Rate increase for utilities means higher bills in future

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(Host) After a lull of several years, 10 of Vermont’s electric utilities are asking for rate increases that will mean higher bills in the years ahead.

Many utilities are feeling the impact of the skyrocketing cost of oil and natural gas.

VPR’s John Dillon reports:

(Dillon) Central Vermont Public Service Corporation was in good company this week. The Rutland-based utility is the state’s largest, and it’s the latest to file for a rate hike request.

CVPS wants to raise rates just over 6%. Green Mountain Power, the state’s second largest utility, wants a 12% rate hike. And in Burlington, the municipal utility has filed for a 23% increase.

(O’Brien) “Utility customers will have to, in the short run, expect rate increases because of simply power price changes.”

(Dillon) David O’Brien is the commissioner of Public Service, the state agency that represents consumers in utility cases.

He says many Vermont utilities are feeling the pinch of higher energy costs.

CVPS is actually the exception. The company says it needs more revenue to cover investments in its transmission and distribution system,

O’Brien says Vermont is in better shape than other New England states. And he says some of the rate hikes may be simply unavoidable.

(O’Brien) “But I will make one significant caveat to that – that the department is going to be looking more and more at, is those non-power cost areas of the utilities. We really want to see a discipline by the utilities in those non-power costs areas, ie: indirect costs, especially given the fact that’s a pressure that’s on employers everyday, to compete globally and limit costs.”

(Dillon) Wholesale electricity prices in New England are pegged to the price of natural gas. And gas is much more expensive than it was a few years ago. Patty Richards is director of resource planning at the Burlington Electric Department. She says power costs are driving the utility’s 23% rate increase.

(Richards) “Over the last few years, natural gas has gone up tremendously. What we had was a 20-megawatt contract at a fixed price during that period. Unfortunately that contract has ended and the market is dramatically and drastically different than it was two and a half years ago.”

(Dillon) The city of Burlington is trying to meet some of its power needs with a wind project planned for Little Equinox Mountain in Manchester. Local opposition has delayed the project. Richards says her ratepayers have felt the impact. If the project was up and running, she says the utility would have saved $1 million dollars in power costs.

(Richards) “I don’t think a lot of consumers get that message. They look at the prospect of building wind power and they’re really focusing on the aesthetic debate. But there’s an economic dimension to this as well. To really get control of our energy costs, we need things like wind power.”

(Dillon) Utilities have to justify their rate hikes before the Public Service. Commissioner O’Brien says his department will make sure the companies have controlled costs. And he wants to examine whether it makes sense to have 21 electric utilities serving the state. He says there could be savings for customers if some companies consolidated.

For Vermont Public Radio, I’m John Dillon in Montpelier.

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