Vermont Legislature SmartTranscripts:

[Rep. Kathleen James (Chair)]: Alright. Welcome, everybody. It is Thursday, January 15. This is House Energy and Digital Infrastructure. We are here today to take some testimony on the fiscal health and oversight of our municipal utilities. So we'll quickly go around the room and introduce ourselves. And then we always ask everybody who's in the room to introduce themselves quickly. And then we'll turn it over to our witnesses. And thank you all for joining us. So I'm representative Kathleen James from Manchester. Scott Campbell from Saint John's.

[Rep. Richard Bailey]: Richard Bailey from Lamoille two. Michael Caledonia two.

[Rep. Christopher Howland]: Christopher Howland, Rutland four. Dara Torre, Washington two.

[Rep. Bram Kleppner]: Bram Kleppner, Chittenden Thirteen, Burlington. Laura Sibilia one nine two.

[Rep. Kathleen James (Chair)]: Great. And in the room. Brent Tetreau, interning for representative fan noise. Awesome. Gabriel Molina with Downs Rock and Martin listening on behalf of the electrocaps. Okay.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Eric Johnson, commissioner, Vermont Department of Public Service.

[Rep. Kathleen James (Chair)]: Welcome.

[Scott Johnstone, General Manager, Morrisville Water & Light (also assisting Hyde Park and Hardwick)]: Jonathan Wolf, the Premier Piper on behalf of Vermont Public Public Service Supply Authority. And just so everyone knows, Ken is downstairs in Senate Natural Resources and Energy, and we'll be up to a bit. Great. Scott John Stone with Marshall Water and Light, and these days also with Hyde Park and the Hardwick. Great. Peter

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Sterling, Natalie Carey, the grass group on behalf of.

[Rep. Kathleen James (Chair)]: Super. Alright. Thanks everybody for being here. And, Ed, are you going first?

[Ed McNamara, Chair, Vermont Public Utility Commission]: Yeah. That was my understanding. Yes.

[Rep. Kathleen James (Chair)]: I see head nodding. Okay. Thank you for being here. Thanks for joining us and for the record.

[Ed McNamara, Chair, Vermont Public Utility Commission]: Great. Thanks. For the record, this is Ed McNamara. I'm chair of the Vermont Public Utility Commission. And apologies. I couldn't be there in person. Sharing is not always caring, and I didn't wanna give everyone else what I've got. So Okay. So I do have a quick PowerPoint. Sorry. Just reacclimating. Just sent a request to Alex.

[Rep. Kathleen James (Chair)]: Great. Sorry,

[Ed McNamara, Chair, Vermont Public Utility Commission]: Alex. I should've done that earlier.

[Rep. Kathleen James (Chair)]: And just so while you're doing this, just so witnesses and committee know, we do we do not have testimony scheduled after this until lunch.

[Rep. Laura Sibilia (Ranking Member)]: So you have any little

[Rep. Kathleen James (Chair)]: No, I just say we're not under time pressure to wrap by 09:45 or anything. We have gap in our schedule, which sometimes happens. We're not in a hurry. You certainly don't have to study for lunch if you don't want to.

[Ed McNamara, Chair, Vermont Public Utility Commission]: Wanna make sure folks can see

[Rep. Kathleen James (Chair)]: We can.

[Ed McNamara, Chair, Vermont Public Utility Commission]: Slide that's up. Alright. Great. Thanks. So

[Rep. R. Scott Campbell (Vice Chair)]: I just wanted to give a quick context here.

[Ed McNamara, Chair, Vermont Public Utility Commission]: As a reminder for folks, Public Utility Commission is a quasi judicial body with oversight of public utilities, including the municipal electric utilities. By way of context, I understand that news regarding Hyde Park Electric helped prompt today's session. I know that's not the entirety of the session, but that is does seem to be a major driver. So the commission has two open proceedings regarding Hyde Park. One is an investigation into the financial status of the utility, and the second is a pending rate increase by Hyde Park. So both of those are contested cases. I'm not gonna be talking about either of those either of those cases. You have three other people heavily involved in those cases who are testifying this morning, and they are much better situated to discuss specifics regarding Hyde Park. So what I'm intending to do today is provide an overview of primarily the rate setting process in front of the PUC and then answer any high level questions. And then I'll be dropping off so folks can feel a little bit more free to talk about the specific cases involving IPART.

[Rep. Kathleen James (Chair)]: Thank you.

[Rep. R. Scott Campbell (Vice Chair)]: Great.

[Ed McNamara, Chair, Vermont Public Utility Commission]: Alright. Again, a little bit more context. So Vermont has 14 municipal electric utilities. There's also Green Mountain Power, the only investor owned utility in the state or distribution utility. And then there is two cooperative utilities as well. I wanna point out that the municipal utilities there's significant differences between the utilities just in terms of scale. City of Burlington, about 19,600 customers. Jacksonville Electric in the southern part of the state, about 700 customers. Very very they're operating on very, very different scales. They're subject to the exact same regulation. There's also significant differences in rates. And I'm not picking on Burlington. It's just they happen to be easy to find. So the rates here, there's customer charge $10, just over $10, and then most of the municipal utilities have what's called an initial block and then a tail block. So the first 100 kilowatt hours tend to be less expensive, and then after that, it is more expensive. Partly, that was a conservation measure, and partly, it had to do with specifics about New York Power Authority, very cheap power going back to the nineteen eighties. But you can see here Burlington, just looking at the initial and tail block, 13 and a half cents roughly and just over 18¢ for the tail block compared to Northfield, which is 6¢ for initial block and just over 13.7 for the tail block. So the rates vary significantly by utility as well. Another aspect, when we talk about municipal electric utilities, it is not confined to the municipality itself. The service territory for every single municipal electric, there actually might be one, but the vast majority of municipal electrics in Vermont extend beyond the political boundaries of the municipality. And one other thing for context, if I'm in regional meetings, some national meetings, people are surprised that we regulate 17 electric utilities all the same. Majority of states do not actually regulate municipal electric utilities, at least in the rate setting context. They leave that to the municipal board to figure out what the rate should be. So I'm not gonna try to provide every single regulatory requirement that the electric utilities, including the municipals, the munis have. There's a lot. I'm just gonna name the most relevant ones here today. Every three years, all electric utilities file an integrated resource plan. And, essentially, what it's doing, this is a statutory requirement in title 30 that stretches back to, I believe, the late nineteen eighties. And it's saying that the utility should be looking out over a twenty year horizon, and how do you provide service to customers at least cost? And by least cost, it includes environmental cost, not just economic cost. Historically, these integrated resource plans, these IRPs have focused primarily on load growth and power supply strategies. The last couple years, we've been starting to touch more on capital planning with potential increases of load or what we're seeing in increases in load from electrification, electric vehicles, heat pumps. What are the cost to the utility to build out the infrastructure in order to meet that load? So that's one planning aspect that's important. It happens every three years. Department is very heavily involved in that. I'm sorry. Department of Public Service, and the PUC is involved in that review. But mostly what I wanna talk about today is the process for filing rate increases. Just gonna jump right into that. I'll well, there's the full rate case, which is traditional. And then in the last five years or so, there's been a simplified process or a process for simplified rate increases as well. Section two twenty five of title 30 is the full process. Utilities are not required to file rate increases or rate changes. Occasionally, there's decreases. There haven't been any in a while, but they're not required to file on any specific schedule. It's not like every December 1 or whatever period. It is generally when the utility needs increased revenue or it's collected so much revenue that it should be returning it to customers. It's a little bit of an art. It's not entirely a science. And that's in part because rate requests when you file a rate request for the Public Utility Commission, again, we're quasi judicial. We operate especially in rate cases and contested cases like a court. So it's expensive. It's expensive for ratepayers. The so the rate request itself has a resource cost, and that is both monetary, potentially hiring consultants. It's also resource constraints on the staff of the utility as well. So generally, the rate requests are only filed when the utility determines that it actually needs these increased revenues to cover reasonable expenses, and I'll get into what are reasonable expenses later. So on a year by year basis, the load, the electric load, kilowatt hours used by all customers, and the power supply costs can vary significantly. And rates are almost never a perfect match to exactly cover the expenses. So in other words, there might be one year where the utility collects a little bit extra money. Instead of just returning it immediately, it can use that to sort of buttress the need for a rate case. And in some cases, if for example, you collect $30,000 extra, but a rate case is gonna cost you $50,000, it doesn't make sense to return it. It makes sense to basically float that 30,000 to the next year. Another aspect as well, municipals and cooperatives maintain what's called a tier requirement times interest earned ratio. In other words, when there's a debt and most utilities carry some debt on the books, the tier is required and it's usually required by the lenders to ensure that the utility is basically getting enough revenue to cover the interest on the debt plus a little bit of a cushion as well to ensure that the debt holders are getting paid. Most recently, in pretty much every single rate case that we've seen, there's three major drivers. Mhmm. Regional transmission costs, and that's ISO New England related transmission costs, so the entire New England grid, health care costs for staff, and then power supply costs. Those seem to be the common denominator among all the rate cases that we've seen.

[Rep. Kathleen James (Chair)]: Yeah. Rip Sibilia.

[Rep. Laura Sibilia (Ranking Member)]: Excuse me. Just oops. In terms of the transmission cost, those are all the those are Vermont's portion of transmission cost in the ISO New England region?

[Ed McNamara, Chair, Vermont Public Utility Commission]: That's correct. Very quickly, the New England Grid, operates as a grid, and every state essentially pays its share of those costs. Vermont is roughly 4%. I'm sure commissioner Johnson can tell you with more detail, but it's historically been roughly 4% of the total costs of last last time I looked was a couple years ago, over $2,000,000,000 per year. So and those transmission costs are increasing every year.

[Rep. Laura Sibilia (Ranking Member)]: Thank you.

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: Yep.

[Ed McNamara, Chair, Vermont Public Utility Commission]: So really quickly on the process, utility files a rate request. Public service department has thirty days to provide a recommendation to the PUC, and then the PUC has forty five days to decide whether to investigate the request. If the PSD recommends an investigation by statute, we it's it's automatic. It's just opened. There's been about 30 rate case investigations since 2021 among all the municipal and cooperative utilities. And sorry. One thing I forgot to put on

[Scott Johnstone, General Manager, Morrisville Water & Light (also assisting Hyde Park and Hardwick)]: this

[Ed McNamara, Chair, Vermont Public Utility Commission]: slide. When they file when a utility files a rate case, they file notice to their customers of here's what the requested rate increase is. Here's how to contact the department. Here's how to contact the PUC. So people have a chance to do that. And then if we actually open an investigation, I believe we almost always, if not always, have a public hearing associated with the investigation as well. So I've already talked about contested cases, no ex parte communication. And I'm explaining this a little bit so you can understand the different parties at play here. The PUC, because we treat we're more like a court in this context. All communication is through filings, noticed hearings. I had I worked for the Department of Public Service for a number of years, including working on a couple of rate cases. That was years ago. The PSD is able to sit down with the utility and just go through the spreadsheet one on one. It's PSD, especially with the smaller municipal electric utilities, has a much larger role because they're able to sit down and try to avoid a protracted contested case. They can work out issues behind the scenes and then present it to the PUC for resolution. That often is I can't speak to now, but historically, at one point, that was a strategy to avoid heavily contested cases for small municipal electric utilities because those heavily contested cases increased costs for ratepayers. So the department's role was to try to minimize those costs and act as the public advocate to ensure that the costs were all just and reasonable and do it. And when I say behind the scenes, I don't mean in a nefarious way. It's just that they were able to do it outside of a contested PUC proceeding. They didn't need to be in a hearing room with all the lawyers and all the witnesses. They could just sit down and have the discussion. So I just wanna make clear that there's different roles for the different regulatory bodies here. And the last aspect is what does the utility file when it files a cost of or when it files for a rate increase? We call it a cost of service. Essentially, it's a glorified spreadsheet And Excel has two different years for the test year, and that is based on audited financials, what the utility spent in that particular year. And then the rate year is in the next once the rate increase would go into effect or what the utility is asking to go into effect, here's what the costs are and here's how those compare to the prior year, the test year. So for example, transmission costs increased by 3%, 5%, whatever it is, that would show up in the rate year category on the spreadsheet as an increase. Those increases to regional transmission costs are typically known usually, they're projected at two to three years in advance, so you understand that. You understand roughly what health care costs are doing. So typically, the the utility presents essentially one set of books, but it has sort of two lines that we're looking at, and we're comparing what are these costs. And the job for the PSD and the PUC is to make sure that these changes are known and measurable and just and reasonable. Known and measurable basically means that you know what the cost is gonna be. It's easily measurable, and it's also a reasonable cost for the utility to incur and for ratepayers to pay.

