A former high-ranking official at the state agency that represents utility customers says the state approached the latest Green Mountain Power rate case “with at least one hand tied behind its back.”
Until recently Brian Winn was director of finance and economics at the Vermont Department of Public Service, which advocates for the public in utility issues.
Winn testified as a state expert in the GMP case, but left state service after a hearing in the case ended this fall. He said he was asked to negotiate his severance the day after his testimony.
Winn filed a document Tuesday with the state Public Utility Commission – the three-member panel that regulates utilities – saying the department failed to advocate aggressively for ratepayers.
His filing was in response to the PUC’s request for comment on an anonymous letter it received last week that alleged a too cozy relationship between the department and GMP.
Winn said he could substantiate many of the allegations in the anonymous letter, but did not have evidence on others.
“I do not have any information that would confirm that GMP executives somehow colluded with Commissioner [June] Tierney in this case,” he wrote.
GMP, Winn added, is acting like any investor-owned utility would: it is trying to maximize return for its investors.
“The Department of Public Service’s conduct of the case is another matter,” he wrote. “Commissioner Tierney would often explain that she was charged with the public interest which may be different from the ratepayer’s interest. But in my opinion, many of the actions outlined [in his document] are in neither the public interest nor the ratepayer interest. The net effect is that the department approached the GMP rate case with at least one hand tied behind its back.”
Among the issues Winn raised:
- While the state says GMP’s request for a 5.43 percent increase will actually be reduced to a 0.9 percent decrease — after a one-time tax windfall from recent tax cuts is factored in — Winn said this benefit is only temporary. He said rates will jump by 5.43 percent after nine months, when that windfall revenue is gone. Winn said in several years, rates are likely to rise close to 8 percent because other investments – which should not have been included in rates – were allowed to be passed through to customers.
- GMP has invested heavily in “micro-grid” technology that employs Tesla PowerWall batteries to store energy that can be used at times of higher demand. Winn said GMP failed to seek competitive bids for the batteries, and that the economic benefit of the technology is overstated. “My recommendation was to oppose the projects and request the PUC exclude the over $30 million” invested in the projects from rates, Winn wrote.
- Department staff were told not to raise the issue of “prudency” – essentially whether GMP incurred costs that could be fairly and legally passed through to customers ("prudency” is a legal term in utility issues). “My recollection is that the prohibition against pursuing imprudence claims actually dates back to last year’s GMP rate case,” Winn wrote. “This prohibition effectively gives GMP carte blanche to spend capital dollars without having to justify whether the dollars were spent wisely.”
- The department declined to use consultants whose examination of GMP’s books over the years have resulted in substantial savings for ratepayers. New consultants were not given time to do an on-site review at GMP of its financial documents, Winn said.
Despite all these concerns, Winn said the PUC should not delay its decision in the case. He said a delay could result in credit rating agencies downgrading GMP – which could then add to its cost of borrowing.
“These costs are ultimately passed on to Vermont ratepayers,” he wrote.
Winn’s comments triggered a response from both the Department of Public Service and Green Mountain Power.
The department said that the PUC should view Winn's comments as “a private statement from one former employee who did not always prevail during every internal debate that took place as the department formulated its policy determinations and litigation strategy,” the department lawyers wrote.
As for the microgrid/battery storage issue, the department said ratepayers will be protected.
“The department negotiated a settlement agreement with Green Mountain Power that largely mitigates financial risk associated with those projects that could ultimately be borne by ratepayers,” the department said.
GMP said a number of Winn’s statements “are factually incorrect and mischaracterize the evidence.” The company said the accounting method agreed to with the department for the battery projects will save ratepayers money.
“GMP is pursuing these innovative projects because they provide a range of important benefits for customers and will reduce costs for customers by a total of $5.4 million over the life of the projects," the company said.
Winn took issue with both the response from the company and the department.
"I note with interest that both the Department and GMP focused their responses on one or two allegations relating to the Solar/Storage projects," he wrote in an email. "While the response from GMP is not surprising, I am disappointed with the Department’s response, which fails to address the half dozen allegations related to its ability to present an effective case. I hope that the PUC will require a more comprehensive response from the department. "
Winn told regulators Friday that he has documents that will back up his claims, and he asked the Public Utility Commission if he could post them electronically on its website. But James Porter, the director for public advocacy at the Department of Public Service, said the records in question are covered by attorney-client privilege.
"It would be highly inappropriate for these or any other privileged documents to be made publicly accessible by the Commission via" its electronic docket system," Porter told the commission.
Winn asserted the documents he has were never labeled as covered by the attorney-client privilege. "So, I find myself in a procedural trap that I will likely need legal counsel to help me navigate," Winn wrote in a letter to the PUC. "This is frustrating because I have access to information that would support my comments."
Winn earlier raised a point that various interest groups have also made over the years: the department’s policy work and its advocacy role are sometimes in conflict.
“The Department of Public Service is clearly in need of leadership and structural changes,” Winn wrote. “The policy and advocacy functions need to be separate.”
Update 3:15 p.m. Nov. 28 The story was updated to include Brian Winn's reaction to the responses of GMP and the department to his criticism.
Update 4:50. Nov. 30 The story was updated to include latest news about the Department of Public Service claiming records that Winn wants to make public are confidential under the attorney-client privilege.
