State decides against bidding on hydro-dams

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(Host) The state of Vermont will not invest in a series of power dams along the Connecticut and Deerfield Rivers. Officials say that the state’s partners in the potential deal dropped out because of the cost.

VPR’s John Dillon reports.

(Dillon) Vermont was interested in the dams because they have a capacity of about 500 megawatts. The state stands to lose about two-thirds of its energy supply over the next decade as contracts with Hydro Quebec wind down and the license for Vermont Yankee expires.

But the dams ended up being more expensive than the state had bargained for. John Sayles is interim manager of the Vermont Hydroelectric Authority.

(Sayles) “The partnership cannot meet its required return at the minimum bid price.”

(Dillon) Vermont’s partners were Brascan Power Corporation of Toronto and Emera Incorporated of Halifax, Nova Scotia. Under an agreement negotiated earlier this year, the state could have acquired a 25 percent share in the dams.

But State Treasurer Jeb Spaulding, who is a member of the hydroelectric authority board, says Vermont’s partners were simply out-bid by a third company, energy conglomerate Trans-Canada.

(Spaulding) “The reality of the situation is that Trans-Canada submitted a very aggressive bid back in August, $125 million-plus more than we did. When you analyze the economics of it, there wasn’t on a conservative basis a lot of value there. And given the volatility of the energy market it just didn’t make sense from a business perspective for our partners.”

(Dillon) Spaulding and other members of the Hydroelectric Authority board said it would be far too risky for Vermont to bid on its own for the 13 dams.

(Spaulding) “It’s just too big a project, too much risk for one, an energy investment for anybody, especially for the state of Vermont where we would have been basically doubling the amount of outstanding debt we have for one fairly risky proposition.”

(Dillon) The dams are being auctioned off to satisfy creditors of U.S.-Gen New England, which is in bankruptcy court.

Spaulding says it’s possible that the state could buy power from the company that eventually acquires the dams. Officials also hope to assist the town of Rockingham in its efforts to buy a Connecticut River dam in Bellows Falls.

For Vermont Public Radio, I’m John Dillon.

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