$17 Million Vermont Yankee Check to Utility--Use It Well: Guest post by Reg Wilcox

Reg Wilcox

The Check

Green Mountain Power (GMP), the state’s largest electric utility, announced last month that it will receive a $17.8 million benefit from Vermont Yankee nuclear power plant. This big check was just the latest multi-million dollar benefit paid to Vermonters by Vermont Yankee and its owner, Entergy.

When GMP and other companies sold Vermont Yankee to Entergy in 2002, Entergy agreed to share proceeds with the previous owners from any power sales above 6.1 cents per kilowatt-hour. The $17.8 million is GMP’s share of revenue generated by Vermont Yankee power sales from March 2012 - 2013. For Vermont consumers, it's a fleeting bright spot in the cloudy outlook of climbing regional power prices.

GMP Payments to Ratepayers: The History

GMP has said the $17.8 million will go directly back to ratepayers. However, we were told this once before when money from the GMP-Central Vermont Public Service utility merger was spent on state energy programs instead of being returned to ratepayers as promised. There has been plenty of talk in the Legislature this year about new rules and laws to protect the interests of John Q. Ratepayer. Here is a perfect opportunity to "walk the talk."

Given the state’s history with not fulfilling energy promises, we have cause to be concerned. The very agreement that created this most recent revenue windfall for ratepayers was predicated on Entergy receiving a timely Public Service Board decision on the continued operation of Vermont Yankee past March, 2012. That guarantee was consciously withdrawn by the 2010 Vermont Senate vote. Entergy has met its obligations to the tune of $30 million in clean energy funding, a 10 year contract that delivered below-market power to Vermont utilities, revenue sharing, and millions for Windham County economic development, while the state has moved the goalposts time and time again.

The Sources For Vermont Power

Vermonters are still waiting for the State of Vermont to deliver on its promise to deliver low-cost, low carbon power. During the protracted dispute between Vermont Yankee and the State of Vermont, the plant’s many supporters repeatedly maintained that the only viable replacement for its power would be more expensive and increase carbon emissions. This is exactly what has happened as a result of Vermont’s decision to stop buying power from Vermont Yankee. According to grid operator ISO-New England, the average market price of electricity in March, 2014 was 11.25 cents per kilowatt hour, almost three times the four cent 2002-2012 contract rate. Even if a new contract would have cost marginally more, it is plain for all to see that we're paying more now for dirtier power.

The latest solution is a recent plan announced by the New England governors to acquire more electricity and natural gas from Canada and surrounding states. How much will this plan cost Vermonters? Who will pay? And how does more natural gas reduce our “carbon footprint?” And if this plan fails we will remain hamstrung by inadequate access to hydro and other traditional forms of power, having placed too much faith in the as-yet unproven promise of solar and wind generation. It is plain to see that state energy policies have left Vermonters without any good options.

Vermont Should Keep Its Promises

For years, many Vermont leaders took every opportunity to criticize Vermont Yankee, while pitching an alternative, bright new energy future that was short on specifics. As we wave goodbye to Vermont Yankee, it’s now time for the state to restore our confidence in its energy policy. It can start by not hijacking the $17.8 million dollar Vermont Yankee benefit from GMP customers, and by keeping its promises to deliver low-carbon, affordable, reliable electricity.

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Reg Wilcox, BSEE Norwich, MSEE Clarkson, is a retired IBM Senior Program Manager. Reg grew up on a dairy farm in Cambridge, worked out of state for ten years after graduate school, and returned to his home town when he began his career with IBM in 1978.   In 1802, Reg’s ancestors, Nathan and Rachel Wilcox, were the first European settlers of the Town of Morgan, Vermont.

This post has also appeared as an op-ed in the Rutland Herald (behind a paywall).

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Update: May 31, 2014

Governor Shumlin announces proposed rate decrease in Vermont.  Press release link below:
http://vtdigger.org/2014/05/30/gov-shumlin-announces-agreement-proposed-rate-decrease/

A quote from the press release, but with emphasis added by blogger:

“At a time when other states in our region are seeing double digit increases in power costs, Vermonters are going to see rates go down this year,” Gov. Shumlin said. “This rate decrease is great news for Vermont. The agreement provides stability and predictability for one of our most valued employers, and helps ensure that Vermont maintains a thriving center of innovation and technology well into the future. This is further evidence that the merger of Green Mountain Power and Central Vermont Public Service is already delivering cost savings and putting money in Vermonter’s pockets.”

