**Updated below with results of Friday's House vote**
Despite a reputation for discord and disorganization, the Vermont Senate on Thursday summoned unity from chaos and delivered a mighty spanking to Gov. Peter Shumlin and the utility merger he supports.
It was a spanking heard ’round the Statehouse.
By a lopsided vote of 27 to 3, the Senate approved an amendment that would force utility companies bailed out by their customers to pay them back directly — in cash or credit. In so doing, the upper chamber sent an unambiguous message to the Shumlin administration and the state’s two largest electric companies: the deal you cut doesn’t cut it with the Senate.
“The water temperature in the Senate has been rising for weeks now,” said Sen. Tim Ashe (D/P-Chittenden), an architect of the amendment that passed Thursday afternoon.
The vote came nearly a month to the day after the Shumlin administration signed off on an agreement with Green Mountain Power’s Montreal-based owner, Gaz Metro, on the terms of its proposed acquisition of Central Vermont Public Service. In that time, discontent has slowly grown over how the companies planned to repay CVPS customers the $21 million it charged in higher rates when it faced bankruptcy a decade ago.
Critics of the merger deal say the companies would be fleecing their customers by investing the $21 million into energy efficiency programs, and then charging that back to their own ratepayers. But the Shumlin administration and the utilities argue the $700 million merger will save Vermonters $144 million over 10 years — substantially more than the $21 million in question.
None too pleased, Shumlin lashed out at the Democrat-led Senate following the vote, calling the move "an extreme overreach of legislative jurisdiction."
After a night and a morning of heated debate, the Senate returned from recess Thursday afternoon and Sen. Peter Galbraith (D-Windham) rose from the floor to present the latest iteration of an amendment to reckon with the controversy.
“When the ratepayers loan money to a financially troubled utility to bail it out for some bad decisions it made and it is agreed that that money should be paid back, that money should, in fact, be paid back,” the loquacious senator said in uncharacteristically brief remarks.
Galbraith (pictured testifying before the House Commerce Committee Thursday) explained that the stripped-down amendment removed a number of stumbling blocks that had caused division within the Senate: it didn’t directly dictate whether state regulators should approve the merger; it didn’t tell the administration what to do; and it didn’t criticize Shumlin’s top negotiator, Public Service Commissioner Liz Miller.
The amendment says that any increase in rates to bail out a utility must be returned in cash or credit to customers. Without explicitly mentioning the pending merger, the legislation would apply to the GMP-CVPS deal. By setting general policy regarding the payback of utility bailouts, Galbraith argued, the Senate was telling regulators what to do without telling them what to do.
“It simply provides policy direction to the Public Service Board,” Galbraith said, referring to the independent regulator charged with signing off on the merger.
As grim-faced electric company lobbyists paced the hall outside the chamber, all but three of the Senate’s 30 members voted for the amendment.
It was a significant move for three reasons. While a chorus has grown in recent weeks to do something about the merger deal, divisions within the Senate over just how to address it remained deep until shortly before Thursday’s vote. Most expected the head of steam building up within the chamber to be released in the form of a toothless resolution. The language approved Thursday was anything but.
Second, the Senate didn’t just amend any old bill. It plopped the merger amendment onto the legislative Big Kahuna: the must-pass budget bill. While the language can still be stripped in conference committee, the Senate’s message was clearly, "we mean business."
Third, the near unanimity of the vote was a striking blow to a governor who twice led the Senate as president pro tem, and who prides himself on his ability to manipulate it. A month ago, the cast of characters opposing the merger deal seemed straight out of the Island of Misfit Toys. Led by chronic rabble-rouser and Senate malcontent Vince Illuzzi (R-Essex/Orleans), the crew consisted of a bunch of back-benchers in the House and Senate who don’t exactly have their hands on the levers of power.
But by crafting consensus and pulling in all but three senators, the rabble-rousers presented a united front. Shortly after the Senate vote, the House called a halt to its own debate on the matter to spend a day taking a closer look at the Senate’s language.
(Pictured: Justin Lindholm of Mendon stood sentry outside the Statehouse Thursday, a sole protester against the merger deal. Credit: Paul Heintz.)
Referring to those in the Senate who backed the amendment, Rep. Patti Komline (R-Dorset), who has led a similar effort in the House, said, “I have hopes that if these people were turned around that our people in the House can be turned around also. Galbraith will have lived up to the reputation of being a good diplomat after all!”
Sen. Randy Brock (R-Franklin), who is challenging Shumlin for governor, agreed that the consensus was striking.
