State utility regulators have approved a merger between Vermont’s two largest utilities, saying the combined company offers "an unprecedented opportunity" to save customers money.
The Public Service Board says customers will share in the savings when Green Mountain Power and Central Vermont Public Service Corporation are merged later this month.
But the board also rejected arguments that customers should get a direct refund when the deal goes through.
The board used sweeping language in describing the benefits of the deal. The transaction, the board said, "represents an historic opportunity to achieve significant, immediate and enduring benefits for all retail customers" of both utilities.
That’s because the combined company can eliminate operational inefficiencies, and then pass on those savings to customers. The PSB said customers will receive $144 million in direct benefits, with about $15 million provided during the first three years.
If the savings are maintained, the PSB said electric rates should be at least 5.8 percent lower than they would be otherwise.
Green Mountain Power is owned by GazMetro of Montreal, but the board cited the Canadian company’s practice of allowing GMP to operate independently.
GMP President Mary Powell said the board’s approval affirms what the company had been telling regulators and the public for months.
"It’s been a transaction that’s been talked about in this state for 40 years," she said. "And now we’re really looking forward to rolling up our sleeves, and getting to work, to save Vermont customers that we serve hundreds of millions of dollars."
The merger became a controversial issue in the Legislature as advocates – led by the Vermont chapter of AARP – argued that customers should get a $21 million refund when the companies are combined.
AARP pointed out that CVPS customers paid higher rates than necessary a decade ago to save the utility from bankruptcy. But the PSB rejected AARP’s request that the $21 million be returned directly to ratepayers. Instead, the board said that the money would be better spent on energy efficiency programs.
Greg Marchildon is AARP’s Vermont director. He was disappointed in the ruling, and said AARP may appeal.
"It’s a real loss for CVPS ratepayers and of course a loss for the 35,000 AARP members who are also CVPS ratepayers," he said. "It’s also a great day to be a GazMetro shareholder and CVPS shareholders, all of whom are just about to open their wallets and have thousands of dollars dropped into them. So the shareholders win, and ratepayers lose, and that’s the story today on the $21 million."
But Public Service Commissioner Elizabeth Miller – whose office represents ratepayers – said the PSB imposed strong protections on how the merged company can use the refund money.
"GMP has to create $46 million worth of benefits through efficiency in order to satisfy the $21 million investment it’s going to make in order to be able to recover that in rates," she said. "So it’s a net and additional benefit to CVPS customers, and the board recognized that."
Miller said the board’s order incorporates the conditions she negotiated with the utilities. These include accelerated sharing of the savings with customers.
The new company will be known as Green Mountain Power. The deal is expected to close by the end of June.
You can read the PSB’s decision here.