Hydro dams vital part of energy mix

Hydro dams vital part of energy mix

- May. 8, 2004

Gov. James Douglas deserves credit for keeping an open mind with regard to state ownership of 12 hydroelectric dams on the Connecticut and Deerfield rivers. Sen. Vincent Illuzzi deserves credit for keeping the project alive while skeptics such as Douglas were persuaded.

When the owner of the dams declared bankruptcy last summer, it occurred to many people that the state of Vermont would have an opportunity to secure valuable power from a sustainable source at a reasonable price. Taken together, the dams have the capacity to produce half the power used by the state, though water conditions usually limit output to a level that may be as little as one-eighth.

But Douglas had questions about the project. It was not immediately apparent to him that state ownership would be in the best interests of the state. What did the state of Vermont know about running hydroelectric dams? What would Vermont do with the power produced by the dams even if it did own them? Vermont utilities have long-term contracts with Vermont Yankee and Hydro-Quebec for the major portion of power used in Vermont. For the moment the state doesn't need the power. Was Vermont prepared to get into the hydro business, owning dams and selling power on the open market? Would the dams even be affordable?

But much of the public had an immediate positive reaction to the idea of keeping the power from those dams available for Vermont ratepayers. Vermont Yankee, the state's nuclear power plant, is due to be decommissioned in 2012 unless its license is extended. The Quebec power contracts were due to expire at about the same time. The unfortunate experience of Vermont utilities, locking themselves into costly contracts with Hydro-Quebec, made the idea of state ownership of hydro dams close to home an attractive idea.

The Legislature responded to the possibility by creating the Vermont Renewable Power Acquisition Authority; Illuzzi was the main driver of the project. Administration Secretary Michael Smith was chairman of the authority, which suggested that Douglas was committed to a serious look at the idea.

Now the authority has forged a partnership with two Canadian utilities, and it appears the state is in a position to make a realistic bid for partial ownership of the dams. The state's share of ownership would be 25 percent, with the possibility that the share would grow. The two utilities have significant experience in the operation of hydro dams and would be able to provide the technical and business expertise needed to make the project work.

State involvement in the project would be an advantage to the utility partners because the state could secure lower-cost financing and could more easily negotiate the permit process. If the financing is cheaper, that would also mean the cost of the power would be cheaper, and that would be an advantage to ratepayers.

The deal arranged by the authority still must be approved by the Legislature, and the bid of the partners must be accepted in bankruptcy court. But it is encouraging that the logic of the project has driven it forward even in the face of skepticism. For the time being Vermont has a reliable supply of electric power. But in the not-too-distant future, those 12 dams might play a vital role in the state's energy mix.

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