CVPS Documents Suggest $21 Million Payout Won’t Kill Merger Deal

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(Host) There’s a $21 million question at the heart of a planned sale and merger of Central Vermont Public Service Corporation.

Proponents of the deal say it could fall apart if the Legislature forces the utility to send the money directly back to customers.

But as VPR’s John Dillon reports, the company has told regulators that repaying the money is not a major obstacle to the merger.

(Dillon) As lawmakers focus on the merger, the three-member Public Service Board has also held hearings to delve deep into the financial details.

The board has reviewed reams of documents as it studies the deal. And included in the paperwork is a proxy statement sent to shareholders that describes the transaction.

In those documents, CVPS says its obligation to share the proceeds of the sale with ratepayers is not a "material adverse event" that could scuttle the transaction.

Utility critics say that’s an important admission.

(Marchildon) "I think the proxy says very clearly that this wouldn’t kill the deal."

(Dillon) Greg Marchildon is Vermont director of AARP. He says customers are owed the money for bailing out the utility with higher rates a decade ago.

(Marchildon) "This is not very complicated for CVPS. They send a bill to these people every single month. Either they can slip a check in it, or they deduct it for $76. Not … administratively complicated at all."

(Dillon) But from the utilities’ point of view, what AARP wants is extremely complicated. Green Mountain Power – which is owned by GazMetro of Montreal – would assume the $21 million obligation if it successfully merges with CVPS. The merged company wants the $21 million to be invested in efficiency and weatherization programs. And it plans to recoup the money through rates charged to customers.

CEO Mary Powell says the entire merger deal is threatened if the Legislature intervenes and tells the company what to do with the money.

(Powell) "I’m telling you flat out that this is a significant issue, and absolutely could have the ability of killing the deal."

(Dillon) Greg Marchildon from AARP says Powell’s concern is contradicted by the proxy statement.

(Marchildon) "It barely stands to reason. We have a $700 million deal, right? And they’re saying on the one hand that $21 million will kill this deal even though we know from the proxy statement that’s not at all what shareholders were being told."

(Dillon) But GMP says AARP is confusing the issue. Dorothy Schnure is a spokeswoman for Green Mountain. And she says the proxy statement was issued only by CVPS, not for both companies.

(Schnure) "If you look at it, that language defines the reasons why CVPS may or may not move forward with the sale. It does not relate in any way to GazMetro’s decisions in whether to move forward with the purchase."

(Dillon) GMP argues that customers will see $144 million in benefits from the merged utility. But the Public Service Board wanted to know what those projected savings mean for individual ratepayers over time. So it asked the utilities to add up the savings per customer.

The answer – according to PSB documents – was that the average GMP customer would save $175, before inflation, over the next 10 years. CVPS ratepayers would each reap about $167.

For critics, that seems pretty low. Cynthia Browning is a Democrat from Arlington.

(Browning) "It’s not that much. And I think it shows that in the way they’re presenting this merger, they’re just trying to constantly inflate how much value there’ll be to the customers. And the value is really not there. And every time we go further into this deal, it leads to more and more questions."

(Dillon) GMP maintains the savings are significant. But exactly how much customers will benefit – and whether they’ll get a direct refund – is likely to come up again as the Legislature holds more hearings on the merger this week.

For VPR News, I’m John Dillon in Montpelier.


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