[Rep. Kathleen James (Chair)]: Sure. I I have a question. So the last slide got to what I was going to ask, and I think this question is for you, sounds like. So my question was going to be broadly how much insight the PUC gets into the fiscal health of any utility, either through the IRP every three years or through a rate case. And I was specifically wondering about audited financial statements. So are those only submitted to you if a utility is requesting if there's a rate case or are those part of the IRP too? In other words, are those just coming to you guys automatically every three years, or does there have to be a rate case?

[Ed McNamara, Chair, Vermont Public Utility Commission]: The audited financials are not typically part of the IRPs. It typically comes in through a rate case. The PUC and also the PSD have broad authority to require information from utilities anytime we want. So we can always just say, we want your latest audited financials. We want your most recent reports, any of that kind of thing. So it's not an automatic that we get the financials every year, but there's a very clear path for obtaining them if needed.

[Rep. Kathleen James (Chair)]: Okay. Thanks.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Yep. Alright.

[Ed McNamara, Chair, Vermont Public Utility Commission]: Last thing I wanna talk about is a change to statute. I think it might have been five or six years ago. And it allows municipals and coops to implement rate increases up to 3% without the nest without the full rate setting process. There are limitations to that. Utilities must have had a full rate case in the last ten years, and this is in the statute. In other words, the utilities can't have been not looked at for so long that we have no clue what's happening with them. All the utilities at this point have come in for full rate increase or full rate cases in the last five years. And also that 3% per year cannot exceed more than 10%. So in other words, they can't do four years in a row of 3% increases. So there's been 10 rate increases using this simplified process by municipal and coops since 2021. And it is not just saying we'd need 3% and no information. There's still a cost of service required. There's still the audited financial test year, known and measurable, rate year, and some narrative explaining what is happening. And the PUC and the PSD both have the opportunity to say, something looks funny. We're going to open a full investigation here. But, generally, there's not the need for an order. It tends to be the utilities have tended to use this as if there's a very significant spike and they need some revenues relatively quickly, they can use this and then come in for a full rate increase somewhere down the road. So I believe that's what I have for an overview of the rate process. I'm sorry to fly through it relatively quickly.

[Rep. Kathleen James (Chair)]: No, that's okay. We have a couple of questions. Oh,

[Alex (Committee staff/IT)]: thank you. Are the fixed charges something that you also review as part of your rate case?

[Ed McNamara, Chair, Vermont Public Utility Commission]: Yes. They are. I'm trying to remember the fixed charges. So there's I wanna make clear there's a difference between a rate case. When I talk about a rate case, what I'm talking about is typically just a in a simplified rate increase, and this is a utility would come in and say we need a 5% increase. That's a 5% increase across the board for all customer classes, for all rates. There's also something called rate design. And with rate design, what you do is you look at there's different cuss classes of customers. For example, commercial, industrial, residential, that's the primary classes. And then the utility would look at, does it still make sense that the commercial customers are paying this amount, residential this amount? Also, does it make sense that customer charge should be $10 versus $8 versus $15? There's much more involved in changing out the proportions. A rate increase is pretty much what are the costs that the utility is incurring, and do they need an increase in their revenues to cover the costs? That increase then is applied across the board. That answer your question, or did that confuse things?

[Alex (Committee staff/IT)]: Well, how often does rate design happen, or what triggers it?

[Ed McNamara, Chair, Vermont Public Utility Commission]: There's nothing in particular that triggers rate design. Some of the utilities have started looking into it a little bit more just given different load characteristics. For example, electric vehicles, changing costs, rate designs tend to be much less common, and that's in part because the information necessary to inform a rate design is much more significant, and therefore, the entire process is much more costly.

[Rep. Kathleen James (Chair)]: One sec. Sorry. Oh, Alex? Yeah. It should we be the little thing is has a

[Rep. Laura Sibilia (Ranking Member)]: red light on it on it.

[Rep. Kathleen James (Chair)]: Is that how it's

[Rep. Laura Sibilia (Ranking Member)]: supposed to be?

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: Thin blue.

[Rep. Kathleen James (Chair)]: Just noticed. Yeah.

[Rep. R. Scott Campbell (Vice Chair)]: Somebody pressed a button on my side. I can't remember how that happened, but it but everybody can hear us. Guess, we on video as well.

[Rep. Kathleen James (Chair)]: Yeah. We just want to make sure it's okay before we keep going.

[Alex (Committee staff/IT)]: We are live streaming. Okay.

[Rep. Kathleen James (Chair)]: And the audio is okay?

[Rep. Laura Sibilia (Ranking Member)]: To

[Rep. Bram Kleppner]: able to hear our questions.

[Rep. Kathleen James (Chair)]: Yeah. I just wanted to make sure.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Yeah.

[Rep. Kathleen James (Chair)]: I don't know what that means.

[Rep. R. Scott Campbell (Vice Chair)]: Yeah.

[Rep. Kathleen James (Chair)]: Well, that was Okay. Sorry to interrupt. Onward we go. R. Campbell and then R. Scott.

[Rep. R. Scott Campbell (Vice Chair)]: Thank you. Yes. Chairman McNamara, so I'm wondering how closely PUC typically monitor the financial health of of of the utilities. Did you have any heads up that Hyde Park was in trouble, for example?

[Ed McNamara, Chair, Vermont Public Utility Commission]: I'm trying to stay away from Hyde Park because we do have an open investigation. I

[Rep. R. Scott Campbell (Vice Chair)]: Yeah. Alright. So I'm gonna ask you specifically about Hyde Park. It's just generally and and Yep. We

[Ed McNamara, Chair, Vermont Public Utility Commission]: generally have a decent understanding of what they have filed of what utilities have filed with the commission and when they have filed and generally what is happening. One of the positive aspects of having 17 electric utilities is there's usually a rate case at any given time, so we typically understand the pressures. Most of the utilities have very similar cost pressures. Obviously, there's gonna be different issues. Hydro relicensing for a small muni can be a significant cost, for example. But we generally have a understanding of what is happening with all the electric utilities and generally have a sense as long as the filings are very clear as to what is happening. There's obviously an open question of should we be more proactive, in asking, and that is a fair question.

[Rep. R. Scott Campbell (Vice Chair)]: Yeah. Guess what I'm wondering is that obviously, the cost pressures are probably more or less uniform across the state, across the utilities, but how each utility manage those pressures is the other aspect. Ben?

[Alex (Committee staff/IT)]: Actually, can we pause for one second? Oh, sure.

[Rep. R. Scott Campbell (Vice Chair)]: Looks like we just lost something here.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Button on the far side is one somebody I don't know.

[Alex (Committee staff/IT)]: Yeah. Somebody pushed the there's a mic button. Okay.

[Rep. Laura Sibilia (Ranking Member)]: No. It's good. That's you. All set. I

[Rep. Kathleen James (Chair)]: wonder if we I don't know.

[Rep. R. Scott Campbell (Vice Chair)]: If if we were on getting reported on the results that are not

[Rep. Kathleen James (Chair)]: Well, it says we're live. Let's try to be I don't know if there was something going on with the audio. Anyway, barring any But

[Rep. R. Scott Campbell (Vice Chair)]: we seem to

[Rep. Kathleen James (Chair)]: further information, on we go. Where were we?

[Rep. R. Scott Campbell (Vice Chair)]: Well, but it's a German word.

[Rep. Christopher Howland]: To have lost. Oh, we've lost.

[Ed McNamara, Chair, Vermont Public Utility Commission]: Still here, and I can still hear you.

[Rep. Kathleen James (Chair)]: Oh, great. We are. Okay. Good. Don't confuse us. All right. Where were we?

[Rep. R. Scott Campbell (Vice Chair)]: Well, so did you hear my last question about the degree to which you're able or the PCA does monitor how utilities are managing their clog pressures?

[Ed McNamara, Chair, Vermont Public Utility Commission]: The PUC is able to, as I mentioned earlier, we have authority to require utilities to file information. The question is internal resources necessary to actually be proactive. And that is not always especially in the last few years has not been has not been something that we've had lots of extra time to be more proactive.

[Rep. R. Scott Campbell (Vice Chair)]: K. Thank you.

[Rep. Kathleen James (Chair)]: Rick Bailey.

[Rep. Richard Bailey]: Commissioner, just wondering, do do you when you get the when annual reports are done by auditors on utilities, do you get copies of those? Are they sent to you, your department?

[Ed McNamara, Chair, Vermont Public Utility Commission]: They're not automatically sent to us. I don't believe I don't believe they're automatically sent to us. If I find out otherwise from staff, I'll let you know. I at least am not reading every utility's annual report as it comes in. It's possible one of my staff is. I don't believe that's the case, though.

[Rep. Kathleen James (Chair)]: Representative Kleppner.

[Rep. Bram Kleppner]: Thank you. Does the PUC, when you're doing rate design, encourage time abuse rates or do you react to those requests as utilities make them?

[Ed McNamara, Chair, Vermont Public Utility Commission]: We generally react to utilities requests as they make them. We did have a workshop. PUC did hold a workshop several months ago now because we understood that Green Mountain Power and VEC were in the initial stages of data gathering related to rate design. Sorry for Monoelectric Co op and Green Mountain Power. And so we had a workshop to sit down with the utilities and note that there's a lot of sort of received wisdom. A lot of the folks who have been doing this have been doing it for a very long time, and we actively encourage the utilities to think a little bit more creatively about redesign and to think a little bit more about the best way to achieve different policy goals. Electro electrification, obviously, maintaining affordable rates. How do you balance all those? And just because the Public Utility Commission had made some determination 30 ago, it doesn't necessarily mean that it still holds up in today's significantly changed environment. So to answer your question, we don't tell utilities how to design their rates, but we are encouraging the actively encouraging the utilities to be considering new rate designs and encouraging the utilities to really work with the department as they're preparing the information. We're still in the process of deciding how proactive we wanna be. Historically, the commission has been very passive when it comes to rate design. We simply get a petition at the very end of their study, then they design new rates, and then they file. Mhmm. We're trying to find the right path between, again, directly telling utilities what to do versus being very passive, that we're we're trying to tread that path by suggesting that they really think about what are the different goals of the state, the policy goals of the state, how to best achieve them, and how to be how to ensure that they're not just recycling the same things that people have been saying for the last thirty years. So that is a very long winded rambling question or rambling answer to your actually concise question. My apologies.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Thank you.

