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Vermont: A Wholly-Owned Subsidiary of Canada?


Published May 31, 2011 at 7:34 a.m.

Vermont's power future can be summed up in two words: "O Canada!"

On Monday, Fortis, a Newfoundland-based power company, announced a $700 million deal to buy Central Vermont Public Service, Vermont's largest utility. The deal includes Fortis buying up about $230 million in CVPS debt. Fortis owns several utilities across Canada, as well as the Caribbean and Belize.

If approved by Vermont regulators, CVPS would become the third major state utility owned by a Canadian firm. Quebec-based Gaz Métro owns Northern New England Energy Corporation, which, in turn, owns Green Mountain Power and Vermont Gas.

GMP's sale to Gaz Métro was approved in 2007, while Vermont Gas was taken over back in 1986.

In addition, all of the dams along the Connecticut River are owned by TransCanada, which is based in Alberta. They purchased the dams in 2005 from USGen New England.

Who's got the power now, eh?

Maybe this is Gov. Peter Shumlin's way of bringing single-payer health care to Vermont? One utility at a time. Canada gets Cow Power and we get cradle-to-grave, universal health care. Sweet.

I guess it's good to have a back-up plan if Vermont can't get the waivers it needs to move ahead with a first-in-the-nation single-payer health care system. Vermont can become a wholly-owned subsidiary of Canada. I doubt the other 49 states would notice, or care.

"In the coming days, my administration will carefully examine the terms of the proposed acquisition," Shumlin said in a statement. "In a utility acquisition such as this, it is critical that the transaction serve the best interests of Vermont's ratepayers and job creators. While CVPS's Board has cited benefits of retained management and control, I will examine this transaction for strong value to the customers in furtherance of our state's priorities. I will also insist on a continuation of the extraordinary corporate ethic we expect here in Vermont."

In addition to the $700 million in cash, Fortis is also proposing to pump $21 million directly back to Vermont consumers — as regulators see fit. It will also allow CVPS to maintain its current workforce of about 520 employees and its headquarters in the greater metropolitan area of Rutland.

The all-cash transaction will provide CVPS shareholders $35.10 per share, a 44 percent premium over the CVPS common share closing price of $24.32 on Friday, May 27. Cha-ching!

And, yes, that's in U.S. dollars, not Loonies. Though lately the Canadian dollar is trading just about par with its U.S. counterpart ($1 U.S. was worth 97 cents Canadian when I checked last night).

CVPS' new president Larry Reilly said Fortis was chosen out of several suitors. Fortis is the largest investor-owned distribution utility in Canada, with total assets of approximately $13 billion and fiscal 2010 revenue totalling approximately $3.7 billion. Fortis serves approximately 2.1 million gas and electricity customers.

"Fortis brings financial strength to CVPS, giving us strong access to capital markets not available to smaller utilities," Reilly said. "And we look forward to sharing best practices with the other operating companies of Fortis, with the goal of finding new ways to reduce costs and improve service to our customers."

Fortis execs praised CVPS for being a top-notch utility that fits well with the Fortis model, which is allowing its subsidiaries to operate as autonomously as possible.

"CVPS is a well-run utility whose operations and operating philosophy are very similar to those of our Canadian regulated utilities," said Stan Marshall, Fortis' president and CEO.

CVPS, the largest electric utility in Vermont, serves nearly 160,000 customers in 163 cities and towns across Vermont. CVPS Cow Power™ won the 2009 U.S. Department of Energy Utility Green Program of the Year Award and the company has been listed by Forbes Magazine as one of the most trusted companies in America for 60 straight months.

"This is a great opportunity for CVPS, our customers, employees, the Rutland region and the state as a whole," commented CVPS Chairman Bill Sayre. "A partnership with Fortis brings additional strengths to help us achieve our vision of becoming the best small utility in America."

Yeah, that's code for get ready to learn the Canadian national anthem. China's got nothing on Canada when it comes to buying up the U.S. on the cheap.

So, Vermont power consumers, I suggest you start to learn the following lyrics to the English version of "O Canada," the national anthem of our neighbors to the north.

O Canada!
Our home and native land!
True patriot love in all thy sons command.
With glowing hearts we see thee rise,
The True North strong and free!
From far and wide,
O Canada, we stand on guard for thee.
God keep our land glorious and free!
O Canada, we stand on guard for thee.
O Canada, we stand on guard for thee.