARP chapter, clearly hope the Senate and the public put enough pressure on the administration and the utilities to convince them to relent, or on the Public Service Board to order the rebates when it issues its ruling in June.
Shumlin seems to be hoping that the controversy blows over. It may. Most Vermonters are not CVPS customers, and so have no direct interest in the outcome. On the other hand, if the utilities are not reneging on an agreement, they and the administration have not effectively explained why they are not, and the public in general has never been favorably disposed toward double-crossers.
Utility executives have hinted that if they do not get their way in this matter, they might call off the whole merger.
At least one senator, Vince Illuzzi, a Derby Republican, was skeptical, noting that Gaz Metro could reap billions from the gas lines southward it would acquire as part of the merger. Compared to those billions, he said, $21 million is inconsequential.
