The bidding war for Central Vermont Public Service (CVPS) between Fortis and Gaz Metro is not just about two Canadian energy companies jockeying to buy Vermont's largest electric utility.
It is about which of the companies is going to get control over Vermont's electrical transmission grid, and thus have a way to ship energy to southern New England markets.
Fortis, based in St. John's, Newfoundland, or Gaz Metro, based in Montreal, would end up with a big stake in the Vermont Electric Power Company (VELCO), the corporation that runs the state's electric grid.
Instead of having the expense and regulatory uncertainty of building a new transmission line, Fortis or Gaz Metro would have access to an existing conduit to the urban markets they crave.
So, who's in front?
Fortis certainly has the financial wherewithal to buy CVPS, as demonstrated by its $700 million bid for the company, a bid that CVPS accepted in May.
A $13 billion corporation, Canada's largest investor-owned utility serves approximately 2.1 million gas and electricity customers. Fortis owns a natural gas utility in British Columbia, and electric distribution utilities in five Canadian provinces and three Caribbean countries.
Gaz Metro - which already owns both the state's second-largest electric utility company, Green Mountain Power (GMP), and the state's only natural gas company, Vermont Gas Systems - has offered $702 million, or a slightly higher price per share than Fortis' initial offer of $35.10.
According to VTDigger.org, it is the second time in less than a year that Gaz Metro has tried to buy CVPS. It made a secret bid last year.
It has also offered to put GMP's 30-percent share of its stake in VELCO into a public trust. This move would generate an estimated $1 million in revenue for the state, which would be used to help low-income Vermonters with energy costs.
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If Gaz Metro - which has 180,000 customers in Quebec - is successful in buying CVPS, the new combined GMP/CVPS would provide power to roughly 70 percent of Vermont's electric customers.
It would also mark the third time in six years that a Vermont power generation entity has been sold to a Canadian company. In 2005, natural gas and power wholesaler TransCanada bought the hydroelectric facilities on the Connecticut and Deerfield rivers. The following year, Gaz Metro bought out GMP.
The bidding war is interesting when you consider that both CVPS and GMP were on the verge of bankruptcy a decade ago, and both the Dean and Douglas administrations were in support of a merger.
A combined GMP/CVPS would be much smaller than the industry norm. However, it's safe to say that, while there will be efficiencies gained by combining distribution and customer service centers, line maintenance crews, and administration, consumers will likely not see the projected savings of $144 million over the next 10 years.
And it strikes us as a bit disingenuous for Gov. Peter Shumlin to rail about “Entergy Louisiana,” his pet code phrase that can be translated to mean “evil, out-of-state corporation that owns Vermont Yankee,” while offering support to Gaz Metro to create a combined GMP/CVPS super-utility that would be owned by people in Quebec.
Shumlin has said little good or bad about Fortis, but he seems a lot more enthusiastic about Gaz Metro, which he said has a proven track record in Vermont and would be a “great partner” for the state.
Some of Shumlin's critics see political favoritism at work here, because GMP has built up the perception of being more receptive to the green-energy agenda than CVPS. But GMP has been in the news a lot in recent months, and not for the good.
Opponents of industrial wind power in Vermont have attacked GMP for its push to build its Lowell Mountain wind project in the Northeast Kingdom, a project that has been called too big and ill-suited for the site.
Then GMP raised some eyebrows when it announced in May that it had signed a power purchase agreement with Florida-based NextEra Energy to buy power from the Seabrook nuclear power plant in New Hampshire.
Anti-nuclear groups questioned why GMP would replace energy generated by one troubled nuclear plant, Vermont Yankee, with energy from another troubled nuclear plant, Seabrook, albeit at a lower price.
Shareholders of CVPS, and the Vermont Public Service Board, will be the ultimate arbiters of which Canadian company will come out on top in the bidding battle. The process is expected to take up to a year.
Whatever the final decision, it must be done with the best interests of Vermonters in mind.