Green Mountain Power, a subsidiary of Montreal-based Gaz Metro, will reduce electricity rates by 0.4 percent starting Oct. 1 as a result of the company’s recent merger with Central Vermont Public Service.
It’s the first time Green Mountain power has reduced rates since 1988.
This is a real boon for consumers and companies, company officials say, as the average annual increase in power rates is 3 percent to 4 percent. Rate increases have fluctuated from less than 1 percent to about 9 percent in recent years.
The 0.4 percent reduction is the equivalent of a 40 cent drop on a $100 monthly power bill, according to Dotty Schnure, spokeswoman for the company.
The savings for customers statewide is $2.5 million. More than 70 percent of Vermont ratepayers, or 250,000 customers, now get their electricity from Green Mountain Power, as a result of the merger in June with CVPS, the state’s largest utility.
Green Mountain Power officials say the merger made the anticipated 0.4 savings possible.
In a statement, Mary Powell, CEO of GMP, said: “Green Mountain Power is fully committed to a cost-effective future for the Vermonters we serve while also working to significantly improve services and reduce the frequency and duration of outages.”
Powell said customers are already “beginning to experience benefits of the recent merger through our ability to keep customer costs lower and through our improved response time to the weather events that hit hard many Vermont homes and businesses in July.”
Shortly after the announcement, press statements lauding the rate reduction were issued by Gov. Peter Shumlin, Department of Public Service Commissioner Elizabeth Miller, Frank Chioffi, head of the Greater Burlington Industrial Corp., Win Smith, CEO of Sugarbush Resort, GE Aviation in Rutland HR leader Justin Warsinskey and John Castaldo, president of the Central Vermont Council on Aging.
Miller said the rate filing “reflects the first year of guaranteed savings to customers required by the merger order.”
“It also sets a base from which future merger savings will be measured over the next decade, and shows us that the company is willing to work hard to hold the line on costs in order to deliver the benefits promised to customers in the merger,” Miller said.
Shumlin said the rate reduction is “a promising start for the new company as it works over the coming years to deliver on its merger promises.”
“This rate decrease is a good example of why I supported the GMP/CVPS merger, as Vermonters are already seeing the benefits of the merger through these real cost savings,” Shumlin said. “I have said for months that this merger will save money for Vermont families and help our businesses create jobs, and this great news is further evidence of that fact.”
Not everyone was as sanguine about what the deal means for ratepayers.
Rep. Cynthia Browning, D-Arlington, sought to pass legislation that would have required Gaz Metro to return $21 million to ratepayers that was borrowed by the company to pay off debts related to high priced power from Hydro Quebec. Had a rebate gone through, the rebate would have been $150 per customer on average, or $70 per residential ratepayer, she says.
The $2.5 million rate reduction, she says, pales in comparison with the $21 million that should have been refunded to consumers and businesses. Instead, Gaz Metro will offer $21 million in efficiency and weatherization savings to the state, which will be recouped in rates. Browning also says Gaz Metro, which hopes to save $226 million, thanks to efficiencies in operations and new technology, will use $80 million of that savings to pay for the merger.
“I’m happy they did it and I hope the later merger savings really materialize,” Browning said. “The rate reduction is a small amount compared with what they’ve already taken from ratepayers, which is by my estimation $120 million. The fact is the annual rate decrease might give back a benefit $2 million. Trying to take political credit for that is contemptible.”