Green Mountain Power wants a little more freedom from regulation in exchange for assuming a little more risk to its own bottom line over the next three years.
The state’s largest electric utility has agreed to cap its spending on new projects to about $85 million a year over three years. GMP says it needs the flexibility to quickly innovate in the face of climate change and a rapidly evolving energy market.
GMP wants to get away from filing traditional contested rate cases that are like court trials and can happen almost annually. So, it’s asked the Public Utility Commission for permission to implement a multiyear rate plan.
However the actual rates allowed in this multiyear plan won’t be known until later this year, when the company files its latest numbers.
Mary Powell, the company's CEO, told the three-member commission Tuesday that the utility needs to develop new services in a more nimble fashion.
These initiatives will include collaborating with renewable energy companies and others, Powell said.
“What collaboration looks like is acceleration of innovation, and acceleration of Vermonters adopting solutions that can help them dramatically reduce carbon, have more reliable power in their homes, and for it be cost-effective,” she said.
GMP and the Department of Public Service, which represents ratepayers, have resolved many of their differences. For example, GMP has scaled back how much it plans to spend on new capital plant investments to about $256 million dollars over three years.
GMP controller Edmund Ryan took the witness stand to outline some of the risks and benefits to the company from the multiyear plan: The benefits are that the company won’t have to get permission to spend money on particular projects, such as upgrades to its system to withstand more frequent storms, while the risk is that regulators could later determine that ratepayers should not be charged for some of those investments.
“That will be a shift of a risk to GMP under this plan,” Ryan said. “I mean it could be significant. We’re spending … $256 million, so there is a potential for a big risk there. So we will have to have our A game on, but we do have our A game on when it comes to capital and construction.”
Ryan said the commission could in a subsequent review "disallow" some of the costs, meaning that GMP shareholders — not ratepayers — would have to cover the spending.
Anthony Roisman, the chairman of the Public Utility Commission, stressed the point that the company will be responsible for showing after the fact that it had spent money wisely on the behalf of ratepayers.
“So, in the vernacular, rather than ask for permission, you might have to ask for forgiveness?” Roisman said.
“Hopefully not,” Ryan said.