[Rep. Kathleen James (Chair)]: Representative Sibilia. Chair

[Rep. Laura Sibilia (Ranking Member)]: McNamara, what tools does the commission have if they are worried about the fiscal health of a utility.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: So

[Ed McNamara, Chair, Vermont Public Utility Commission]: we have the information gathering tool.

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: We have the ability

[Ed McNamara, Chair, Vermont Public Utility Commission]: to drag a utility and have them explain, have them file all the financials and explain exactly where they are. It's interesting whether I've never seen an a case where we have told the utility you must file a rate increase of x amount. Instead, it is much more a reviewing process of what is your financial health right now? Why aren't you doing anything? You need to move forward on this. If a utility really just decided to not move forward even under that, I'm I'm honestly not sure. I'm sure there's something in there, but it's not something that's come up before.

[Rep. Laura Sibilia (Ranking Member)]: So, do you have the authority to tell the utility to raise their rates or cut costs?

[Ed McNamara, Chair, Vermont Public Utility Commission]: We have the authority to decide what an appropriate rate increase or rate change would be either way, and that could be a decrease. There have definitely been times when a utility has come in and asked for a 15% increase, and at the end of the day, they ended up getting a 9% increase at the end of the proceeding. In terms of and I would assume that the opposite is true, that the PUC could require a larger increase than the utility had requested. Not sure I've seen that, but I'm guessing it might have happened over the last however many decades.

[Rep. Laura Sibilia (Ranking Member)]: So, madam chair, we I actually am pretty interested in this question and what the authority who has the authority with you to in terms of the commission and the department. I don't know if we should hear from Ellen or if, I don't know if that's something your attorneys, Chair McNamara, could shed more light on for the department.

[Ed McNamara, Chair, Vermont Public Utility Commission]: We can definitely do that. Happy to bring back additional. So just to make clear, you're interested in the commission's authority to set the utilities rates without their without a request from the utility, or that might be countered to the request of the utility. Am I hearing that correctly?

[Rep. Laura Sibilia (Ranking Member)]: I believe so. I I am specifically interested in what tools the commission has if they see that a utility or assess that a utility is in financial trouble, what tools the PUC has and what they don't. I mean, think that's important for us to understand.

[Rep. Kathleen James (Chair)]: And I think to follow-up, you talked at the beginning about sort of the underlying motivation for these hearings and one motivation in the back of my mind, and I don't know the answer to it, which is why we're one of the reasons we're here, but is to find out whether either PUC or the department needs more tools that we would have to that you can't get unless we provide them in statute.

[Rep. Richard Bailey]: Understood. Thank you.

[Rep. Kathleen James (Chair)]: On we go. Are you done?

[Ed McNamara, Chair, Vermont Public Utility Commission]: I am done with the presentation. Sorry, was waiting for additional questions.

[Rep. Kathleen James (Chair)]: Onwardly do not go. Does anybody have any additional questions for Chair McNamara? Okay. Oh, yep. Representative Howland?

[Rep. Christopher Howland]: All the utilities are on the same three year 2024 IRP. So all utilities file the same year.

[Ed McNamara, Chair, Vermont Public Utility Commission]: It's no. That they're all on different schedules. And in part, there's occasionally the need to push out by a few months the timing of when a utility needs to come in. They might have a very significant issue that they're attempting to resolve that is going to impact their IRP. And so there's not a you know, every every year on 2020 or every 2027 and then 2030 will have a big rash of them. They tend to be scattered. There's a few of them every year.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Thank you. Yep. Great.

[Rep. Kathleen James (Chair)]: Thank you. And thanks for your written testimony. Always appreciate it. We'll get that posted.

[Ed McNamara, Chair, Vermont Public Utility Commission]: Thank you very much. We'll get some answers back to you.

[Rep. Kathleen James (Chair)]: Great. Thank you.

[Ed McNamara, Chair, Vermont Public Utility Commission]: Alright. Thanks very much. Bye. Feel the

[Rep. Kathleen James (Chair)]: Yeah. Do better.

[Ed McNamara, Chair, Vermont Public Utility Commission]: Thanks.

[Rep. Kathleen James (Chair)]: I'm sorry.

[Rep. R. Scott Campbell (Vice Chair)]: That's okay.

[Rep. Kathleen James (Chair)]: For the record.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Yes. The record, my name is Kara Johnson. I'm the commissioner of the Vermont Department of Public Service. Thank you for the opportunity to testify. I thought, given the questions you had kindly provided, madam chair, what I thought would be useful. Some of it I'll I'll go quickly because, the chairman the chair, addressed it. But I thought what would be useful is first a grounding on what tools, what regulatory processes are in place now.

[Rep. Laura Sibilia (Ranking Member)]: No. No. Chair. I'm sorry. I'm hearing from, folks that are watching the video that there's some audio issues. Okay. I can just pause and check.

[Rep. Kathleen James (Chair)]: Sure. Sorry about that. Let's take a break and figure out if we have an audio issue. Did we do more explicit?

[Rep. Laura Sibilia (Ranking Member)]: Very annoying intermittent buzz coming from the hearing.

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: Maybe that's why we were muted here. I

[Rep. Kathleen James (Chair)]: am. Is Excuse me. Your Vermont insurance not there? Equipment or computer? Think your

[Rep. Laura Sibilia (Ranking Member)]: headphones. I don't how much I don't know. We didn't hear from chair that there was a problem. So, chair McNamara.

[Alex (Committee staff/IT)]: Isn't that funny? We just Yeah. I had somebody check-in on it and watched the YouTube stream so far, and they said everything has been recorded and sounds fine. Okay. So I can also have

[Rep. Laura Sibilia (Ranking Member)]: somebody come check. I don't know. Reporting the news. Reporting the news. Yeah. We can continue. Yeah. Chairman of the.

[Rep. Kathleen James (Chair)]: Alright. Alex, why don't we keep going? But maybe you could check-in with Yeah.

[Alex (Committee staff/IT)]: I'm messaging a couple people.

[Rep. Kathleen James (Chair)]: IT. Okay. Sorry about that.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: It's alright. Just threw the buzzing, and this is, Eric Johnson, commissioner of the Department of Public Service. Understanding the precipitating cause and what the committee is looking for, I thought would be the most useful. It would be a little bit of a grounding because Ed did an excellent job. The chair did an excellent job covering some of the statute, or which I will touch upon, but a couple more just in the context from my point of view leading the department, the statutory powers, as well as at least three regulatory requirements of utilities that leads to information coming to the department, ultimately, that can find its way to the commission, but really comes to the department.

[Rep. Kathleen James (Chair)]: Okay.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: The chair is exactly right. We are really the more the front line that works the most directly, formally and informally, with Vermont's distribution utilities. So statutory provisions, regulatory constructs, IRP. Then I I would like to discuss a utility assessment that we're doing in collaboration with Wild Pulpit Power Supply Authority. I'll tell you what's going on there and what precipitated that because it was not the high part initiative that precipitated that. Okay. And then we can get into Hyde Park, and I can share a bit more given the the the position I owe. That makes sense in terms of what they're covering. Indubitably. Yeah. Okay. Alright. So, to be clear, one thing, think Ed touched upon it, but and I did confirm this with, general manager, Ken Nolan of Ipsa. I'm and I'll I'll cut to the punch line here. I don't believe at this current times, there are many things that need to play out. We're in the middle of going through the process with high tar. But based on my career and the various places I've had, and now I'm here, I don't think it's a dearth of regulations or regulatory tools that are lacking here at the department. I think in some case, we'll get into some of the causes and get into that, but that's my punch line that I'm gonna tell you. Okay. But there's so much more that we need to find out, so much more insights that we need to discover, because we can't even talk about lessons learned while the activity is still going on. So three statutory provisions through regulatory practice. One, we basically can ask for any information we want. So to the degree there's something we're aware of, have we even if it's soft information, if it's hard knowledge, some kind of information, we can have a request that we need to furnish furnish us this. We don't need to avail. We have not had to avail ourselves of that particular tool. Usually, when we ask the utilities, we're dutifully provided. That so that hasn't necessarily been a problem. One thing that I would note in passing, because there was question about receipt of audited financials annual reports. The department, a matter of practice, used to receive annual reports of all utilities. There was a court case because it what was perceived at the time, I think it was Verizon, a telecommunications company, where there was a back and forth. The department was seeking additional answers. This is during, commissioner Tierney's tenure. And Verizon appealed, it went to the Vermont Supreme Court. It it was deemed that we that that was an overreach. It was like asking for tax returns, and we could only ask for certain effectively, ended the practice. The department no longer receives annual reports from any distribution utility. We'll get into somehow we're seeking to rectify that, but that was the state of play for the last, I don't know, I wanna say four years, six years, something like that since that since that decision.

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: Yeah.

[Rep. Laura Sibilia (Ranking Member)]: I mean, I think there's

[Eric Johnson, Commissioner, Vermont Department of Public Service]: a pretty big difference between Verizon and our utility. I got it. I there's what? They're they all are regulated by the Vermont Public Service Department or, excuse me, have regulations to a certain degree. And further, this was the powers of the department to compel provision of these materials. That's the common denominator. No. Only under explicit circumstances and not under a much more involved process. Happy to provide you more because this is something that I had had general knowledge about. I've become more aware about it. So that's 30 BSA and, madam chair, I'll provide this. Sorry. I didn't get to you before, but I'll provide after. Okay. 30 BSA section two zero six. Ed mentioned this. That's the part where we can ask for what we want. Second is overall regulation that comes a full pan of lead at 30 BSA section two zero nine. That sets the jurisdictional limits, what the commission does, what the public service department, the kinda who does what in terms of regulation with regards to utilities. Third is section two two thirty one. Again, 30 VSA, section two thirty one. That's a certificate of public good. Who gets to be a utility and granted the service territory? It's under those provisions that happen. One thing I I would respond to the question, okay. What are the tools? What you can do? Presumably, with sufficient motivation, you actually thought it was in the best interest of ratepayers of some utility, you could actually revoke a certificate of public good for a given utility. Vermont in its past has come close to that. Well but typically what happened, it was in the case of a company called Citizens Utilities, it was essentially forced out and said, you will sell, or we're just gonna revoke it, you'll have no asset to sell.

[Rep. Kathleen James (Chair)]: So did did the department do that? Or the

[Eric Johnson, Commissioner, Vermont Department of Public Service]: It was combination.

[Rep. Kathleen James (Chair)]: Okay.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Combination. But my my point is there is broad latitude if there's bad actors or something that needs to be done to protect Vermont Ray Bears. Yeah. Just clarifying. Citizen, when when was that approximately? Mean, it's Honestly, since COVID, my time frame, like, what year happened, well, I don't know. I don't. I can

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: find out. In the '28

[Eric Johnson, Commissioner, Vermont Department of Public Service]: 1999. So we go.

