Tuesday, May 8, 2012
Money Settles into Gaz Metro Pockets, Dust Settles under the Dome
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.
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
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.)
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Good post - thanks for the followup. It's an interesting story to watch develop. Now the question is, will Vermonters actually care about this?
I would disagree with you on one point - I don't think it's fair to return money owed to one ratepayer, to a different ratepayer. You say that ratepayers and shareholders are alike in this regard - that you give the money to current rate payers and current shareholders.
The key difference is, that a shareholder who sells his shares gets compensated for those shares by the person who bought the shares. It's kind of like land - if I sell you land, you get rights to whatever resources (trees or other plants, deer and other game, mineral rights, etc) is on that land. I try to factor that into the asking price I negotiate with you.
A ratepayer who moves doesn't get paid anything for their rebate check. They paid that money to CVPS, and they should be returned that money, not the current ratepayer at that same address.
You might try to reason that, well, the rebate check is like mineral rights or lumber - part of the property. That idea breaks down, however, when you consider the idea of renters - if I rent an apartment, I have to pay utility rates, but when I move out, the new renter doesn't pay me a dime. Should my landlord get the rebate on the rate over-charges I paid while renting? That doesn't seem in any way equitable. Utility fees and property ownership are not "tightly coupled", in this case.
Jeff. Thank you for the thoughtful comment.
I want to add two things to think about.
First, when the PSB said that "if sold, you must return the money to the ratepayers" the PSB had no idea when the sale would take place or IF it would take place. So they could not have imagined that their rule was for the utility to track all the older rate-payers for (say) thirty years in order to return the money. I think for simplification and ability to carry out the orders, the PSB meant: "return the money to the current ratepayers" at the time of the sale. The problem is that under the current plans, no money is going to be returned to the ratepayers, though money is being returned to the shareholders.
Second, whoever the current ratepayers are--they are people who have loaned money. The problem is that the usual loan looks like this: I have ten dollars, and I loan it to you and later you give it back to me with interest.
That's the wrong model for this "loan".
What happened here is that all ratepayers, past and present, paid higher rates than they would otherwise have paid, therefore providing an on-going loan to the utility. By returning money to current ratepayers, some ratepayers who have moved away won't get money back, and some ratepayers who just signed up last month will get more than their "fair share" perhaps. But the model is that everyone buying power right now is paying more than they should pay right now. And they will get money back right now.
It's not perfect, but, in my opinion, it's a lot better than shareholders getting money and ratepayers getting none.
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