A new report from Vermont Energy Partnership asserts that the state’s utilities have only purchased enough power to support consumers’ electricity needs through the end of this year.
Guy Page, communications director of the group which represents a number of Vermont companies, including Vermont Yankee, the state’s sole nuclear power plant, says that by 2016 the state will have a power gap of 31.4 percent between demand (which is on the rise) and “committed power.”
Next year Vermont will have to buy electricity from the New England market, and Page writes that will lead to “to potential electricity price increases, less investment in in-state renewable generation, and higher carbon emissions.”
Page says the “gap” between demand and long-term contracts with base power generators leaves the state vulnerable to uncertainties in the market. He anticipates that power from fossil fuels will be used to fill the gap.
Nuclear power, which used to be the source of about 30 percent of the state’s electricity, will be reduced to 12 percent. That power won’t come from Vermont Yankee, but from Seabrook and Connecticut’s Millstone 3 reactor, which is partially owned by Central Vermont Public Service. Entergy Corp., the owner of Vermont Yankee, and the state’s utilities couldn’t agree on a purchase price, and so as of next year, all of the electricity from the plant will be sold out of state.
The “gap” Page describes is referred to by utilities as an “open portfolio.” Utilities typically leave a percentage of their portfolios open in order to get the best prices on the market, according to Robert Dostis, a government affairs executive with Green Mountain Power.
GMP expects to pay less, not more, for electricity over the next few years.
“You want a balance — long-term fixed contracts provide stability, but you also want to keep a portion open to take advantage of changing markets,” Dostis said. “With lower market prices right now, it’s advantageous for us to purchase power at much lower cost.”
Elizabeth Miller, commissioner of the Department of Public Service, says she would expect to see a percentage of utilities’ portfolios open.
“We wouldn’t want a 100 percent commitment,” Miller said. “It (the open portfolio) is not surprising or troubling because there is excess power on market right now.”
Vermont tends to favor long-term contracts as a hedge against higher future prices, but portfolios are traditionally more open so utilities can make decisions going forward about resources, Miller said.
CVPS had a bigger open position than Green Mountain Power had, Miller said. The two companies merged last month. GMP, owned by Montreal based Gaz Metro, is now the state’s largest utility, delivering power to more than 70 percent of Vermont consumers.
Page’s report says over the next three years the state will be more dependent on out-of-state and international power.
About 23 percent of the state’s electricity will come from Hydro-Quebec, a massive hydro project in Quebec, Page says. He estimates that in-state wind generation from turbine farms in Lowell, Milton and from the Deerfield project, existing wind projects and Vermont’s share of the Granite Reliable wind farm in Coos County, N.H., will generate 9 percent of the state’s power. Methane and biomass each will provide 4 percent of Vermont’s electricity. Solar, on the other hand, will account for 1 percent of the power on the grid.
“Looking at the contributions to our electric power portfolio, it is clear that apart from a dramatic, unexpected change in the amount of power anticipated from wind or biomass, very little new electric power will be generated within Vermont’s borders,” Page says.
The state’s utilities, he says, are replacing Vermont Yankee power with electricity from the region power market which is dependent on natural gas and other fuel sources.
Editor’s note: The headline originally said there was a 31.2 percent gap. The correct percentage is 31.4 percent.
