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Edited on Sat Oct-11-03 06:00 PM by cryingshame
Bob Young is plugging into a career's worth of energy industry experience to lead Central Vermont Public Service Corp. through deregulation by Pip Vaughan-Hughes
Originally published in Business People, May 2000. Photos: Jeff Clarke)
As deregulation sweeps through America's electric utility industry, utilities are losing their traditional status as power-providing monopolies and are facing a new era of free enterprise and competition. That's the case with Central Vermont Public Service Corp. (CVPS), Vermont's largest electric utility. Under the leadership of Bob Young, president and CEO since 1995, CVPS is meeting the challenges of deregulation head-on.
President/CEO Bob Young has been preparing Vermont's largest electric utility for deregulation since 1993. The plan reduced CVPS's employee roster and brought in officers with a variety of backgrounds to compete in an international market.
"He's smart; he's tough," says Gov. Howard Dean. "He's extremely dedicated to his community. He's an enormous asset to CVPS, and to the state." .............................................................................................................................................................
HIGH VOLTAGE ZAPS STATEHOUSE POWER BROKERS;LEADERSHIP STUNNED
Well, folks, it's a billion dollar rip-off brought to you courtesy of your friendly neighborhood public utility company, Governor Howard Dean, and key satraps of both Democratic and Republican parties. Will Vermonters roll over and submissively shell out? ..
The Senate passed the bill, S-62, placidly called "an act relating to electric industry restructuring," and now it will sit before the House for a year or so. Well and good. House Speaker, Michael Obuchowski has done us all a favor by slowing the power companies' juggernaut and letting the dust settle. The Senate made a valiant but hasty effort to understand the torturously complex piece of legislation but as Finance Committee Chair, Senator Cheryl Rivers said in the floor debate, "We really don't know what this bill will do."
We are, however, beginning to get an idea. It's starting to look like Vermonters are about to get mugged for truly big bucks.
Senator Vince Illuzzi, in a failed insurrection on the floor, put it best. He said, "This bill should be called: The Hydro Quebec Protection Act." Illuzzi, a strange blend of bad-assed populist and stiff-necked conservative, went on, "This bill is the biggest bailout of an industry in Vermont history. It's analogous to the deregulation of the savings & loan industry and subsequent multi-billion dollar bailout."
Remember Hydro Quebec?
About six years ago, our benevolent power companies and a few high level politicians and bureaucrats rammed through a disastrously overpriced deal with Hydro Quebec. A lot of people complained about it at the time but the financial implications flew far over the heads of most Vermonters. Now, the chickens come home to roost. And now S-62 proposes to give nearly the same cast of bad actors, bumbling and/or conniving utility executives, their political cat's paws, and their captive techno-bureaucrats, the responsibility of cleaning up this very smelly hen house.
Contrary to the usual media slush, S-62 does NOT deregulate the electric utility industry in Vermont any more than NAFTA brought about "free trade."
Wrapped into our traditional electric bill are three main cost components: generation, transmission, and distribution. Generation means the machinery and fuels that actually produce the electricity. Transmission means the high voltage network required to wheel large blocks of power long distances. And distribution means the system of poles and wires connecting all of our homes and businesses to the grid.
The distribution component, wires and poles, accounts for forty or fifty percent of our power bills. Transmission costs add another ten or fifteen percent. The remainder, the costs of the actual electrical generators themselves, amounts to less than fifty percent of our total electric bill.
It is this generation component that would be opened, under the new rules, to a kind of market place competitive environment. In theory, each of us consumers would be able to choose our power sources. That's the theory anyway, but in any event, the majority of the price we pay for electricity would continue to go to our same old power companies. For most of us, that means Central Vermont Public Service and Green Mountain Power. These companies and all the smaller Vermont electrical suppliers will still be regulated by the Public Service Board and guaranteed a profit in the same old way.
Getting some kind of choice in where and how and at what price our electricity is produced is a nice idea. We could choose a windmill company in Maine or a solar company in Arizona. You can bet if we had had a chance to choose twenty years ago Vermont Yankee nuclear and Hydro Quebec would have gone out of business in Vermont long ago.
But, unfortunately, our choices promise to be considerably less than free and our electric bills considerably higher than our New England neighbors. If the power companies and Governor Dean and Senator Shumlin and Senator Snelling and Senator Spaulding get their way we will also be forced to pay those same old power companies the costs of their very expensive mistakes.
The big shots say we are all on the hook for this very long contract with Hydro Quebec. Our prudent and public spirited utility executives agreed to pay for a lot more power than we need at a price billions of dollars higher than its market value. It's enough to make a good free market capitalist throw up.
So now it's fake free market time. Why now? Actually, there are no special technical reasons to restructure the electric power business now. It's all really just a matter of corporate bookkeeping. Technically, generation could have been separated from distribution twenty or thirty years ago. Or it doesn't need to happen at all. But everybody's doing it, all over the country. It's the latest thing, so little Vermont has to jump on this bandwagon too.
You might ask, how could us dumb citizens of Vermont have made such a crummy deal with Hydro Quebec in the first place? Well, basically, we didn't. Utility executives, against the advice of their own planners, made that deal, sailed it past the Public Service Board, and signed the contract themselves. We have to pay for it, they say, because they complied with a regulatory process that sticks the public with the bill every time.
The Vermont public wasn't paying close enough attention when the power company executives shopped that turkey around like sweet honey and the promised land. But it's doubtful public pressure would have made any difference anyway. Actually there was quite a hue and cry over the environmental impacts of the gigantic James Bay project. It didn't matter. These power companies have had the political machinery wired for generations. And the same bunch, more or less, maintains its political clout today in the governor's office and the state senate, thus the billion dollar bailout.
Utility lobbyists swarmed the statehouse in record numbers on this one. But those several dozen gray eminences couldn't simply techno-talk and bully their way to victory this time. There is resistance and they are terrified that this new fashion in corporate structure will stick them with some of the costs, or, perish the thought, all of the costs for their own bad decisions. When it started looking like stockholders would be forced to pick up even part of the bill corporate execs started rumbling ominously, "If you don't give us what we want we'll go bankrupt on you."
Bankrupt!
This sand box bully boy tactic actually scared a lot of legislators. "Heavens to Betsy," they were muttering, "the lights will go out all over Vermont." But of course that's nonsense. No matter what the internal financial difficulties of the power companies they can't turn the lights out. It's against the law.
Even so, the senate stuck a whole lot of language in S-62 that guarantees the financial health of the utilities no matter what damned fool things they have done or might do. They also gave the Public Service Board almost unlimited authority to decide how much rate payers (you and me) will be forced to pay and how much corporate stockholders will pay for that ridiculously overpriced Hydro Quebec juice.
What S-62 lacks as a result is any incentive for either the power companies or Hydro Quebec to renegotiate that horrible contract on more realistic terms. Thankfully, it is not a done deal yet. The bill barely skated through the senate with no more than one in three senators actually understanding its details and consequences, which is not bad considering the dense language and loud lobbying. But now the House will have a more reflective opportunity to make it a little more ratepayer friendly. We'll see.
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