By Mike Polhamus, VTDigger
Green Mountain Power’s electric rates are slated to rise by 5 percent in 2018 if the Public Utility Commission approves a deal the state’s largest utility reached this month with the Vermont Department of Public Service.
The deal incorporates approximately $18 million due to GMP customers as a result of terms the company agreed to when it purchased Central Vermont Public Service Corp. in 2012.
The proposed 5 percent rate increase is somewhat lower than it would have been without that sum, said Kristin Carlson, a GMP vice president.
“This filing reflects uncontrollable cost pressures,” Carlson said. Those costs are related to the aging state of Vermont’s and New England’s grid, she said, the cost of transmitting electricity, and the cost of a type of energy contract usually used for small-scale solar power called net metering.
These costs actually represent a 6 percent upward rate pressure, Carlson said.
In response to these larger influences that are driving up GMP’s costs, the company is offering innovative products such as battery storage, she said.
A Nov. 24 filing by Canadian firm Valener, which owns a 30 percent stake in GMP and Vermont Gas Systems’ parent company, Gaz Metro, paints a slightly different picture, portraying this and future rate increases as a consequence of energy efficiency measures required by the state. These rate hikes are expected to be offset by those same efficiency measures, which will drive down the amount of electricity Vermonters require, the report states.
“GMP experienced lower demand for electricity in fiscal 2017 than the previous fiscal year, mainly due to the adoption of energy efficiency measures by customers in the residential, small commercial and industrial markets,” the annual investor report states.
“GMP expects that overall demand will fall slightly over the medium term due to continuing improvements in energy efficiency measures across the state and growing use of self-generated electricity in the residential and commercial markets,” the report states. “GMP expects that these energy efficiency measures, which will translate into lower energy consumption, will help customers realize savings that will exceed the rate increases resulting from the lower consumption and from the investments required to implement these measures.”
Another portion of the report states that GMP’s 2017 revenues are down by $6.8 million compared with last year at this time, “mainly due to the adoption of energy efficiency measures and the use of solar power.”
Carlson said she had not seen the report and that Green Mountain Power functions independently of its corporate parents.
The utility’s rates are tied to its return on equity, meaning the percentage return that regulators allow Green Mountain Power on the value of its infrastructure. As with other Vermont utilities, GMP earns money not directly from the power it sells, but rather from the infrastructure it lays to handle that power.
For 2018, GMP will seek approval from the PUC for a 9.1 percent rate of return on its Vermont assets, which amounts to just over $1.43 billion. In 2019, the utility will seek a 9.3 percent rate of return, according to Valener’s 2017 annual investor report.
The Public Utility Commission is expected to rule by the end of the year on whether to accept the deal GMP reached with the Department of Public Service, and to adopt the proposed 5.02 percent rate increase.