Plan Designed to Protect Manufacturing Jobs in Vermont and Provide Greater Certainty to GMP Customers and GlobalFoundries
Vermont Business Magazine Green Mountain Power (GMP) today announced an agreement with GlobalFoundries (GF) to support its petition to the Public Utility Commission to become a self-managed utility at its Essex manufacturing site starting in 2023. If approved, GF would directly manage its own transmission connections, distribution system, and power supply costs according to its own goals, needs and operational standards. The agreement is aimed at strengthening GF’s position in Vermont with its nearly 2,200 manufacturing jobs, while also helping to protect all other GMP customers from rising costs. The plan is subject to regulatory review and approval.
“We know the tremendous value GF provides to the Vermont economy, and that’s why we’re supporting this collaborative solution to help strengthen GF’s Vermont operations while protecting our other customers from cost impacts,” said Mari McClure, president and CEO of GMP. “For decades, we’ve worked closely with IBM and now GF to ensure they can thrive in Vermont with competitively priced power. No other customer comes close to the size and energy load of GF, so we’ve used innovative models and existing regulatory guidelines that recognize the uniqueness of this facility.”
The loss of GF power usage in Vermont could have a negative impact on all Vermont electricity customers. This proposal is designed to provide a lasting solution that will help GF manage its own costs and risks in line with its other manufacturing facilities in the U.S. and worldwide, and will allow GMP and Vermont Electric Power Company (VELCO), Vermont’s transmission provider, to minimize any impact on the rest of Vermont.
“We appreciate the close collaboration with GMP and VELCO on this important initiative, which will help GF conduct business more affordably in Vermont,” said Pradip Singh, vice president and general manager of GF Fab 9. “As the state’s largest private manufacturer, GF consumes more electricity than any other single customer of GMP, and this agreement allows us to remain globally competitive by positioning GF for future investments in equipment and personnel.”
GF is the largest electricity customer in Vermont by more than double, and if approved, it would become the third largest utility in the state behind GMP and VEC. Due to its size, GF has for years been the only customer in the State of Vermont in the “transmission class” of electricity service, meaning it takes service at a higher voltage than all other customers in addition to owning, maintaining and investing in its own transmission and distribution system. This uniquely positions GF to take on the responsibilities of becoming its own utility, directly serving only the plant’s needs.
This agreement protects customers from economic impacts through a four-year transition period. During this time, GMP will supply GF’s electricity needs through a power purchase agreement, and GF will also pay a $15.6 million transition fee to benefit GMP customers by offsetting most of the costs associated with the transition. After the transition period, GF will be served directly by VELCO and will also establish a $700,000 fund so VELCO can manage any transmission cost changes to other utilities due to GF becoming its own utility. During the transition period, GF will continue its corporate and site-specific renewable and carbon-free energy purchases planning and continue and expand energy efficiency investments at the facility, which have been significant over the years.
“This proposed change makes important strides to meet the unique needs of GF, which plays a critical role in Vermont’s economy,” said Lisa Ventriss, president of Vermont Business Roundtable. “Kudos to GMP and GF for their work to reach an agreement that will give the company greater control over its energy portfolio, and to stay competitive in the global markets in which they operate. At the same time, this proposal importantly aims to serve GMP’s remaining residential and business customers by creating greater certainty and stability, which is so important to Vermont’s economic recovery from the pandemic.”
The details of the proposal filed with Vermont Public Utility Commission will also be in the regulatory section of GMP’s website.
In part, the Petition states:
Petitioner Green Mountain Power Corporation hereby submits this Petition to the Vermont Public Utility Commission in support of a limited modification to GMP’s service territory, pursuant to 30 V.S.A. § 249, in order to separate GLOBALFOUNDRIES U.S. 2 LLC’s Essex, Vermont facility from its current customer service area in the event that the Commission approves GF’s separately-filed petition under 30 V.S.A. § 231 to operate a Self-Managed Utility (SMU) (the GF 231 Petition).1 GMP supports GF’s proposed SMU, so long as it is implemented consistent with the three-party Memorandum of Understanding (Transmission MOU) between GF, GMP, and Vermont Transco LLC & Vermont Electric Power Company Inc. (latter two referred to together as “VELCO”), as described further in GMP’s motion to intervene in GF’s 231 Petition proceeding. In the event the Commission approves the GF 231 Petition, GF will cease to take service from GMP under Transmission Rate Class 70 retail service for its Essex Campus starting on October 1, 2022, and instead will take Local Network Service directly from VELCO’s transmission system. As a result, the limited alteration of GMP’s service territory is necessary to reflect this change and to ensure the accuracy of GMP’s service territory map going forward. In support of this Petition, GMP offers the following:
1. GMP is a Vermont corporation operating as an integrated electric utility and certified BCorp in the State of Vermont, and is subject to the regulatory authority of the Commission under 30 V.S.A. § 203.
