Vermont PSB approves merger of GMP, CVPS
by Alan Panebaker vtdigger.org The Vermont Public Service Board issued an order Friday morning approving a historic merger between the state’s two largest utilities: Green Mountain Power and Central Vermont Public Service Corp.
The board also approved a mechanism embodied in a memorandum of understanding between state regulators and the utilities that would allow $21 million to be invested in efficiency projects rather than refunded to ratepayers in a credit or cash.
Canadian utility Gaz Metro will be the parent company of the new Green Mountain Power, which will provide electricity to more than three-quarters of Vermont residents.
"This once-in-a-lifetime opportunity will save customers money and create additional significant benefits to customers of both utilities," said Mary Powell, president and chief executive officer of Green Mountain Power. "Our guaranteed cost savings and reliability improvements will help our customers with their own household and business budgets, and be a boon to Vermont's economy at a time when it is critically needed. We have set a goal to become the best small utility in the country, and with this regulatory approval, we can begin the work to make that goal a reality."
Larry Reilly, president and CEO of CVPS, said the merger was long overdue. "CVPS and GMP are among the best small utilities in America today, but together the men and women of the new GMP will be better positioned to serve our neighbors across Vermont," Mr. Reilly said. "There is justifiable pride in our record of customer service, reliability and storm response at CVPS, but I am confident that our employees will work with their new co-workers at GMP to provide even greater service levels in the years ahead. And I am confident that GMP will continue and expand CV's commitment to the communities we have traditionally served, including Rutland."
Governor Peter Shumlin, like many of his predecessors, has been a proponent of merging the state's two largest utilities, and has been an especially vocal proponent of this deal with Gaz Metro.
In a statement released shortly after the announcement, he said: “Today’s ruling by the Public Service Board affirms that the merger between Central Vermont Public Service and Green Mountain Power will bring tremendous benefits to ratepayers and is in the best interest of Vermont. I continue to believe, and this ruling reflects, that the terms as approved by the Board will produce extraordinary benefits for consumers and the state. This merger will result in dramatic cost savings of $144 million over the next decade and $500 million over 20 years, improve efficiency and lower energy costs for more homes, and ensure that the public interest will be represented in the oversight of our state transmission system. This ruling is great news for Vermont ratepayers."
The utilities filed a petition with the board in September.
Numerous parties intervened in the docket, and issues like how the utilities will account for $21 million in “windfall” money resulting from the merger and the makeup of the Vermont Electric Power Company became prominent issues at the Statehouse as well this legislative session.
The opinion states: “In sum, the evidence before the Board in this proceeding persuasively demonstrates that the approval of the proposed acquisition of CVPS, the subsequent merger of CVPS and GMP and the other related transactions, as described and subject to the conditions in this Order, will promote the public good and will not obstruct or prevent competition.”
As for the refund issue, the PSB wrote: “[O]n the whole, after considering all the evidence and relevant circumstances, we find the CEED Fund to be an adequate mechanism for achieving windfall recovery, not because the Petitioners and the DPS have offered a perfect or ideal proposal, but because it is one reasonable option and a negotiated term within a unique transaction that will directly deliver substantial and permanent savings to every ratepayer now served by CVPS and GMP,” the opinion states.
6.15.2012. vtdigger.org, Vermont Business Magazine, GMP, Governor's office.