Vermont Electric Co-op will not raise rates

Vermont Electric Cooperative (VEC) announced that the Co-op will not seek a rate increase in January 2012. Favorable conditions including higher revenues due to increased electricity sales, in combination with reductions of several key operating expenses, are helping VEC to stabilize rates. While the annual demand for power is projected to increase by 2.7 percent, the cost for VEC to purchase power has decreased. Additionally, reduced labor costs due to technology improvements from automated meters and lower interest costs have helped to control operating expenses.
VEC reviews electric rates on an annual basis to determine whether adjustments are needed. VEC will not be requesting approval from the Public Service Board for a rate change in January. ‘At a time when Vermonters continue to struggle with economic recovery, we are very pleased to report that VEC will be holding the line on rates,’ said Dave Hallquist, CEO.
‘VEC’s power supply team has been very successful in securing contracts to purchase power at favorable rates. And, VEC continues to be a leader in using technology like automated meters to hold expenses down while keeping the lights on,’ continued Hallquist. In recent years, VEC has dramatically improved its reliability performance by cutting outages in half.
Improvements in VEC’s financial stability were reflected earlier this year when Standard & Poor’s upgraded VEC’s credit rating from BBB to A-. This improved rating, in combination with historically low interest rates, has allowed VEC to lower its borrowing costs while investing in infrastructure upgrades to improve system reliability. Additionally, VEC has secured millions of dollars in grant funding for capital improvements, offsetting the need to seek support for these improvements through electric rates.
Looking past 2012, VEC will be closely monitoring several key drivers of potential rate increases. While higher electricity sales, primarily in the commercial sector, indicate signs of improvement in the economy, VEC will be watching closely to see if this trend continues. One major concern is that regional transmission costs are expected to rise, resulting from major infrastructure improvements to the New England electric grid, and this is likely to be reflected in rates in 2013 and beyond.
Another concern for VEC is the change in weather patterns which has resulted in more frequent major storms causing widespread power outages which are costly to restore. During the past year, VEC has been successful in securing Federal Emergency Management Agency (FEMA) funding to offset much of the expenses associated with these types of outage events. For example, VEC received more than one million dollars from FEMA for restoration costs associated with the December 2010 windstorm which severely damaged parts of the VEC electric grid. Without this type of funding, storm recovery costs could translate to higher electric rates.
VEC’s next annual budget review will begin in September of 2012. ‘One of our objectives at VEC is to provide realistic expectations around electric rates,’ explained Hallquist. ‘This year we have worked to avoid a rate increase, but we expect that upward pressures next year, such as increasing transmission costs, will require higher rates in 2013. We will continue to carefully manage the costs that are within our control.’
VEC is Vermont's third largest electric distribution utility serving more than 34,000 co-op members in 74 towns throughout northern Vermont. Founded as a cooperative, VEC is locally owned by its consumers or members. A national leader in technology and innovation, including the use of automated meters, VEC has been providing energy solutions to Vermonters since 1938.
VEC. 11.21.2011