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YCQM - Liz Miller - September 11, 2011 - WCAX.COM Local Vermont News, Weather and Sports-

YCQM - Liz Miller - September 11, 2011

September 11, 2011 -- Vt. Public Service Commissioner Liz Miller joins Anson Tebbetts to discuss energy issues including Vermont Yankee, wind, energy plan and hydro.

TRANSCRIPT:

Good morning to you. Today we're going to be talking about energy issues, utility issues, everything from solar to wind to vermont yankee, and joining us in the conversation is the commissioner of public service, liz miller, thank you for joining us.

 Happy to be here. Thank you.

 You have a full plate, seems like energy news is in the news every single day. Why don't we begin with wind. There's a couple of projects underway. The sheffield, the lowell project, some down south. Not without controversy, some do not like it, some like it, and the administration has taken i guess a pro wind, for better stance of that. Why do you think wind is part of the solution to our energy future?

 First, let me just give some perspective on where we are with wind. The searsburg project, the southern project you referenced is about 2/10ths of a percent of our load in state. The other projects that have conditional certificates of public good, including sheffield, which is going up right now, the lowell project that you mentioned, deerfield and a few others, if all of them were built and sold in state, it would be about 6% of our load. So that just kind of gives you a sense of where we are now versus where we might be within a few years if everything gets built.

 So plus the granite wind project which is under contract.

 That doesn't sound like a lot.

 Well, for some perspective, biomass, which mcneal generating station here in burlington and the red gate facility, that's about 6% of our in-state load. So 6% is significant for an in-state load, particularly for renewable like wind. Solar right now is only a 10th of a percent, but we have a lot of solar projects in the pipeline, so that gives you some perspective. In-state hydro, just over 10% of our load.

 And looking at the wind, people are now with sheffield, you know, some of the turbines are up, people can see it, now there is a great debate going whether it's scarred the landscape. Some people may think it attracts visitors, tourism. From your seat, where do you see the, i guess, the landscape question?

 Well, first of all, it has to be balanced. I mean, we in vermont must protect our scenic beauty, our tourism, our vermont brand, and i think everybody that i've spoken with agrees to that premise. So it is not a question of wind everywhere, wind on ridgelines everywhere, anything like that, instead, it is a project by project look at whether a particular proposal fits in vermont given our mix, given the area that it's in, given the natural resource issues, and the aesthetics issues. You really do have to look at it project by project. On sheffield, i really want to go down, i haven't been able to be there since the towers have started going up, and i'm going to go down and take a look, because, of course, i'm interested, too, knowing that other projects may be proposed.

 And we heard early this week some with the lowell project wanted the state to slow down, they wanted to have the state and green mountain power focus more on solar. What do you say to those folks?

 We've had a lot of comments for small-scale solar. I think vermonters across the board really in our energy planning process we've heard renewable energy, community-scaled energy, a big emphasis on solar. Those are comments that are really pretty consistent throughout vermont with the comments we've received. So i'm not surprised by those comments. I think any portfolio, though, has to look for balance, it is a question of mixing the resources and making sure that the resource mix fits for the state. Solar, as you know, produces energy when the sun shines, for example. Wind tends to produce energy overnight and in the early morning hours when the wind is stronger. So it is important to balance these things when looking at the portfolio overall.

 And those projects, the critics say, you know, one of the arguments they don't like it really doesn't help the locals at all. They are not getting that energy, it's going to go somewhere else, it's either to go to go to southern new england, somewhere outside of vermont. They are the group that is going to be stuck there looking at these towers in their backyard, and in the people getting the benefit won't have to look at them or be underneath them or hear them else.

 I've heard those concerns. I understand there are deeply felt people on both sides of this issue, frankly. Wind is something especially large-scale wind on ridgelines has en gendered a lot of comments in vermont, especially in the lowell area. That project is a green mountain power project, the power will be used in green mountain power's portfolio. Green mountain power has entered into an agreement with neighboring towns to share some of the revenue from that project. There's also a tax-based benefit, so there are local benefits from that project and i think those are important to keep in mind, but that doesn't discount the fact that for any one person adjacent to that site, they may have view impacts and other issues that they have to deal with for the project. And, you know, as we look to the future, i think we need to recognize the tradeoff that all forms of energy bring, and we need to make decisions with those tradeoffs in mind, because the one thing we can't do is have no energy projects in state. That would not be a wise choice for our energy security and our independence. So knowing that there will be tradeoffs, one has to do a balance and say what is in the society's best interest.

