(Host) The Senate Finance committee plans to hold hearings on a plan by the Douglas administration to have residential customers of Green Mountain Power subsidize an energy rate reduction for IBM. Committee Chairwoman Ann Cummings says she has serious concerns about the proposal.
VPR’s Bob Kinzel reports.
(Kinzel) The administration has been eager to find a way to reduce power costs for IBM, the state’s largest employer, to encourage the company to maintain a sizeable workforce in the state.
There are several provisions to this proposal. First, GMP will agree to lower their level of profit. Second, GMP’s 80,000 residential customers will have their rates frozen for the next two years; in year three the rates would increase just under 2% and less than 1% in the fourth year of the contract.
Critics say these rate increases would help finance a rate reduction for IBM of about $500,000 a year. Senate Finance chairwoman Ann Cummings says this kind of cross subsidy represents a major policy change that needs to be reviewed by the Legislature:
(Cummings) “This will be precedent, this will be a change. And if we do it now are we going to start making deals with every business? It really is a way to ask ratepayers to pay and if the state decided to pay we’d have to raise taxes or cut something else. And this is really an end run. We’re going to say, ‘Well, we’ll let the ratepayers pay it and we won’t have to have people angry at us for raising taxes.’ And I think that’s a concern.”
(Kinzel) And Cummings wonders why only customers of GMP are being asked to help IBM.
(Cummings) “There’s concerns that I have that one small group – Green Mountain Power ratepayers – may be subsidizing economic development that many other people of the state as a whole will benefit from. The city of Burlington, which is arguably a major beneficiary from having IBM, isn’t going to have a rate increase, the people of Washington County are. How that works out proportionally is concerning.”
(Kinzel) Governor Jim Douglas says the economic development agreement with IBM is not unusual and Douglas thinks the entire proposal is good for all parties:
(Douglas) “I think this is a great deal for the consumers of our state – two years of a rate freeze and then two subsequent years with increases that are likely to be less than the rate of inflation. And the IBM EDA is not unusual at all. There are about 58 Economic Development Agreements in effect now between companies, utilities of our state. GE has one, Ben and Jerry’s has one, there are a lot of them. It’s a very common practice.”
(Kinzel) The Senate Finance Committee will hold its first hearing on this issue next Monday afternoon.
For Vermont Public Radio, I’m Bob Kinzel in Montpelier.