(Host) A small Vermont utility is about to get a lot larger. The Vermont Electric Cooperative will close soon on a deal to buy the Northeast Kingdom territory of Citizens Utilities.
The acquisition represents a dramatic recovery for the co-op, as VPR’s John Dillon reports:
(Dillon) In 1996, top officials of the Vermont Electric Cooperative were headed to bankruptcy court. They needed protection from creditors because their small utility was reeling from a 100 million dollar debt.
Next month – eight years to the day from the bankruptcy filing – V-E-C will buy the Vermont territory of Citizens Utilities. The deal will make V-E-C the third largest utility in Vermont, with about 37-thousand customers.
(Richard Cowart) “This is a remarkable turnaround story for a Vermont utility.”
(Dillon) Cowart was the state’s top utility regulator in the 1990s when V-E-C filed for bankruptcy. Under previous management, the utility had gone on a buying binge by investing in many power projects throughout the region.
As chairman of the Public Service Board, Cowart ruled that VEC’s huge debt was unsustainable and should not be paid off through massive rate increases.
(Cowart) “That’s a tough decision for any regulatory body to make, but we made it, and we made it twice in fact. And as result we were able to push back agencies of the federal government who were demanding that Vermont ratepayers pay back all of that debt.”
(Dillon) The federal government eventually accepted a settlement that allowed the co-op to recover financially. When Citizens’ territory came up for sale, V-E-C decided to make a bid.
The Public Service Board approved the $18 million dollar deal earlier this month. The approval includes a provision that VEC lower its rates by about 8 percent over 18 months to levels now paid by Citizens customers. The cooperative has also agreed to a five-year rate freeze.
Kelly Enright is the co-op’s executive manager. She says the co-op didn’t plan to close the deal on the eighth anniversary of its bankruptcy. But she does appreciate the symbolism.
(Enright) To be able to deliver this to the cooperative I think is something special. I think it is symbolic. It wasn’t part of our plan, but it is kind of nice to know that eight years the co-op didn’t even know if they would exist and to be able to turn around to do what we’re doing. .. We really believe in what we’re doing.
(Dillon) Cowart, the former chairman of the Public Service Board, points out that the sale represents an end of an era for Citizens Utilities as well. Several years ago, the company was sanctioned for misleading regulators and then decided to get out of Vermont.
For Vermont Public Radio, I’m John Dillon in Montpelier.