State may evaluate purchase of dams

April 10, 2003

By SUSAN SMALLHEER Southern Vermont Bureau

MONTPELIER — Sen. Vincent Illuzzi, R-Essex-Orleans, said Thursday he would include $225,000 in this year’s capital construction bill to study whether the state should take over six hydroelectric dams on the Connecticut River .

The dams, currently owned by US Gen New England, a subsidiary of financially troubled PG&E National Energy Group, have been for sale for more than a year.

Two bills are pending in the 2003 Legislature concerning the dams. One would lay the groundwork for state ownership by creating a state power authority, and the other would allow the town of Rockingham to purchase the Bellows Falls hydroelectric dam.

Officials from PG&E Energy Group met with the Senate Institutions Committee on Thursday to discuss the pending sale of the dams. Cleve Kapala, director of government operations for US Gen, said the sale of the New England generating facilities would be completed this year.

PG&E has already taken a $1.1 billion pre-tax loss on the generating facilities, Kapala said.

The Vermont House, which passed its capital construction bill this week, didn’t include any money for the project, said Illuzzi, the committee chairman. He said he expected the Senate to vote on the bill in about three weeks.

He said he was “intrigued” by the idea of power from the Connecticut River finally being used by Vermonters, almost 100 years after the first dam was built.

“Wouldn’t it be great if Vermont could control that block of power?” Illuzzi said.

So far, the Douglas administration has been unenthusiastic about the plan. Gov. James Douglas told business leaders in southern Vermont last week that he opposed the idea of state ownership, although he has endorsed the right of Rockingham to try to buy the dam.

The six dams, which stretch from the giant Moore Dam in the north to the Vernon Dam in southern Vermont , generate about 480 megawatts a year, or about 20 percent of Vermont ’s electric needs. And it’s considered “green” power, since it comes from a renewable source — water flow.

Currently, none of the power from the Connecticut River dams is used by Vermont utility customers.

But neither Kapala nor George Boothby, another PG&E employee, would say how much money US Gen makes from the dams, or how much they were worth.

The two largest and most productive dams, Moore in Waterford and Littleton , N.H. , and Comerford, which is located in Barnet and Monroe , N.H. , are located near Illuzzi’s district.

Moore at 190 megawatts and Comerford at 161 are the two largest hydroelectric facilities in New England , according to Boothby, manager of the dam system for PG&E.

However, US Gen New England is selling more than just the Connecticut River dams. Part of the package includes some coal-fired generating facilities in Rhode Island , as well as another network of hydro dams on the Deerfield River , some of which are in Vermont and some in Massachusetts .

Kapala wouldn’t name names, but Illuzzi noted that Brazcan, a Canadian energy conglomerate, has been mentioned as a possible bidder for the power system.

He said that when the hydro system was purchased in 1998, the closing price was $1.59 billion.

Rockingham wants to buy the Bellows Falls dam and establish a municipal utility, selling off the excess power. However, Kapala noted that the dams are run as part of a system and PG&E wasn’t interested in splitting up the system.

Since PG&E bought the dams, it has invested heavily in automation, according to Boothby. He said the number of employees at New England Power, the original owner, had been cut to 87 employees. In 1997, when the dams were sold, there were 166 employees, he said.

Now all the dams are controlled remotely from offices in Wilder, a village in the town of Hartford , where another dam is located., Boothby said.

Property taxes drive the cost of the power more than the operating costs, he said, noting that operating costs for the dams was $18 million.

Kapala said that US Gen paid about $15 million in property taxes annually: $7 million in Vermont , $5 million in New Hampshire and $3 million in Massachusetts .

Rockingham recently won a big court case against US Gen over its tax appraisal, a win closely watched by other towns that have reduced their dam appraisals in the face of a challenge from US Gen.

Illuzzi said later Thursday that power authorities work well in other states, including New York .

And he and Sen. Matthew Dunne, D-Windsor, said several municipal power authorities operate in the state — the largest being the Burlington Electric Department.

Reaction from the Senate committee ranged from Illuzzi’s enthusiasm to the studied indifference of Sen. Julius Canns, R-Caledonia, whose district includes Moore and Comerford.

“Which dam has the best fish?” was the only question he asked.

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