GMP works to resolve Proctor rate woes
By Bruce Edwards
STAFF WRITER | July 09,2012
Green Mountain Power Corp. is working on a solution for commercial customers in Proctor who were blindsided last year by a spike in their electric bills – a spike that is forcing the Vermont Marble Museum to close its doors in the fall.
Businesses in town were caught by surprise following the sale of the Vermont Marble Power Division to Central Vermont Public Service Corp.
Residential customers saw a jump in their electric bills as well – a 58 percent rate hike — but prior to the sale being approved by the Public Service Board, CVPS agreed to lessen the sticker shock by phasing in residential rates over four years.
CVPS, which merged last month with GMP, had a different commercial rate structure, one common in the industry. Customers are billed at an energy use rate and at a peak demand rate, which dramatically increased the bill for some commercial customers in town.
GMP spokeswoman Dorothy Schnure said the company is revisiting the impact on Proctor’s commercial customers.
“We understand why those customers are frustrated with the issue,” Schnure said, “and we’re looking at several different options that we’re hopeful can help the situation.”
Schnure declined to say what those options are.
Throughout its history, the Vermont Marble Power Division did not assess a peak demand rate for most commercial customers, so when CVPS issued its first Proctor bills in September, commercial accounts were hit with what amounted to a double-barrel rate increase. And unlike residential customers, who had their rates phased in, businesses were hit with the rate increase all at once.
“The absence of a rate phase-in plan for VMPD commercial customers was based in large part on the finding that rate differences between CVPS commercial rates and VMPD commercial rates were not as pronounced as the differences in residential rates,” the Public Service Board said in its June 5 letter to CVPS seeking additional information.
However, since CVPS took over the Proctor service territory last year, the PSB began looking at the issue and concluded that the peak demand rate, which didn’t exist for most VMPD commercial customers, was the source of the problem.
In a June 20 letter to the PSB, Alan George, a lawyer representing the town of Proctor, said CVPS told neither the town or commercial customers that a demand rate was coming.
“CVPS did not advise town personnel or otherwise provide information to explain rate options or the relative advantages or disadvantages of alternative rates, or how the demand rates are triggered or avoided through load management, e.g., installation of load limiting devices,” George wrote. “The town understands that other commercial customers were similarly left uninformed.”
Asked whether CVPS failed to inform commercial customers about the changes, Schnure said she was not privy to communications between CVPS and the parties involved.
George asked the board to “negate” the demand charges for customers who explore alternative rates or load management options and to waive the demand charges going forward for 60 days.
In its June 20 written response to the PSB, CVPS said there are 62 commercial accounts in Proctor (a customer can have more than one account) with 22 accounts billed at the demand rate.
The PSB also wanted to know whether CVPS considered the impact the demand rate would have on commercial customers.
Although CVPS said an analysis was not possible because VMPD did not have a demand rate, the company did acknowledge that demand rates can have significant impact on a customer’s bill.
“When billed via rate design without a demand charge the customer experiences a relatively small bill due to their small kwh (kilowatt-hour) use. However, when billed via rate design with a demand charge the high demand is then a larger billing component and a customer could see a dramatic bill increase.”
Schnure said the portion of the bill attributed to the demand rate is less when a customer maintains a steady use of electricity throughout the month. When overall usage is less during the month but peaks at certain times, she said the demand rate can cause a customer’s bill to spike.
That’s what occurred with the Vermont Marble Museum which saw its electric bill more than double in September to $2,500 from the previous year. That pushed the museum over the financial edge.
Owners Marsha and Martin Hemm announced in April they could no longer afford to operate the museum, which had been making a small profit.
The Hemms are now working with the Preservation Trust of Vermont to find a nonprofit to take over the museum, which is a repository of marble industry history in the state. The couple are also exploring the possibility of establishing a solar farm on the property.
At the time it purchased the VMPD from Omya Inc., CVPS warned that rates would increase. Proctor enjoyed some of the lowest rates in the state but CVPS said Omya had deferred upgrades of the hydroelectric facilities, which kept electric rates artificially low.
The Public Service Department, the public advocate in utility cases, is also working with the parties to find relief for commercial customers.
PSD spokesman Geoff Commons said that VMPD’s rates “were very outdated” while rates charged by CVPS were much more current.
“Very few VMPD customers had been on demand rates; as a result most customers did not have meter data at that time that would have allowed estimation of the CVPS rate switch bill impact,” Commons said in an email.
“Nevertheless, now that the problem has been identified, we would like to find a solution that helps smooth the transition. We intend to continue working with the utility, the PSB and affected parties to determine what relief may be available for those customers.”