Green Mountain Power Asks for 11.95 Percent Increase in Rates; Increasing Power Costs Principal Factor
14 Avril 2006 - 7:24PM
Business Wire
Green Mountain Power (NYSE:GMP) today asked the Vermont Public
Service Board to authorize an 11.95 percent rate increase to go
into effect on January 1, 2007. The Company said 88 percent of the
increase is due to rising power costs in a post-Katrina wholesale
market, while the remaining 12 percent is due to increasing state
and regional transmission costs. Green Mountain Power's rates have
risen less than three percent since January 2001. During the same
five-year period, the consumer price index rose 13 percent and
wholesale energy costs increased 93 percent. Vermont as a whole has
the second lowest rates in New England due in large part to the
low-cost Vermont Yankee and Hydro Quebec contracts. Among Vermont's
five largest utilities, Green Mountain Power's overall average
rates are currently tied with Burlington Electric's for the lowest,
based on the most recent state data available. "We have been able
to keep our rates relatively flat over the last several years
because we have done a good job of managing our power supply
costs," said Chris Dutton, president and chief executive officer.
"Our low-cost power contracts with Vermont Yankee, Hydro Quebec and
Morgan Stanley have brought significant value to our customers.
However, as the Morgan Stanley contract expires at the end of this
year, we are forced to replace it in a significantly higher cost
marketplace." The Morgan Stanley contract currently supplies
approximately 15 percent of Green Mountain Power's power supply
portfolio. Higher energy costs in New England are attributable to
several factors, including the run-up in global oil and natural gas
prices and concern about the impact on the wholesale market of a
predicted abnormally active hurricane season. Rising energy costs
are driving up rates for other utilities in Vermont, New England
and across the country, with pending increases running as high as
72 percent in Maryland. In Vermont, rate hikes pending or approved
in the last year range from 10 percent to 23 percent. (A list of
Vermont rate increase requests is attached.) In New England, rate
hikes pending or approved in the last year range from four percent
to 60 percent. (A state-by-state regional summary is also
attached.) "While we know any increase in rates is difficult for
our customers, we believe we have been able to keep our request
comparatively low through our aggressive power supply management
and efficient operations," said Mr. Dutton. "It is also important
to note that we are maintaining a generation mix that has extremely
low air emissions. Finally, we are proud of our superior customer
service as measured by service quality standards established with
state regulators, including low frequency and length of power
outages and high customer responsiveness in our call center." Green
Mountain Power operates in a highly efficient manner, serving 464
customers per employee. The other four largest utilities in Vermont
ranged from 367 customers per employee to 155 customers per
employee in 2004, which is the most recent data available. If the
full rate request is approved, the monthly bill for average
residential customer using 650 kwh would increase by $10.25, from
$85.74 to $95.99. Also, with the encouragement of the state
legislature, Green Mountain Power separately filed today an
innovative proposal that would establish a new regulatory framework
for the Company. Last year, the General Assembly passed legislation
(Act 61) that provided additional authority to utilities and
regulators to propose alternative regulation plans with a
particular emphasis on the public policy goal of separating the
financial success of a utility from increased electricity sales,
thereby removing potential barriers to energy conservation. Green
Mountain Power is the first electric utility in the state to file a
plan under this new law. (Vermont Gas Systems filed its plan in
September 2005). Act 61 requires the Public Service Board to report
to the General Assembly on the number and progress of utility
alternative regulation initiatives by January 15, 2007. If approved
by regulators, the proposal would create opportunities and
incentives for the Company to become more efficient, improve
customer service, remove incentives to benefit from increased
electricity sales, streamline cost recovery, share efficiency
savings with customers, increase credit quality, and reduce
regulatory and borrowing costs borne by customers. In addition,
Green Mountain Power proposes directing additional funding to Power
Partners, Green Mountain Power's low income assistance program.
"This innovative proposal will advance important public policy
objectives, provide benefits to our customers and raise the bar on
our already efficient operations. In addition, an anticipated
improvement in the company's credit quality will allow the Company
to borrow capital at more attractive rates which will hold down
costs for our customers," Dutton said. "This is especially critical
as we begin discussions about replacing expiring power contracts
with Hydro Quebec and Vermont Yankee." Vermont law provides the
Public Service Board with a full year to consider utilities'
alternative regulation proposals. Green Mountain Power Corporation
(www.greenmountainpower.biz) is a Vermont-based energy services
company serving 90,000 electric customers. -0- *T 2005 and 2006 New
England Electricity Rate Increases (pending or approved) State
Range of Increase Requested
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Connecticut 4% to 22%
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Maine 8% to 10%
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Massachusetts 4% to 55%
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New Hampshire 12% to 60%
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Rhode Island 10% to 25%
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Vermont utility rate increase filings in past 12 months Utility
Date of Request or Increase Implementation Requested
----------------------------------------------------------------------
Village of Hyde Park Electric Department 5/16/2005 14.81%
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Village of Johnson Water & Light Department 5/16/2005 14.83%
----------------------------------------------------------------------
Town of Readsboro Electric Department 6/16/2005 15.27%
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Town of Stowe Electric Department 6/16/2005 9.94%
----------------------------------------------------------------------
Village of Jacksonville Electric Department 7/1/2005 12.72%
----------------------------------------------------------------------
Lyndonville Electric Department 11/16/05 17.68%
----------------------------------------------------------------------
Vermont Electric Cooperative 12/1/05 14.35%
----------------------------------------------------------------------
Vermont Gas 3/10/06 16.7% (10/11/05 requested 13.6% and 11/05 took
effect)
----------------------------------------------------------------------
Burlington Electric Department 3/16/06 22.86%
----------------------------------------------------------------------
Green Mountain Power 4/14/06 11.95%
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*T
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