This morning, the Vermont Public Service Board OK'd the proposed merger of Vermont's two largest electric utilities, granting final approval for Green Mountain Power (GMP) to acquire Central Vermont Public Service Corporation (CVPS). The deal is seen as an unqualified victory for Gov. Peter Shumlin, who supported the deal, and GMP President and CEO Mary Powell, who took over leadership of GMP in August 2008. Powell will continue to run the newly combined utility under the GMP name.
Supporters of the deal had touted the merger as a "once-in-a-lifetime opportunity" that would reap more than $144 million in savings and efficiencies for Vermont ratepayers in the first 10 years, and almost $500 million over 20 years.
Evidently, the PSB took those words to heart. In its 173-page order, which can be read in detail here, the board described the merger as "a historic opportunity to achieve significant, immediate and enduring benefits for all retail customers of CVPS and GMP."
Shortly after the board's announcement, Shumlin hailed the decision as "great news for Vermont ratepayers."
"Today’s ruling by the Public Service Board affirms that the merger between Central Vermont Public Service and Green Mountain Power will bring tremendous benefits to ratepayers and is in the best interest of Vermont," Shumlin said in a press statement, "I continue to believe, and this ruling reflects, that the terms as approved by the Board will produce extraordinary benefits for consumers and the state."
For her part, Powell said the length of the order — 173 pages — speaks to the PSB's thoroughness in reviewing the details of the merger beforehand.
"It definitely shows that [the PSB] did an an extensive and deep dive into pretty much evevery aspect of the transaction," Powell said. "It's very clear that they were struck by the opportunities for Vermont and the rigor with which we'll be held for that." Powell added that the PSB order includes 94 conditions, "all of which we can certainly live with."
Critics of the deal, including the advocacy group, AARP, condemned the decision as bad for ratepayers and Vermonters in general. In particular, the PSB did not approve efforts to get GMP to return the $21 million in customer-financed bailout of CVPS that took place a decade ago, before the company nearly went bankrupt. According to a deal struck at the time, CVPS was supposed to reimburse its customers that amount in some form before the company could be sold.
Critics were also concerned that a foreign entity — Gaz Metro, GMP's parent company — would now have a controlling interest in the Vermont Electic Power Company (VELCO), which owns and operates the state's transmission grid.
"Today was a great day for Gaz Metro and CVPS shareholders and a lousy day for the ratepayers that bailed CVPS out when it was in financial crisis," said Greg Marchildon, AARP Vermont state director in a written statement. "Company shareholders and executives will reap $150 million in profit from this merger while 135,000 Vermont ratepayers get nothing. In fact, they will be paying more rather than getting paid back. AARP and its 36,000 members in the CV territory are very disappointed in this decision."
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