[Rep. Christopher Howland]: That means there. Yeah. Was gonna

[Eric Johnson, Commissioner, Vermont Department of Public Service]: say again. So those are the three major and, I think, very comprehensive regulatory, excuse me, statutory provisions and powers that the department have. The three regulatory tools, one on the jury didn't touch upon this, and that's service quality reliability. SQRP is in the province. Every utility has a service quality reliability, covers seven broad areas, billing, customer service phone answering, billing, meter reading, work completion, customer satisfaction, worker safety, and overall reliability of service. Every utility has one. There are some similarities, but they're tailored per utility, because given your reliability requirements, you may have a very rural service territory. It acknowledges because each utility has maybe a bit of a different capital structure, a different service territory. There's there's there I guess I'll call them nuances. There's different underlying factors that help inform what standard they should be held to, and they're held to it. And there's financial there's at least one financial penalty if you fail to deliver, and they're held accountable. These are reported quarterly. So we have a sense of what's going on in the ability of utilities to serve. Are they failing? And these are, again, reported quarterly so that it gets a good vision into what's going on.

[Rep. Kathleen James (Chair)]: Rep Campbell.

[Rep. R. Scott Campbell (Vice Chair)]: So on the one hand, you you said that the department does not receive annual financials or or sort of regular financial information, but then you should you're just saying that you do have a good window in into the the financial health that utilities could receive. I I think everyone just No. That's not what I

[Eric Johnson, Commissioner, Vermont Department of Public Service]: what I here's what I said. I'm sorry. I didn't wanna interrupt.

[Rep. R. Scott Campbell (Vice Chair)]: No. No. What I'm that's that's what I'm trying to understand. What am I missing

[Eric Johnson, Commissioner, Vermont Department of Public Service]: what I missed? I what I didn't make clear enough is that you can draw inferences if there's if reliability is failing, typically, what's happening? You're not keeping your system up. If you're not keeping your system up, what's going on, what's going on with personnel? Are you are you lacking cash to be able to put the investments that you need to in the grid to maintain system reliability? That's what

[Rep. R. Scott Campbell (Vice Chair)]: you hear about quarterly. It's the there's a system

[Eric Johnson, Commissioner, Vermont Department of Public Service]: All of the service that that's 17 seven areas, it's not booked 17, but there's yes. They're reported. Each utility reports them quarterly.

[Rep. R. Scott Campbell (Vice Chair)]: So that's basically quality of service. I I you know, maybe we

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Hence the name. Yep. Oh, well Well, service quality, reliability. Okay. Okay.

[Rep. R. Scott Campbell (Vice Chair)]: No. But the real question is Yeah. Well, and you'll get to it, I'm sure. But who and how are we monitoring the health of our of our distribution utilities, and who should be doing that? And that's the general question you don't have to answer.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: You asked know, the general let me give you a general answer, if I may, please. What what I would say is I went back and and looked, and most Vermont utilities were incorporated, say, in the eighteen nineties, 1900, 1910 time frame. We had as many as 47, maybe 52 utilities, and now we're down to 17. There's been thousands of rate cases and things that have happened for utility. This issue with Hyde Park is the first time an issue like this has happened. So I just want in terms of setting context and where are we, right, one is an off. If there was two or we have a trend, at least in my judgment, subject to further verification, this doesn't constitute a trend. And I'll give you my opinion, reasonably informed, on what happened in the case of Hyde Park. But I guess, madam chair and the committee here, I from the department's point of view, maybe the most important thing to say is local distribution utilities remain the most effective way to deliver cost effective service. Two, do I think that there could be efficiencies secured? Yes. I have never been the one to advocate consolidation, but I have made it and and and consistently said, including to the board of trustees and the leadership of Hyde Park, you need to collaborate better. There's all I know firsthand about the inefficiencies in existing grades. Some of that is personality and fiefdoms. Some of that is operational lack of knowledge. There's a continuum of how utilities are managed. There's really effective people, and there's people who are less effective as we have seen. So my, in my view and our department, the way the department sees this is continue the best strategy to ensure cost effective, reliable service delivery to Vermonters is to first help the local utility survive. And then if they are deemed, for whatever reason, lack or a wit of incompetent or unworthy, then we find and we'll move through and come up with another strategy. In this particular case, which we're still learning about, it's against that kind of backdrop. So this is a one off case. I don't know. So I'm giving you a general answer, so I don't want so I'll stop there. So that's what I would say. Okay.

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: We we yes.

[Rep. Laura Sibilia (Ranking Member)]: Are you done?

[Eric Johnson, Commissioner, Vermont Department of Public Service]: No. I'm not. No. But go ahead. I'm happy that

[Rep. Laura Sibilia (Ranking Member)]: Were were you done answering reference? Okay. So just broadly, the SQ

[Eric Johnson, Commissioner, Vermont Department of Public Service]: SQ. Service quality, reliability, SQ work.

[Rep. Laura Sibilia (Ranking Member)]: Broadly. How are what's the process for reviewing those by the department?

[Rep. Bram Kleppner]: They are sent,

[Eric Johnson, Commissioner, Vermont Department of Public Service]: and we have our customer customer advisory I'm sorry.

[Rep. Laura Sibilia (Ranking Member)]: Kathy?

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Yes. And they review, and they say, okay. This is is a problem. And we work with the utility

[Rep. R. Scott Campbell (Vice Chair)]: Okay.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: To decide let's say they failed or there's a a customer satisfaction is down. We have the conversation. Well, what happened here? And they'll give an explanation. And and those that has been I could obviously, I knew I was gonna be asked. Those have been very healthy discussions. And typically, I will say, the utilities are very responsive. That's why Hyde Park sticks out so much. Yeah. Utilities have been very responsive to it. Now do they have a financial incentive to do so? Yes. They do. Are they challenged? And there's a whole thing we can get into, given more frequent and extreme storms, and how that's accounted for versus what you're accounting for in your service quality real reliability plans. And I think there's room for efficiencies in reconciling that. But fundamentally, that is an effective living process. So that's

[Rep. Laura Sibilia (Ranking Member)]: so so they're somebody's job to review those.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Yes. It is.

[Rep. Laura Sibilia (Ranking Member)]: And when they review them,

[Eric Johnson, Commissioner, Vermont Department of Public Service]: does the does the commissioner then get a report? Yes. My thing is, even beyond the SQRPs, what I seek to do is get a report every month. What are people complaining about? Okay. Thank you. Like, you know, just alright. The third so

[Rep. Kathleen James (Chair)]: Oh, we have another question. Sure. Representative Kleppner?

[Eric Johnson, Commissioner, Vermont Department of Public Service]: I'm sorry. Can you indicate me a little the I know it's an uphill struggle. That was a Alright.

[Rep. Bram Kleppner]: The the utilities issue annual reports. Is that true? Some do. Some don't. Some do. Some don't. And that's separate from audited financials. In some cases. In some cases. And the ones who do issue annual reports, are those public documents?

[Eric Johnson, Commissioner, Vermont Department of Public Service]: I they have to be if it's for municipal utilities. Yes.

[Rep. R. Scott Campbell (Vice Chair)]: Well, it

[Eric Johnson, Commissioner, Vermont Department of Public Service]: must be for all of them. Right? Because if you're investor owned, you have to provide

[Rep. Bram Kleppner]: Which means you can get the annual report. Right. Those who issue them, you can get them. I mean, you said we don't get them anymore.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Well, there's a What I said was, as a matter of practice, we don't get them any. And they they used to compel, hey. Where's your annual report? You haven't sent it yet. Yeah. Secondly, like as the chair mentioned, the era in which we had that, we had someone dedicated who did nothing but read those reports. I remember I remember working with her well, the previous line. That whole area of the Department of Public Service is gone. There's one person who did. There's three other people whose job it was to do some of that work. Those people are gone. Mhmm. So and we'll get to some other things we're gonna again, that we're gonna, in some cases, you'd say a restart, and in some cases, kinda being more effective in the in the information. And I guess what I would say at this point is I'm very mindful of the don't precipitate that what you're what you're trying to protect against. Mhmm. There are significant regulatory requirements on utilities. Significant. And it's the world's getting more complicated, and it's harder to to to run those utilities. My team's incredibly busy. So I am making sure, because of both of those factors, how efficient are we in the information in the what are we asking for and why, and what are we gonna do with it? Yeah. Candidly, I think we could do a better job in exactly what we asked for and how we manage it, and we're pursuing at least one particular project to be able to better address that because we're stuck speaking of the nineties, we're stuck in the nineties with some of the data management tools that we have in place. So we're gonna try and do that. So I guess my point is and on the other side, when I first started, now that was a year ago, there was at least in some cases where I felt that some of the people we regulate weren't as responsive, weren't as respectful as they needed to be to our department. Wasn't any of the municipal utilities, but it was some of the other people we regulate. And so we had to affect behavioral change, which we have done. So I see this because having said all I've said, what I will say is I target what I hope what I it's an extreme case, but arguably, a harbinger. And what is happening out there? And this will get to why I started, and we'll get kinda jumping around. And so I I apologize for that.

[Rep. Bram Kleppner]: So I just got a quick thoughtful one Yeah. For Sure. You know, so having written annual reports, I know that they tell the story that whoever writes them wants to tell.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: So, you

[Rep. Bram Kleppner]: know, like, it doesn't feel to me a huge loss of information not to get the annual reports. The the audited financials, on the other hand I gotcha. Are important. And as I've mentioned before on the subject of regulatory burden, easy tech to have those come to you automatically.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: I could not I could not agree with you more strongly. I'll just note here. I I I it's almost like the in the interest of full disclosure. For about six years, I wrote the annual report for CBS. So I know all about the story that you have to work with than the story you tell. Yeah. What has to you know, there has to be truth there. The 10 k, though, that's comprises. Right? There's there's two parts that comprise an annual report. You have the story, and then you have the straight up financials that the Wall Street investment types and your shareholders are looking. Yeah. And there that has real information Yes. For the publicly traded folks. Okay. One thing on IRPs, and I should have thought this manager, but I will follow-up and do this, is provide I think it would be good for this committee to see an example of the SQRP and see an example of an integrated the questions we ask in an integrated resource plan.

[Rep. Kathleen James (Chair)]: That'd be great.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Yeah. The third thing I was gonna but Ed did such a good job on rate cases. We know about rate cases, and you explore that. Ed did a better job. Chair did a better job than I would. Where I wanna go with the IRPs is the next, to talk about the utility assessment that the department is gonna conduct of every utility in the state of Vermont. Now for some, that will mean much more explorers exploration and data information sharing, because we don't have the full picture, like we do bluntly for a g of Green Mile Power. That isn't that we have everything, but the list of things that's missing is a heck of a lot smaller than with some of municipal utilities. Honestly, my team hasn't met with some of these utilities in years. The members of our team has changed, the members who's managing these utilities. And Vermont's too small to to not have that kind of build up that trust, have that relationship, being able just to reach out and get the information. So we're going to be doing that, but I see you have a question.

[Rep. Kathleen James (Chair)]: Is that sorry. Is that a that sort of a new comprehensive process that you're undertaking? Like, you're new ish, I guess. And not to the scene, but did you proactively decide, you know what, we need to check-in with every single utility, and did that come before Hyde Park or after Hyde Park?

