by Alan Panebaker April 17, 2012 vtdigger.org Richard Saudek, a former state utility regulator, said thereâ s no easy answer to the question of whether the Legislature should pass a law requiring Vermontâ s two largest utilities to give $21 million in â windfall’money to ratepayers.
Former Public Service Board Chair Richard Saudek testifies on the implications of the Legislature intervening in an open docket. Photo by Alan Panebaker
Saudek, the first commissioner of the Vermont Department of Public Service, explained to lawmakers why they shouldnâ t intervene in the Public Service Board case, which is an open docket now before the quasi-judicial body.
â The wisdom of jumping into a case at this point, I think, is questionable, regardless of which side youâ re on in the issue,’Saudek said.
In what has become one of the hottest issues this legislative session, some lawmakers have pushed for a bill that would direct the Vermont Public Service Board to place a condition on a merger agreement between the two power companies that would require a $21 million cash payout or rebate to ratepayers.
Central Vermont Public Service, the stateâ s largest utility, and Green Mountain Power, Vermontâ s second biggest electric company, were bailed out by ratepayers when the two utilities were on the verge of bankruptcy. In 2001, the Vermont Public Service Board approved a rate increase as a result of an â imprudent’contract state utilities entered into with Hydro-Quebec. The agreement was a sharing mechanism that could be triggered by the sale of either utility. In 2007, Gaz Metro purchased Green Mountain Power, and the company struck a deal with the state to return money to ratepayers through efficiency savings and agreed to a settlement with AARP for a pilot program for low-income Vermonters.
Last year, Green Mountain Power, a subsidiary of Montreal-based Gaz Metro, made a bid to merge its Vermont operations with CVPS. Under the 2001 sharing mechanism, CVPS must repay ratepayers if it enters into a profitable merger.
Now lawmakers and AARP are pushing for a cash rebate to CVPS ratepayers. That move would essentially override a deal made by the Shumlin administration whereby Green Mountain Power and Central Vermont Public Service Corp. would invest $21 million in an efficiency fund that would go in large part to a low-income weatherization program.
In testimony about the $21 million â windfall’on Tuesday, former commissioner Saudek told members of the House Commerce and Community Development Committee that the Legislature should let regulators do their jobs.
Legislative intervention could undermine the authority of the Department of Public Service, according to Saudek. The department has a significant amount of clout, he said, and utilities have to deal with it. A legislative â fix’could change that for the future.
â If youâ re a utility, you would go to the Legislature first before you go to the department,’he said.
On the other hand, he said, it is the responsibility of the Department of Public Service to explain to the Legislature and the public why its memorandum of understanding with the utilities is in their interest.
â Itâ s incumbent on the department to at least explain to you people why this is just as good of a deal as the other,’he said.
That said, Saudek said he didnâ t necessarily think ratepayers shouldnâ t get a refund.
As for the fact that Gaz Metro, a Canadian utility, will control a majority of the distribution utilities in the state, Saudek said, â The fact that big decisions are made elsewhere will ultimately have an effect on how the utilities behave toward Vermont.â
Saudek gave testimony on the first day of weeklong House committee hearings on the implications of legislative intervention into the Public Service Board process.
So far, four representatives have tried, without success, to get their proposal to the House floor as an amendment.
House Bill 718 is â housekeeping’legislation for the Department of Public Service and the Public Service Board.
Reps. Cynthia Browning, Patti Komline, Chris Pearson and Paul Poirier, see the bill as a vehicle for an amendment and they plan to hold a meeting at 10 a.m. on Thursday with the amendmentâ s sponsors (Poirier says there are 74) to announce plans to move the bill forward before the session ends. (Adjournment was originally slated for April 27, but that early end date now appears unlikely.)
Browning tried to introduce a floor amendment addressing the issue to this yearâ s energy bill but House Speaker Shap Smith said it was not germane to the underlying bill. H.718 is more relevant to the issue, and Browning and others say it was stalled in order to block her floor amendment.
The bill, H.718, stalled in the House Committee on Appropriations, but the House voted last week to return it to its original committee and take testimony on the merger issue.
Committee Chair Bill Botzow said the purpose of the hearings, which will continue throughout the week, is to get a grasp of the complicated utility issue.
Botzow said hearings will let the committee and the House understand the implications of the merger.
â I think the Speaker decided if thereâ s going to be a vote on this issue, it should be an informed vote,’he said. â We want to understand what it is weâ re talking about and what are the implications of our decisions.â
Last week, the committee took a straw poll with a majority of the members saying they were reluctant to intervene in the open docket, Botzow said. He said it will be up to the committee to decide whether an amendment is friendly or unfriendly to the bill.
Rep. Heidi Scheuermann, a member of the committee, said she thinks ratepayers should get cash refunds.
One of the issues, she said in committee, is that many people feel the Public Service Board is not accessible enough.
â People donâ t feel theyâ re getting a fair shake, and theyâ re going to their peopleâ s representative to do that,’she said.
The windfall issue caught fire when lawmakers began to realize that the $21 million investment would come from an increase in rates. That investment would then create $25 million in future benefits for ratepayers, according to the agreement.
The weatherization program is based on one approved by the board in 2007 when Gaz Metro purchased Green Mountain Power.
The Senate has also looked into an amendment that would direct the Vermont Department of Public Service to reopen negotiations with the utilities.
Rep. Tony Klein had said he would introduce a resolution addressing the windfall, but on Tuesday he said the proposal hadnâ t gone anywhere.
April 17, 2012 vtdigger.orgEditorâ s note: Anne Galloway contributed to this report.