Successful management of its open power supply position, including an extension of the HQ supply contract, and full cost recovery (despite lack of a fuel adjustment surcharge) via annual rate requests to the VPSB.
Positively, for VEC, the VPSB has supported the cooperative's recent requests for rate adjustments, as well as its current capital plan.
In December 1998, the VPSB
granted CV a temporary rate increase of 4.
Continued constructive regulatory treatment by the VPSB
, in particular, maintaining a higher interest coverage level through VEC's capital program.
7 percent temporary rate increase approved by the VPSB
and cost reduction measures implemented by management.
Without a fuel or purchased power adjustment surcharge (legislatively disallowed in the state of VT), VEC's operating margins and cash reserves suffer, until the VPSB
approves rate relief for the system, which has occurred twice since 2004.
Clearly, a key credit factor in addressing VEC's Negative Outlook is its treatment by the VPSB
in its review of VEC's pending rate case.
Overall, the current rate arrangement approved by the VPSB
will mean that our customers will have experienced four years without a rate increase and two years of minimal increases - 1.
In addition, while VEC is mandated by the VPSB
not to increase retail rates for five years (to April 2009), the cooperative can request a rate increase under certain circumstances including unexpected and non-mitigable purchased power costs.
GMP said it asked the VPSB
to eliminate the winter/summer rate schedule because, for the first time, the cost of service in summer is basically equal to the cost in winter.
These increases in power supply expenses were nearly offset by a decrease in the cost of Hydro-Quebec power due to recognition of $8 million received from Hydro-Quebec under a Memorandum of Understanding entered into in 1996, consistent with allowed ratemaking treatment under a VPSB
The rate increase request will be reviewed by the Vermont Public Service Board (VPSB
) in accordance with Vermont legal process, and the VPSB
would make a final determination on the request during the next eight months.