Flemming: GMP rate hike reveals monopoly influence in government

By David Flemming

Several months ago, Green Mountain Power received permission from the Department of Public Service (DPS) to raise Vermonters’ electric rates by 5.5 percent, due to GMP’s recent investments in Vermont’s electric grid. In late November, an ex-employee, Brian Winn, supported an anonymous letter to Vermont’s Public Utility Commission (PUC) protesting the lack of effort from the DPS (especially its commissioner) to negotiate the rate increase suggested by Green Mountain Power. The PUC’s response? “None of our business.” Winn’s letter should be taken seriously, especially considering the questionable oversight from the DPS over Green Mountain Power during the past decade.

Among the letter’s most provocative claims were that GMP “used an accounting gimmick … shorten(ing) the rate year to nine months,” which would mean that the rate increase would be “at least 8%,” instead of the 5.45 percent which had been reported. DPS “Commissioner Tierney on multiple occasions altered Department witness testimony to remove information that would have been embarrassing to Green Mountain Power. This included removing recommendations about clearly uneconomic and risky investments … that would have saved the ratepayers money.”

In recent years, GMP has made some rather troubling investments, lending the letter a great deal of plausibility. Between 2011 and 2016, Green Mountain Power failed to provide the DPS with documents showing that their investments were in Vermonters’ best interest, according to Vermont Public Radio. At one point, GMP was unable to properly document spending $18 million on wind turbines in the Northeast Kingdom, a cost which the DPS allowed GMP to pass along to its customer base, no questions asked.

The letter also insinuates that the DPS’ light touch on GMP involves career considerations. “Liz Miller, who used to be Commissioner (of the DPS) and signed off on the last very generous alternative regulation multi-year plan, is now representing Green Mountain Power in the new case.” The DPS’ Commissioner Tierney negotiating with GMP’s Miller, who sat where Tierney was sitting a few years ago. We’re left wondering if Tierney went easy on GMP so that she can walk into a higher paying job where she can negotiate against the public on behalf of the GMP.

By granting monopoly privileges, Vermont has incentivized monopolies to take advantage of bureaucrats who have every reason to look toward their next career move, rather than looking out for the common good. South Carolina has recently been looking into breaking up its utility monopolies. Perhaps Vermont should also consider such a move.

David Flemming is a policy analyst for the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.

Image courtesy of Wikimedia Commons/Paul Anderson
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7 thoughts on “Flemming: GMP rate hike reveals monopoly influence in government

  1. The Vermont Heat Pump Promotion Troika
    http://www.windtaskforce.org/profiles/blogs/vermont-baseless-claims-about-cold-climate-heat-pumps-for

    1) GMP: Kristin Carlson, GMP’s vice president for strategic and external affairs, said in an email that the utility has now installed 1,125 heat pumps.

    – GMP arranges for the installation with an Efficiency Vermont-approved contractor.
    – The contractor chooses the heat pump brand and model; brands include Daikin, Fujitsu, and Mitsubishi, with outputs ranging from 9,000 Btu/h to 18,000 Btu/h.
    – GMP loan at an interest rate is 10.74%/y. That appears to be a USURY rate!
    – GMP says that payments will range from $49 to $81 per month, depending on the model of heat pump that’s installed.
    – At $49/month, a homeowner would pay $8,820 for a single-head minisplit over the 180-month payback period.
    – At $81/month, a homeowner would pay $14,580.
    – That doesn’t include the electricity required to run the unit.
    – Should a homeowner sell the house before the loan is repaid, GMP says it can offer a buy-out price for the heat pump, or the new owner could pick up the payments.

    2) Efficiency Vermont: According to a fact sheet at Efficiency Vermont, a homeowner would save:

    – $1,842/y by shifting 80% of the heating load away from electric resistance heat to a cold-climate heat pump.
    – Propane users would save $1,268/y.
    – Fuel oil users would save $865/y.
    – The “fact sheet” (fiction sheet?) is no longer accessible!

    3) VPIRG, an RE Lobby: VPIRG, a booster of renewable energy, mostly financed by Vermont RE businesses, estimated the annual savings of a heat pump at $1000 to $1500 on a $3000 household heating bill. It appears, VPIRG grabbed a number out of the air, because it looked good.

    4) After numerous complaints about a lack of energy savings, the Vermont Department of Public Service surveyed 77 existing heat pump installations at 65 locations and found the average energy savings were $200/heat pump/y, which had an installed cost of $5000/heat pump, and might last up to 15 years. Amortizing the $5000 at 5% requires monthly payments totaling $474/y.

