VELCO Question Leads to Showdown in Vermont Senate
The Senate went into session to take up the budget adjustment bill, normally not the most controversial piece of legislation. But sparks flew over a proposal to have the state purchase a majority stake in VELCO, Vermont's electricity transmission system.
Three senators on the Economic Development Committee — Vince Illuzzi (R-Essex/Orleans), Tim Ashe (D/P-Chittenden) and Peter Galbraith (D-Windham) — want the state to consider spending $500 million to become the majority owner of VELCO, which manages the high-voltage transmission lines that carry power from Canada through Vermont to New York and Southern New England.
To that end, they proposed an amendment setting aside $250,000 to study the pros and cons of the purchase.
Senate President Pro Tem John Campbell (pictured), who has called the idea of the state owning VELCO "crazy," faced a test of leadership in trying to put down the insurrection. He declared a recess and called Illuzzi into a closed-door meeting with the chairs of the Senate Finance and Appropriations committees to cut a deal to avoid the floor amendment. Campbell wanted just Illuzzi and the committee chairs in the meeting — not Ashe or Galbraith.
Illuzzi emerged from the meeting agreeing to postpone the amendment while the Finance and Appropriations committees took testimony on the feasibility study. It looked like the Senate had a deal. But Galbraith — ticked off that he was excluded from the discussion — went rogue, standing to offer the amendment on his own.
The backdrop for the debate over purchasing VELCO is the pending merger of the state's two largest electric utilities: Green Mountain Power and Central Vermont Public Service. If state regulators approve GMP's purchase of CVPS later this year, the new company will control 70 percent of Vermont's electricity market.
Because VELCO's board of directors is composed of representatives from Vermont's utilities — the number of seats each utility gets is proportional to its market share — the merger would also give Green Mountain Power a majority of seats on the board. With a majority of seats, GMP and its parent company — Montreal-based Gaz Metro — would have broad authority over the current power lines running through Vermont, and including the ability to decide whether to build new ones.
Illuzzi (pictured) says that purchasing a majority stake in the transmission assets would serve Vermont in at least two ways: It would give the state greater control over its energy future; and it would be a lucrative investment for Vermonters. Illuzzi wants to condition approval of the Green Mountain Power-Central Vermont Public Service merger on the state purchasing a 51 percent stake in VELCO. In the short term, he wants to hire a financial advisor to study the pros and cons of the idea.
Campbell talked Illuzzi out of offering the amendment on the floor, but he apparently couldn't persuade Galbraith, even after saying that it risked sinking the entire budget adjustment bill, which could delay the release of badly-needed disaster aid to towns repairing from Tropical Storm Irene.
Galbraith (pictured) said the Senate should move forward with the study because VELCO represents "an extremely lucrative investment." He likened it to owning a toll booth on the only highway in the state.
"These companies have a guaranteed 14 percent of return," Galbraith said. On a $500 million investment, Galbraith estimated the state could be earning $50 million to $55 million a year. He said the state blew it by not buying the hydro dams on the Connecticut River years ago, and warned that missing an opportunity to invest in VELCO would be just as bad.
Following that, senator after senator — Republicans and Democrats alike — rose to try to talk Galbraith down. Sen. Jeanette White (D-Windham) said the Senate should consider the VELCO study as a separate bill. State Sen. Randy Brock (R-Franklin), the GOP candidate for governor this year, said the Senate has more homework to do before approving the study.
Though he originally backed the amendment, Ashe said, "This issue will not be viewed on its merits today and that would be a tremendous shame." He asked the Senate to cease debate and allow Galbraith to withdraw the amendment.
After another recess or two, Galbraith finally backed down, but not without a bit of defiance.
"This amendment is only calling for a study, but a study on something that could transform this state," he said. "So in this case, delay is the same thing as killing it and losing the opportunity forever."
(Disclosure: Tim Ashe is the domestic partner of Seven Days publisher and coeditor Paula Routly.)