Powering Strong Communities

New Vermont law offers flexible ratemaking structure for public power utilities

Vermont Gov. Phil Scott, a Republican, recently signed a bill into law that provides cooperative and community-owned public power utilities with the ability to make minor adjustments to electric rates and provide customers with new, innovative services, the Vermont Public Power Supply Authority (VPPSA) reported on April 30.

The legislation, S.60, which was sponsored by Vermont Sen. Ann Cummings, a Democrat, is the result of collaboration among electric utilities, state utility regulators, and Vermont legislators, VPPSA noted.

Prior to the passage of S.60, all electric utility rate adjustments and pilot programs were subject to formal reviews by state utility regulators. “Often lengthy and expensive, this review process also presents a hurdle to utility innovation,” VPPSA said in a news release.

The new law gives public power utilities the authority to implement rate changes up to 2% each year without undergoing the traditional reviews. It also allows utilities to pilot new services that advance Vermont’s climate requirements without being subject to a formal tariff review.

Utility regulators will maintain oversight under the new flexible ratemaking structure. Utilities must provide written notice to the Vermont Department of Public Service and Public Utility Commission 45 days prior to implementing a new rate or pilot offering.

The rate or pilot will only proceed if regulators do not raise an objection. A full, traditional review of utility rates will be triggered for individual rate increases over 2% or after a utility’s cumulative rate increases reach 10% since the last state review or if a decade has passed since the last state review.

Regulators also have the authority to implement the full review process any time an objection is raised against a utility proposal, VPPSA said.

The law goes into effect July 1, 2021.

VPPSA provides municipal electric utility members with a wide range of services and solutions, including regulatory assistance, financial planning, and power supply.

VPPSA members include Barton Village, Village of Enosburg Falls, Hardwick Electric Department, Village of Jacksonville Electric Company, Village of Johnson Electric Department, Ludlow Electric Light Department, Lyndonville Electric Department, Morrisville Water & Light Department, Town of Northfield Electric Department, Village of Orleans, and Swanton Village Electric Department.