IBM reviews conditions on electric rate cut

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(Host) Officials at IBM, the state’s largest private employer, are taking a close look at a recent Public Service Board order that will reduce its electric rates. The computer giant is concerned that the board tied its rate break to employment levels at the Essex Junction plant.

VPR’s John Dillon reports:

(Dillon) IBM has about 6,200 workers in Vermont, which makes it the state’s largest private employer. Employment has dropped by 27 percent over the last three years. And IBM and the Douglas administration argued that a reduction in electric rates would help retain jobs in Vermont.

The Public Service Board agreed that keeping jobs at IBM is in the public interest. It said, “We accept the proposition that retained jobs are essentially equivalent to new jobs.”

But the board also imposed a key condition. It said if IBM cuts employment by five percent or more, the rate discount from Green Mountain Power will be terminated. IBM spokesman Jeff Couture said that provision is troubling because the computer industry is cyclical.

(Couture) “The condition that eliminates the rate reduction on this part of our electricity that we receive a discount on if employment levels decrease could come at exactly the wrong time, in the sense that when employment is going down is typically when the business is in trouble. So the prospect of having costs rise during an economic downturn is really counter to what we think the state should be doing to support IBM’s presence in Vermont.”

(Dillon) Couture says IBM has not decided whether to appeal the order.

Meanwhile, Public Service Commissioner David O’Brien, whose office represents ratepayers, says he’s pleased with the decision. He says the board recognized that Green Mountain Power’s customers are not subsidizing IBM.

(O’Brien) “That finding is a very important affirmation that the department and what the administration has been saying about this agreement is something that the board agreed with as well.”

(Dillon) The Public Service Board also allowed Green Mountain Power to raise its rates by 1.9 percent in January, 2005.

For Vermont Public Radio, I’m John Dillon.

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