In testimony before the full Senate, Department of Public
Service Commissioner Elizabeth Miller Thursday experienced the
power of political demagoguery and learned how the appeal of
writing checks to a few trumps policy that benefits the
many. She must have walked away dispirited.
It's unusual this late in the session for anyone to testify before
all 30 state senators. But the case in point, the proposed merger
between Central Vermont Public Service and Green Mountain Power has
been unusual from the outset. It's a $750 million deal that
concentrates the power of the state's utilities into a single
entity - Gaz Metro, of Quebec.
But what has drawn the ire of legislators [fueled by the AARP's
fundraising needs] is $21 million that is to be returned to CVPS
customers when and if the company is sold.
Advocates want the Public Service Department to make the merger
contingent on checks being written to CVPS customers - on average
about $75 each. Advocates insist that a deal is a deal. They note
the PSB made it clear the only way they would agree to a rate
increase for CVPS [more than a decade ago] was if the company
agreed to pay back its customers the $21 million in question.
As long as we're stepping back in history, let's take a full view.
It's true CVPS was in tough shape. But the reason was that the
regulators had disallowed the utility to pass through its costs of
doing business. The issue driving the debate was the 30-year
power deal struck with Hydro Quebec by Gov. Richard Snelling in the
mid 1980s. The market price for energy in the late 1990s was low,
but the state was stuck with Hydro Quebec prices that were high.
Legislators were screaming about the idiocy of the contract and
trying to burn at the public stake those responsible.
Basically, the question was this: Why should the utilities be
allowed to pass through the costs of a bad contract? To mollify the
outcry the board essentially granted the rate increase, but with
the condition that the money be returned.
Of course, it ended up that the contract was a very good thing for
the state. When market prices rose and the contract with Hydro
Quebec was again advantageous, legislators who once complained,
were heard no longer. They disappeared. It was political
demagoguery at its worst. We've now negotiated another 26-year
contract with Hydro Quebec, but the remnant of this decade-old
regulatory morass is the $21 million owed CVPS ratepayers.
Nowhere in the agreement did the regulators specify how that $21
million was to be returned to the ratepayers. What's understood is
that it has to be demonstrable and that the value meets the
conditions of the agreement.
What Ms. Miller has proposed is that the utilities be forced into
energy efficiency programs that would produce that value. In fact,
it's estimated that the required investments will yield a gross
dollar gain to ratepayers of over $40 million, with a net value
increase of $24 million. That's $40 million over and above the
projected $140 million ratepayers will see in reduced operational
costs that will result from the merger.
Had she opted for the utility to write a $75 check to each
ratepayer, it would have been a one-time affair, with no lasting
benefit. By forcing the utilities to be more aggressive with their
efficiency efforts, we all benefit, and the benefit is
It's incredibly ironic that many of the same legislators who want
to take credit for stuffing a $75 check in the pocket of CVPS
ratepayers are also the ones pushing renewable power and energy
efficiency efforts at all other levels. It's a lack of consistency
explained by the political advantage of being able to take credit
for disbursing cash to voters.
Ms. Miller explained her department's responsibility to consider
the state's greater good; but it fell on deaf ears, which is
disappointing. Her overriding responsibility is to forge public
policy that is for the state's overall good, and she sacrifices
that responsibility if she abdicates to those pandering for
We would hope she would stand her ground and that the utilities
would do the same. To capitulate would expose the process to a
level of political intervention that could undermine the public's
trust in future regulatory proceedings.
As distasteful as the process was, we expect the legislators will
be saved from themselves. Fortunately, the governor has been
resolute in his defense of Ms. Miller's decision and legislators
are smart enough to know they don't have the votes to override a
veto. They can puff out their chests without having to worry about
the ill effects of intervening in a process in which they would do
more harm than good.
Ms. Miller was just part of the show.
Welcome to Montpelier.