The big guns in the Vermont utility world converged on the Statehouse Tuesday to warn lawmakers against passing legislation that would direct the state Public Service Board to a specific course of action.
In testimony before House committees on Natural Resources and Energy and Commerce and Economic Development, utility CEOs, business representatives and a former chair of the board all cautioned against proposals that would, in effect, tell the board or the Department of Public Service to ensure ratepayers get $21 million in a cash or refund. The Legislature has yet to consider as a body any of the proposals.
The hearing hosted proponents of a proposal by the Shumlin administration and the state’s two largest utilities. It stands in stark contrast to a hearing in the Senate last week in which lawmakers grilled Department of Public Service Commissioner Elizabeth Miller on why the state could not strike a more favorable deal with Green Mountain Power and CVPS, who need approval from the Public Service Board for a merger of the two companies under the ownership of Gaz Metro, a Canadian utility.
The utilities and the Department of Public Service recently produced a memorandum of understanding in the $700 million merger. The utilities petitioned the state Public Service Board in September for approval of the deal.
The sticking point for the Legislature is a proposal in the agreement that would invest $21 million in an efficiency fund to comply with a requirement that the utilities share profits from an above-market-value merger with ratepayers to compensate them for a bailout in the 1990s when the state utilities entered into imprudent contracts with Hydro-Quebec. Some lawmakers want to see that money go straight to ratepayers, and they are ready to pass legislation that would make sure that happens.
Louise McCarren, former chair of the Public Service Board, told the House committees to tread lightly when considering interfering with the board’s work.
“There are consequences of the Legislature reaching into this case and making a decision that constrains the outcome of the board’s decision,” McCarren said.
She said the Legislature created the board to be independent. Parties in the proceeding should not be allowed to approach the General Assembly when they do not believe the Public Service Board will deliver them a favorable result. She said interfering with the quasi-judicial board would be like the Legislature interfering in a high-profile civil court proceeding.
She said it could encourage a “backdoor process” that could undercut the board’s authority and ability to make independent decisions.
“It’s an incredibly dangerous thing to do,” she said. “It sends a message that the orderly process can be replaced because there’s someone across the street who can help out.”
CEOs of both the state’s largest utilities and Department of Public Service Commissioner Elizabeth Miller hammered the importance of not intervening in the deal.
The Legislature has intervened numerous times in open Public Service Board dockets. The most high-profile intervention came in 2006 when it passed a law requiring legislative approval before the board could approve a renewed license for the Vermont Yankee nuclear power plant, a law that a federal court ultimately found unconstitutional.
Rep. Tony Klein, who chairs the House Committee on Natural Resources and Energy, organized the meeting with Bill Botzow, chair of the Committee on Commerce and Economic Development.
Klein said the purpose of the hearing was to gain knowledge of the entire proposed merger, which the utilities hope the board will approve this summer.
“If it’s a 700-plus million dollar deal and people are only focused on the 21 million. Part of hearing was to figure out what’s in the rest of the $700 million,” he said.
Klein said he wanted to hear from businesses about how they felt they would be affected by an unstable regulatory environment.
But for lawmakers who have been trying desperately to find a vehicle to propose some sort of amendment that would require the utilities to pay CVPS ratepayers $21 million rather than invest $21 million in ratepayer money to create benefits in electric and thermal efficiency, the hearing seemed fabricated to quash those ideas in the Statehouse and the media.
“I had the feeling it was orchestrated,” said Rep. Patti Komline, who has worked with other lawmakers to push House Speaker Shap Smith to allow bills to come to the floor that could be used as a vehicle for an amendment to require the cash or refund payment.
Komline and the AARP were added to the list of witnesses at the last minute. The original lineup only included representatives who supported the utilities’ position. It was the first time representatives from AARP, which has embarked on a months-long media campaign pushing for cash payments to customers, gave legislative testimony on the issue.
Klein, who asked few questions of other witnesses, peppered AARP Director of Advocacy Philene Taormina. At one point, Rep. Paul Ralston asked Klein to lay off and not engage in a debate.
Proponents of the cash payback mechanism proposed by AARP in the Public Service Board proceeding and ultimately adopted by some lawmakers continue to try to find a means to get their message to the board.
Komline said about 80 representatives, representing more than 320,000 Vermonters are ready to vote for such an amendment. She said it is appropriate for the Legislature to intervene, especially considering the fact that many feel the utility shareholders are getting a better deal since they will recoup the $21 million investment in rates.
Green Mountain Power CEO Mary Powell said legislative intervention could unravel the entire process, particularly since lawmakers have not read through the thousands of pages of testimony and days of hearings that go into the merger as the board has.
“One of the things that hopefully became very clear today was the rigor that goes into the Public Service Board process,” she said. “We’ve always found in hindsight that they do a fair job figuring out all the different views and perspectives and coming up with an order that makes sense for Vermont.”
Other lawmakers have more nuanced opinions.
Rep. Ernie Shand, who sits on the Commerce and Economic Development committee, said he sees the Public Service Board as an employee. The state should tell its members what they should do but allow them sufficient space to do their job.
“If the time comes and they screw up, we will tell them,” he said.
Shand said he would be more comfortable with the Legislature disapproving of the board’s process after the docket is closed.
Correction: The original version of this article referred to Ernie Shand as a Senator. He is a state representative.