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Before. So thank you for that question. So what happened was, as part of governor Scott's, there's this event called capital for a day. And you go into a different county, and you each of the members of the cabinet do this stuff that they do. So I did what I did, and I met with a utility. And I can you know, the vibe I got, there was information, and I dutifully wrote it down. But, you know, you get a sense when you're in an office. This is the power of of being in person, the sense and just something felt this this doesn't feel like sustainable. This worries me, you know, in your gut. This worries me. So I talked to my team, and then candidly, I reached out to Ken Nolan, general manager of VPSA, and I said, I'm concerned. I think what we need to do now, here's the new ish, newer, new regulator saying, I'm coming here, and I wanna launch a whole new, like, assessment. So, of course, that led to some robust discussions about what about what that might look like. However, I wanna say that Penn and Vipsup was in the leadership team was incredibly constructive, incredibly constructive. So we began iterating. I had the ball, and I took a long time, like two or three months, to figure out what exactly do we ask. And it was and that's why I think of it for the committee. I needed to learn exactly the questions we're asking of utilities through SQRPs. What are we asking of them in the IRPs? What is the picture where we should be able to piece together and what's missed? After reviewing, that led to the schedule of questions that that general manager Nolan and I have been iterating, and we are now effectively done on that. The idea is and I have language, but I can give you the objective. And the like the idea is to look at have the conversation with three utility, look at three dimensions. One is their financial status. Getting clarity on their financial status, hearing directly, seeing the information, and talking to the people managing the books and the like. Two is their operational kind of take. Do they know their grid? Do they have a sense of their trouble spot? Do they have a plan for capital investment to address those troubles? Because you can get a sense of how someone knows their knows their plant out in the field and what's going on there. And then thirdly, is people. How are they doing? Are they do they have long standing vacancies? Do they have imminent retirements? Do they have a succession plan? Are they man are the crews working safely? Are they being stressed and overtime and they're a little bit older and and they're putting in in positions that they shouldn't be being put in? Those are the three dimensions. That's what we agreed that we would concentrate on. We have now a set of of questions. This will be new, but what general manager, Noel, and I have tentatively agreed to or not tentatively, what we've agreed to is we would try and I I think it's get the interviews done in person, the order of which because that seemingly is a thing. The order of which we'll decide and to be done by June 30 with a final and then review and no later than October 1 have the like, okay. Here's what we have learned. So that that is that utility assessment that we're embarking upon.

[Rep. Kathleen James (Chair)]: And that's every utility, or are you starting with the Vipsa members?

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Starting with the Vipsa members. Okay. Again, because that's where we we are the most blind. And, also, we are informed. I am informed by what happened with Hyde Park, a small municipal. And if you look at the profile, okay, what are the stressors for this utility? One, you don't have. Right? Just a couple words of that because I think it's important. Hey. Chuck touched on a couple, and he's exactly right, like, what's showing up tactically in rate cases, say, the last year and a half. But what are the larger the context, at least in our judgment, in my judgment, what's happening? One is rising costs for wholesale energy materials and regional transmission services. I'd give you a flavor of that, but the costs there are significant. And that is cyclical, and we're now in a cycle where it's gonna go up. And what's new is now there is much, it was about thirty years ago or so when there's a spate of transmission that was built. There was the new federal reliability standards because of the blackout that hit years ago. The new federal reporting standards became effective June 2007. Those, in turn, spawned a whole lot of new transmission being built, including Vermont, which hadn't built anything for, like, twenty five years in transmission. All that means, the region. And since we're all joined at the wallet, there's a whole lot of asset condition, whole lot. Okay. We gotta replace this.

[Rep. R. Scott Campbell (Vice Chair)]: Mhmm.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: But what's happening is because more and more people want to decarbonize and shift more usage of the grid, We're not building same for same. We're building bigger, costlier at a time of tariffs, including on aluminum and steel and other material that go into the grid. Some of the key companies and providers are in Canada as well as some of the Nordic companies, and the tariff map is incredibly difficult to to navigate, which is also taking place at a time now where data center hunger for power is exacerbating supply constraints, in addition to supply chain was that continue to this day since since COVID and the the things you experienced there.

[Scott Johnstone, General Manager, Morrisville Water & Light (also assisting Hyde Park and Hardwick)]: So that's just cost. Yeah.

[Rep. Laura Sibilia (Ranking Member)]: Just a little more fine tune chair's question.

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: Yeah.

[Rep. Laura Sibilia (Ranking Member)]: So I I heard VIPSA members only for at at this point. Are we going to be doing all of the utilities, though, so that we have Yeah. The ability? And and do you have a timetable for that?

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Well, the the idea would I thought that on Ish. Candidly, by October 1, everything better.

[Rep. Laura Sibilia (Ranking Member)]: Like all of the utilities. Not just the meetings.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Yep. Honestly, I think it's easier. It'll be easier. Like, with Green Mile Power, we're gonna be in the midst of a comprehensive rate case anyway. Right? So we'll have

[Rep. Laura Sibilia (Ranking Member)]: So you'll just be asking all the utilities consistent questions.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Correct. Right. Thank you. You're welcome. So that also, I think it's important to note that the the customers that local utilities are serving, like all my customers in Vermont, their needs are evolving. I think the tolerance, one for outages and and not being able to charge your phone, not being able to access the computer, let alone electric vehicles, batteries, the appetite and the demands, the expectations of customers have grown. And so serving now you're not serving the same where, okay, we're gonna be out for for a day and a half or two days. That doesn't fly. I mean, it still happens once in while, but that really doesn't fly. So you have more cost. You have rising custard demand. We've already talked about aging infrastructure. Oh, and you have those costs at the same time as these other rising power supply costs all at a time when property tax are raising, so the munis are uniquely stressed because small small rate or customer base over which can spread in these multiple stacking of costs that are happening. I would also say regulatory requirements. Some of the new stuff that wasn't back in the day is now cybersecurity, and cybersecurity this is one thing I wish you know, once you know, you know. Wish you didn't know. Well, I'm I'm glad I do, but it is it is deadly serious. Yeah. And the one takeaway I'll give you so I can share this concern is that the assumption now by the law enforcement what I know that can be a freight attorney. What I would say is people who who I have great knowledge and people I trust in people who I trust because someone I trust trust them. And when they tell you, here's the state of play, it is assumed now that there are bad actors who are already in every utility operating system. It's just the question of when they choose to act. It isn't I'm not saying they're all behind the firewall. I'm just saying they're there lurking. So what I learned is extreme weather events are the perfect opportunity to couple that with this with a cyber attack. So municipal utilities, these people, have to guard against this. Right? It's the weakest link that you're gonna go to to be successful. So all the tools for protecting against data incursion, the training you're have to do for your team to not sign in or click a link on a phishing email and the like, all that has to happen for this at the same level for the municipal utility.

[Rep. Laura Sibilia (Ranking Member)]: So just not to go veering off, on this, but, does the department have any plans about so that's pretty serious. It is. I appreciate you saying that.

[Rep. R. Scott Campbell (Vice Chair)]: Yes.

[Rep. Laura Sibilia (Ranking Member)]: We have a responsibility ourselves as do you to the public. Have you been talking about in the midst of all of this other work that you're doing, how to help Vermonters prepare for what is likely an inevitability there?

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Here's what I would say. First, what I have is time and and power to do is first educate our team and the people most engaged at the futility level.

[Rep. Laura Sibilia (Ranking Member)]: I and I don't wanna take us too far.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: No. I'm just it's gonna be quick. So I came for this event in Boston. Mhmm. Brought some people. And so now what we're doing is and pitched it to the, utility and and emergency management and other people. So now we are org it takes working forever, but we are now organizing an event precisely to talk about that dual combined threat. So we, the people you would look to, what are we supposed to do? Tell me, like, where is the emergency shelter like? We're gonna have that and run through that just as we learned in Boston Great. To try and keep the educate the people to get that done because you're Thank you. You're right. It's a

[Rep. Richard Bailey]: big deal. So that, in which

[Eric Johnson, Commissioner, Vermont Department of Public Service]: funny funny, but the next thing is these more frequent extreme weather events. There's incredible collaboration that handles among the utilities, both the investor the investor owned municipal utilities, New England wide and beyond. There is digital tools. There's relationships established. That's one thing I have to say. Like, utilities, generally speaking, get it right. When there's an emergency, it's all hands on deck. How can we help each other? That and that really works. But the frequency of when they're having to do that continues to ride, and the severity of the storms that are hitting, they're more severe. And if you think of the assets now that are in the field, communication assets are just as important, like, to keeping your vision system, which wasn't as much of a thing previously. Now it's a thing, so it's another asset in the field that you have to be mindful of, and they take provisions. So that's it. Just one data point I learned, Vermont is fourth in the nation in terms of per capita cost for these disasters. $902. Fourth in the nation. Washington County, who knew, in Vermont is one of the most frequently costliest hit counties anywhere in the nation. Yeah. So so that so that's another factor that what's on the plate for these small utilities to have to manage, all utilities, whatever, having to manage. Lastly, what I would say is a fact that in why we need to explore this personnel retention and recruitment. There's a whole cadre of people who work their butts off, didn't matter the time of day or weather, clean up a poll, do the stuff they need to do, and there's a whole generation that continues the utility industry nationwide and certainly in Vermont, given our demographic, are aging out. And where you get the people to actually backfill, though, that continues to be a challenge. There's a lot of cannibalization among the Vermont utilities where some companies train, and, oh, you just train that person. We'll take them here and pay them a little bit more. So it's a very, very competitive it's hard to find people that the utilities need to do it. So I just wanna run through when you're saying we have tools in place. It's good to be knowledgeable of the pressures that they're under. Having said that, they have a job to do. Right? Run the utility. So I've already told you about the assessment. Perhaps it would be good to talk specifically about Hyde Park.

[Rep. Kathleen James (Chair)]: Yeah.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Let me make sure because so here, I wanna I wanna credit. I was sent an email. There were some the most the first signal true signal I had was on September 3, an email from Efficiency Vermont saying, hey. Just want you to know. High Park has now, we've been trying to work with them, commissioner, but they are really behind and now not answering our phone calls or emails. They're not remitting to us the dollars collected from their customers, which, by statute, they are supposed to convey to efficiency risks. I have never heard of that ever happening in my life. So to me, I insi I saw the email. I got, like, 02:37, 3PM. Gather my staff. This is bad. And I checked myself, made one call. Look. This to me, this is oh, hell yes. Has this ever happened? Remember, I'm a year end. Has this ever happened before? No. Okay. So your instincts are good. So launched. So September through that, September on September 4, I got the the then general manager. We had a tough conversation. Directed them for an in person meeting. They asked for a few days to to put their materials together. I gave them four, so we met in person on September 9. Tough meeting. It was a tough meeting. The outcome, though, of which was you own this. You're you will you will file immediately with the Public Utility Commission. Here's what we've done. Here's the situation we're in. Tell them everything. That's all you got now. That letter, was sent on September 29. They filed that letter.

[Rep. Laura Sibilia (Ranking Member)]: So can I just I so

[Eric Johnson, Commissioner, Vermont Department of Public Service]: sorry? Yeah.

[Rep. Laura Sibilia (Ranking Member)]: You're telling them to file with the PUC because the PUC holds their CVG. Their

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Because the CPG the CPG determines what they can charge for rates.

[Rep. Laura Sibilia (Ranking Member)]: That's allowing them to operate in the state. Yeah. So that's why you're sending them

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Yes. And and thank you for saying it because my response to your question would also be, remember, at this particular time, we there was smoke. Right? Mhmm. And you see a little flame. Mhmm. He had no idea. That's a poor metaphor.

