Dams still for sale despite Chapter 11

By SUSAN SMALLHEER Southern Vermont Bureau

The impending bankruptcy of PG&E’s National Energy Group likely will not have an immediate effect on plans to sell eight hydroelectric dams on the Connecticut and Deerfield rivers, the company said Friday.

Meanwhile, a spokesman for Gov. James Douglas said the governor had an open mind about the state possibly buying the dams. He supports including money in this year’s appropriations bill, now pending in the Legislature, that would fund an evaluation of that purchase.

“The governor has no predisposition whether the state should purchase the hydroelectric dams,” said the governor’s spokesman, Jason Gibbs.

He added that Douglas didn’t believe the state should be in the power-generating business.

“The governor believes that power generation is generally best left in the private sector,” but he’s willing to consider its benefits, Gibbs said.

He said Douglas would wait for a recommendation from Public Service Department Commissioner David O’Brien before making a final decision.

Gibbs said the governor had changed his mind somewhat about the proposed purchase in the past couple of months.

Earlier this week, PG&E chairman Robert Glynn said it was likely the company’s National Energy Group would have to seek Chapter 11 bankruptcy protection in order to restructure its debts.

The filing is expected by the end of June.

PG&E, based in San Francisco , filed for Chapter 11 protection from its creditors several years ago, but its national wholesale energy business has not. National Energy Group is $2.9 billion in debt. NEG’s subsidiary, USGen New England, operates the eight dams.

Company spokeswoman Lisa Franklin said that the decision earlier this week to seek bankruptcy for National Energy Group would have no immediate effect on last year’s decision to sell the dams. The dams are still for sale.

“The company is still looking at a potential sale of its assets. If the timing of the Legislature coincides with the company’s sale interests — who knows?” she said. “We are still looking at a sale as an option.”

Restructuring the debt would be in both the company’s interests or a buyer’s interests, she said.

PG&E had announced this week that it lost $354 million for the first quarter of 2003, in large part due to a $261 million loss by the National Energy Group, of which the Vermont hydro-electric dams are a part.

Glynn had said on Wednesday that the company was still evaluating a sale, but there had been no “definitive decisions” made, according to Franklin .

Sen. Vincent Illuzzi, R-Essex-Orleans, has proposed including up to $250,000 in the state budget for studying the feasibility of the state’s purchase of the dams.

The dams could provide 479 megawatts of renewable energy for the state.

Rep. Steve Darrow, D-Putney, had introduced legislation that would create a state power authority to own the dams and sell the electricity to Vermonters.

Darrow said Friday that his bill had been revised and he wasn’t sure of its exact status.

“But those dams are workhorses and are in place and should be generating power for Vermonters,” he said.

Illuzzi couldn’t be reached for comment Friday.

Franklin said that National Energy Group would file tax grievances in several Vermont towns this year, contesting their tax bills. S

o far, the company has only filed formal grievances in the town of Rockingham and the village of Bellows Falls, which assesses the dam at $90 million and receives about $3 million in taxes.

Rockingham is considering buying the dam itself and forming a municipal utility.

“Like any taxpayer, we have a right to grieve our taxes,” Franklin said.

The Connecticut River hydroelectric system produces 479 megawatts of power at six hydro stations. The Deerfield River system, which includes both the Somerset and Harriman reservoirs, is located in southern Vermont on the Massachusetts border and produces at least 84 megawatts.

Contact Susan Smallheer at susan.smallheer@rutlandherald.com.