GMP Seeks Five Percent Rate Increase

Saturday, April 29, 2017

Green Mountain Power, Vermont’s largest electric utility, is asking the state to approve a five percent rate increase that would go into effect on Jan. 1.

The requested rate increase is slightly less than the increase in costs the utility has experienced, a company representative said.

Between transmission costs, regional capacity increases and other costs associated with small-scale in-state power generation, GMP’s costs have actually increased by six percent, spokesperson Kristin Carlson said.

The company may not receive the five percent rate increase to offset those costs, Carlson acknowledged. The five percent request perhaps represents the opening gambit in what’s likely to be an eight-month review process.

The request, Carlson said, will be subject to a “robust regulatory review.”

The increase being requested is unrelated to the new renewable-energy standard Vermont electric-distribution utilities must comply with beginning this year, Carlson said.

That standard requires Vermont electricity distribution utilities to obtain 55 percent of their energy from renewable sources in 2017, and to increase that proportion until it reaches 75 percent in 2032. That standard also requires Vermont electricity distribution utilities to get one percent of their total energy needs from distributed renewable energy sources, which are small-scale, in-state generators that get power from wind, sunlight and flowing water.

Green Mountain Power produces more wind energy and solar energy than any other entity in Vermont, according to filings by its parent company, Gaz Metro. Gaz Metro is the largest natural gas provider in Quebec, and both Green Mountain Power and Vermont Gas Systems are wholly-owned subsidiaries.

Because Green Mountain Power sells the renewable energy credits from these facilities, in 2016 Gaz Metro said zero percent of its power came from its solar and its wind generators. Renewable energy credits are titles of ownership over produced renewable energy; in legal terms, a utility cannot claim to provide renewable energy to its customers unless the utility buys or retains these certificates.

Green Mountain Power has operated under what state officials call “alternative regulation” since 2007; this is a form of regulation that subjects the company to less financial scrutiny from regulators in exchange for greater freedom to negotiate rates with the state. Green Mountain Power and Vermont Gas Systems are the only utilities in the state to sell energy products under alternative regulation.

Alternative regulation has been criticized by a number of parties, including AARP, and this year’s rate filing will undergo what regulators call a “traditional” rate case, meaning that instead of negotiating rates with the Department of Public Service, GMP will argue its case before the Public Service Board.

The PSB is a quasi-judicial entity, and rate cases before the board are carried out in a form similar to litigated court cases.

The Department of Public Service will advocate for the public interest of Vermonters in that case, and the department has issued three separate requests for independent contractors to examine GMP’s books in preparation for the case, said Jim Porter, director of the department’s Public Advocacy Division.

The department has already asked the Public Service Board to conduct a separate inquiry into alternative regulation generally, to study what regulatory structures are available and feasible, and to find which of those might best serve Vermonters.

Porter said that it’s too early to comment in depth on the reasonableness of GMP’s rate request, as the department just recently received it. He said that “all assumptions will be aggressively tested” as the case proceeds.