Expert Questions Green Mountain Power Dam Purchases

Aug 19, 2016

Regulatory filings this week show Green Mountain Power is purchasing 17 new hydroelectric dams to add to its generation portfolio, but state regulators aren't sure the dams are a smart buy.

Four of the 17 dams are in Vermont and the rest are spread throughout New England, and Green Mountain Power asked state regulators to let the company bill its customers for the $23 million price tag.

But Bill Schultz, a consultant hired by the state to vet GMP's rate request, says there are concerns about the transaction.

"The $23 million cost was an estimate and the [company] is still in the process of determining the actual cost," Schultz's report said. It also said that "the cost benefit analysis as prepared [by Green Mountain Power] was not considered adequate."

Green Mountain Power isn't sure how much the dams will actually cost in the end, and regulators aren't satisfied that the company did its due diligence to determine that the dams are a sound investment.

Jon Copans is the deputy commissioner of the Department of Public Service, and he said the department needs to know more about the dams to figure out if customers should reimburse the company for them.

“The key is that they are being acquired at the right price. That really is the fundamental question,” he said.

Copans says the department plans to hire an independent expert to check out the dams and make sure the company isn't asking customers to overpay, or pay for dams that are going to need major fixes soon.

"The key is that they are being acquired at the right price. That really is the fundamental question." - Jon Copans, Department of Public Service

“Whenever I've been successful in buying a used car, I always bring it to a mechanic to check it out, right? And honestly, that's I think what we intend to do,” he said.

Green Mountain Power paid more than $4 million dollars for renovations to a hydro project at Glen Falls this year, and Schultz said in a report this week that he's worried similar costs could stack up for the new dams.

He wrote, "it is obvious that capital dam maintenance cost and relicensing cost can be significant."

Charlotte Ancel, the vice president of power supply and general counsel at GMP, says the company's analysis showed the hydro projects are a good investment, and that the company is confident in hydro power because it already owns 32 hydro generation facilities in Vermont.

"They are some of the most cost-effective, low-cost power sources that we have in our portfolio. We specialize in operating those types of projects." - Charlotte Ancel, GMP vice president of power supply and general counsel

“They are some of the most cost-effective, low-cost power sources that we have in our portfolio. We specialize in operating those types of projects,” she said. “Our team's got significant expertise on it.”

The company plans to get licenses for the out-of-state dams through the Vermont Public Service Board.

Copans at the Department of Public Service said that process will give the department an opportunity to watch out for customers before the dams are part of the company's operations.

“We will participate in that process with a better picture of what the condition of those facilities are and what the right price might be for those facilities,” he said.

If regulators determine that the company overpaid for the dams, Green Mountain Power is on the hook for any overages and can't bill customers for the imprudent spending.