Politically Thinking: Merger of utilities a $21M question

The continuing controversy over the $21 million “windfall” resulting from the merger between Green Mountain Power and Central Vermont Public Service has produced some very unusual political alliances.
The terms of the merger deal provide for GMP to pay a premium of $21 million over book value to purchase CVPS. In the late 1990s, when CVPS was facing severe financial problems, the Public Service Board authorized large rate increases as a way of preserving the company’s financial stability. The PSB also provided that, should CVPS ever be sold for higher than its book value, the windfall resulting from the sale should be shared with the CVPS customers who bailed the company out a decade and more ago.
The Shumlin administration’s Public Service Department and GMP have negotiated a plan by which GMP will fund $21 million in home weatherization projects over the next few years. The PSD and the utility argue that these weatherization projects will result in significant energy savings that will benefit all CVPS customers, by reducing the amount of power that the company will need to buy in the years ahead. The weatherization plan is having a hard time gaining traction in Montpelier, with an eclectic collection of lawmakers and others advocating instead for direct cash refunds to CVPS customers.
The defenders of the weatherization plan are Gov. Shumlin; officials in his administration such as PSB commissioner Elizabeth Miller, Speaker Shap Smith and his colleagues in the House Democratic leadership; and some community action agencies and contractors that carry out weatherization projects in the homes of lower-income Vermonters. The weatherization plan is also supported by a coalition of big businesses and large law firms that do not want the Legislature to set a precedent of directing the Public Service Board how to decide an open case.
If the $21 million were returned to CVPS customers in proportion to the amount of electricity they use, the principal beneficiaries would be manufacturers and other energy-intensive businesses in the CVPS service area, such as OMYA and General Electric’s Rutland plant. Estimated refunds for residential users would range between $75 and $100, or less than the cost of one month’s electricity for many households.
Defenders of the cash refund plan include the Republican State Committee and Republican gubernatorial candidate Randy Brock, who see this issue as one on which they can score political points against Shumlin. In fact, the GOP put out a fundraising email earlier this month that was critical not just of Shumlin but of the utilities as well. One can remember a time not too long ago, when Richard Snelling was governor, when the Vermont Republican Party and the state’s utility companies were hand-in-glove. Those days have passed.
Progressive legislators also want cash refunds for customers. Many Progressives see the weatherization plan as concentrating too much influence over the state’s energy future in Green Mountain Power, a corporation controlled by pension funds and other large investors in Canada. Some environmentally minded Progressives also note that GMP’s Canadian corporate partners include firms that sell “dirty oil” extracted from Alberta’s tar sands.
A number of maverick legislators from all parties also support cash refunds. These legislators include Sen. Vincent Illuzzi, a long-time supporter of public ownership of energy assets such as the Connecticut River dams and VELCO. They also include two House members from Bennington County, Republican Patti Komline and Democrat Cynthia Browning. Interestingly, four town meetings in Bennington County — Bennington, Dorset, Manchester and Sandgate — passed resolutions in March asking CVPS not to install “smart meters” on customers’ homes in those towns.
Eric L. Davis is professor emeritus of political science at Middlebury College.

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