Digger Tidbits: VELCO bond sale to pay for transmission upgrades; Poll shows Vermonters divided on Yankee, support $21 million cash payback to CVPS ratepayers

Power lines cut across a Vermont hillside. VTD/Josh Larkin
Power lines cut across a Vermont hillside. VTD/Josh Larkin

A $120 million bond sale by the state’s electric transmission utility could save ratepayers millions, says Kerrick Johnson, vice president of external affairs for the Vermont Electric Power Co.

VELCO, the company that manages the state’s electric transmission system, announced the bond sale last week, which will help pay for transmission grid reliability projects.

The money will finance a 950-mile fiber optic project and a number of substation upgrades, including one in Ascutney.

VELCO uses a 50/50 debt-to-equity ratio to fund projects. The $120 million bond will allow for $240 million in upgrades, Johnson said.

The bond sale represented the most attractive pricing on record in the U.S. private placement bond market, according to VELCO officials.

That pricing and a favorable rate of return on investments in the transmission system will lower rates for customers, according to Johnson.

“Owing to Vermont regulatory structure, that goes back to ratepayers,” he said.

The Federal Energy Regulatory Commission allows utilities to make an 11.5 percent to 12.5 percent return on investment on transmission upgrades. Investor-owned utilities are allowed a lower rate than that for their investors and the rest has to go to their rate base, which can reduce costs for their customers.

A small group of lawmakers proposed legislation this session to study state ownership of up to 51 percent of VELCO, which is in flux given its two largest owners (Green Mountain Power and Central Vermont Public Service Corp.) plan to merge. Part of the reasoning behind that proposed legislation was to allow the state to take advantage of the favorable rate of return allowed on investments. That effort failed in the legislative session.

Poll shows Vermonters divided on Yankee, ambivalent about CVPS/Green Mountain Power merger

Whether Vermont Yankee should remain open is one of the key issues that divides Vermonters. A poll released last week shows the split between supporters and detractors is 44.4 percent and 44.8 percent, respectively.

The poll paid for by Vermont Business Magazine/WDEV/WCAX, shows that the majority of residents, however, back wind. Nearly 70 percent of the 607 people surveyed by the Castleton Polling Institute said they support the construction of industrial wind turbines on the state’s mountaintops, while 17.3 percent oppose wind power. Sixty-three percent of Vermonters backed state subsidies for renewable energy, while 24.1 percent didn’t like the idea.

About 36.4 percent of those polled support the merger of the state’s two largest electric utilities, Central Vermont Public Service and Green Mountain Power company; 33.4 percent weren’t sure; 28.7 percent opposed it. If the deal goes through as expected, 8 in 10 Vermonters will get their power from Green Mountain Power, a subsidiary of Montreal-based Gaz Metro.

There was no such ambivalence when it came to the $21 million reimbursement for ratepayers who bailed out CVPS in the early 2000s when the company nearly went bankrupt. About 66.4 percent of Vermonters surveyed for the poll want the money to be returned in a cash payback; 23.4 percent like Green Mountain Power’s proposal to invest the money in weatherization programs.

~Anne Galloway

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