State hopes to resolve power line dispute

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The state hopes to resolve a dispute over a new $40 million power line between Waterbury and Stowe.

At issue is how much the Stowe Electric Department will have to pay for the project.

The electric department says it may have to raise rates 65% to cover the costs.

VPR’s John Dillon reports:

(Dillon) Public Service Commissioner David O’ Brien wants to be a peacemaker in this bitter and complicated controversy.

He wants Stowe Electric to back off from its legal fight over how to pay for the power line. But he also finds fault with the other side in the dispute, VELCO, or the Vermont Electric Power Company. VELCO runs the statewide transmission grid.

(OBrien) "No one here is completely innocent in my eyes. I’m not at all happy with VELCO when it comes to cost of this project. This project originally started out at $12 million, went to $20 million, and is now at $40 million, which is a big reason why there is so much apprehension and disagreement over how to pay for it is because the cost has gotten beyond the comfort level of the various utilities involved."

(Dillon) Almost everyone agrees that the new, 115 kilovolt line is needed to resolve a transmission bottleneck in Lamoille County. Even before new development in Stowe added to the burden on the system, the electric grid was under strain.

But Stowe Electric says if it has to pay for the entire project, it may have to increase rates by 65%.

(Ellen Burt) "That would be more than any rate impact that was ever put into the state of Vermont."

(Dillon) Ellen Burt is general manager of the Stowe Electric Department. The utility is waging a legal challenge before federal regulators over how the project will be paid for.

(Burt) "We wouldn’t be doing this if we didn’t feel it was in Stowe Electric best interests."

(Dillon) But Commissioner O’Brien says the litigation strategy is risky. He wants Stowe Electric to carefully consider a financing proposal put together by VELCO and the Vermont Public Power Supply Authority, an organization that acts on behalf of municipal utilities. Essentially, the financing plan involves utilities like Stowe investing in VELCO.

The rate of return on the investment would be used to offset the cost of the project. Under the plan, the rate impact on Stowe could be much less – 7 or 8%, not 65%.

(O’Brien) "We are under the impression that there has been a variety of financing mechanisms made available to Stowe to deal with the cost of the project and the financing of the project over the next 10 years that result in a far less of a rate increase than Stowe has been talking about."

(Dillon) Kerrick Johnson is VELCO’s vice president for external affairs. He says the deal is good for Stowe Electric.

(Johnson) "No one likes to have a rate increase, but given the reliability needs of this system in the Stowe area and what the project would bring and the benefits it would bring, we think it’s a reasonable bargain."

(Dillon) But Burt, the general manager of Stowe Electric, says there’s no guarantee on the financing plan.

(Burt) "If that rate of return can be guaranteed, certainly myself and certainly my board of commissioners would revisit that proposal."

(Dillon) And here may be the heart of the impasse. The people working on the proposal say there’s no way the rate of return can be absolutely guaranteed. But they say the level of risk is low enough for the financing plan to make sense.

Scott Corse is general manager of the Vermont Public Power Supply Authority. He hopes Stowe Electric takes advantage of the financing plan and that the power line project can move forward.

He says he’s both puzzled and saddened by Stowe Electric’s opposition.

(Corse) "I’m saddened because the reality is this is a small state, and we all have to work together and we all need to get along. And I am of the opinion that the rest of the utilities in the state working through VELCO have done a good turn for the Lamoille County system."

(Dillon) There may be some progress this week. Commissioner O’Brien has asked the parties to meet – without their lawyers – to try to settle the dispute.

For VPR News, I’m John Dillon in Montpelier.

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