Rate Case Roundup: Vermont

In a highly unusual turn of events, the Vermont Public Utility Commission adopted a proposed stipulation under which an electric utility, Green Mountain Power Corporation (GMP), was granted a rate increase that actually was larger than what it had initially sought, although the margin of difference was ever so slight. Whereas the utility had petitioned for a 4.98% increase in its revenues, a settlement crafted by the company and the state’s Department of Public Service (DPS) ultimately provided for an increase of 5.02% instead.

In seeking additional revenues, the utility had listed three primary factors driving its rate application:

1. climbing transmission expenses,
2. increased costs of capacity in the market overseen by the Independent System Operator of New England, and
3. rising costs associated with growing participation in net metering programs.

The company cited those three items as accounting for at least 6% in “rate pressure” GMP was facing. The utility added that it also has been experiencing reduced demand, and therefore lower sales, year-overyear from 2016 to 2017.

Part of the company’s rate request also had been predicated on planned investments in three new microgrid projects. But the final rate agreement between GMP and DPS eliminated the projects from the utility’s rate plan. According to the commission, the company and DPS had concurred that the near-term costs of the facilities outweighed their expected longterm benefits, even though the microgrids were projected to bring in additional revenue for GMP in future years.

The commission stated that the proffered settlement recognized that in exchange for forgoing the microgrid initiative, which was anticipated to produce a positive return on investment exceeding $10 million in subsequent years, it was only fair that the utility be compensated for those lost revenues through a somewhat greater level of rate relief on a current basis. The parties thus assented to a higher near-term rate increase to satisfy a revenue deficiency GMP and DPS pegged at approximately $31.9 million.

However, the net increase actually will be closer to $29.8 million, after a 0.35% offset stemming from a residual power cost adjustor decrease. Of that total, the amount assigned to the residential class will be about $12.9 million.
The commission related that the parties had stipulated to a 9.1% ROE for the 2018 rate year, with that ROE edging up to 9.3% for the 2019 rate year. The commission declared both values just and reasonable given present conditions in financial markets and in New England in general. Re Green Mountain Power Corp., Case No. 17-3112-INV, Dec. 21, 2017 (Vt.P.U.C.).