[Rep. Laura Sibilia (Ranking Member)]: Mhmm.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: There's a little bit of water. I had no idea how deep, like, broad the problem how deep was this problem. So when I had the co when we had the conversation, it was tough because I defensive, not taking in it was incredible, actually, what was going on. But that told me there's even more.

[Rep. Laura Sibilia (Ranking Member)]: Mhmm.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: So smile and do everything. And I was I started to reach out. For instance, I reached out to Bell and go, hey. High Park paying you the stuff they need to pay? No. Oh, well, they are behind. Well, okay. How far hey. You're officially wrong. Exactly how far are they behind? So we started thinking what else? Of course, I have no sense of the individual vendors they're working with in High Park, but I know as a utility, their responsibility. Everyone had red lights. So the idea was how to what's the quickest way to initiate the process for a full review with all the panoply of tools that would then be at the disposal? That's why we had to get make the PUC aware. Got it. I will tell you, as I told directly the High Park leadership trust the chair of the board of trustees and the general manager, For right now, based on what I know right today, this is a pilot stuff you created. But as I see it right now, the most effective way to protect ratepayers is to see how we can we'll figure out how bad you are, restore you to financial solvency, phase one. Just get them so they're not bleeding anymore because and by bleeding, I mean, if they're not paying their debts, then there's penalties and there's late fees, and, like and it starts to add up. So what ultimately ratepayers, they have to pay is more

[Rep. R. Scott Campbell (Vice Chair)]: Mhmm.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Than if we try and at least triage it, restore them to some kind of financial solvents. That's the purpose of phase one, which is what we're in right now. Phase two is the full reckoning, or I should I should say the partial reckoning, because there's gonna be a comprehensive review, everything. And there has been things discovered from that first filing On September 29, there was more. So that phase two is everything's on the table. Here's effectively a workout plan, how we could It do is almost inevitable that there's gonna be an ask for special treatment for high priority to incorporate in rates expenses and loans and financial instruments that heretofore have not been allowed to be incorporated into rates.

[Rep. Kathleen James (Chair)]: Special request made of the PUC? Correct.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: They're they're gonna have to. If if that wants to if that entity is to avoid, in my opinion, this is my opinion, bankruptcy. And I want this community to know, we I explored, and I've been through this before in the nineties over restructuring and the advocacy at the time for bankrupting CBPS and Green Mile Power as a way to get out of the Hydro Quebec contract, and that would be good for repairs. If you don't know, that was active discussion. And I knew I reached out at that time, I reached out to a bankruptcy lawyer and worked with them. And let me just tell you, there's nothing good about bankers. Nothing, in the utility business. But my team, I felt it's important for us. We have to at least explore the option. And this instance, what it looks like, you bankrupt the utility effectively. What you're doing is bankrupting the village. And I don't think either of those things, ultimately, if you're my lane is worried about electric rate pair, but obviously gonna be aware of the broader impacts of the strategy we pursue. So there's gonna come a time in phase two exactly what makes sense to do, and how should these ratepayers currently served by Hyde Park Electric Department should that in fact be the model by which they're served. In my judgment, that is an open question as to whether or not that should continue to be an ongoing entity.

[Rep. Laura Sibilia (Ranking Member)]: So is it your sense that it will be the high park rate payers that will be on the hook? Will Vermont taxpayers also be on the hook? Do you have a sense of this yet?

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Good question. Clearly, the high park rate payers will be on the hook, and there may be other broadly speaking, because of other interconnection points, could see where other electric ratepayers across Vermont could be impacted. There may be the taxpayer consequences, but that's that's why it's tough to say, what tools do you need? Because we don't even really have I don't have. It hasn't been filed. No one really yet has. Here's the clear picture and how it might be resolved, and thus, who has to pay. So there's financial institutions involved. How can they help to mitigate or save the, change the terms, the cadence of whatever financial instruments are in place, understanding the situation this is in, right? These are Vermont institutions. They entered into it. And I think this was a case of we had our flashlight into Hyde Park operations. Also, I heard stuff, which is why, in fairness, the general manager reached out to me and said, hey. I hear you're meeting with the the distribution utilities. Would love it if you'd come talk to us. Said, are you kidding me? We'd love to be there. And I could not have been more candid in that meeting. I don't like the signals I'm getting. You need to collaborate and join with either VIP. You pick who, but I don't think you're gonna you're gonna be able to make it long term. I didn't know what was going on, but you're gonna be able to make it long term on your own like this. Join Vipsa or join some other group. There's other things you can do. You're gonna you guys are gonna need help, and I got that because I was picking up. This is Vermont. Yeah. There's some weird requests. They're asking this, Hyde Park started to really make requests during storms. They weren't giving anything to the table. They were only asking. And then they started asking for general operations, not just storms. That's another signal that they know that there were problems. Last the one thing I do think it's important that I also wanna share, though, the depth of this problem and the length of time over which it festered tells me we could have done a better job. He is who? The public service department. We could have done a better job. And in fact, there was a customer who called who said, hey. I'm a little bit concerned. Now the team did it, had a two half an hour phone calls to run through and did stuff. And by the letter of the law, they did exactly what they were supposed to do. It's easy for me to say this right because it's retrospect, but I think those of you who know me, I would would have likely taken a bit more of an expansive view. Okay. Hey. And then called, well, what you know, this is concerned. What do we what do we do? What if for whatever reason, that didn't happen. So my point is we're not just pointing at others. Having looked at that and thought critically about the information we get, our you know, if you have the stars of this production, if we're down way down on the credit list, way down is this someone that has some measure of culpability. I think we we could have done a bit better. But make no mistake. This was we got here and in the situation we are through a series of intentional decisions over a period of time where where the officials running that utility were less than forthcoming, there was there was measures taken to hide certain things in from certain venues or certainly not share to give the full picture, acts of omission that were done. And so it's no wonder then that various people who had just one view into one thing on this didn't have the totality of picture, and that didn't really the the tipping point came when that email from efficiency Vermont said they're not remitting their their revitives.

[Rep. Laura Sibilia (Ranking Member)]: So I I would just note, commissioner Yeah. That sadly, you probably will not be commissioner for all kinds. And so we need to make sure that we're leaving, you know, we're leaving, processes behind so that are able to adjust with whomever is in the office. And I would also say for myself, just a flag, you know, we have other ratepayers or Vermont taxpayers involved here, for me, that starts to rise up to it's just I don't know enough. So just more curiosity about how our Vermont taxpayers and ratepayers in general being protected around the monitoring of the health of these utilities. And it's and I think you're doing a great job explaining to us. It's very helpful to where we are.

[Rep. Kathleen James (Chair)]: I had a question and then we

[Eric Johnson, Commissioner, Vermont Department of Public Service]: If if I may, madam chair, I just wanna respond. Just two things. One, from day one, I have been mindful of my the brevity of my tenure. Mhmm. So it's like going into a park. Right? You leave it better than you're bound. So first has been restoring the team, camaraderie, muscular the connective tissue about the message and the esprit de corps and all that. Two has been, again, the tools we have to receive and process and distill insights from the information we have, and that's in place. And that will outlast certainly me. So the team will have better tools. Secondly, what I would say is as the insights, as the lessons learned and we see what mistakes were made, I may come back to you and say, you know what? Here's this one. And maybe it it can be a regulatory fix, or maybe it's a statutory in the cases where in the rare cases where this happens, this is the one thing. But I'm not I'm not sure that is going to happen, but it may, so I take your point on notice on that. Sorry, madam chair.

[Rep. Kathleen James (Chair)]: I'm gonna put myself at the back of the line. Rep Southworth, Bennington, and Kleppner.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Generally speaking Yeah.

[Ed McNamara, Chair, Vermont Public Utility Commission]: I was

[Eric Johnson, Commissioner, Vermont Department of Public Service]: don't need specifics. You been able to identify the root cause of what started the downhill slope into the pond? That's a that's a great question. And let me let me respond with a process. So this is a two phase rate cape or kind of proceeding here. Phase one is restore financial solvency to the best, just so monies are coming in. And I think now, as I've learned from general manager Nolan, that I think the monies are just starting to come in. So that's now that means a rate increase for Hyde Park ratepayers, but less than what they otherwise would have had to experience. And now you can start rationally and rationalizing of costs and operational costs and with revenue. So that's phase one. Phase two will be that, okay. Here's everything that happened. Here's what we think we can do to fix it sustainably. This institution agreed to re rework these particular loans this way. It's all part of a package. Ultimately, this is what it all resolved All that work, phase one to phase two, phase two to what the investigation, as the chair mentioned, it's the precise reason that the sentence to open the investigation was, we're gonna examine and determine root causes and remedies, essentially. So the idea is now do our homework, continue to understand. Here again, VPSA has been doing incredible work partnering with the department and stepping up both in terms of the leadership, Ken and his team, and the board to do incredible work to help. This is where I mean, this happened, and it's never happened in our history before. But the Vermont like response of collaboration, what do we do here, especially between my department of people, Ken, with lawyers and consultants, and it could have been messy. And it still might be messy, ultimately, depending on if there's any civil litigation. I don't know what's gonna happen ultimately, because people sign stuff that asserts what they knew or didn't know. So all that is yet to work out, but it will be under the auspices of the PUC investigation that will say this through that investigation, it will determine exactly what what you're asking for. And along with that, after that's identified, my assumption is there'll be remedies in place that will hopefully red flag this when it gets to this point again for any other utility that would run into something like this. It it's a great point to note that part of over the root cause and remedies might be just as colloquy where it just happened. Is there some regulatory or statutory hole that would be good to fill such that we could avoid some yes. Okay. Thank you.

[Rep. Kathleen James (Chair)]: So, Mark?

[Rep. R. Scott Campbell (Vice Chair)]: I apologize if you already mentioned this, but are utilities required to file audited financial statements on an annual basis? No. Why not?

[Eric Johnson, Commissioner, Vermont Department of Public Service]: There was a There was a court case, the free where the department was requesting information in that instance in that immediate instance, it was a telecommunications company, but had broad impact, which meant that those audit financials are like, tax returns, and the the the department can broadly compel that you have to send them. We had to be you would only be able to do that if it was very narrowly focused for a specific reason. Now, look, be skeptical all all you want. That's the state of legal play when I entered. And as I said to the committee, I'm happy to learn more about it because I've explored it in bits and pieces, and so happy to share more about it with you. But what I didn't get into, madam chair, in response to your to your question is, the other thing that general manager, Noel, and I negotiated is what information is to be provided. And it includes, not surprisingly, it includes those documents. And candidly, I also learned about a financial reporting creature I had never heard of before, which are three fifty three fifteen?

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: One fifteen.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: One fifteen. Letters. One fifteen lettering, which a letter from the auditor, which goes to, I'm gonna put it this, whoever paid them to actually undertake the audit. No one in my department knew that those existed. Those are what seemingly, at least in this instance, that's where the real candid stuff gets articulated. And now we have them. Now we know enough to ask about them. But that was something that even when the court I'm not sure our department ever, one, knew about or two, ever asked for. But collaboratively, again, in in partnership with VPSA, we'll start with the municipal utilities, but now we even have a better sense of what precisely to ask for. And and VPSA has agreed working with its members to provide that information. That's important, and it's very helpful.

[Scott Johnstone, General Manager, Morrisville Water & Light (also assisting Hyde Park and Hardwick)]: I'm glad that answers it.

