March 20, 2006
Susan M. Hudson, Clerk
Vermont Public Service Board
Chittenden Bank Building, Fourth Floor
112 State Street, Drawer 20
Montpelier, Vermont 05620
Re:
VIA E-MAIL
Act 61 Implementation Workshop
EEU Scenario Analysis
Dear Ms. Hudson:
This letter sets forth the comments of Central Vermont Public Service Corporation
(“Central Vermont,” “CVPS” or the “Company”) on the scenario results prepared by
Efficiency Vermont to assess the potential budgets to be deployed in connection with the
provision of service by the Vermont Efficiency Utility (the “EEU”).1
The scenarios defined by the parties and quantified by Efficiency Vermont provide useful
results to inform the PSB decision regarding the appropriate level of the EEU budget in
the future. Along with the updated cost-effective potential for energy efficiency to be
presented by the DPS on March 28, the scenarios can help the PSB decide how to acquire
all cost-effective energy efficiency while giving due consideration to rate impacts per Act
61. Results of the scenarios and subsequent rate impact analyses can be interpolated and
extrapolated with the bounds of reasonableness to guide budget decisions.
To the extent that rate impacts are a limiting consideration to the acquisition of all cost
effective energy efficiency, CVPS suggests that we develop ways to borrow funds and
collect the interest and principal under the EEC over a time period that more closely
matches the life of the programs. For example the securitization plan developed to reduce
the costs of the VEPPI units may provide a useful model. See 30 V.S.A. § 209a. Under
this model, “Securitization” could be used as a low-cost financing tool to help Vermont
manage the rate and bill impacts arising from the introduction of incremental DSM
services by the EEU.
For securitization to take place, the Public Service Board would have to include in the
EEC a non-bypassable “financing charge” that would be due from customers as a part of
1
For purposes of these comments, the term EEU is intended to refer to all entities appointed by the Public
Service Board pursuant to 30 V.S.A. § 209 to provide demand-side management (“DSM”) services.
Presently this would refer the efforts of both Efficiency Vermont and the Burlington Electric Department.
their service. This financing charge would be used to repay the cost of the bonds issued
to pay for the enhanced DSM service. The creation of a DSM financing authority might
further enhance the opportunities for low cost access to DSM capital. The right to collect
a financing charge from consumers to pay for DSM financings, if granted by the Public
Service Board, would likely be considered to be a beneficial attribute by potential bond
purchasers and help to improve their credit quality for the issuer. To implement this
recommendation, legislation similar to that which created 30 V.S.A. § 209a may have to
be enacted conferring the requisite power on the Board to issue the financing orders
which would collateralize the DSM financings. CVPS believes that this approach would
give the Board additional tools to help manage the bill and rate impacts.
CVPS notes that wholesale power prices have risen dramatically over the past 24 months
and, while they may not remain at today’s levels, the current prices do suggest that
additional System Wide DSM investment would be cost effective. Moreover, given the
difference between the cost of DSM and current market power projections, the payback
on DSM investments has been reduced thereby lowering the risk that additional
investments would not prove to be cost-effective over their lives. If the Board has
concerns in this regard, targeting the enhanced services towards areas that are subject to
future bulk transmission or sub-transmission system supply concerns and/or higher
Locational Marginal Prices should further reduce this risk.
Central Vermont very much appreciates the opportunity to comment and hopes that its
suggestion that participants consider the potential role for securitization in the financing
of DSM will prove useful. CVPS would very much like the opportunity to discuss this
concept further with the Board and is happy to schedule a meeting for such purposes at
your earliest convenience. Should you have questions concerning these comments,
please do not hesitate to contact me.
Very truly yours,
Bruce W. Bentley
BWB/b
Cc:
Service List