The proposed merger of Central Vermont Public Service (CVPS) and Green Mountain Power (GMP) would be beneficial to Vermont Electric Power Company (VELCO), according to Kerrick Johnson, VELCO’s vice president of external affairs.
“What [the merger] brings to us is a better capitalized company that will have the resources necessary to provide VELCO with the capital we need to keep our transmission system reliable,” he told TransmissionHub Jan. 13.
VELCO is in the midst of building, for instance, a 1,000-mile, 72-strand fiber optic network, he said, adding that the project is scheduled to be completed this year. “We have ongoing substation projects in a number of areas,” Johnson said. “We are refurbishing a high-voltage direct current converter in a town called Highgate. That is one of our key connections with the Canadian system.”
The merger is currently being discussed at the state Public Service Board (PSB), with one of the state Department of Public Service’s witnesses filing testimony on Jan. 10, he said.
In a pre-filed statement, Michael Dworkin, former chairman of the PSB, said the proposed merger, as it relates to the transmission system, will be consistent with the general good of the state if structural measures are put in place to ensure, on an ongoing basis, explicit consideration of the general good of the state in the management of Transco’s assets by VELCO or its successors.
An appropriate way to ensure such a consideration of the general good is to, for instance, ensure that the public interest is represented on VELCO’s board of directors through establishment of “general good directors” on the board, Dworkin added.
A example of a “structural measure” would be to formalize the membership on the VELCO board and restructure it such that there are essentially three voting blocs: the combined company, public power – and any future companies that are smaller than the largest single VELCO member – and “general good directors.”
Dworkin also said these directors would have to be selected and in that selection process, it will be vital that they be technically competent, that they represent the general good, but not be subject to short-term political influence and that their tenure and replacement not cause instability or abrupt shifts in the management of a long-term complex infrastructure.
One possibility to implement this, he said, involves establishing a state transmission nominations board (TNB) made up of individuals appointed by public officials and the utilities. This board would nominate at least five “general good directors” to the board of 13 directors of VELCO, and if this model were used, the governor could appoint nominees from a slate chosen by the TNB, perhaps subject to Senate confirmation. Among other things, Dworkin said the directors should serve six-year, staggered, terms removable only for cause.
“If there’s one fundamental concern we have with the testimony filed thus far is that…if [Dworkin’s] recommendations were adopted by the Vermont Public Service Board, it would…require that we for the first time, would have essentially political appointees serving on our board,” Johnson said.
He also said VELCO will file its comments on Jan. 20 with the PSB, whose decision on the merger “could [occur] anywhere from June to September.”
Johnson also commented on competition concerns. Vermont state Sen. Vincent Illuzzi, for instance, has told FERC that the proposed merger will harm competition by concentrating VELCO’s control in the hands of the post-merged company.
“The notion that combining two distribution utilities in Vermont…would have any impact on the region’s, let alone the national wholesale competitive markets, is farfetched to be generous,” Johnson said.
Among other things, Johnson said VELCO has been prepared for the scheduled shutdown of Entergy’s (NYSE:ETR) Vermont Yankee nuclear power plant and that “everyone is awaiting the decision from” a judge.
The Hartford Business Journal reported earlier this month that while the U.S. Nuclear Regulatory Commission granted the plant a 20-year license extension to operate beyond March 21, the state has not extended its state permit for the facility. The federal judge’s anticipated decision stems from Entergy filing a federal lawsuit opposing the need for a state permit, according to the report.
“We have been planning as if the plant would not be running by March 2012 for almost two years,” Johnson said.
Gaz Métro is the parent company of GMP.