Feasible or fanciful?

Burlington Free Press, May 7, 2003
Hey, Vermont , want to buy some dams? They offer a reliable source of power. Maybe lower utility rates. Great river views.

It's worth checking out. State purchase of eight hydroelectric stations on the Connecticut and Deerfield rivers might be part of the solution to one of Vermont 's most serious economic weaknesses: the high cost of electrical power.

The dams are on the market after their owner, USGen New England, defaulted on loan payments last year when a steep decline in wholesale energy prices meant the company couldn't meet its debt schedule. The Legislature is considering financing a study of the wisdom of the state taking over the facilities.

At initial blush, the idea is attractive because Vermont has the nation's sixth most expensive utility rates. That's largely because the state lacks cheap coal-fired power plants common in many other states and instead must rely heavily on imported energy from Hydro Quebec and electricity generated by Vermont Yankee nuclear plant.

The Connecticut and Deerfield systems were built generations ago and now supply power to the spot energy market. Little of the electricity is used in Vermont .

High power bills are consistently listed among the chief gripes of companies doing business or seeking to expand operations in Vermont . While it's doubtful that Vermont will ever compete solely on price against states with low-dollar generating facilities, state control of the hydro system could enhance Vermont 's economic attractiveness.

Moreover, with Hydro Quebec contacts set to expire in the next decade and Vermont Yankee possibly nearing decommissioning, the state needs to develop future sources of dependable power. The dams, which could account for roughly 20-30 percent of the state's annual power demand, might enable the state to smooth out what could become a highly volatile energy market, as well as reduce state reliance on outside sources for electricity and provide Vermont a safe, non-polluting, renewable energy supply.

As of now, however, there are more questions than answers regarding the fate of the dam system. The owners, for example, are expected to want to offer the dams as part of a package with other properties in southern New England . It's uncertain whether US Gen New England's parent, PG&E National Energy Group, would sell the Vermont sites separately and at what price if the company did.

The big issue, however, is as much philosophical as financial. Should the state get heavily involved in the utility industry? What are the risks to taxpayers and ratepayers if it does? Could a partnership between the state and private utility companies be worked out?

That's why the legislative study is a good approach. Presented with a possibly historic opportunity to ease a potential future energy-supply and cost crisis, the Legislature owes Vermonters a thorough review of the purchase idea.

Buying the dams might be fanciful; it might be feasible. Let's find out which it is.