A fired state official said in a filing with Vermont regulators Tuesday that the state's Department of Public Service isn’t delivering on its mission of serving the public.
The department is responsible for representing Vermonters in utility regulation cases before the Public Utility Commission. But last week, an anonymous letter sent to reporters and regulators alleged that Commissioner June Tierney was favoring Green Mountain Power’s financial interests over the Vermonters she is paid to represent.
The letter, reported by VTDigger.org and Vermont Public Radio and mailed to Seven Days, said Tierney fired the department’s director of finance and economics, Brian Winn, for refusing to give GMP favorable treatment.
On Tuesday, Winn confirmed many of the allegations in a filing with the Public Utility Commission, the regulatory body that oversees Vermont utilities and sets the price of electricity and natural gas. Winn wrote that the department approached the latest GMP rate case “with at least one hand tied behind it’s [sic] back.”
Winn did not confirm allegations in the anonymous letter that GMP officials conspired with Tierney to subvert the formal rate-making process. He also refused to say if he thinks Tierney fired him for disagreeing with her during the GMP case.
“The day after the GMP rate case hearing, Commissioner Tierney told me not to return to the Department and I was given the option to negotiate a severance — which I did,” Winn wrote in the filing. “We disagreed on the rate case but that did not come up and I prefer not to speculate about her motives.”
The rate case is GMP's second in as many years. When a utility comes before the Public Utility Commission, regulators are tasked with inspecting the company's finances to make sure mismanagement isn't running up costs or putting customer service in jeopardy. If regulators determine that the utility is spending its money wisely — on new substations that help reduce outages, for example — the utility is allowed to recoup its investment from customers.
The case will determine how much Vermonters will pay the state’s largest utility for nearly a year. Millions of dollars are at stake, and now there are multiple allegations that the state officials representing the majority of Vermont power customers are caving to the utility.
One key disagreement between Tierney and Winn could have costly implications for GMP’s customers. Winn wrote that Tierney allowed a “highly unusual” accounting approach that allowed GMP to account for all of the economic benefits of its solar and battery infrastructure in the first year it comes online, instead of each year it's in use.
The result is a 2.3 percent decrease in the next year's rates, but it comes with a drawback. Counting up the entire benefit now means that later on, when that infrastructure costs money to maintain, GMP will have to hit up customers for more money.
Winn wrote that the decision will have implications for years to come because “having supported these projects, [the Department of Public Service] will have no basis to oppose them when GMP seeks to recover higher costs going forward.”
GMP spokesperson Kristin Kelly said Winn has it wrong.
"We disagree with how Mr. Winn characterizes the projects, as the accounting is consistent with the approach approved by the PUC," Kelly wrote. "Also, the record shows these projects will provide real, tangible benefits for customers, and it returns the benefits of the projects as quickly as possible to customers, which, in this case, results in reduced rates of 2.3 percent."
Winn's filing echoed the anonymous allegation that the Department of Public Service wasn’t pressing GMP hard enough on its financial management. In fact, Winn confirmed that the state did not send anyone to GMP’s offices this year to check whether the company was properly documenting its expenses, a practice that dates back years and regularly results in savings for customers.
Bill Schultz, a state-hired economist who has worked with the department on a contractual basis since the 1990s, regularly pointed out problems on customers' behalf, forcing the company to produce better records before billing customers. But this year, Schultz told Seven Days, he never heard from the state about the GMP case.
“I don’t think they asked me to work on it in any way," he said. "I just know they filed a case."
Winn wrote that Tierney decided not to hire Schultz because she didn't think he was a good witness and because "certain PUC commissioners 'couldn't stand him.'"
In a statement, Kelly said this year's rate case will get a full review before the PUC, as opposed to previous years when GMP and the department entered a settlement agreement and regulators simply signed off. She emphasized that the case was already creating an extensive public record with filings from both state and GMP officials.
"[The case] will be fully litigated before the PUC. This seven month-long process is incredibly laborious but important for our customers and the public to know how our company is run and the work we are doing to deliver reliable energy, great service, while cutting carbon," Kelly said. "We’ve provided thousands of documents, participated in public hearings and rounds of discovery to ensure regulators have the information they need so the PUC can rule on our case."
Last week, the Department of Public Service's director for public advocacy, Jim Porter, sent regulators a response to the anonymous claims.
The department "affirms and stands behind its sworn testimony, recommendations, and briefs, all of which are the product of an exhaustive, detailed, and comprehensive investigation into GMP's rate request and related proceedings," Porter wrote.
He went on to write that the anonymous letter "reflects a poor understanding of not just the factual and analytical underpinnings of the pending GMP rate case, but also of rate case litigation process generally."
“It seems of late the arguments are drifting from the merits of policy to instead taking issue with the character of the individuals who are engaged in crafting the policy, or in enacting the policy,” Tierney told VPR.
Tierney refused to comment on Winn's filing for this story, but she sent Seven Days a copy of a second filing by Porter — this one in response to Winn. Porter wrote that the department's staff was doing its job well on the case, and it was Winn who was out of line.
"Among expert staff, it is always healthy to have robust debate and honest disagreement regarding how competing priorities should be balanced; where the dynamic goes awry is when one staff member believes that he or she is the only voice of reason and theirs is the only way to represent the public interest," Porter wrote.
Winn’s filing does not include documents supporting his claims, but he repeatedly makes reference to emails and other documents that he is aware of or in possession of that could shed light on Tierney’s management of her department.
Last week, the Public Utility Commission released the anonymous letter publicly and asked for comment from the department and GMP. The commission hasn't announced any formal action or investigation so far.
From Winn's standpoint, the commission can't solve these problems by itself.
“The Department of Public Service is clearly in need of leadership and structural changes,” he wrote. “These issues should be addressed, in a bipartisan way, by the Governor and the Legislature.”
Read the anonymous letter, Brian Winn's filing, and responses to both from Green Mountain Power and the Department of Public Service, below: