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Electric Utility Penalized for Power-Supply Strategy

Fortnightly Magazine - January 15 1995

Citing an excessive commitment to increasingly expensive purchased-power contracts, the Vermont Public Service Board (PSB) has reduced allowed rate of return on equity by 75 basis points. In setting rates for Central Vermont Public Service Corp., the PSB explained that ratepayers should not bear all of the costs associated with 1) excessive power commitments; 2) a failure to fully explore return sales opportunities; and 3) inefficient energy-efficiency programs. The PSB rejected, however, Central Vermont's proposal to establish a voluntary rate ceiling as one method of adjusting to the competitive changes in the electric industry. It said that the company's plan assigns shareholders neither responsibility for the current situation nor any share of the necessary remedies. Re Central Vermont Public Service Corp., Docket No. 5701/5724, Oct. 31, 1994 (Vt.P.S.B.).

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