Energy rates may increase sharply
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By Bruce Edwards STAFF WRITER - Published: November 18, 2009
Ratepayers of Central Vermont Public Service Corp. could see their electric rates climb 30 percent over the next five years, CVPS President Robert Young told local lawmakers Tuesday.
Young cautioned that his estimate is subject to change based on fluctuations in the wholesale Northeast power market. He said much will also depend on whether Vermont Yankee is relicensed and whether CVPS reaches a deal on a new power purchase contract with Entergy, the nuclear plant's owner.
Young made his comments at the annual legislative breakfast hosted by Stafford Technical Center.
Young expressed frustration in negotiating a new deal with Entergy but said progress on a new contract picked up over the past two months. At the same time, he said a new contract remains far from certain.
He said inking a new deal is complicated by several factors including the relicensing of the plant, which requires legislative approval, the involvement of other utilities and involvement by the Department of Public Service and the governor's office.
Young said a new contract has to make sense from an energy standpoint and pass political muster as well.
"I hope we can reach an agreement," he said. "I will tell you personally that I view the plant itself as a tremendous asset to the state of Vermont in terms of jobs, in terms of tax base, in terms of reliable power, in terms of its lack of contribution to carbon dioxide and carbon footprint."
But Young said if a deal isn't reached by early next month Entergy is likely to make its own "take it or leave it offer" to Vermont utilities.
The contract with Vermont Yankee expires in 2012 and if there is no new contract, Young said there is plenty of surplus power available in New England for the foreseeable future.
"So you don't have to worry about whether your lights are going to stay on if that plant shuts down," he said.
Young said CVPS already has a backup plan to purchase replacement power from a fossil fuel source that has a slightly larger carbon footprint than Vermont Yankee.
The utility sent out requests for proposals seeking 100 megawatts to 120 megawatts of replacement power and received bids totaling 1,800 megawatts.
During a question-and-answer session, Rep. Robert Helm, a Castleton Republican, asked Young where electric rates are headed.
"The guy who's paying $100 a month now is going to be paying five years from now how much?" Helms asked.
Young said that's difficult to predict because it's based on the Northeast wholesale power market, which is driven by the price of natural gas-fired generating plants.
"You tell me what gas is going to be and I'll tell what the price of power is going to be," he said.
Young pegged the cost of future power in the $60 to $90 megawatt range with renewables priced even higher. By comparison, the current Hydro-Quebec contact is priced at $65 per megawatt hour and Vermont Yankee at $42 per megawatt hour.
He said if Vermont loses Vermont Yankee, the company's ratepayers will likely see a "substantial run-up" in what they pay for electricity.
"I will tell you we could see our rates going up in the next five or six years 30 percent, if some of these prices bear out," he said.
CVPS recently filed for a nearly 6 percent rate hike that would go into effect in January.
The state's other major power source is Hydro-Quebec.
Young said negotiations on a new contract with the provincial utility are "certainly going a lot smoother" than the talks with Entergy. He said CVPS expects to have a new contract with Hydro-Quebec by next year. The existing contract expires in 2016.
If new long-term contracts with Vermont Yankee and Hydro-Quebec are forthcoming, he said CVPS would be buying somewhat less power from both sources.
Young said the utility is listening to Vermonters who want a balanced power portfolio that includes renewables, with an eye on cost.
He said CVPS has renewable power sources lined up as part of its portfolio that will begin in 2012.
Young also touched on other areas:
Giving serious consideration to building a medium-sized power plant in the state.
CVPS is embarking on its Smart Power investment, installing and upgrading its infrastructure to two-way digital in-home meters that will give customers control over their power usage.
A 50-kilowatt solar project is being built at the company's service center on Route 7 with the help of Stafford Technical Center students.
bruce.edwards@rutlandherald.com
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