Scribblings by Rep. Koch

Rep. Thomas F. Koch
Barre Town
Tkoch@leg.state.vt.us
476-4141

“Scribblings”
An Occasional Newsletter from the Legislature

April 25, 2012
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“Lemme outta here!!” I’m ready for the final gavel to drop, and the sooner it does, the safer the people will be!

This is the point in the session that is most dangerous. Strange things happen. Committees have killed bills by taking no action on them, but individual senators or representatives try to resurrect them by attaching whole bills to other bills as amendments. Conference committees bury pet items in bills at midnight. And bills are held hostage by one senator or representative in order to force passage of another bill.

This year there is another twist. The Senate is far, far behind in its work, and the House is mainly waiting for the Senate to catch up. Yesterday, there were 31 bills on the Senate calendar, and only a handful wee dealt with. There are several freshmen senators who seem to want to be heard on every bill, and that takes time. President pro-tem John Campbell is a thoroughly decent individual who does not practice the dictatorial style of some recent presidents pro-tem (including one Peter Shumlin), preferring a collegial style, but the collegial style does not seem to be working with this particular herd of cats.

We could have been finished this weekend, but now we’re looking at next weekend, and even that’s not guaranteed. If the session extends to Mothers’ Day weekend, I won’t be surprised. Meanwhile, my garden and other projects are waiting. This is supposed to be a part-time job, and every year after May 1, I get antsy. From a personal point of view, I have other things to do; from a public point of view, this is the time when bad things happen to Vermonters.

As I said before, it’s time for the final gavel to drop—lemme outta here!!
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Of all the issues the legislature has dealt with this year, the one that has captured the attention of the public is the $21 million due to Central Vermont Public Service (CVPS) ratepayers.

I have previously sent a copy of Rep. Oliver Olsen’s summary of this mess, but let me go through it again, because it’s become worse since Oliver wrote his piece.

Remember that about 10 years ago, CVPS got a rate increase in order to avoid bankruptcy. Part of that deal was an agreement that if CVPS survived and was eventually acquired by another company, the ratepayers would be repaid their $21 million. That was fair, because the ratepayers, by agreeing to the rate increase, bailed out the shareholders, whose stock in the company would have been worthless if the company had gone bankrupt.

The time for the shareholders to keep their part of the bargain has now come; Green Mountain Power Corporation (GMPC), which itself has been bought out by the Canadian company Gaz Metro, has agreed to acquire CVPS and has asked the Vermont Public Service Board to approve the transaction. This is a $700 million deal, and it would result in Vermont’s two largest distribution companies becoming a single company, which, in turn, would be owned by a Canadian company—Gaz Metro. But it is believed that the real prize is Vermont’s transmission company, VELCO, which would then be controlled by Gaz Metro and could be used for Gaz Metro’s plans to become involved in the electric market in southern New England and beyond. And don’t forget the golden parachutes for CVPS officials, several in excess of one million dollars each!

So despite commitments made ten years ago, the parties don’t want to repay the ratepayers as agreed, and the Shumlin administration has entered into a memorandum of understanding with the utilities for an alternative form of “repayment” and the utilities have asked the Public Service Board to approve the new plan.

The new plan proposes to give the $21 million to quasi-public entities to support energy efficiency and residential weatherization programs for CVPS customers. Because these programs are income-sensitized, only some CVPS customers will benefit, but the parties to the agreement contend that the benefits of weatherization and energy efficiency programs will eventually create savings well in excess of $21 million by avoiding future construction of infrastructure and expensive electrical generating facilities. It’s a classic case of Montpelier telling people that Montpelier knows better what to do with the peoples’ money than the people do!

But then the deal that the utilities and the Shumlin administration have cooked up provides that the company will be able to raise its rates in order to recoup the $21 million that it proposes to contribute to the efficiency and weatherization programs! This “clawback” will be charged to all of the customers of the merged company, so that even though only CVPS ratepayers will be able to benefit from the efficiency and weatherization programs (and not even all of them), both CVPS and GMPC customers will experience the increased rates.

But we’re not done. It gets worse—if that’s possible. This week, during hearings on this matter, the House Commerce and Economic Development Committee uncovered the fact that the merged company will be granted a guaranteed seven percent (7%) rate of return on the $21 million “investment” in the efficiency and weatherization programs!!!!!!

To put it in plain English, this deal stinks to the high heavens!

The legislative response has yet to be seen. In the next couple of days, we will have a debate on this matter. Several responses will be considered.

There will be one or more amendments offered to a bill coming forth on public service matters. The major amendment, sponsored by Reps. Cynthia Browning (D-Arlington), Patti Komline (R-Dorset), Chris Pearson (P-Burlington), Paul Poirier (I-Barre City), and 68 other members of the House, would prescribe that the Public Service Board may not approve the CVPS-GMPC merger unless it also requires that the $21 million is paid in cash or credits on power bills. Although the amendment is couched in more neutral language, it is a direct intervention in the pending proceeding.

When this amendment was initially suggested to me, I refused to support it, precisely because it is direct interference in an open case, and I have previously opposed similar interference in other situations. As the facts have come out—little by little—however, I have come to change my mind. Sometimes it is necessary to commit a crime in order to prevent a more serious crime, and this is one of those times. In my view, the $21 million belongs to the CVPS ratepayers, and it is literally being stolen from them! Although I am reluctant to change the rules in the middle of the game, I think it is necessary in this instance in order to prevent what I view as outright thievery.

The Shumlin administration and its allies are desperate to prevent any effective action from being taken to protect the ratepayers. They have proposed instead a non-binding resolution expressing the sentiments of the legislature that the $21 million should be returned to the ratepayers. This is a course of action advocated by Rep. Tony Klein of East Montpelier, the chair of the Natural Recourses and Energy Committee, but because it is non-binding, it can easily be ignored by all concerned, and it is nothing more than a fig leaf for those who want to deprive the ratepayers of their rightful refunds.

A different amendment proposes to create a new office of public advocacy in the Attorney General’s office to be the public’s voice in Public Service Board proceedings. The trouble with this proposal is that we already have a Department of Public Service, and its function is supposed to be to represent the public in PSB proceedings. If the Commissioner of Public Service Liz Miller isn’t doing her job, she should resign—or be fired. It doesn’t help to create yet another public advocate, who still might not do his or her job.

The third possibility is that the amendment that 72 of us have co-sponsored may actually pass. I suspect that if it does, we will see the entire bill diverted to one or another committee so that it actually never gets to the governor’s desk. That way, he doesn’t have to make a choice whether to allow it to become law or veto it.

The bottom line is that this is the dirtiest deal I’ve ever seen in my 20 years as a member of the House.

In reality, our only hope on this issue is that the Public Service Board, which is supposed to be independent of any administration (which I do not have reason to challenge), may hear the public outcry and order that the $21 million be returned to the CVPS ratepayers as a condition of approving the merger of CVPS and GMPC.

What GMPC is saying, however, is that such an order would result in the entire deal falling apart. Somehow, though, I doubt that $21 million will cause a $700 million deal will fall apart. But if it does, what would be the consequences? Vermonters would still own the largest distribution company in the state, and Vermonters would still own VELCO, the major transmission system in the state. Would that be so bad?

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