Vt. Senate Committee Talks Power Line Purchase

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(Host) A Senate committee is exploring ways to have the state buy a controlling stake in Vermont’s electrical transmission network.

The pending sale of the state’s largest utility has drawn scrutiny at the Statehouse and has brought the statewide electric grid into the political fray.

VPR’s John Dillon has more:

(Dillon) Essex Orleans Senator Vince Illuzzi chairs the Economic Development Committee. And he says the state’s economic future is very much linked to favorable electric rates, and how the statewide transmission network is used.

So Illuzzi is taking aim at the Vermont Electric Power Corporation, or VELCO, the private company that manages the electric grid.

Illuzzi is concerned that the planned sale of the state’s largest utility and its merger with a company owned by Gaz Metro of Montreal would give a controlling interest in VELCO to a foreign corporation. But Illuzzi also sees the merger as a once in a lifetime opportunity to gain public ownership of the electric grid.

(Illuzzi) There is a growing chorus of legislators who believe that the state should acquire an ownership interest of VELCO to ensure that the decisions made by that corporation not only serve the shareholders of the corporation but also accomplish public benefits.

(Dillon) VELCO is a company worth about $1 billion. So Illuzzi’s committee is exploring ways for the state to raise the half-billion or so needed to gain a 51 percent stake.

Windham Democrat Peter Galbraith said investing in VELCO is virtually a no-lose proposition.

(Galbraith) It is an extremely good investment. The guaranteed rate of return – it would be 14 percent – and even if the state had to pay 4 percent to finance it there’s a 10 percent net rate of return that’s absolutely guaranteed. It’s as close to a no-risk investment that you can make.

(Dillon) Galbraith and other senators grilled state treasurer Beth Pearce about using special bonds to finance the deal, or have the state invest some of its pension funds in VELCO.

Galbraith pointed out that other pension funds -including one for public employees in Quebec – are already major investors in Gaz Metro.

(Galbraith) So they’ve done due diligence. They’ve determined that this is a safe investment.

(Dillon) Treasurer Pearce said a state investment in VELCO was possible, but she stressed she wasn’t an expert in utility financing.

(Pearce) We’re not averse to looking at any opportunity in any investment. We do not have the regulatory and utility background to take a look at this. If and when all that is done and you want to take a look at it, the treasurer’s office is clearly interested in the same thing you are which is the over all economic benefit and well-being of the state.

(Dillon) VELCO spokesman Kerrick Johnson said that any profits that VELCO makes flow back to utility customers in the form of lower rates. And he said an investment in VELCO is not risk free.

(Johnson) What comes with ownership is also risk. Right now the risk associated with running a transmission system are significant. And right now… the risks to those operations aren’t on the backs of statewide taxpayers.

(Dillon) The state Public Service Board is also considering the future of VELCO as it reviews the proposed merger of the state’s largest utilities.

But back in the Senate committee room, lawmakers struggled with how to give the Legislature a say as well. Tim Ashe is a Democrat/Progressive from Burlington.

(Ashe) And I think what we’ve raised today is can 180 legislators sit by and play no role in what’s going on with something so critical. And if we want to have a role, that requires some intervention.

(Dillon) Illuzzi’s committee may offer an amendment to a state budget bill that would put the state on a path toward majority ownership of VELCO.

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

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