How To Avoid Electric Rate Hikes

Back in the 1990s, the Vermont General Assembly rejected a proposal to deregulate our electricity market. It was a wise move. States that deregulated (Massachusetts, Connecticut, Maryland, California) watched helplessly as their electricity costs soared. Politicians who supported the moves were punished. These effectively lost control of their markets to out-of-state companies.

Unfortunately, Vermont is facing the prospect of effectively deregulating its electric system again. But this time, the decision cannot be avoided by our elected Legislature. If we do not immediately take action, our electric prices will soar, making our current electric prices feel like a walk in the park. Vermont is facing what amounts to a major tax increase on electricity.

Ninety percent of Vermont's contracted electric power supply is set to expire between 2012 and 2016, as contracts with Vermont Yankee and Hydro-Quebec expire. Whether or not you think that Vermont Yankee should be relicensed, we need to understand that Yankee will not renew the contract at the current favorable price. Massachusetts will pay more for the power into their deregulated market. The same is true of Hydro-Quebec. Their history shows that they will sign new contracts, but they will be short term (no long-term price protection) and closer to spot market rates. They can sell the power to other locations.

These events will unilaterally take control of electric prices out of the hands of Vermonters and put us at the mercy of out-of-state generation companies that don't much care about our economy or our environment. They will result in substantially increased costs and transfers to out-of-state companies (giant tax increase). This will start to happen within four years.

There is a solution. Vermont can take strong and immediate action to take charge of its own energy needs by generating an increasing percentage of its own power. This will give us a bargaining position, a lever of strength instead of a pose of weakness.

Granted, we cannot make up, from in-state sources, the amount of electric generation that we are set to lose. Of course, the longer we wait the fewer choices we have. We have the time to place substantial long-term renewably powered generating systems on line. Non-polluting, wind, solar, and biomass electric systems can be brought on line in the four-year period we have, but just. Another year of delay, and significant (market changing) amounts of power will no longer be able to be added to the grid in time.

Now that consultants to the Legislature have told us we can save millions through efficiency investments, our course is becoming clearer every day. Invest in new, clean generation and efficiency. Failure to do that dooms Vermont to huge energy taxes down the road.

We will see attempts to install natural gas-fired electric generating plants in Burlington, Rutland, and Bennington, with their associated gas line. A similar proposal was made years ago and almost enacted. This time, it will be positioned as our only solution. Continued delay will make that true. Natural gas plants will trap us into a 20-year life of increased pollution and cost, while exporting our energy dollars out of state.

It is not too late to use this opportunity to begin an era of increasing energy and economic independence. In today's tumultuous economy, the more Vermont can be self-reliant, the more Vermont can weather the storms of the future. Putting in place a plan for active investment in renewable energy can make a very significant contribution to Vermont's long-term energy needs. Large amounts of this energy can be put in place rapidly, as wind and solar power plants are among the fastest power plants to construct.

Here is the choice: Begin investing today in in-state, renewable generation plants with state subsidies or pay the giant energy tax down the road to pay higher costs imposed by the out-of-state and foreign generation companies. Vermont can choose to invest now or pay more soon. Our legislative leaders know the answer is the former. There is no time to lose.