Apr 14 - Business Wire

Green Mountain Power (NYSE:GMP) today asked the Vermont Public Service Board to authorize an 11.95 percent rate increase to go into effect on January 1, 2007. The Company said 88 percent of the increase is due to rising power costs in a post-Katrina wholesale market, while the remaining 12 percent is due to increasing state and regional transmission costs.

Green Mountain Power's rates have risen less than three percent since January 2001. During the same five-year period, the consumer price index rose 13 percent and wholesale energy costs increased 93 percent. Vermont as a whole has the second lowest rates in New England due in large part to the low-cost Vermont Yankee and Hydro Quebec contracts. Among Vermont's five largest utilities, Green Mountain Power's overall average rates are currently tied with Burlington Electric's for the lowest, based on the most recent state data available.

"We have been able to keep our rates relatively flat over the last several years because we have done a good job of managing our power supply costs," said Chris Dutton, president and chief executive officer. "Our low-cost power contracts with Vermont Yankee, Hydro Quebec and Morgan Stanley have brought significant value to our customers. However, as the Morgan Stanley contract expires at the end of this year, we are forced to replace it in a significantly higher cost marketplace."

The Morgan Stanley contract currently supplies approximately 15 percent of Green Mountain Power's power supply portfolio.

Higher energy costs in New England are attributable to several factors, including the run-up in global oil and natural gas prices and concern about the impact on the wholesale market of a predicted abnormally active hurricane season.

Rising energy costs are driving up rates for other utilities in Vermont, New England and across the country, with pending increases running as high as 72 percent in Maryland. In Vermont, rate hikes pending or approved in the last year range from 10 percent to 23 percent. (A list of Vermont rate increase requests is attached.) In New England, rate hikes pending or approved in the last year range from four percent to 60 percent. (A state-by-state regional summary is also attached.)

"While we know any increase in rates is difficult for our customers, we believe we have been able to keep our request comparatively low through our aggressive power supply management and efficient operations," said Mr. Dutton. "It is also important to note that we are maintaining a generation mix that has extremely low air emissions. Finally, we are proud of our superior customer service as measured by service quality standards established with state regulators, including low frequency and length of power outages and high customer responsiveness in our call center."

Green Mountain Power operates in a highly efficient manner, serving 464 customers per employee. The other four largest utilities in Vermont ranged from 367 customers per employee to 155 customers per employee in 2004, which is the most recent data available.

If the full rate request is approved, the monthly bill for average residential customer using 650 kwh would increase by $10.25, from $85.74 to $95.99.

Also, with the encouragement of the state legislature, Green Mountain Power separately filed today an innovative proposal that would establish a new regulatory framework for the Company. Last year, the General Assembly passed legislation (Act 61) that provided additional authority to utilities and regulators to propose alternative regulation plans with a particular emphasis on the public policy goal of separating the financial success of a utility from increased electricity sales, thereby removing potential barriers to energy conservation.

Green Mountain Power is the first electric utility in the state to file a plan under this new law. (Vermont Gas Systems filed its plan in September 2005). Act 61 requires the Public Service Board to report to the General Assembly on the number and progress of utility alternative regulation initiatives by January 15, 2007.

If approved by regulators, the proposal would create opportunities and incentives for the Company to become more efficient, improve customer service, remove incentives to benefit from increased electricity sales, streamline cost recovery, share efficiency savings with customers, increase credit quality, and reduce regulatory and borrowing costs borne by customers. In addition, Green Mountain Power proposes directing additional funding to Power Partners, Green Mountain Power's low income assistance program.

"This innovative proposal will advance important public policy objectives, provide benefits to our customers and raise the bar on our already efficient operations. In addition, an anticipated improvement in the company's credit quality will allow the Company to borrow capital at more attractive rates which will hold down costs for our customers," Dutton said. "This is especially critical as we begin discussions about replacing expiring power contracts with Hydro Quebec and Vermont Yankee."

Vermont law provides the Public Service Board with a full year to consider utilities' alternative regulation proposals.

Green Mountain Power Corporation (www.greenmountainpower.biz) is a Vermont-based energy services company serving 90,000 electric customers.

For far more extensive news on the energy/power visit:  http://www.energycentral.com .

Copyright © 1996-2005 by CyberTech, Inc. All rights reserved.