MONTPELIER — Gov. Peter Shumlin and legislative leaders announced the formation of a working group Tuesday to explore a potential state purchase of hydroelectric dams on the Connecticut and Deerfield Rivers.
The announcement came ahead of an afternoon hearing held by the Senate Finance and Government Operations Committees to begin gathering information on the dams, and what it will take to for the state to purchase them.
TransCanada put 13 dams located on the Connecticut and Deerfield Rivers on the market on March 17 as part of an effort to acquire Columbia Pipeline Group, a Texas-based firm that operates a natural gas pipeline between New York and the Gulf of Mexico, for $13 billion. The sale process involves a total of 4,600 megawatts of power in TransCanada’s northeast power portfolio, including the hydroelectric plants in Vermont that total 560 megawatts, according to spokeswoman Jennifer Link.
TransCanada purchased the dams in 2005 for $505 million. The state made an effort then to acquire the dams but its bid came up short.
The seven-member advisory group will be headed by Secretary of Administration Justin Johnson. It will have no authority to act and will only report back to the administration and legislative leaders with a recommendation on whether or not to proceed.
“This working group is being tasked by us to get back to us with a preliminary recommendation prior to the Legislature adjourning on the feasibility of Vermont acquiring in some way or form the hydropower assets that we all know are for sale by TransCanada,” Shumlin said at a State House news conference.
The advisory group also includes state Treasurer Beth Pearce, Vermont Law School’s Energy Institute Director Michael Dworkin, Saint Albans Mayor and Efficiency Vermont Director Liz Gamache, Former World Bank lead economist Linda McGinnis, Vermont Electric Power Company President and CEO Tom Dunne and former state senator and Essex County State’s Attorney Vince Illuzzi.
“We’re asking this working group to vet, preliminarily, whether full or partial acquisition of the hydro assets currently for sale is cost effective, and to evaluate the benefits … to Vermonters, to Vermont’s economy, our utility ratepayers and our clean energy portfolio,” the governor said.
Senate President Pro Tem John Campbell, D-Windsor, called the sale a “truly unique” opportunity for the state.
“It’s in our best interest to examine this and to determine whether or not it is something we would like to have as a state, have an asset there,” he said.
House Speaker Shap Smith, D-Morrisville, said he is hopeful the working group will return with a recommendation to begin the process of purchasing the dams.
“We have an opportunity strengthen our clean energy future and an opportunity to strengthen our economic future in the state of Vermont. I’m pleased that we’ve been able to put together a group so quickly to look at the possibility of this purchase,” he said. “We know that it needs to make economic sense for Vermonters. This group is meant to determine whether that’s possible.”
“My hope is that we will get a green light from this group and that we can move forward for something that I think is a once-in-a-generation opportunity,” Smith added.
Johnson was cautious later Tuesday when speaking to the two Senate panels. He said the working group would hold its first meeting later this week and issue its recommendations in about three weeks. He noted, however, that it is a “pretty big conversation that is likely going to have to happen in a timeframe that not all of us are comfortable with.”
There are “some obvious challenges around state ownership of the dams,” Johnson said, including how the state would pay for such a large acquisition. There’s also not a clear path for who the state would sell the power to, he said. And, the state is most interested in the 13 dams along the Vermont border and so far no indication that TransCanada would be willing to sell those separately from its full portfolio.
“It will ultimately have some risk on the state’s part and we’ll all have to be comfortable with that risk,” Johnson said.
Beth Pearce, the state treasurer, told the committee that the potential purchase is an exciting opportunity, but it must “have value to the taxpayer.” There is plenty of analysis to be completed before determining if the state should purchase the dams, including a valuation of the assets, the operating expenses, what reserves will be needed for infrastructure needs and the market for the power output, she said. The purchase price is also unknown.
“My presumption is it’s going to be a little higher price tag,” Pearce said.
Shumlin said at the news conference Tuesday that he believes the state can complete the necessary analysis in time to make a bid for the dams by the end of the year, when TransCanada hopes to sell the dams to acquire the cash for its Columbia Pipeline Group deal.
“It’s our hope that it is possible for Vermont to move just as quickly as any other potential purchaser. I think one of the challenges in both of the times that I’ve been involved in this conversation before, one under [former] Gov. [Howard] Dean the other under [former] Gov. [Jim] Douglas, was that in both cases we got out of the gate too late. We’ve all learned very recently this sale is happening. That’s encouraging and there’s no reason to believe we can’t move just as quickly as anybody else.”
Smith said he, too, hopes the state will work quickly to determine if the dams can be purchased.
“If this is a once-in-a-generation opportunity, we have to do whatever we can, whatever the timeframe, to make sure that this isn’t a lost opportunity. I think this is not only a commitment to Vermonters now, but it’s a commitment to the next generation of Vermonters and I would hate to say, ‘Hey, we didn’t have enough time,’ 20 years from now in explaining why we didn’t go forward with a deal that made sense for Vermonters and Vermont’s future,” he said.