“This is a pretty broad coalition involving people who are from all three political parties coming together to find a solution,” he said. “One of the things that has brought people together is we’re dealing with a situation that is so egregious in its nature, that has offended a broad range of people.”
Shumlin has not masked his ire. He has accused the legislature of “quibbling” over the $21 million and during a press conference Wednesday said they were “pandering” to voters on the issue. Within minutes of Thursday’s vote, his office released a statement spanking the Senate right back.
“The Senate’s action today interferes with an open [Public Service Board] docket, undermines the credibility of the regulatory process and is an extreme overreach of legislative jurisdiction,” the governor said.
And then came this zinger reminiscent of what former Gov. Jim Douglas would say when, at the end of a long legislative season, he wasn’t getting his way: “The Senate should be wrapping up its work and adjourning this week. Instead, adjournment has been pushed back at least a week, and Vermont taxpayers are now on the hook for another $275,000 thanks to the Senate’s inability to complete its work on time. The Senate should focus on the real issues under its jurisdiction, like passing the budget that should have passed days ago, and bringing the session to a close.”
There is no question that after Thursday’s Senate battle, the war will only escalate.
Less than an hour after the vote, the House Commerce Committee held an impromptu hearing to examine the Senate language. As Galbraith testified on his amendment before the House committee, chairman Bill Botzow (D-Pownal) expressed deep skepticism with the approach. In an informal straw vote later in the afternoon, the committee voted 8-2 against it.
Of more significance is House Speaker Shap Smith’s steadfast opposition to any approach that would meddle with the Public Service Board process while the merger is being considered. His verdict on Thursday was that the Senate’s language didn’t pass the smell test.
“I have some real concerns about it,” Smith said. “I think it may do more damage to the integrity of the process.”
While Smith said he would allow votes on several merger amendments Friday, his body is tacking them on to a far less important bill than the budget — so even if they pass, that bill could die on the vine. Meanwhile, Smith will appoint members of the conference committee charged with reconciling two different versions of the budget bill — and he can instruct them strip the Senate’s merger language from the final bill.
If all else fails, there’s always the veto pen — though a Shumlin aide declined to say whether the governor would reject a final budget bill that includes the Senate’s amendment.
“The governor does not issue veto threats,” spokeswoman Sue Allen said in a statement. “He’ll make a decision about this bill and all other bills that reach his desk when they reach his desk.”
Ever the realist, Sen. Illuzzi refused on Thursday to bask in the fleeting glow of victory for a cause he single-handedly championed for months. In the end, he said, Shumlin and the utility companies will likely get their way.
“The house always wins,” he said. “The most important thing is we have educated Vermonters about the Enron-type economics they tried to sneak by us.”
Update - Friday 8:30 p.m.
On Friday, the Vermont House had its turn to weigh in on the controversial electric company merger proposal — and its members took a far more nuanced approach than their Senate counterparts.
In a marathon of votes lasting much of the day, the House adopted several gentler amendments relating to the merger. But in the marquee decision of the day, the House rejected by a vote of 54-87 a motion forcing the Public Service Board to require a $21 million ratepayer refund. Offered by Rep. Cynthia Browning (D-Arlington), that amendment drew criticism from House members who said it directly and explicitly interfered with the board’s oversight.
By a vote of 99-43, the House passed a symbolic resolution saying that the proposed merger should be in the best interests of Vermonters. It also okayed amendments limiting utilities’ ability to raise rates, and studying whether the public is adequately represented in such discussions. The House rejected an amendment offered by Rep. Chris Pearson (P-Burlington) to study public acquisition of the state’s electric transmission lines.
Near the end of the day, Rep. Paul Poirier (I-Barre City) pulled an unexpected procedural move out of his cap. The merger skeptic moved to instruct House negotiators assigned to reconcile competing versions of the budget to side with the Senate's version of a merger amendment which that body passed on Thursday. Poirier’s move was rejected by a vote of 24-105.
In a statement released after the votes, Green Mountain Power signaled its support for the House’s actions Friday.
“We are pleased that the House chose not to interfere and direct the Public Service Board how to rule in a pending docket. PSB has taken months of testimony and it is the right forum to consider all of aspects of the merger in order to decide what is in the public good,” spokeswoman Dorothy Schnure said. “We are also pleased that the House members reinforced the importance of not interfering with the Public Service Board’s decision-making in an open docket by passing [the symbolic resolution].”
Photo credit: Paul Heintz