Vermont’s energy future is Canadian

[Updated August 16, 2011: Gaz Métro’s announcement to investors that the existing Canadian natural-gas pipeline will be extended from Burlington to Middlebury (Vermont) by 2015; management’s investor discussion and analysis of the Central Vermont Public Service (CVPS) acquisition.]

Why does Gaz Métro — pipelining Canadian natural gas to Vermont, New Hampshire, Maine and Massachusetts — own Vermont Gas Systems and Green Mountain Power, and covet Central Vermont Public Service?

The Québec government, owner of Hydro-Québec, governs La Caisse de dépôt et placement du Québec, a $151.7-billion provincial investment fund. (“Québec Deposit and Investment Fund” has no official name in English.)

La Caisse controls Trencap, which controls Noverco, which owns Gaz Métro Inc., which controls Gaz Métro Limited Partnership, which owns Northern New England Energy, which owns VGS and GMP, and would own CVPS, “a clear consolidation opportunity.” (details)

La Caisse’s chairman is chairman of GMP. Noverco and subsidiaries’ boards share key members.

In Québec, Gaz Métro must sell natural gas at cost and Hydro-Québec must discount electricity. Both profit by selling their surpluses to the neighbors, subsidizing Québec employers and employees competing with us for free-trade business and jobs. (speech)

The Vermont Comprehensive Energy Plan includes a natural-gas power plant on the pipeline in Franklin or Chittenden County “as an anchor load to leverage expansion of the VGS network to communities that are currently without natural gas.” (plan)

(August 16, 2011) Valener, Gaz Métro’s investor-owned business partner (Toronto Stock Exchange: VNR) has announced a “significant extension of the natural-gas distribution network in Vermont [from Burlington to Middlebury], a US$65-million project, expected to be operational by 2015” (Investor Presentation, May 26, 2011, page 22).

Gaz Métro’s pipeline partner, TransCanada of Calgary, Alberta, provides the natural gas and owns a modern, 560-megawatt, natural-gas power plant in Rhode Island, easily duplicated here. Gaz Métro’s merged GMP and CVPS will buy the electricity and resell it to us at attractive rates as long as natural-gas prices remain low.

Closing 605-megawatt, federally relicensed Vermont Yankee eliminates their principal competitor.

(Transmitting electricity from Québec through Vermont to other states is impossible without new transmission lines similar to the Northern Pass project in New Hampshire.)

Howard Fairman
Vernon, Vermont, USA

Vermont Uncommon Taters: plain, nutritious, organic, underground, local food for thought about Vermont


Background:

My researching and writing of this uncommon tater was inspired by two contrasting press releases:

Competing to buy Central Vermont Public Service, Fortis of St. John’s, Newfoundland, said in a press release: “Approximately 50 percent and 40 percent of the energy supply in 2010 for CVPS was derived from nuclear and hydroelectric sources, respectively, making it one of the cleanest energy supplies in the United States. Most of the energy sold by CVPS is acquired from Hydro-Québec and the Vermont Yankee nuclear power plant through power purchase agreements.”

Shunning Vermont Yankee, but contracting to buy “low cost, low-carbon, reliable” New Hampshire nuclear power from Seabrook, Green Mountain Power said in a press release: “This agreement is very favorable for our customers, and delivers on the vision Green Mountain Power launched three years ago to move to a cleaner, greener future in a cost-effective way. We set out to accomplish this by ramping up cost effective renewables while we built a solid portfolio that is low in carbon, cost and is incredibly reliable. This provides the perfect platform for our continued efforts to pursue cost effective renewable energy options.”

Buying and merging with Central Vermont Public Service, how could Green Mountain Power rationally reject and replace Vermont Yankee nuclear power?

Having explored a rationale, I offer this uncommon tater as food for thought about this question.

Another question: Backed by La Caisse and therefore far better financed than Fortis, did Gaz Métro let Fortis set the price of CVPS before bidding slightly higher to dissuade Canadian and international competitors hoping to buy lucrative, increasingly scarce, investor-owned American utilities?

(August 16, 2011) Gaz Métro management, via investor-owned business partner Valener, offer an informative discussion and analysis of the CVPS acquisition (Consolidated Financial Report for the Third Quarter of Fiscal 2011 Ended June 30, 2011, page 14).

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