2. As recognized in previous proceedings, GF is a unique GMP customer.2 GF is currently GMP’s largest retail customer by a significant margin, and the only customer taking service under GMP Transmission Class Tariff (Rate 70). Under this tariff, GF takes service through several substations on the GF Essex Campus at the 115kV level, delivered through its extensive distribution grid, which GF already owns and maintains. GF is the only retail customer in the state with 115kV service.
3. In the GF 231 Petition, GF is requesting approval to become its own utility serving only itself. As such, GF would independently manage its own distribution system and supply its own load through the region’s wholesale power market as separate and distinct from GMP.
4. GF proposes to commence operating as its own utility beginning on October 1, 2022, which coincides with the expiration of GMP’s current Multi-Year Regulation Plan.
5. GF, GMP, and VELCO have executed a Memorandum of Understanding (the “Transmission MOU”) setting forth terms for the transition of GF from GMP customer to SMU (Exh. GMP-JC-1). The Transmission MOU incorporates a Letter of Intent between GF and GMP which includes the payment of certain fees to GMP during a four-year transition period and also includes payments to ensure other Vermont Distribution Utilities are made whole for expected changes in transmission costs, among other terms. (Exh. MOU-1 to Transmission MOU). The Transmission MOU also defines the area that will be excluded from GMP’s current service territory and where GF will serve its own electric needs, and outlines the transfer of certain equipment and facilities necessary to give effect to the proposed structure.
6. If GF’s 231 Petition is approved, only the area of the GF campus located within the Village of Essex Junction and the Town of Essex (the “GF Essex Campus”) would be transferred out of GMP’s customer service territory, as delineated in the map included with the Transmission MOU (Exh. MOU-2 to Transmission MOU). GMP’s service territory otherwise would remain unaltered.
7. GF’s property in the Town of Williston will continue to be part of GMP’s service territory. After implementation of the SMU and related facility transfers, GMP will own the substation there and serve any customers who operate at that site. GMP and GF will cause the metering point to move to the Williston property so that it is entirely separate from the GF Essex Campus.
8. The technical aspects of GF’s separation from GMP as a customer and its operation as an
SMU will be reviewed by the Commission in the GF 231 Petition matter, including
approval of the Transmission MOU. This § 249 Petition is limited to review of the modification to GMP’s service territory necessary to give effect to GF’s transition to an
SMU, only in the event that the Commission approves GF’s § 231 Petition as proposed.3
9. As described further in the prefiled direct testimony of Josh Castonguay, submitted with this Petition and concurrently with GMP’s motion to intervene in GF’s § 231 Petition proceeding, GMP supports GF’s request to serve itself as an SMU, so long as it is implemented consistent with the Transmission MOU and the Letter of Intent appended to it. The proposed approach is acceptable to GMP because it mitigates the risk of GF’s departure from the state, which could result in significant costs for GMP customers and other utility customers, and significant economic disruption for Vermont. At the same time, the SMU transaction provides GMP customers reasonable financial terms and a clear timeline for a smooth transition to a system that recognizes GF’s unique status in Vermont and allows GF to control its own power supply needs, while shifting the market and operational risk associated with that responsibility from GMP customers to GF. The structure is designed to help GF to invest in its operations in Vermont and maintain its presence as a significant employer, taxpayer, and wholesale transmission customer.
10. The proposed removal of the GF Essex Campus from GMP’s service territory is based on the unique nature of GF’s current infrastructure and interconnection at the transmission level infrastructure. This will allow GF to take service directly from VELCO’s 115kV transmission system with minimal system changes and minimal cost to our other customers.
11. The limited modification of GMP service territory to allow GF to serve itself as an SMU is therefore consistent with the general good of the State of Vermont because it will help ensure GF’s continued presence in the state and will provide for more certainty and less risk for GMP customers with respect to GF’s contribution toward costs of service and electric supply.
