[A] recently ousted Department of Public Service official has backed up claims made in an anonymous letter last week that his former boss acted improperly in an ongoing Green Mountain Power rate case.
Brian Winn, former director of finance and economics for DPS, said Commissioner June Tierney had not acted in the public interest when dealing with GMP, the state’s largest utility.
“Commissioner Tierney would often explain that she was charged with the public interest which may be different from the ratepayer’s interest,” Winn writes. “But in my opinion, many of the actions outlined below are in neither the public interest nor the rate payer’s interest. The net effect is that the Department approached the GMP the rate case with at least one hand tied behind it’s back.”
Other department officials joined Tierney in disagreeing with Winn’s assessment.
In his statement filed Tuesday with the state’s Public Utility Commission, Winn offers a point-by-point assessment of 15 bullet-pointed claims in the anonymous letter, most of which are accusations leveled directly at Tierney.
The anonymous letter alleges that Tierney and Mary Powell, chief executive of GMP, cooperated to push through a rate proposal that benefits the company at the expense of ratepayers. Both GMP and the DPS filed initial responses last week with the PUC categorically denying the claims in the letter.
In his comments, Winn says that he has no evidence that GMP “colluded” with Tierney, adding that the company’s conduct in this case is “consistent with most investor owned utilities.”
In April, GMP filed for a 5.45 percent rate increase effective Jan. 1, 2019, to be offset by the recent federal corporate tax cuts that mean ratepayers will actually see a slight decrease in their rates through Sept. 1, 2019.
But Winn says that Tierney prevented the department from living up to its duty to serve as a ratepayer advocate in this case, focusing instead on pursuing policy objectives.
He said that she failed to deploy enough experts, or give them enough time, to properly vet the case; prohibited staff from pursuing imprudence claims against the utility; and refused to hire a consultant with a proven track record of creating savings in similar cases.
“There were times in this case where I only had a few days to review a mountain of documents before completing my testimony,” he wrote.
Additionally, Winn wrote that when his expert testimony for the case deviated from the commissioner’s policy positions, portions of his expert opinion would be omitted.
Tierney declined to comment Tuesday on specific claims about what she told staff to do or which consultants she decided to hire. She said in an email Tuesday that some of the more general accusations about how she weighed policy priorities with ratepayer needs were part of the job — made explicit by her role overseeing the directors of both planning and public advocacy.
“In my view, this signals a clear legislative intent that it is the responsibility of the Commissioner to ensure that the Department’s policy and advocacy roles are coherently integrated in its work,” she said.
Tierney added that there was nothing unusual about the time given for due diligence in this rate case. “Under Vermont law, a rate case must be completed within a set period of time – generally 7.5 months. This case was no exception,” she said.
James Porter, director of advocacy at DPS, and Daniel Burke, special counsel for the agency, submitted an official statement with the PUC on Tuesday defending Tierney’s handling of the rate case and her statutory obligation to balance competing interests in representing the public.
“Each person will have a different perspective on how to best balance those interests,” they write, “absent some unifying direction, the Department’s review of petitions would be a cacophony of different perspectives, with one witness recommending denial of a petition and another recommending approval.”
Porter and Burke go on to suggest that Winn was an outlier in his unwillingness to accept the outcomes of these debates.
“Among expert staff it is always healthy to have robust debate and honest disagreement regarding how competing priorities should be balanced; where the dynamic goes awry is when one staff member believes that he or she is the only voice of reason and theirs is the only way to represent the public interest,” they write.
GMP submitted its own filing Tuesday accusing Winn of relitigating the issues in the rate case, such as whether the savings from investment in new projects should be paid back to ratepayers now or over the next 25 years.
“Mr. Winn’s comments do not address, and certainly do not refute this record evidence, but instead ignore this evidence, and other extensive supporting testimony explaining how the projects benefit customers,” wrote Geoffrey Hand, an attorney for GMP.
A key claim in the anonymous letter is that GMP used an “accounting gimmick” for three solar and battery storage — or “microgrid” — projects and a nine-month rate year to make it appear that there would be no rate increase. The unnamed author claims that there will actually be an 8 percent rate increase after the tax credits expire.
GMP said in its statement last week that it “has been clear” in all filings and customer communications that the underlying rate increase, now requested for 5.43 percent, will go into effect following the nine-month period.
The company’s spokesperson, Kristin Kelly, disputed in an email Tuesday that any further increases were predetermined.
“We do not know what future rates will be, and any future rate change needs to be vetted and approved by the PUC, but do know that GMP’s approach delivers more benefits to customers both in 2019 and over the life of the project,” she said.
In his letter, Winn states that the department effectively supported a staggered 8 percent rate hike by approving GMP’s microgrid projects in Milton, Essex and Ferrisburgh. The PUC has not yet made a decision on those projects.
The idea behind the microgrid projects is for GMP to draw on stored energy from the batteries during peak periods, when wholesale electricity is most expensive, to lower the amount of electricity it needs to purchase from the grid operator — ultimately saving ratepayers money.
However, Winn says in his letter that he finds the “degree of uncertainty around the economic benefits” from the projects disconcerting and had recommended the department ask the PUC to prevent ratepayers from having to shoulder the more than $30 million cost of the projects.
“The value of the projects is highly dependent on factors such as market price, the success in timing of peaks and other assumptions,” wrote Winn.
GMP said in its filing Tuesday that the projects were economically viable and would benefit ratepayers over time.
“As GMP’s testimony explained, GMP is pursuing these innovative projects because they provide a range of important benefits for customers and will reduce costs for customers by a total of $5.4 million over the life of the projects,” said Hand, the company’s attorney.
Hand also writes that GMP found that it would benefit ratepayers to see the financial benefits of these projects in the short term, as opposed to spreading them over 25 years.
“This is just one of many instances where Mr. Winn’s comments fail to account for or acknowledge the extent to which the issues he raises have already been extensively litigated in this case,” Hand writes.
Winn said in a telephone interview that it was not hard feelings that drove him to make his thoughts on the case public, but rather his desire to offer a “dry assessment” on what he saw as a “good faith effort” by the author of the anonymous letter.
“I’m in a position where it’s not as detrimental to me to take the risk,” he said.
In an interview Monday, PUC Chairman Anthony Roisman said the commissioners will discuss the letter and comments on it during their internal meeting on Wednesday.
Roisman said that although uploading the letter as a public comment had been characterized as “unusual” in the media, the commission was actually following standard procedure in making it public.
“We didn’t have a choice,” said Roisman. “We would have violated state law if we would have ignored it.”
He added that the “level of detail” contained in the letter, however, was atypical when compared to the more general public comments commissioners typically receive, such as discontent over proposed rate increases.
After reviewing the anonymous letter and responses, the commissioners could decide to ask for additional information from the parties specific to the proceedings at hand if they feel the evidence on record is lacking, Roisman said.
“Our job is not to investigate any agency in the state, including the department,” he added.
He noted that the letter, filed as a public comment, is not in itself a piece of evidence the PUC could base decisions on for any of the cases.
Winn concludes his letter saying that Gov. Phil Scott and the Legislature need to separate the energy policy and ratepayer advocacy functions of the department to avoid some of the problems that have arisen from these GMP cases.
“The Department of Public Service is clearly in need of leadership and structural change,” he writes.
Rebecca Kelley, spokesperson for Scott, said in an email yesterday that the governor retains confidence in Commissioner Tierney and the “thorough, robust” process of ratemaking cases in general.
“There will be a full, fair and transparent airing of the facts as part of the PUC review, and the Department’s work to put downward pressure on rates will be clear to Vermonters,” said Kelley.