 And maybe just wrap it up here on wind, we've got these projects that are sort of on the front bunker. -- burner. Are there ones that are coming along that we'll have more? I mean, we don't have a lot of ridgelines that are viable, but are we at the end of the projects with lowell and, i mean, london der -- londonderry, milton. Are we going to see more?

 There is the georgia mountain project in milton, that's probably the one you're referencing. I am not aware of any larger scale wind projects, certainly nothing pending at the moment. I think it will be interesting in ten years to see what the history has been, not just with the projects that have conditional cpg's and are to be built, but also to see how many additional project may actually be proposed. As i said, if everything is built that's currently in the pipeline, that's 6% of our load, and that actually is a significant number, so i think time will tell, but there aren't other large projects pending right now.

 Your department is in the midst of putting together a comprehensive energy plan, i guess october is the target date.

 Yes.

 What can you share with us as far as wah is in at that plan -- what is in that plan now and what it's going to look like?

 We're putting the finishing touches on it, hoping to get it out to the public right after labor day for comment and to have public hearings towards the end of september, so that the governor can have it in october on schedule. You will see in the plan a long-term vision for hor renewable energy -- more renewable energy in all sectors for vermont. I'll talk about that in a second. You'll also see short-term steps, a realization that you cannot get to a renewable energy future in a linear fashion. You really do have to start with small steps and let the acceleration curve take over over time. You need to do that because of the economics of it, it is very important to keep rate payer costs in mind, total energy costs to vermonters in mind, but there are policies and things that we can do now to help set you us up for a more independent and renewable future.

 So you're going to have to gradually build it, so we get a tremendous amount of power from hydro in canada, looks like that's going to continue for a number of years. So that's in the mix.

 Um-hum.

 We can't go it alone, there is no way that vermont can go it alone on its energy. We have to rely on canada now, right?

 We need to rely on regional resources. We could in vermont with about a thousand megawatt peak load, we could in vermont make a choice to have all generation here, but we haven't made that choice in the past, and i don't believe we'll be making that choice in the future. Instead, particularly with our regional energy market, and the fact that we have supply on the regional market with more coming online in the future, it is my expectation that vermont will continue to use long-term, stable contracts from out of state entities as part of the mix. But i think it's also important to say, okay, what are we going to do here in vermont right here in our state for economic independence and jobs and everything else that it can bring, and the community-scaled projects particularly solar project, knelt metering project -- net metering projects, small-scale wind projects, those are all going to be a part of the future mix in vermont and the energy plan. We'll talk about those things. We'll also, though, that you can about the other big sectors of energy in vermont. There is a real emphasis on electricity for, you know, lots of reasons, it is in the news quite a bit. But transportation and heating are two-thirds of our total energy usage and they are also the two-thirds of our energy usage that are quite dependent on oil, petroleum-based fossil fuels right now. And if we're going to over time reduce vermonters' dependence upon the market conditions and volatility associated with petroleum, we need to move those sectors toward more renewable and more locally sourced options as well.

 Biomass, where is that in our portfolio?

 Biomass right now is about 6% of the electric portfolio, and that's, again, mcneal, rigate, a few methane plants. We also have a few, 13% of our schools in state heating with wood. That's a large number when you look at a national picture, vermont has really led the way with biomass heating in schools. There's a really good opportunity in vermont because we have a lot of small businesses here focused on it to grow the biomass thermal side of the equation, and that's just a fancy way of saying using wood and grass and other bio product for heat. Using them in our homes and businesses. There's also some opportunity to do what's known as combined heat and power, where you have an electric plant that sheds some of the heat load to either an industrial sight or residential or commercial site so that you can reduce your heating bills at the same time, so biomass already has a significant portion in our load. I think looking to the future, you're going to see more particularly on the thermal side.

 And the other issue, and a couple of other big issues we got a merger that's on the table between green mountain power and central public service, also the vermont yankee issue. Why don't we take a short break, we'll come back and talk more about those issues. Our guest is liz miller with the public service department. We'll t

 welcome back to you can quote me, we're talking about energy on this edition of "you can quote me" liz miller with the public service department, commissioner there is with us. Before the break we were talking about a couple of enormous issues that vermont is facing, the court case where the vermont yankee and the nuclear power plant in it vernon scheduled to close, well, coming up next year, unless there's some dramatic development in that. Where is that, we've got a court case coming up, energy, the company out of louisiana wants to keep it open, the administration, legislature, said no, you must close the plant. Where is the court case, and where is that headed now? Are we going to have a trial, i guess.

