State unlikely to bid on hydro dams

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(Host) It’s unlikely that the state of Vermont will submit a formal bid next month to purchase a series of dams along the Connecticut River.

As VPR’s Bob Kinzel reports, the value of the project has increased dramatically in the past few months.

(Kinzel) The state has been looking at the possibility of buying the dams for the past year because the facilities generate just over 500 megawatts of power. The deal includes a group of 13 dams on the Connecticut and Deerfield rivers that are being auctioned off by U.S.-Gen New England, a company that filed for bankruptcy last year.

Because of the enormous financial size of this project, the state is teaming up with two large Canadian power companies to consider buying the dams. Under the agreement Vermont would have a 25 percent share and the power companies 75 percent.

The partnership made an initial bid of roughly $375 million but another Canadian energy company has made a preliminary offer of $505 million. Vermont officials say they’re surprised by this larger bid. They question if the state should try to top it because they doubt that the power from the dams can be marketed at a cost effective rate at this higher purchase price.

Senate Institutions Chairman Vincent Illuzzi has been one of the leading advocates for this project:

(Illuzzi) “The price of energy was going through the roof, and as a consequence the value of the assets is now 50 to 75 percent more than what we initially thought that they were worth. It appears that we are at a point where it’s not economically feasible to buy the dams at a price higher than the bid that’s out there now at $505 million.”

(Kinzel) Illuzzi says he became interested in this project as a way to deliver low cost electricity to Vermont businesses. Now he thinks it will be difficult to achieve this goal.

(Illuzzi) “One of the main reasons I wanted the state to get involved in this was to have low-cost power available to attract industry to help with economic development, perhaps to help with the electric costs of low-income Vermonters. If we’re going to be paying at or above-market price for the wholesale cost of electricity, then there’s much less incentive to become involved as an owner of those generators.”

(Kinzel) The state and its partners plan to make a final decision about a possible bid for these dams by the end of next week.

For Vermont Public Radio, I’m Bob Kinzel in Montpelier.

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