COLCHESTER, VT--(Marketwired - Aug 1, 2013) - In its on-going merger commitment to continually hold down costs for its customers, Green Mountain Power today unveiled a new two-year strategy to stabilize and minimize utility costs.
The stabilization strategy is contained in a filing made today with the Vermont Public Service Board that endeavors to smooth out a $24 million increase in regional ISO-New England transmission costs and higher VELCO costs due to infrastructure investments to increase system reliability in Vermont. These costs, if not addressed, would have sharply driven up GMP customer rates by at least four percent for the year beginning on Oct. 1, 2013.
Instead, GMP and the Public Service Department agreed to the proposal that minimizes the impacts of transmission costs, the primary driver of utility cost increases over the next two years. Every state is required to share in the regional costs that are stated to be necessary for the reliability of the New England grid. Green Mountain Power's transmission obligation for 2014 is $24 million higher than in the current rate year.
If the stabilization strategy is approved by the Public Service Board, customer rates would increase by 2.46 percent beginning on Oct. 1, 2013. The exact cost impact for the second year of the plan will not be set until Oct. 1, 2014, after a thorough top-to-bottom review by state regulators. GMP agreed that the maximum increase for the year beginning Oct. 1, 2014 would be no more than 2.5 percent and could be less.
Win Smith, owner of Sugarbush Resort in Warren, Vermont, said, "It is especially important for a ski area to be able to plan with some certainly what its future energy costs will be. I appreciate all the hard work GMP has done to keep the upcoming increases relatively low, especially compared to many other cost pressures we face."
A major component of the new two-year plan is the guaranteed $13 million in merger savings over the two- year period, which played a significant role in controlling costs. This is on top of the $2.5 million in merger savings included in current operations.
"We are demonstrating every day that operating as one company saves our customers money," said Mary Powell, president and chief executive officer of Green Mountain Power. "In the face of significant increases in regional and local transmission costs, our diligent work to serve customers more effectively combined with our guaranteed merger savings of $13 million means that our rate plan is at least two percentage points lower than it would have been without the merger."
The imposed increase in transmission costs, along with increases in property taxes and necessary investments for reliability and new energy generation was moderated by Green Mountain Power's intensive management to reduce costs in other areas. This includes power supply costs that were slightly lower, savings from the implementation of smart grid technology, and importantly, $13 million in guaranteed merger savings.
"The Green Mountain Power team is incredibly focused on providing cost-effective, highly reliable and friendly service to its customers," said Powell. "Over the past year, thanks to merger efficiencies and smart grid technology investments, our response during storms has become faster and more efficient. We are pleased to see our customers benefit from the changes we are making, from both a financial and a service perspective."
The two-year plan has the effect of offering customers more stable rates, as single year rate filings would have called for a higher increase this year, and less of an increase next year. It also provides more predictability in rates, which is especially helpful for business customers as well as homeowners in planning budgets.
Future rate changes will benefit from the guaranteed $144 million in savings Green Mountain Power promised in the first 10 years of the merger. This includes the upfront savings of at least $15.5 million in the first three years following the merger.
About Green Mountain Power
Green Mountain Power generates, transmits, distributes and sells electricity in Vermont and is a leader in wind and solar generation. The Company, which serves more than 250,000 customers, has set its vision to be the best small utility in America. For further information, visit www.greenmountainpower.com.