Bennington Banner: GMP head sees merger pluses

Dec 02, 2011 No Comments by

Reposted from Bennington Banner.


BENNINGTON — Green Mountain Power Corp.’s pending acquisition of Central Vermont Public Service Corp. will allow for better service and cost-savings for ratepayers, according to GMP CEO Mary Powell.

“The value proposition of bringing us together is really simple — by creating one great team we’re going to provide better service, faster restoration and we’re going to do it while we’re about to carve a lot of cost out of our system, which will benefit Vermonters,” she said.


Powell, who will head the new combined company, to be known as Green Mountain Power if regulatory approval is granted, attended a series of meetings Tuesday with local and state officials, as well as with local business owners in Bennington County.


“I’m not hearing a lot of concerns. I’m actually hearing thoughtful questions, and I would say my sense, and it doesn’t surprise me, particularly from business folks, my sense is that business folks intuitively understand the value proposition of reducing bureaucracy and creating value for customers. If you’re in business that’s largely what you have to be thinking about.


GMP and CVPS filed paperwork in September seeking approval to merge. Gaz Metro, the Montreal-based parent company of GMP, would continue to oversee the new, combined utility. Gaz Metro, which also owns Vermont Gas, has been in Vermont for years and has allowed local management teams to operate freely, she said.


“They’d been in Vermontfor 20 years and I’d never heard of them. In fact, I knew people that were on the board of Vermont Gas, and yet I had never heard of Gaz Metro. So that, to me, spoke volumes to me that they were the type of investor that makes sense for Vermont, that they deeply understood that the way to make the right business decisions is to have local governance and local management making decisions that are right for the customers,” Powell said.

A merger of the state’s two largest electrical utilities has been discussed for about 40 years, Powell said, and governors on both sides of the political aisle have supported a merger. “It’s something that has a long history. It’s been talked about for a long, long time. Talked about by our previous four governors. I think it resonates with a lot of people because, to me, there’s a strong common sense part of it,” she said.


The merger will deliver some savings. Powell said combining the two utilities will save at least $144 million in the first decade.


“We know for sure, we’re guaranteeing as part of the docket, that we’re going to save Vermonters $144 million in the first ten years,” she said. “Right now you have two completely different sets of infrastructure, bureaucracy, whatever you want to call it, and that will all be one.”


That does not translate into lower rates, however. “There will still be cost pressures,” Powell said. “That would be sweet, but it’s not realistic.”


Cost pressures, including infrastructure upgrades, are projected to be significantly higher than the savings, according to Powell. So, rates are still likely to rise, but at a lower pace than they would if the utilities remain separate.


Both GMP and CVPS are among the lowest rates in New England, Powell said, and the merger should preserve that. “If we cans stay there, that’s really good for Vermont. It’s really good for the homes that we power, it’s really good for economic development,” she said.


GMP will continue its “energy vision,” developed about three years ago, that seeks reliable power at a low cost and with a small carbon footprint, according to Powell. So far, GMP has agreed to long-term deals with Hydro-Quebec and NextEra, which operates the Seabrook Station Nuclear Power Plant in New Hampshire.


Powell said the utility originally hoped to negotiate with the owners of Vermont Yankee, the state’s only nuclear power plant in Vernon. The two entities could not reach a deal, though. It remains unclear if the plant will continue to operate beyond 2012 when its license expires. The plant is seeking a 20-year extension.


“Right now, relative to Vermont Yankee, I would say that we’re in a neutral position on it,” Powell said. “We’re not really in a position where we need another long-term contract. I suppose if they came with a deal that you can’t refuse, we’d have to consider that.”


The merger deal is currently winding its way through the regulator process. The Public Service Board will hold hearings in March. Powell said GMP is hoping for a final decision by June. “It’s important to move forward with these deals. It’s not good to let them sit for a period of time,” she said.


The new utility, with 740 employees, will remain a “Vermont-sized company,” Powell said.


“Overall, what it means for everybody, without a shadow of a doubt, is we are going to provide better service in a more cost effective way in the future. We are absolutely convinced, I would say both companies, that we will do a better job for Vermonters working as one team than as two separate teams,” Powell said.



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