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#10-06
April 14, 2006
GREEN
MOUNTAIN POWER
ASKS
FOR 11.95 PERCENT INCREASE IN RATES;
INCREASING
POWER COSTS PRINCIPAL FACTOR
COLCHESTER, VT
. . . Green Mountain Power (NYSE: GMP) today asked the Vermont Public Service
Board to authorize an 11.95 percent rate increase to go into effect on January
1, 2007. The Company said 88 percent of the increase is due to rising power
costs in a post-Katrina wholesale market, while the remaining 12 percent is due
to increasing state and regional transmission costs.
Green Mountain Power’s rates have risen less
than three percent since January 2001. During the same five-year period,
the consumer price index rose 13 percent and wholesale energy costs increased
93 percent. Vermont as a whole has the
second lowest rates in New England due in
large part to the low-cost Vermont Yankee and Hydro Quebec contracts.
Among Vermont’s
five largest utilities, Green Mountain Power’s overall average rates are
currently tied with Burlington Electric’s for the lowest, based on the
most recent state data available.
“We have been able to keep our rates relatively flat over the last
several years because we have done a good job of managing our power supply
costs” said Chris Dutton, president and chief executive officer.
“Our low-cost power contracts with Vermont Yankee, Hydro Quebec and
Morgan Stanley have brought significant value to our customers. However, as the
Morgan Stanley contract expires at the end of this year, we are forced to
replace it in a significantly higher cost marketplace.”
The Morgan Stanley contract currently supplies
approximately 15 percent of Green Mountain Power’s power supply
portfolio.
Higher energy costs in New England are
attributable to several factors, including the run-up in global oil and natural
gas prices and concern about the impact on the wholesale market of a predicted
abnormally active hurricane season.
Rising energy costs are driving up rates for other
utilities in Vermont, New England and across
the country, with pending increases running as high as 72 percent in Maryland. In Vermont, rate hikes
pending or approved in the last year range from 10 percent to 23 percent.
(A list of Vermont
rate increase requests is attached.) In New England,
rate hikes pending or approved in the last year range from four percent to 60
percent. (A state-by-state regional summary is also attached.)
“While we know any increase in rates is difficult for our customers, we
believe we have been able to keep our request comparatively low through our
aggressive power supply management and efficient operations,” said Mr.
Dutton. “It is also important to note that we are maintaining a
generation mix that has extremely low air emissions. Finally, we are proud of
our superior customer service as measured by service quality standards
established with state regulators, including low frequency and length of power
outages and high customer responsiveness in our call center.”
Green Mountain Power operates in a highly efficient manner, serving 464
customers per employee. The other four largest utilities in Vermont ranged from 367 customers per
employee to 155 customers per employee in 2004, which is the most recent data
available.
If
the full rate request is approved, the monthly bill for average residential
customer using 650 kwh would increase by $10.25, from $85.74 to $95.99.
Also, with the encouragement of the state legislature, Green Mountain Power
separately filed today an innovative proposal that would establish a new
regulatory framework for the Company. Last year, the General Assembly
passed legislation (Act 61) that provided additional authority to utilities and
regulators to propose alternative regulation plans with a particular emphasis
on the public policy goal of separating the financial success of a utility from
increased electricity sales, thereby removing potential barriers to energy
conservation.
Green Mountain Power is the first electric utility in
the state to file a plan under this new law. (Vermont Gas Systems filed its
plan in September 2005). Act 61 requires the Public Service Board to
report to the General Assembly on the number and progress of utility
alternative regulation initiatives by January 15, 2007.
If
approved by regulators, the proposal would create opportunities and incentives
for the Company to become more efficient, improve customer service, remove
incentives to benefit from increased electricity sales, streamline cost
recovery, share efficiency savings with customers, increase credit quality, and
reduce regulatory and borrowing costs borne by customers. In addition,
Green Mountain Power proposes directing additional funding to Power Partners,
Green Mountain Power’s low income assistance program.
“This innovative proposal will advance important public policy
objectives, provide benefits to our customers and raise the bar on our already
efficient operations. In addition, an anticipated improvement in the
company’s credit quality will allow the Company to borrow capital at more
attractive rates which will hold down costs for our customers,” Dutton
said. “This is especially critical as we begin discussions about
replacing expiring power contracts with Hydro Quebec and Vermont Yankee.”
Vermont law provides the
Public Service Board with a full year to consider utilities’ alternative
regulation proposals.
Green Mountain Power Corporation (www.greenmountainpower.biz)
is a Vermont-based energy services company serving 90,000 electric customers.
-30-
For
further information, please contact Dorothy Schnure, Manager of Corporate
Communications, at 802-655-8418.
2005 and
2006 New England
Electricity Rate Increases (pending or approved)
State
Range of Increase Requested
Connecticut
4% to 22%
Maine
8% to 10%
Massachusetts
4% to 55%
New Hampshire
12% to 60%
Rhode Island
10% to 25%
Vermont utility rate increase
filings in past 12 months
Utility
Date of Request or Implementation
Increase Requested
Village of Hyde Park Electric Department
5/16/2005
14.81%
Village of Johnson Water & Light Department
5/16/2005
14.83%
Town of Readsboro Electric Department
6/16/2005
15.27%
Town of Stowe Electric Department
6/16/2005
9.94%
Village of Jacksonville Electric Department
7/1/2005
12.72%
Lyndonville Electric Department
11/16/05
17.68%
Vermont
Electric Cooperative
12/1/05
14.35%
Vermont
Gas
3/10/06
(10/11/05 requested and 11/05 took effect)
16.7%
13.6%
Burlington Electric Department
3/16/06
22.86%
Green
Mountain Power
4/14/06
11.95%