By Douglas Smith, Green Mountain Power’s Director of Power Supply
posted
Nov 12, 2012
Thoughtful public debate can often bring a better perspective
and better solutions. For that reason, GMP welcomes the recent
report by the Campaign for Vermont about the future of electric
rates in the state. However, in our view, the vision and action
steps suggested by the Campaign are not the way to keep Vermont
moving toward an energy future that is cost effective, low carbon
and incredibly reliable.
Vermont policy and Vermont utilities have a long history of
valuing competitive and stable electric rates. And a key component
of that has been regulatory and legislative endorsement of
utilities making long term power commitments, while other New
England utilities divested their power plants and adopted a
strategy of buying their power primarily only a few months to a few
years in advance. The result of a shorter term approach in the
rest of New England has resulted in much more volatile electricity
pricing for those customers, including years of double-digit price
increases when fossil fuel prices increased from 2005 to 2008.
Vermont, and particularly Green Mountain Power customers, have
benefited from the long standing commitment in Vermont to
stability. For the past half dozen years, Vermonters served by GMP
have enjoyed some of the lowest rates in New England. Our customers
and Vermont's economy have benefited from those very stable, low
cost rates.
In recent years, expansion of U.S. natural gas production, in
combination with a severe recession, caused wholesale electricity
market prices to decline significantly. Those utilities
relying on short-term market purchases have benefited from the
price decline, allowing them to lower their rates to levels that
are more competitive with GMP. On average, though, since the
neighboring states' utilities restructured and took a shorter term
approach to electricity purchasing, GMP customers have paid much
lower and more stable electric rates.
GMP expects our rates to remain lower than the majority of the
other utilities in the region for the next few years. Looking
forward, GMP's power supply portfolio will provide substantial
protection against rising power market prices. We are
positioned well and expect to maintain very competitive retail
rates in the future.
Our recent merger with Central Vermont Public Service will help
us to achieve this goal by keeping costs down for customers, as we
have guaranteed $144 million in savings for our customers over the
next ten years.
The Campaign urges that Vermont roll back renewable energy
requirements and wait for costs to decline. Our experience at
GMP demonstrates that it is possible to maintain stable prices for
low emission resources through a well managed and balanced
portfolio that combines long term contracts for nuclear,
hydroelectric, wind, and other renewable resources, as well as
utility ownership of a portion of the generation that our customers
need. Further, the cost to customers of participating in renewable
resources is reduced by current Vermont policy of selling the
associated renewable energy credits.
So is the Campaign's call for reducing renewable energy the
right choice for Vermont? No, not in GMP's
view. We continue to believe that the right course of action
in the long-term is to ramp down reliance on nuclear and
fossil-fired power sources, and to increase the role of renewable
power sources at a sensible pace. In fact, our recent Kingdom
Community Wind project will be one of the most cost-competitive
sources in our portfolio over time, in the same way that our hydro
generation plants provide some of the lowest-cost power available
to Vermonters. Renewables can play a constructive role by
diversifying the electricity supply portfolio, providing long-term
price stability, and by increasing the small fraction of our power
that is produced within Vermont. The future that GMP sees for
Vermont is one in which customers enjoy the type of electricity
supply that they tell us they want for their homes and
businesses: competitive and stably priced, affordable, clean
and reliable. GMP is pursuing a balanced strategy that we
believe can deliver on those goals.
