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Utilities agree with state to lock rates
until 2005
By BRUCE EDWARDS Herald Staff The agreement with the PSD,
the consumer advocate in utility rate cases, puts in writing a commitment by
Central Vermont Public Service Corp. and Green Mountain Power Corp. to hold the
line on rate hikes. According to the terms of
the agreement, CVPS and GMP will not seek a rate increase before The agreement does allow GMP
to raise rates a maximum of 1.9 percent on GMP’s last rate hike of
3.42 percent took effect on CVPS has said its goal is to
hold off on filing for a rate increase until 2006. The agreement and any
subsequent rate increases would require the approval of the rate-setting Public
Service Board. The agreement also reduces
the allowed rate of return of both public utilities. CVPS agreed to lower its
allowed return on equity from 11 percent to 10.5 percent. GMP would see its allowed
return on equity cut from 11.25 percent to 10.5 percent. Any earnings in excess of
that amount in 2003 and 2004 would be used to reduce expenses to benefit the
ratepayers of each company. In addition, should GMP exceed its allowed rate of
return, the amount would be refunded to customers in the form of credits on
bills in 2005 and 2006. PSD Commissioner David
O’Brien said in a statement Friday that the agreement was prompted by the sale
of Vermont Yankee, the state’s only nuclear power plant. Both CVPS and GMP had
a substantial investment in the plant, which was sold to Entergy. O’Brien said his objective
was to ensure that “The plans provide CVPS spokesman Stephen
Costello said Friday that the agreement formalizes the company’s objective of
holding rates steady. “Our stated goal is not to
file a rate case before 2006,” Costello said, adding that should a rate
increase become necessary it would not take effect until mid-2006. CVPS’s last rate increase
of 3.95 percent went into effect on Costello said the agreement
also saves the company a costly battle with the PSD, if the case had been argued
before the Public Service Board. “Litigation is costly and
we felt this was a fair outcome to resolve this issue,” he said. With the threat of
litigation removed, Costello said the company can continue to focus on reducing
costs. The agreement does allow the
utilities to seek rate hikes to recover costs due to extraordinary circumstances
such as a devastating storm or other calamity. The PSD said that GMP and
CVPS will also file cost-of-service analysis and rate redesign to determine
whether costs are properly allocated among classes of ratepayers. Contact Bruce Edwards at
bruce.edwards@rutlandherald.com |