12. In order to protect GMP customers in the future, the Transmission MOU includes a clause that requires any successors in ownership of GF’s Essex Campus be assigned all obligations required under any CPG that may be issued by the Commission for operation of the SMU under Section 231 in order to continue this proposed structure. In the event that GF ceases operations, or a successor fails to obtain approval for the assumption of such obligations, the Essex Campus would revert back into GMP’s service territory. GF and GMP have requested the Commission include this condition in GF’s § 231 CPG, and for clarity and consistency between these two related proceedings, GMP requests that the Commission include this same condition in its approval of this Petition as well.4
13. In approving a modification to utility service territories under § 249, the Commission gives consideration to the following factors:
(1) existing service areas;
(2) any voluntary agreements between or among two or more such companies filed with the Commission which define service territories of the companies;
(3) consistency with the orderly development of the region;
(4) natural geographic boundaries;
(5) compatibility with the interests of all consumers; and
(6) all other relevant factors (which typically includes consideration of the general good of the State).
14. As addressed in detail in Mr. Castonguay’s testimony, these factors favor Commission approval of the proposal to remove GF’s Essex Campus from GMP’s service territory. GMP and GF have entered into a voluntary agreement defining the separation of the Essex Campus from GMP’s service territory, and which clearly defines the benefits to GMP’s other customers. Furthermore, the modification to GMP’s service territory will follow the boundaries of GF’s Essex Campus property line and the natural geographic boundaries of the town lines between Essex and Williston along the Winooski River, and will help ensure the future of the property as a manufacturing facility to the benefit of the orderly development of the region. The overall plan supports GF’s continued operations in Vermont, is compatible with the interests of all consumers, and supports the general good of the State.
WHEREFORE, GMP respectfully requests that the Commission take the following steps:
1. Provide due notice to interested parties and hold a hearing as required by 30 V.S.A. § 249;
2. Consolidate any proceeding for this Petition with GF’s separate Section 231 Petition;
3. Make findings of fact and conclusions of law that the proposed modification to GMP’s service territory is consistent with the general good of Vermont;
4. Issue an order approving this Petition, contingent upon the Commission’s approval of the GF 231 Petition, to take effect on a date as approved by the Commission for commencement of GF’s operation as an SMU, but not before October 1, 2022; and
5. Impose conditions as part of this proceeding and the related GF Section 231 proceeding to require reversion of GF’s Essex Campus territory to GMP’s service territory in the event that GF ceases operations of its SMU, or any successor does not assume all obligations and restrictions applicable to GF’s operation of the SMU and all other conditions as set forth in the Transmission MOU and any Commission Orders issued in conjunction with these related proceedings.
6. Take such other actions as in the Commission’s judgment are necessary or advisable in connection with this Petition.
Signed this 17th day of March, 2021 in Burlington, Vermont.
1 Petition of GLOBALFOUNDRIES U.S. 2 LLC for a Certificate of Public Good, pursuant to 30 V.S.A. § 231 to
operate a Self-Managed Utility, Case No. 21-1107-PET, submitted March 17, 2021.
2 See e.g., Case No. 18-2850-TF (Order of 12/21/18) (GMP Rate Design Proceeding) (noting GF’s status as GMP’s
largest customer and only transmission class customer, and recognizing “the importance of GlobalFoundries’
contributions to Vermont’s economy…”).
3 In addition to this Petition and the GF 231 Petition, GF and GMP, with VELCO as needed, will jointly seek
Commission approval for substitution or transfer of Section 248 CPGs and any other appropriate approvals
necessary to give effect to the SMU and the proposed modification to GMP service territory, as described in Mr.
Castonguay’s testimony.
4 See Prefiled Direct Testimony of Gregory L. Rieder, filed on behalf of GF in Case No 21-1107-PET (GF 231
Petition).
About Green Mountain Power
Green Mountain Power (GMP) serves approximately 266,000 residential and business customers in Vermont and is partnering with them to improve lives and transform communities. GMP is focused on a new way of doing business to meet the needs of customers with integrated energy services that help people use less energy and save money, while continuing to generate clean, cost-effective and reliable power in Vermont. GMP is the first utility in the world to get a B Corp certification, meeting rigorous social, environmental, accountability and transparency standards and committing to use business as a force for good. GMP earned a spot-on Fast Company’s Most Innovative Companies in the World list four years in a row (2017, 2018, 2019, 2020). In 2019 GMP was honored by the Vermont Chamber of Commerce and Vermont Business Magazine with the Deane C. Davis Outstanding Vermont Business of the Year Award.
Source: COLCHESTER, Vt. – Green Mountain Power 3.17.2021