 That's right. There is a trial scheduled september 12th, and where we've been so far, the lawsuit was filed in april, the judge held a preliminary injunction hearing in june and then issued a decision if -- in july agreeing with the state that there was no irreparable harm caused such that vermont yankee should be granted a preliminary injunction. The judge also said, but i'm going to get this to trial the judge will issue a ruling fairly promptly, certainly we would hope by the end of the year, maybe a little more quickly than that, so at that we'll have some sense of where the case is going before the march 2012 date you mentioned.

 What is the state's argument, they want the plant to close, but on a legal standpoint what is the state going to argue before the judge who is going to make this decision?

 Sure. And of course the attorney general is handling the indication for the state, and so i give you my understanding of the indication, but i leave it to the attorneys, as it were to actually make the arguments. There's two bases for the state's case: first, when energy bought the plant, it knew the certificate of publi it is about a third of our portfolio right now. I believe through of our utilities, three or four take power from the station. The others do not take any power from vermont yankee. Cvps in green mountain power are the two largest utilities in both in terms of obviously the state and the share of power they take from vermont yankee, and both of those utilities have made plans to cover the need when vermont yankee closes. So in the near term, there is -- vermonters should feel confident that when the plant closes, the power absolutely will stay on, we have plenty of excess supply in the regional market. Our utilities have covered the costs right now, regionally, quite favorable, which is good news, so we're in a good position when the plant closes, we will be in a good position going forward, because there is excess supply on the market, and of the concerns that i've heard raised, by vermonters, and i understand there are deeply held opinions on this issue, too, i really just want vermonters to understand that if vermont yankee closes in march, 2012, as scheduled, the lights will stay on, our utilities have done what they need to cover.

 And folks will want to know is my utility bill going to go up. Not only is it going to stop, but they want to know am i going to be paying more for power because of it. Can you assure them that their power bills won't go up, though?

 Well, both cvps and gmp have recently entered into contracts that in part cover the vermont yankee portion, and those contracts are at favorable prices. I can't recall the number that cvps put out in its press release recently, but the early cover was in fact lower than the vermont yankee price, so in the short-term, again, i think we have not only the power that we need, but a reliable price and a good price for that power, and forecasted prices are right now quite favorable, so although there are many pressures on electric bills, regional transmission projects are one, certainly, we don't believe that vermont yankee's closure will be the pressure on rate payers bills that opponents fear.

 One other subject that's generated a lot of talk over the last few months is the potential merger between central vermont public cervix and green had the -- service and green mountain power, the two largest utilities. Has the department taken a position on those, and while the filings haven't been done yet, it seems like the administration, the governor, maybe, like that deal, have you taken a position on that yet?

 No, not at all. We haven't seen the petition yet at the department. We understand that it will be filed, if not this week, then perhaps next, and we are talking with both gmp and cvps about the timing for that filing so that we can get the process started. T public service board, the regulators in charge of this merger to kick the tires, to make certain that it's for the benefit of the state, to make certain that it provides the rate payer benefits that have been promised, and i am committed to making sure that happens.

 The argument that green mountain power has made, you know, they can reduce management, that's one way, you've got maybe, they are saying they are not going to lay off any employees, you know, some may be skeptical of that, create a solar city in rutland. Do those all sound realistic in a plan that you have seen, or discussions behind the scenes that would be a good for vermont?

 We haven't seen the details in the filing, so i can't judge right now how the way that gmp plans to achieve those savings does or does not fulfill the promises they've made. Having said that, the categories of items that they've laid out that we've seen in the press accounts are what we would be looking for, that is, savings particularly savings to rate payers, savings achieved in a reasonable manner, given the economy that we're in right now, one could achieve labor savings quickly by layoffs, as you mentioned, but gmp and cvps has planned to do it through attrition over time, appears appropriate, so long as those savings really are achieved over time. So it's going to be really important to measure the progress, to set the progress and then set measurements and make sure those are achieved.

 And what is going on, there's a lot of discussion about transmission lines with velco needing a lot of upgrades throughout the state, there's project underway in new hampshire as well. What is sort of the synopsis of the infrastructure of getting power to our homes through the big transmission lines, where are we in that?

