April 27, 2012
Statement on the vote today to reject Rep. Browning’s amendment
Dorothy Schnure, Green Mountain Power spokesperson
“This merger will provide $177 million dollars of guaranteed total value to Vermonters. We are pleased that the House chose not to interfere and direct the Public Service Board how to rule in a pending docket. PSB has taken months of testimony and it is the right forum to consider all of aspects of the merger in order to decide what is in the public good.
We are also pleased that the House members reinforced the importance of not interfering with the Public Service Board’s decision-making in an open docket by passing J.R.H. 37.”
The merger is designed to deliver significant, on-going benefits to CVPS and GMP customers
· By operating as one company, the new GMP will be far more efficient.
· Unprecedented value for Vermont — $177 million guaranteed in first ten years. Hundreds of millions after that. Value that can only be achieved by merging these two companies.
· GMP limited to minority ownership of VELCO
· Investment in efficiency and weatherization will yield $46 million in value, thus $25 million net benefit for CVPS customers
· Improved customer service and reliability from merging adjoining service territories
· Savings will be achieved without layoffs, other than some executives, or forced relocations.
· Commitments to Rutland to ensure CVPS home community benefits from merger
Customers will save millions of dollars
· GMP’s original proposal guaranteed $144 million in savings to CVPS and GMP customers over the first ten years following the merger, hundreds of millions more into the future.
· The concessions made to the Dept of Public Service increase the savings and benefits from $144 million to $177 million over 10 years.
· At the DPS request, GMP added an additional $25 million in net benefits to customers from investments in efficiency and weatherization. Total value is $46 million, customers will see $25 million benefit after the investor is paid back.
· Investment in efficiency has precedent in GMP 2007 sale. GMP’s efficiency fund has doubled the value for customers.
The Legislature should allow the Public Service Board to hear the merger case without interference
· The GMP/CVPS merger is in the middle of a regulatory process at the PSB. The PSB should be allowed to do its job and the Legislature should not interfere in a pending case.
· Intervening on one issue diminishes the regulator’s authority as it sends the message that if you don’t like the decision you think the PSB will make, you can do an end run by asking the Legislature to intervene.
· All Vermonters, whether homeowners or businesses, count on predictable legal and regulatory processes. Having the Legislature dictate certain decisions while that process is ongoing creates uncertainty that fosters an unstable economic environment for Vermont
· The current PSB is well respected around the state. The PSB created the provision now in question, analyzed and ruled on it in 2007, and recently completed extensive testimony on it.
The discussion over how to return the $21 million obligation has distracted from the significant benefits of the merger.
· This is a once in a lifetime opportunity to make a change that will bring permanent cost savings and benefits for nearly three quarters of Vermont electric customers.
· Customer savings over 20 years is expected to be $500 million dollars
· There are few opportunities, like this merger where actions today can yield such significant savings for so many of Vermont citizens and businesses.
Windfall obligation details.
· The windfall sharing mechanism was not a loan or a bailout. It was one part of a comprehensive rate order in which the PSB was setting just and reasonable rates for CVPS.
· In establishing the windfall sharing mechanism in 2001, the Board specifically left open the manner in which the mechanism should be implemented if CVPS were ever sold. The Board did not specify that ratepayers had to be given refunds or bill credits.
· In the 2007 case approving Gaz Metro’s acquisition of GMP, the Board specifically ruled that Gaz Metro/GMP’s proposal to make investments in energy efficiency measures, including investments in thermal efficiency measures (weatherization), satisfied the very same windfall sharing mechanism. The Board members today are the same as in 2007.
· In doing so the Board explicitly rejected the argument that customers should get a cash refund and rejected the argument that the investment in energy efficiency measures should not be recovered, along with a rate of return, in rates.
· The Board was clear about this. The Board’s order is consistent with ratemaking and how efficiency investments have been treated in rates for at least twenty years.
· Instead, the Board ruled that the windfall sharing mechanism is satisfied so long as the ratepayers receive benefits from the investment that exceed, by the required amount, the amount of the investment.
· The Board created the Windfall Sharing Mechanism in 2001 and the Board interpreted its own ruling in 2007, as it should. GMP and the DPS properly relied on the Board’s 2007 ruling
· In the present merger case GMP is proposing to make $21 million in investments in energy efficiency measures that will provide at least $46 million in benefits to CVPS’s customers. As a result, CVPS’s customers will be receiving at least $25 million in value above and beyond the amount of the initial investment.
· The efficiency investment plan is one part of a comprehensive package of benefits to customers from the merger, guaranteeing $177 million in customer benefits. There are no guarantees for the investor. And if savings are greater, the customer will get even more.