Regulators propose changes in GMP revenue collection

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(Host) State utility regulators have proposed changes in the way Green Mountain Power customers pay for their power.

Environmental advocates say the changes will encourage energy conservation. But GMP doesn’t agree, and says the proposal moves away from fundamental principals of utility regulation.

VPR’s John Dillon reports:

(Dillon) The case before the Public Service Board concerns GMP’s rate design. Rate design cases are supposed to be revenue-neutral – they don’t give the utility more money, but instead determines how the company collects its revenue.

So in a rate design case, utility regulators spell out how much a company can charge for residential, industrial and commercial rates. It also sets levels for customer charges, which is essentially a flat fee you pay for the power to be delivered to your house.

In the GMP case, a state hearing officer proposed reducing monthly residential customer charges from about $11 dollars to about $9 dollars.

Sandra Levine of the Conservation Law Foundation says this change would mean people would pay more based on how much electricity they use. That, she says, will send a strong price signal for customers to use less electricity.

(Levine) “If you use less power you will pay a lower bill. If you use more power you will pay more. That keeps the overall system costs down.”

(Dillon) Levine sees the rate design case as an important step in promoting energy conservation.

(Levine) “Vermont’s demand for energy use is growing. There was a peak in energy use during the hot weather about a week ago. We can either meet that demand by more power from dirty power plants around the country and having more pollution or we can meet that demand with more efficiency. This decision supports more efficiency and thus is better for Vermont.”

(Dillon) GMP spokeswoman Dorothy Schnure says the change may lead customers to use less electricity if they’re forced to pay more. But she says the proposal overlooks a key economic principal of utility regulation. She says the PSB has always set rates based on a company’s costs.

(Schnure) “And we had designed the rates with an energy charge that very closely tracks the costs to serve those customers. If you artificially lower the customer charge and artificially raise the energy charge, then you’re really not sending appropriate price signals because then the rates are not based on the actual cost to serve.”

(Dillon) The proposal also reduces discounts for large customers, such as the IBM plant in Essex Junction. And it requires that all rates include an energy efficiency charge.

The proposal now moves to the full Public Service Board for approval. GMP will argue that the board adopt the company’s plan, instead of the one recommended by the hearing officer.

For Vermont Public Radio, I’m John Dillon in Montpelier.

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