Money Settles into Gaz Metro Pockets, Dust Settles under the Dome

The Bottom Line: Gaz Metro Keeps the Money

After a fast and furious two weeks, Governor Shumlin got his ducks (I mean, the legislators) in order and beat off an attempt to return $21 million dollars to the ratepayers of Vermont.

Background: The rate-payers of Vermont are owed $21 million dollars that they loaned to CVPS. This money was to be returned if another company bought CVPS, half to the ratepayers and half to the shareholders.  Gaz Metro is buying CVPS, but they seemed totally shocked that ratepayers might expect to be repaid with actual cash money. Gaz Metro is happily sending cash money to the shareholders for their part of the loan return.The mere ratepayers don't rate cash, though. They are to be paid by the ability to take out weatherization loans. For further background, I recommend my post: A Modest Proposal: Use the Shareholder Money

The AARP and others objected to this scheme. It looked for a while as if the ratepayers might actually get some money.

Not to worry, though.  Shumlin lined up the ducks, and the ratepayers will get no cash.

The Legislature and the Ratepayers

On April 9, Governor Shumlin spoke at a clean energy summit, and the 7 Days blog reported that Shumlin said:“It’s ironic to me that [when] we talk about a merger that’s gonna save Vermonters $150 million in 10 years, that we quibble over whether or not we should be putting another $21 million into energy efficiency measures instead of sending out small checks to people we can’t find 12 years later.”

Apparently, Shumlin thinks it is easy to find the shareholders but hard to find the ratepayers. I can give Shumlin and Gaz Metro a hint--bills are sent to the ratepayer's addresses.  They quibble that some of the ratepayers from a few years ago have left town or died.  So true!  And some of the shareholders have left town, died, or sold their shares to new people.  It's just the same, for ratepayers and for shareholders. You have to give money back to the current shareholders and the current ratepayers.

The AARP strongly objected to the idea that returning $21 million dollars to ratepayers was "quibbling."

The Senate Escapes

The message from the voters about "quibbling" got through to the Vermont Senate.   On April 26, the Vermont Senate voted to direct the Public Service Board (PSB) to return the money to the ratepayers--as money.  The Senate voted 27 to 3 to return the loan to the ratepayers as money.

That same day, Shumlin sent a strong note to the Senate saying they had exceeded their legislative jurisdiction by interfering in an open PSB docket.  He chided them for costing the taxpayers money by staying in session and. for...well, I wouldn't call it a note.  I would call it an accusatory rant from someone who was used to getting his own way.  As a matter of fact, I am reprinting it at the bottom of this post.

Let's face it.  Shumlin's ducks in the Vermont Senate had gotten away from him.  He had to begin rounding up the ducks in the House.

WTF? Why the Flip?

Rob Roper wrote a great article in True North Reports about the vote in the House:  WTF?! Why the Flip?  There are 150 members of the Vermont House. Of these, 72 were sponsoring a bill to return the money to the ratepayers, and another eight to ten were committed to vote for that bill.  Shumlin's agenda of letting Gaz Metro keep the money was about to go down in flames in both the Senate and the House.

Pressure was applied.  Legislators flipped their votes and lined up behind Shumlin.  Why the flip?  We may never know.

I also recommend John McClaughry's article on Pirates of the Winooski about Shumlin's need for more tax revenue for the Clean Energy Development Fund. Also the amusing article by Paul Heintz of 7 Days on Shumlin's explanation of why interfering with the Public Service Board about Vermont Yankee was okay (he led that charge in the Senate) but the Senate interfering in the utility merger would be overstepping: Shumlin Clarifies Position on Utility Merger---Kind Of.

Oh, by the way.  If accusing the legislator of "quibbling" about $21 million weren't enough, Shumlin also said this about the legislative attempts to intervene in the merger: "I understand the need to pander for votes."(From an article by Terri Hallenbeck in the Burlington Free Press.)

Bottom Line: No Refund for the Ratepayers


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Statement from Gov. Peter Shumlin:

“The appropriate avenue for legislators to express their views on this proposed merger is through the Public Service Board, which has taken countless hours of testimony and received input from a wide range of stakeholders and experts. This matter is now in the hands of the Board. The Senate’s action today interferes with an open PSB docket, undermines the credibility of the regulatory process, and is an extreme overreach of legislative jurisdiction.

The Senate should be wrapping up its work and adjourning this week. Instead, adjournment has been pushed back at least a week, and Vermont taxpayers are now on the hook for another $275,000 thanks to the Senate’s inability to complete its work on time. The Senate should focus on the real issues under its jurisdiction, like passing the budget that should have passed days ago, and bringing the session to a close.”

(This message was sent April 26 after the Senate vote.)