    Heat pumps used in typical Vermont houses are money losers, and more so, if annual amortizing costs of back-up systems and maintenance contracts for both systems were added.

    The main problem is the typical Vermont house is an energy hog and has a high peak heating demand during colder winter days, which makes it unsuitable for heat pumps.

    – Heat pumps used in such typical houses would displace only about 32% of the Btus, which would not provide adequate $savings.

    – Heat pumps used in highly insulated and sealed houses would displace 100% of the Btus, which would provide adequate $savings.

    • My heat pump article shows, the CEP projection of numbers of heat pumps and energy reduction and CO2 reduction are BOGUS.
      My biofuel article showed, the CEP projection of biofuel by 2050 is BOGUS.
      http://www.windtaskforce.org/profiles/blogs/excessive-predictions-of-future-biomass-and-biofuel-consumption
      That means the CEP projections for 2050 are BOGUS.

      The VT-DPS heat pump study is a dense piece of obfuscation.
      The info is there, but it is hard (for lay people) to make sense of.
      After much effort, I was able to figure out all of it.
      Then I thought, gee, all that could have been covered in a much simpler manner.
      I guess they opted not to, in order to keep the scam going; part of VT – DPS “policy objectives”.
      So, I wrote my article, which has been distributed to thousands.

      A lot of folks have trouble understanding heat pumps, but they do understand refrigerators.
      A heat pump works to cool, like the (cool) inside a refrigerator, and to heat like the (warm) rear of a refrigerator

      Generally, it is less costly to ONLY operate the back-up system starting at 8F to 10F, because of low coefficients of performance of the heat pumps, i.e., high kWh/delivered Btu.
      A COP = 1.0 is equivalent to electric heating.
      Do that ON A COLD DAY, and your electric bill will skyrocket, which GMP loves

      If a house is highly insulated/highly sealed, it uses very little energy of which the annual cost is low.
      Heat pumps can provide 100% of the heat for such houses, but do not provide much in ADDITIONAL $savings.
      A back-up system is needed in case of a heat pump outage or power outage.
      The TWO systems have maintenance contracts and service calls not related to maintenance.
      Amortizing the cost of the TWO systems requires annual payments for 15 years.
      Unless the state MANDATES heat pumps, I would not bother.

      Geothermal heat pump is the way to go for NEW houses and other buildings. THAT SHOULD BE MANDATED

  2. All Monopolies are inherently self-serving no matter what the institution, be it GMP (a private company) or the AOE (our public education monopoly). That’s why the Founders established a Republic with as many limits on government as they could muster. The Sherman Antitrust Act of 1890, for example, was the first measure passed by the U.S. Congress to prohibit abusive monopolies. But is that enough?

    Unfortunately, weak politicians are compromised by powerful lobbyists. Worse, when politicians campaign or speak publicly about holding these organizations accountable, they aren’t telling the truth. Typically, politicians blame someone (anyone) else for their crony behavior and just as typically the perpetrators are powerful members of the unelected Administrative State – in this case, the appointees on the PUC and DPS.

    https://patriotpost.us/articles/59975-video-who-are-the-most-powerful-people-in-america

    Unfortunately, I can’t offer a short-term political resolution to eliminate the problem because when one crony politician risks being voted out of office, the only replacements that can afford to run against them are equally beholden to the lobbyists.

  3. GMP is a huge scam. Look at the salaries. Look at the wind turbines, solar panels and batteries they are installing which supposedly is/are saving US dollars. Then look at the industrial and residential rates. Some of the highest in the nation. We need to reel them in especially they’re guaranteed rate of return on projects.

  4. Will anyone initiate an investigation? Does our legislature or governor work for the people of Vermont?
    Hello? Is anyone there? No, I have not said this before.

  5. My utility company has been installing new hi-tension wires on huge steel utility poles. Maybe 200ft tall? Not a nickle increase in my electric bill. Mind you I pay .05/KWH for all off peak electricity I use. Off peak represents 21h/day. Will a little time management of devices that draw high loads I have a very cheap electric bill every month. NO efficiency VT tax either. Humph.

    What’s GMP’s rate up to now with the exta EVT tax? .16/KWH?

  6. Well since they’re in collusion with the media in this state it’s pretty interesting Kirsten happens to be their media spokesman now you don’t think that’s a little conflict of interest which fits right into the pay for play

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