by Alan Panebaker vtdigger.orgIf an unprecedented merger between the state’s two largest utilities goes through, the state’s electric transmission utility is bound to see big changes.
Just how big those changes are is up to the Vermont Public Service Board ‘ a quasi-judicial entity that must approve the marriage between Green Mountain Power and Central Vermont Public Service.
At the Statehouse Wednesday, the major players had their say in the proposed merger and what happens with the Vermont Electric Power Company (VELCO) ‘ the utility that operates the more than 700 miles of electric transmission lines in the state. Elizabeth Miller, commissioner of the Department of Public Service, Sen. Vince Illuzzi, R/D-Essex-Orleans, who has questioned the impact of the merger on VELCO, and Kerrick Johnson, an executive with VELCO, testified before the House Commerce and Community Development Committee.
Whoever controls the state’s transmission system has a say in major electricity decisions in Vermont. Currently, the two largest utilities control nearly 80 percent of the transmission utility, and together, they would have a majority share of votes of the affairs of VELCO, since the company is owned by the state’s utilities in proportion to their share of the electricity market.
What happens to VELCO has caused a stir among ratepayers, politicians and utilities alike. Fifteen parties to the merger case intervened in the Public Service Board proceeding, which started in September. One of the worries cited in the complaints is too much concentration of power in the hands of one new large utility. Illuzzi is concerned that concerned that the large new utility, owned by the Canadian parent company, Gaz Metro, would bully smaller, publicly-owned co-ops and municipal utilities.
Illuzzi intervened last fall on behalf of himself and a group of ratepayers asking for the state Department of Public Service, who represents ratepayers in front of the board, to appoint independent counsel. Elizabeth Miller, commissioner of the department, is married to a partner at the law firm Sheehey, Furlong & Behm, who represents Green Mountain Power.
Illuzzi backed off once the department hired former chairman of the Public Service Board Michael Dworkin to provide independent testimony on the VELCO issue.
Dworkin filed testimony Tuesday. The 40 pages specifically address the VELCO issue. The gist of the testimony is that the utilities’ proposal to shift one-third of the ownership of VELCO to a low-income trust is not enough to ensure the public’s interest will be protected.
‘While we understand [what the utilities plan to do],’ Miller said. ‘We don’t agree it’s the best way to achieve the goal of serving the public interest.’
Part of Dworkin’s proposal would be to hire a nomination board that would nominate at least five of the 13 director’s on VELCO’s board to be ‘public good directors.’ The board would ensure that nominees are qualified and knowledgeable about finance, corporate governance, and the industry. Currently, Miller said, VELCO ‘ a for-profit corporation ‘ does not have nominating criteria for membership on the utility’s board of directors. The only requirement for nominees is shareholder approval.
Ensuring the management of VELCO takes the public interest into account is crucial, Miller said in testimony.
‘The testimony insists that the goal should be whatever is in place lasts long term and there is assurance that the public interest aspect continue,’ Miller said.
As for the the department’s independence from the utility, given a perceived cozy relationship between Gov. Peter Shumlin ‘ who appointed Miller ‘ she said the governor expects the department to kick the tires on the deal and ensure it is good for the public.
‘You will find significant disagreements between the department and the utilities,’ Miller said.
Dworkin’s testimony for the department also addresses the relationship between Transco, which physically owns the transmission lines in the state, and VELCO, which manages the system. Both are owned proportionately by Vermont utilities.
Under the utilities’ proposal, Transco could hypothetically enter into a new agreement with another organization and essentially fire VELCO.
Dworkin’s testimony proposes that the two entities ensure provisions in place to protect the public interest would continue in any future relationship with VELCO or any other managerial entity.
That future uncertainty is what has caused some of the unease about the merger between the utilities and particularly is ramifications for VELCO.
Miller assured lawmakers Wednesday that if there is a change of control of Gaz Metro or VELCO, that would be subject to approval by the Public Service Board.
Illuzzi, who put his motion with the board on hold, said he still has some concerns.
‘The essence of my concern is that by selling a controlling interest in the grid to a foreign for-profit corporation with a duty to its stockholders, I thought the interest of Vermonters would be second or third instead of where it should be, which is priority No. 1,’ Illuzzi said in testimony.
The differences between Illuzzi and the department have calmed somewhat, however, with Dworkin’s testimony. Tapping Dworkin to give a third-party perspective, he said, quelled some concerns. Illuzzi said the other ratepayers who intervened with him can still continue to be active in the proceeding. He also filed a petition with the Federal Energy Regulatory Commission which is still pending.
Illuzzi’s filing with the Public Service Board also addressed a map created by VELCO that showed a proposed transmission line through the Northeast Kingdom.
Kerrick Johnson, vice president of external affairs for VELCO, dismissed any chance of this map materializing into anything during his committee testimony Wednesday.
‘If people think there is a stealth transmission of any kind or way we could build transmission that would escape notice somehow, that is just not the case,’ Johnson said in testimony.
With Dworkin’s testimony on everyone’s mind, Johnson and representatives for Green Mountain Power and CVPS were hesitant to offer any comments on the new filing.
Robert Dostis, a spokesman for Green Mountain Power, said the utilities will need to review the filing closely. He said the utilities’ initial proposal to transfer a one-third share of VELCO to a low-income trust was sufficient from their point of view.
‘At least when it came to VELCO, we made sure we didn’t have a majority share,’ Dostis said. ‘We thought our proposal addressed that.’
Dostis testified that the merger will bring efficiencies to the energy market in Vermont that will allow the new Green Mountain Power to save ratepayers $144 million in the first 10 years.
Ensuring those savings as well as addressing a so-called windfall mechanism, where the utilities will be required to pay back ratepayers for a bailout due to a bad deal with Hydro-Quebec will be the subject of further filings on Jan. 20, according to the Department of Public Service.
January 11, 2012 vtdigger.org
Miller: Public interest crucial in managing VELCO after GMP-CVPS merger
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