4.27.2012 – The Central Vermont Public Service “Windfall Return”
Hopefully, we are coming down the homestretch of the 2012 legislative session. As we await the “must have” bills such as the Budget, Miscellaneous Tax, Fee, Redistricting, Transportation, and Health Care bills, many of us are working hard to make sure other bills make it through the process, as well, before the final gavel falls.
At the time this was written, the House and Senate had appointed their respective members for the Committee of Conference on H.496, the Working Lands Enterprise Bill, but the committee of conference had not met. The big question is how much money, if any, will be available for continued investments in our agriculture and forest products sectors.
One of the issues that took a significant amount of time to debate was the Central Vermont Public Service (CVPS) “windfall return.” The concern for many of us was the precedent that would be set if we intervened in an open Public Service Board (PSB) docket. The PSB is in the process of determining how the ratepayers should be reimbursed for the investment that was made when CVPS and Green Mountain Power (GMP) were in financial trouble due to the cost of the Hydro Quebec contract.
At the time of the financial trouble, the PSB allowed CVPS and GMP to charge customers higher rates to help them get back on their feet. Had this not happened, there was concern that customers would have been very negatively affected if the bankrupt utilities could not meet their service obligations or make prudent investments.
The PSB said that if the ratepayer assistance was successful, and if the utilities were acquired for more money later, ratepayers would be compensated based on the help they provided. The PSB did not determine, at the time, how that compensation would be made, but kept jurisdiction over the issue for the future, if needed.
When Gaz Metro acquired GMP, the PSB required that the windfall value be returned to the ratepayers through efficiency improvement investments. The PSB Order stated that these investments would “provide consumers, as a whole, benefits equal to or greater than they would receive through a refund.” The American Association of Retired Persons (AARP) entered into a settlement with GMP that allowed for $1 million to be invested in a low-income pilot program.
Regarding the CVPS/GMP merger, AARP has been an active participant, presenting testimony and cross examining witnesses on the windfall return. At the same time, they launched a public relations campaign with television advertisements pushing for a cash payback of the windfall money, which is valued at approximately $21 million. When one considers the logistics of a cash payback, however, it presents significant questions and potential problems.
Looking at the details of determining which CVPS customers deserve a check and how much the check would be written for is staggering. For instance, a CVPS customer who has lived in their home for the last 10 years but who has recently moved to another utility territory would deserve a check but would not get one. The person moving into that house from somewhere else would get the check and not deserve it. How that would all be determined seems to be extremely difficult and a bureaucratic nightmare. One wonders how much would be spent on the logistics of the payback process alone.
The important thing to remember is that the PSB is in the middle of its deliberations and may decide to proceed with this sort of plan or determine some other way to return the investment.
The Department of Public Service (DPS), which represents Vermonters in the process, supports the idea of allowing the windfall to fund efficiency investments for CVPS ratepayers, similar to what happened when Gaz Metro acquired GMP. The feeling is that those investments, including thermal and electric efficiency and clean energy, will provide greater benefits for all CVPS customers and will be consistent with past PSB decisions.
Weatherization programs (thermal efficiency) will help Vermonters struggling to heat their homes and recoup the value of the investment more quickly. The DPS is seeking ways to ensure that any residential programs would benefit all CVPS customers including low-income, and commercial investments would include schools and similar buildings. The DPS is also working to make sure all savings are measured and verified so CVPS ratepayers are assured of getting value for the investment they made.
The major concern for many of us is the precedent that would be set if the Legislature intervened in an open PSB docket of this sort. In the past, the Legislature has intervened, but only when asked by the parties involved. The Legislature created the Public Service Board 55 years ago and the process has worked well. One can imagine a scenario with a Legislature of different composition and a controversial issue where intervention in an open docket could be of great concern. The PSB should continue to do its work without interference from the Legislature.