Rutland, Vermont - June 24, 2011
Two Canadian conglomerates are in a bidding war over Vermont's biggest power company.
On March 30 the Canadian power company Fortis announced its plan to purchase Central Vermont Public Service for $470 million, but just Thursday CVPS was surprised by an unsolicited second offer from Gaz Metro, the parent company of Green Mountain Power. The company says it will match Fortis' offer and raise them 15 cents more per share. Now the question is which deal best suits the customers?
Energy expert Michael Dworkin of the Vermont Law School says Central Vermont Public Service is seen as an attractive investment and a hot commodity for companies seeking a low risk investment with a focus on energy efficiency and utilizing smart grids for customer predictability.
"Neither of those are flashy, cutting edge, but they are both ahead of the industry and together they help," Dworkin said.
For Fortis, the first company to make an offer, it would be their first foray into the American power market.
"My perception of why they did was the combination of a relatively low-risk investment, and a well-understood situation. Plus being able to show they had some U.S. experience," Dworkin said.
A step which would grant them full access to VELCO's power line infrastructure. Some argue the company could use those transmission lines as short cut to larger power markets in the U.S. But Dworkin says the grid could handle that kind of influx.
"We get about one-third of our electricity from Canada right now, and our lines were built to handle that," he said. "They are not so strong for moving it to Southern New England after that. It could be done, but there are other paths do to it as well."
Dworkin says Gaz Metro's interest in CVPS may be because it would give them greater weight when negotiating power contracts.
"You are putting more dollars on the table so you can ask for a bigger cut," Dworkin said.
He says GMP and CVPS customers have similar peak usage hours, making it easier to buy bulk power for both companies.
"So if the two serve territories fit together technically in terms of matching demand, having levelized demand around the clock-- that offers a real chance for savings," Dworkin said.
Dworkin says not enough information has been released about either offer to know what is best for CVPS, but expects the customer to benefit either way.
"We have had a pretty successful record of using efficiency to control the cost of power," he said. "If these companies make it effective and work well with Efficiency Vermont, I think the answer is either one of them could keep us in a healthy situation in regard to rates."
Both companies have promised no layoffs and minimal change in higher up positions. Dworkin did bring up that if GMP and CVPS are both controlled by the same company that Vermonter's would lose the ability to compare them in terms of their public service.
Molly Smith - WCAX News
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