 It is a great question. It's really complicated, but let me just try to separate it into a couple different areas for you. The project in new hampshire, just to take that first, that project, the northern pass project, is what is known as a merchant transmission project. Merchant transmission project is just a fancy way of saying private companies are doing it, and it's not based upon a specific reliability need that the federal government, ferc or the iso-new england operator has identified. That's a purely economic merchant project. That project is designed to bring 1200 mega watts of power from canada down into the new england market.

 1200 mega watts. I think you said earlier --

 1200 mega watts.

 Vermont was looking for, we need about a thousand, is that right?

 Our peak load is around a thousand.

 All right.

 So that's a big deal, then, 1200, going down --

 it is a large project.

 Yes. It is.

 And that merchant project is distinct from projects that many people have seen here in the state which tend to be reliability projects, and it is important for folks to know velco operates as a part of a regional transmission system and velco operates that system subject to federal reliability regulations, particularly after the 2003 blackouts, the federal regulatory commission in charge, which is known as ferc has really taken great steps to make the regional transmission operators and the state transmission companies meet reliability standards, and those standards have increased since 2003, and so many of the projects that we've seen here have been a direct result of those increases. Coupled with, frankly, some need to upgrade infrastructure over time, and that's happening throughout the new england states. We have many, many projects throughout the six states that are happening right now, and are scheduled to happen in the next ten years, and the way we pay for transmission projects regionally is through a percentage based upon a state's load profile, and so vermont has about 4% of regional transmission project pajts that it must make. It is really important through efficiency and other measures to keep our load number low so that our percentage of transmission projects regionally does not rise.

 Big expensive work, though.

 Right.

 For utilities.

 Yes.

 Costs a lot of money.

 It does.

 And is that part of the energy plan that you're working on and also part of this sort of restructuring going on with green mountain power and cvps, does that play in here what's going with upgrades of transmission lines and mergers, that it takes a lot of capital to make these things happen?

 It does take a lot of capital to do transmission project. You know, we tend to add zeros to transmission projects much more quickly than we would to a generation project, for example. And it's really important to keep that in mind, the capital needs are really intensive. In terms of the energy plan, we are suggesting a couple of things. We think that the state could have a greater presence and more involvement in the regional transmission planning process down at iso-new england, we do follow that process now, but i think vermont, because we didn't go through restructuring in our electric industry like some other states did in new england in it the 1990s, i think vermont hasn't focused as much on the regional market as we perhaps could be to ensure that as projects are planned our voice is heard. So that's one thing we're suggesting in the comprehensive energy plan. In terms of the merger, separate issue, green mountain power has suggested that 30% of the velco ownership that would otherwise transfer on the merger would be instead vested to the state for the state's benefit. And we haven't yet seen the details of that proposal. What i'll be looking for when that proposal is made to us is per pet out, in other words -- perpetuity, in other words, if additional mergers or consolidation were to happen, we can continue to keep less than 50% ownership in a foreign utility, so that will be important. Real estate benefit from that ownership will also be important, and then finally, an assurance that the way the transmission company is operated will continue to be in the public benefit.

 Why is canada so interested in vermont's utilities? They've got the other company that wanted to buy cvps was a canadian company. Is it because they've got the power and they need to get it to southern new england and they got to go through us? Is there some bigger picture here? Why are they so interested in our energy and we don't have, say, american companies looking at us?

 Good question. Couple of answers. First of all, if you look nation wide at utility purchases, you would see canadian utility companies in many different states in the united states. It's a bit of a trend. There are many economists who could probably tell you better than i why that might be, but canadian companies have been coming south, not just to vermont, but many other places in the united states, looking for acquisition. So we're not unique. And i think that's important to know. In terms of transmission, you know, gas metro is a gas company, and gasmetro has a history since 1986 when it purchased vermont gas systems and more recently green mountain power. Gazmetro knows vermont. The fact that it would look to expand its portfolio here in vermont is not a surprise to me. Fortis, we did meet with them when they announced they might purchase cvps. My understanding from fortis, they were looking for a company around that size here in the united states to gain some experience in the united states' market. Again, it didn't, to me, sound as if it were transmission related. So i think there are other reasons canadian utilities look to vermont and other states for acquisitions. That's what we're seeing.

 A lot on your plate, a lot of issues and people can comment on the energy plan at your office in montpelier. Liz miller, thank you so much for talking about these issues. I this i we got them all. In maybe we missed a few kts but thank you so much.

 Happy to do it.

 All right. That's our edition of you can quote me for this it sunday. We'll be back next weekend. Captioning provided by caption associates, llc captionassociates.com

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