[Rep. R. Scott Campbell (Vice Chair)]: Well, you can only ask for it if they do it or have done it. Well So they're not required to do it because of this Supreme Court law. How many of the members, for instance, are auditing their financials already? Certainly,

[Eric Johnson, Commissioner, Vermont Department of Public Service]: I would defer to to general manager Nolan, but I believe as a matter of public management, all of them audit every year. Okay. Great. That's what I see. But that's what I Not Hyde Park. No. Hyde Park. To be clear, Hyde Park was audited. And when this hap well, there's a hole. There was a series of audits that that we became aware of, and that's when we became aware of these letters that where the candid stuff was exchanged. And all this arrived email from EBT started and all this sort of happened. And they and that audit for the 2025 financials had not yet been closed. So it was still open. And that led to some yeah. '20 sorry. That led to quite a robust discussion of back in the fourth and exactly so it was a mess. We're gonna find out exactly. We'll we'll do the some kind of workout plan to get to a sustainable outcome, which may or may not involve the continued existence of Hyde Park Electric Department, and then we'll go to root causes, and that might be alright. Here's the things that need to be solved. Thank you. You're welcome.

[Rep. Bram Kleppner]: So to rep Southworth's question about what was the first step that started sliding towards the pond, I'm gonna venture a prediction that as Hemingway described a man going into bankruptcy, he went first gradually and then suddenly.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: I know that a lot. It's a great I would say this. First of all, there was a tragedy involved in all this. So at least it's sad. The previous general manager became ill and passed away. And and and then the the and then you have the existing well, the then the next, the the subsequent general manager. There was a decision made. Well, here's what I I would say, here's what I would respond. And, again, please caveat, but this is my take right now knowing what I understand the full trail will be coming, is that there was a big decision made to enter into an incredibly large solar project that required loans, and it was a big deal made on I I actually went to the, like, ribbon cutting and the like. For little Hyde Park, k, this was a huge financial and operational commitment. It sucked up a lot of the capacity for that system. It it sucked up a lot of financial capacity and operational grid capacity for that system. And then there was gyrations made. So I would say if I had to pick one thing that started, still not fully versed in all the things that might have happened, I would say that lingering almost albatross of saying that hampered options, required loans and loan servicing to be able to handle that, meant that there wasn't a whole lot of capacity for the other things that happened. Then you have a change in leadership, and then you have the strengths and weaknesses of the of the leaders in that village, of that utility, and how they decided to make decisions, affect change, policies they pursued, and how they chose to manage ratepayer dollars that led to these consequences. But, Bailey, are you a customer of High Park Electric? Oh, yeah.

[Rep. Bram Kleppner]: Would you share what the experience of a customer was like during this period of time?

[Rep. Kathleen James (Chair)]: Well,

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: it didn't affect me any. I had

[Rep. Richard Bailey]: my power was there every day. So it stayed reliable and I always paid three months in advance on my nitrile. Not didn't even know they had a problem.

[Rep. Laura Sibilia (Ranking Member)]: Yeah. Just Thank you. If part of

[Eric Johnson, Commissioner, Vermont Department of Public Service]: The the other thing, madam chair, almost keen off of that is that I do also have to thank Scott Johnstone for stepping in with VPSA and the contractual arrangements made to really calm the water, steady the ship, and bring some, more effective management of the organization. I'm also aware that, Ken and Scott have held a series of informational meetings with custom which is exactly what we were I I wanted to have happened. So those have been those have been going forward. So my point is, in terms of seeking to share with with customers, what can be shared? Because just like with the chair talking about, okay, now it's a contested contested case proceeding. There could be the prospect of litigation. There's some things you can't share. But in terms of the effort to communicate what what can be done, I think they've really done a good job in providing to customers, the body politic, here's what's going on. Here's the next steps. Here's what we need to do. And I'm grateful for that.

[Rep. Kathleen James (Chair)]: I don't know whether my question is best put to you or to VPSA because I'm aware that Hyde Park wasn't a VPSA member. But I've one thing I don't understand with our municipal utilities is the role of, like, the local select board. And if immunity wants to raise their rates, does the select board have to approve that? Because that seems thin ice to me just in terms of expertise and political dynamics and weirdness. And then, and I was curious too then about the role that our select boards would be required or asked or expected to play in providing fiscal oversight for a business that they might know zero about.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Two things I would say, and this is a perfect segue, unless there's other questions about in chair, for me to exit. But I would I would say this. One, the same factors I talked about that are they're on the shoulders and affect the management by utility staff themselves, cyber attack, rising customer expectations. One thing I didn't talk about is more sophisticated digital tools now, which, you know, I'm also pushing for to better more effectively get more value out of the grid. Well, that makes serving as a trustee or on the board there's a commensurate amount of burden and requirement for additional training, for additional knowledge on the part of the people who are I mean, right, no good deed goes unpunished. If you're gonna if you're gonna volunteer to do that, like, what you're actually stepping into and to your point, madam chair, and having to do, it's it's not just it's not perfunctory as it as it used to be. Last point is that was why I urged the village trustees in Hyde Park to join with VPSA. I was very upfront. Here's what I'm hearing. I didn't know any of that. I mean, this was in March, and it was, like I said, September before the stuff that happened. So but general manager Nolan is the better person than me to answer that question.

[Rep. Kathleen James (Chair)]: Great. That's been one of my burning questions coming into this whole thing. So commissioner oh, yep.

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: You're Well,

[Rep. Richard Bailey]: just to clarify. In in this case, it's a village entity, so it's the village trustees. It's like Morrow had nothing to do with it. Okay. They're outside the the generally, the village trustees are the commissioner for the water life department. Yeah. Both that is same in in Marshall Waterline as it is. And that's why we've never merged the town because the town didn't ever wanna take on the. So that's why we still got two government entities side.

[Rep. Kathleen James (Chair)]: Thank you. Johnson, thank you so much. Is that written testimony that you're gonna be submitting?

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Yes.

[Rep. Kathleen James (Chair)]: Great.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Was not. K. It was like no. No. I said at the outset that I that I would share that. So I just wanna be clear. So one, owe you this, which I'll send Alex. Yeah. To Alex. Yes. And then two, also include is SQRP example Yeah. As well as an IRP. Because I I think it would when when general manager Nolan, when I was looking what questions do I want us to ask for the utility assessment, I I looked at the IRP and said, oh my god. There's a lot of financial questions we're already asking as part of the IRP, a lot of them, which you'll see. So I'll provide those three documents.

[Rep. Kathleen James (Chair)]: Great. Thank you so much for your time.

[Rep. Bram Kleppner]: Yep. Thank you. Thank you, mister.

[Rep. Kathleen James (Chair)]: Alrighty. I don't

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: wanna stay. People don't wanna hear what I said, Jared. So

[Rep. Laura Sibilia (Ranking Member)]: I'm sure. I just wanna note. A I meeting in about fifteen minutes. I apologize. Okay.

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: Good. Great. So, Alex, I don't know if it's better for me to share a screen or have you put my presentation up.

[Alex (Committee staff/IT)]: You can do it. That would be best.

[Rep. R. Scott Campbell (Vice Chair)]: Bring it in here.

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: So for the record, I'm Ken Nolan. I'm the general manager of Vermont Public Power Supply Authority. I've got a few slides that I sent Alex last night. I'll try to share here. I just put together a few slides starting from a high level, like community wide, put this in context as to what's been going on at community level. Then some more on Hyde Park and as the commissioner said, I can go so far and then I have to stop given the investigation that's going on in our role in this put the solution here. So a couple of slides to remind everybody what PEPCa is and what we do. So you created us in 1979 specifically to help public power entities act as their kind of back office. A lot of these folks have two people in the office and a couple of line workers, and they don't really have the capacity to react to the regulatory environment and some of the technology issues they're dealing with. We handle that. Don't need to go on our guiding principles, he's a little time. A little bit on the membership. The chair mentioned Hyde Park was not a VEPSA member. They actually were. They were a member up until 2016. We have a two year notice to get out. So they actually left in 2019 and went on their own. They hired an entity at Massachusetts called Energy New England to run their power supply, and they did everything else themselves. But over the past few years, we've seen people moving back into the organization. So there are 11 full members that we provide everything for. They pay a percentage of our bill and they can call on staff anytime. Burlington Electric and Stowe Electric are now what's called strategic members. So they participate on our board conversations. They have access to the resources, but they pay on an hourly basis. It's not a percentage of the cost. And then we have a number of contracts that have happened over the last few years. Washington Electric has been for some time, we've managed power supply for them. They do a lot of stuff themselves internally, but we are the ones who handle their renewal credits and power contracts, things of that nature. Global Foundries actually was here a couple of years ago to to be their own utility. When they actually got out into the New England market and realized what was involved, they decided they needed some help. So they contracted with us to provide power supply services and some of the regulatory aspects as well. And we work with a number of entities in New Hampshire and Maine. Trisarge Energy is actually a power marketer who has a lot of projects in Massachusetts, but has to submit those into the ethanol in the market. So we do contracted services for them as a private entity. And as of, I think it was October when we finally signed the contract, we're now helping Hyde Park. And as of today, with Scott's help, we're essentially managing a utility. My CFO sits in their office every day running the office operations and Morrisville is handling the field aspects of it. All the list of services and we talked about some of these financial, we were actually created originally to let municipals invest in the McNeil biomass plant that Burlington was building in the 80s. So we were very much a finance entity originally. And now you look at the list today and we're doing renewable energy standards, key accounts, legislative, regulatory. As of a few years ago, we provide IT support. We actually have built into our budget cybersecurity. So the VEPS IT staff actually provide services to all of our members. We procure computer equipment for them. We monitor their system, provide coverage and patching and education, all those aspects.

[Rep. Laura Sibilia (Ranking Member)]: How many staff do you have, Ken?

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: Right now we're at 20. Up from about sixteen three years ago. And we're looking at adding more. This is an eye chart. The key thing is to say, this is a rate comparison that we do at the end of every year. So this is as of 12/1525. Just say the orange bars of co ops, the gray bar is Green Mountain Power, and blue is all the municipal utilities. So from an affordability rate standpoint, the municipals are still the lowest rates in the state. Now, people will argue is that the rate's too low, you need to increase them to provide services or hire staff. This is directly at the heart of the way municipalities operate. They are concerned about the cost to consumers and they're gonna do everything they can to ring every dollar out of the operation. So they're very much affordable to the customers they serve. This is one aspect of the SQRP that the commission was referencing specifically on reliability. And again, just the colors of the charts, blue is municipalities, orange the co ops, gray is Green Mountain Power. And then in this case, yellow is the statewide average. Now, like puts us up here to say, each utility has its own demographics, its own service territory, our numbers are gonna move around. But if you're looking statewide, the municipalities are some of the most reliable utilities as well.

[Rep. Kathleen James (Chair)]: Rutland? Yeah.

[Rep. Laura Sibilia (Ranking Member)]: Ken, can you just go back one slide? Just in terms of affordability and the top three, those are the those are significantly larger geographic areas Correct. Which presumably is a significantly larger cost for maintenance and hardening and recovery from effects of climate change that we're seeing, particularly in our coops, which are very rural. Yeah.

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: And I think rural rural is gonna be more costly for sure. That's why the coops are at at the top. It's really a it comes down to how many kilowatt hours do you sell per mile of line. Right? And so if you have a dense population, you tend to

[Eric Johnson, Commissioner, Vermont Department of Public Service]: be able to reduce cost. Yes. Thank you. Yeah. Can you just run through the acronyms at

[Rep. Bram Kleppner]: the top of those three graphs, please? Sure. The bottom. See, there's the bottom thing. I didn't see that.

