State weighs PG&E filing

July 10, 2003

By SUSAN SMALLHEER Southern Vermont Bureau

The state of Vermont will intervene in this week’s bankruptcy filing by the owners of the hydroelectric dams on the Connecticut and Deerfield rivers, Administration Secretary Michael Smith said Thursday.

Smith said that Public Service Department attorneys would be participating in a conference call about the bankruptcy today.

Smith said the bankruptcy of USGen New England and PG&E’s National Energy Group was expected; in fact, it had been expected to happen before June 30.

Smith said there were advantages and disadvantages to the state in a bankruptcy situation. The big advantage, he said, is that the state — if it proves feasible for the state to buy the dams — will know of any competing bids.

“The bidding procedures will be more open to us — what’s going on,” he said.

Smith is also the chairman of the Vermont Renewable Energy Acquisition Authority, which was created by the 2003 Legislature to study the feasibility of the state owning the dams.

The disadvantage to bankruptcy, Smith said, is that it invariably is a more complicated legal picture involving the bankruptcy court.

This week’s expected bankruptcy filing by the owners of the hydroelectric dams on the Connecticut and Deerfield rivers will not affect their proposed sale, a company spokeswoman said Wednesday.

Natalie Wymer said in a telephone interview that the sale of the dams “still remained likely.”

On Tuesday, PG&E’s National Energy Group, which, in turn, owns USGen New England Inc., filed for Chapter 11 bankruptcy, which allows it to continue to operate while reorganizing its debt.

Wymer wouldn’t say whether the company was negotiating actively with a company. USGen New England also includes coal-fired plants in Massachusetts and Rhode Island , in addition to the hydro dams.

The filing was in the U.S. Bankruptcy Court in Maryland , Wymer said.

Wymer also said that the bankruptcy would not affect the company’s tax status — it would still be paying its property taxes to communities along the two rivers in Vermont .

Rockingham Town Manager Shane O’Keefe said Wednesday that the bankruptcy would probably complicate that town’s efforts to buy the hydroelectric facility at Bellows Falls , which is assessed at $90 million.

He said the town would file to be an intervenor or party in the bankruptcy proceeding.

As a matter of coincidence, the annual tax bills were being readied in Rockingham, with USGen’s bill at $3.2 million, for both taxes in Rockingham and the village of Bellows Falls.

“It certainly throws our proposal to acquire the hydro facilities in question,” O’Keefe said. He said the hydro proposal would be discussed by the Rockingham Select Board in the near future, likely at a closed-door session slated for Thursday to discuss real estate.

In the town of Rockingham and the village of Bellows Falls, tax revenue from USGen New England looks large. It represents 28 percent of all taxable property in the town, and 47 percent of all taxable property in the village, O’Keefe said.

Sen. Vincent Illuzzi, R-Essex-Orleans, one of the main proponents of the state buying the hydro system, said the bankruptcy would probably complicate matters.

“It just throws into question how easy it will be,” he said. “Bankruptcy locks everything in.”

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