Utility argues against rate reduction

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(Host) The state’s largest electric utility wants regulators to change a recent ruling that said customers may deserve a rate decrease. Central Vermont Public Service Corporation says the Public Service Board should approve a rate freeze instead of a rate reduction.

VPR’s John Dillon has more.

(Dillon) In its ruling last week, the Public Service Board said the 130,000 CVPS customers may deserve a better deal than the one the utility and Douglas administration had agreed to. The board said that customers may deserve a rate reduction now, rather than a freeze on rate increases until January 2005 that was part of a settlement reached with the state.

The board ruling was a victory for the AARP, a non-profit group that represents thousands of utility customers. Philene Taormina is the group’s Vermont advocacy director.

(Taormina) “I think the board ruled correctly in that it said, you know, the company has a surplus of revenue and deferred debt and a rate freeze probably isn’t good enough.”

(Dillon) Taormina says the Department of Public Service – the state office that represents customers – didn’t press hard enough to save ratepayers money. The rate freeze was part of a settlement agreement signed last summer called a memorandum of understanding, or MOU.

(Taormina) “It looks like their own experts told them that it looks like this might warrant a rate reduction. So how they came up with supporting the MOU, I’m not sure.”

(Dillon) But Public Service Commissioner David O’ Brien, whose department represents ratepayers, disagreed. He says his consultants said the company might have deserved a rate increase instead.

(O’Brien) “I would reject any notion that AARP or any other party has greater interest in the ratepayers’ benefit than we do. The ratepayer interest is the reason we’re here and it’s what we’re focused on. And when we reached the settlement it was in our estimation that we were doing something on balance that was in the ratepayer interest.”

(Dillon) In its order, the Public Service Board also highlighted a potential problem with CVPS’s method of accounting. The board said the company’s deferred expenses – costs that it must pay off in future years – grew from $31 million to $47 million in less than two years. The board said it’s not fair to pass those expenses on to future ratepayers.

Late on Tuesday, CVPS asked the board to change its order. Kerrick Johnson is a CVPS spokesman. He says the company was surprised by the PSB order and now wants a chance to explain the accounting issues in more detail.

(Johnson) “I think it’s incumbent on us to make the case for what rates we believe we are entitled to. I think we believe we have made that case but obviously there’s more information that we to provide the board in order to have that kind of discussion. That’s why we’re hopeful the board will take us up on our offer, and be willing to schedule that kind of hearing.”

(Dillon) Johnson says the company had hoped to avoid a time-consuming rate case that could result in new rate hikes for customers.

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

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