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: Yeah. I'm gonna finish it down below. Got it. So these are the standard reliability metrics. So how many customers are out for a given time? How long are they out? How quickly can you get them back on? We're looking in conjunction with the department. We're actually looking at adding more metrics here to get a better granular view of reliability. But these have been the standard in utilities for a hundred years. Thank you. I won't dwell on this commission or hit them all. We face the same challenges that other utilities do. Mean, aging workforce, inflation is pretty significant right now. In addition to the tariffs, federal tax policy is changing, and it's at odds with Vermont's renewable energy standard and climate policies. So you're seeing federal tax incentives go away for the same resources we're trying to build, which makes them more expensive on a per kilowatt hour basis. At the elected official level or appointed official level is declining volunteerism. People just don't want to spend the time to be on a village board or town board. So there's a lot more having to go out and recruit people and try to draw them in. Pace of technology, not only in how quick your iPhone changes and we're up to 18 now, but just the equipment that the utilities have to put in. Also, it's not only expertise you need to be able to install that equipment and run it, but you're you're changing over computers. It's a five year cycle when you have to keep reinvesting in this a a standard part of your cost structure. And the commissioner mentioned customer expectations. Used to be you could have two days out and then people would start to call, hey, you like am I gonna be back on the next couple of days? And today is an hour, and you're getting screened at. But the evidence I think shows that the municipalities, as a total, are meeting the challenges. They are actively maintaining affordability, maintaining reliability. We have a technology roadmap where BEPS is helping them put in advanced metering technology, SCADA, demand resource software to manage customer appliances. That's all ongoing right right now. And they started amongst themselves, even aside from BEPSA, there are conversations going on in each part of the state about how the municipalities themselves can share staff and get more efficient. We're aware of conversations going on in the Northeast Kingdom with Orleans Electric, Barton Electric, and Linden Electric. Their trustees are jointly meeting, talking about, can they operate more like one utility and use the same call center, use the same software? That will kind of organically grow over time. The same conversation is beginning in Lamoille County with Morrisville and Hardwick, and to some degree with Scott Johnstone managing on a temporary basis, at least all three utilities. Hyde Park is in that conversation as well. And we're also seeing in Franklin County, Swanton and Needlesburg have been doing this for a number of years. They share hydro operators and line crews. So those discussions are going on. Getting into Hyde Park. We're in a unique position here in that we were asked as an entity Hyde Park left in 2019, we were asked to come back and the original request was that we do the financial due diligence to figure out what happened, how can we fix it, put the rate cases together that are required to get revenue coming into High Park and also put together a long term financial or business plan about how do you get this utility into a place where it's an operating entity going forward. So they can actually take a breath and have the conversation about whether they want to continue as a utility or not. I remember visibly, Saturday morning, commissioner called me and says, Ken, we have a problem. What do you mean we? And that quickly turned into Hyde Park's in trouble, what do we what can we do? We had an emergency that's a board meeting where I presented this to the board, unanimous vote to have us step in and and try to help. Little did I know that two weeks later turned into the manager of Hyde Park leaving with two hours notice and us then scrambling to bring Morrisville in as as an acting manager. Scott stepped up without hesitation and agreed to be acting go to the manager. Of course, of a couple of weeks from finding out there was a problem to we're actually managing the utility. It was a very quick turnaround. I would echo due diligence is still happening. My CFO has dug into the financials going back a number of years. We believe we understand all the debt, the accounts payable that the High Park has still outstanding, who they owe and how much, but we're still turning out. Customers will call and say, hey, I paid my deposit for a line extension two years ago. What's going on? And we have to dig through the files like, okay, do we have the money? Is this a real project? Where did it get left off? That that stuff is still happening.

[Rep. Kathleen James (Chair)]: I was gonna I I think I've just looking at the length of time and the the parties involved over the years, I was going to ask, and maybe you probably can't answer this, but if there was any reason to believe that funds had been misappropriated.

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: We have not found any evidence of that yet. The commissioner described it as there were a series of bad decisions. Effectively, what happened I forget this on the next slide, but Hyde Park, the last thing they did with the VEPSA on their way out the door was we filed a rate case for them in the twenty eighteen, twenty nineteen timeframe. That was about a 15%, so if I

[Eric Johnson, Commissioner, Vermont Department of Public Service]: can go forward. Yeah, the bottom

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: of this slide, it was a 15.69% rate increase that they requested. What ultimately got approved was 7.75%. So if you talk to folks in Pike Park, they point to this as trigger for them because they feel they'd had cost justifying 16% increase and the state regulatory process gave them half of that. So they felt like they were immediately in a, Oh, we need to borrow money to keep operating type mode, which is what they did. They went to their local bank and got line of credit and started paying bills with a line of credit. Well, at the end of the year, you have the line of credit, you still don't have any more money coming in. You have to renew the line of credit, roll over the interest, and you they've done that. Frankly, they did it for ten years. So if you go back in the audited financials, and we've done this, you'll show a small loss ten years ago, and that loss has just increased every year over time. They had some difficulty finding rate consultants. Frankly, I think that was partly due to the way management was treating the consultants. Folks would start the work and they'd have difficulty getting information and they said, well, we can't help you. This is too much effort. So in the end, they ended up using this two eighteen b n process and saying, well, we'll ask for a 2%, we'll ask for a 3% and see if that's enough to get us through. And it clearly wasn't. But just to put a pin in, we do rate cases probably 10 a year. The average cost for a utility, whether you're small Hyde Park or a Washington Electric, which is one of the larger utilities we work with, it's about $40,000 to file a full rate case. Given the level of scrutiny, testimony and financial reports and everything that you need to put together to go through that process, it's not a cheap endeavor. So municipalities tend to wait until they absolutely need. It has to happen. Let's go back here for one second. Mentioned there are two managers, the one that passed away and then their replacement trustees. I would argue the Vermont regulatory structure actually played a role in this. And I'm gonna have a contrary opinion to whether we need more regulations to solve the problem. Think it kind of leans the other way in actuality. But key issues we've found so far, the village structure in this case, the underlying electric department issues. So if you look at the audited financial reports for Hyde Park, they have governmental funds, which is a taxpayer, roads, all the general operations. And then they have enterprise funds. Well, Hyde Park runs a water department, a sewer department, and electric department. And the auditors combine those three into one category for the audited financials. And there's a chart or a table that lately Here's the electric, here's the electric status, water and wastewater. But that's in a 60 page audit, that's one page. If you look at the enterprise funds as a total, they look fine. They have extra money, they have a positive fund balance. It's not until you dive into the electric department specifically that you start to see there's an issue. So I think the way that the financials were put together created some ambiguity on as to what was actually going on.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: So basically, combining those masked the actual problem that was happening. Right.

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: And in Hyde Park's case, I had to commission to describe it as if there was some omission. So you've got the actual hard numbers that the auditors put together, and then you've got this MD and A document, the management discussion that the management puts together and it goes on in front of the audit. Well, the MD and A made everything sound like it was perfectly fine. So you had to really dive into the details of the financial to see what the issue was.

[Rep. Kathleen James (Chair)]: R. Scott, you're gonna stand up first.

[Rep. Bram Kleppner]: Can you give us just a general scale? What were Hyde Park Electric's annual revenue and how big is the pile of debt right now?

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: Yeah, so their revenues as a utility are roughly 3,000,000 a year. If you include the whole package of the debt related to the solar project that they have, the revolving lines of credit they've taken out and the accounts payable, which is actually fairly large, it's a total of about 4 and a half million dollars.

[Rep. Bram Kleppner]: Yeah. That's a tough ratio. Yep.

[Rep. R. Scott Campbell (Vice Chair)]: Oh my god. Sorry. That's their annual expense or that's their The I can't Their

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: their annual revenue is roughly 3,000,000, and their total debt, including accounts payable, which on their books is technically debt, but it's amount of money owed, it's about $4,500,000 Thank you.

[Rep. Christopher Howland]: No problem. Two questions, that 4,500,000.0 includes the solar project? It does.

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: About 2,000,000 of that is related to to to solar. And when

[Rep. Christopher Howland]: it comes to this, the water company and the wastewater company and electric company, when it comes to the bottom line, they all come down to one blue number when but the electric company gives them is the only identity that's involved there in. Correct. And and when we my local town, if they don't have the revenue coming in from a project, then the tax rate supports the lack of income coming in from the source. Does that happen with the village? Does the village

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: has not, and that's one of the issues that is thorny in this case. The village, if you look at the debt, the loan documents, the loans were taken out of the name of the village as a whole, which would imply that they're a taxpayer obligation. But the money that was borrowed was used for electric department operations, which would imply it's electric ratepayers. Hyde Park has got another issue here in that the village, the residents of the village are like 300 to 400 people, and they serve 1,200 ratepayers. So there's a big discrepancy if it's a taxpayer obligation or a ratepayer obligation. Part of what we're still struggling through and looking at the financial is being able to tie, okay, Hyde Park borrowed this amount of money. Where did they specifically use it? Tie that to an electric department expense because when we file the phase two rate case that was mentioned, that's gonna be a PVC question. It's okay. In order to approve this, even if we decide that the special treatment for Hyde Park is warranted, we need to be able to document that those borrowed money actually went to electric costs and electric ratepayers should have to pay for it.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: We still do not have that completely tied link down, so there's work to do there. Are there people who reside in the town of Eiffart who are not served by High Park Electric.

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: There are. I think some folks are VEC customers.

[Scott Johnstone, General Manager, Morrisville Water & Light (also assisting Hyde Park and Hardwick)]: You've seen Morrisville and Johnson. Yeah.

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: So sitting where I am, and I'll grant you, my view is more a municipal view than a state view. So I'm looking as a more of a local official as to what's going on. I spent more than a decade on select boards and county boards in Chittenden County and worked at VEPSA over a course of two times there right out of college and then came back to be general manager. Did twenty years at VEPSA and twenty years at Burlington Lecture. Steeped in municipal side. But when I look at this and I was just talking to our national association over the weekend about regulation of utilities and how different states do it, Vermont is one of six states in the country that actually regulates municipal utilities. In most states, they say, well, the local government is responsible for their operations. If they have an electric department, it's up to them to operate that system and make sure it's healthy and viable and can continue to operate. There are two other states that say, well, if you own a utility that's completely in your own municipal boundaries, you're on your own. But if you serve people outside, now the state's gonna get involved. Nationally, there's only eight states out of 50 that regulate municipal utilities. What I'm seeing in Hyde Park, part of the issue is all the experts were doing relying on somebody else when they were doing the the auditor. Well, the bank looked at this and they were fine. The DPS has looked at it and said, We're good. You talk to the bank and they said, Well, the auditors looked at it and they're good. DPS didn't say anything, so we're fine. You go to the DPS and they say, Well, the auditor should have raised this. How did we So everybody was counting on somebody else to surface the information. I argue, and I may have a minority opinion, I recognize that. But I think the amount of regulation and oversight that's coming down from the state level actually clouds the governance of the utility. Now the local municipality feels like they're not really responsible. They're gonna pick their filing to the state. It's going come out however it comes out, and they're going to move on.

[Rep. Kathleen James (Chair)]: I have a question. Do you want finish this, Dave?

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: Sorry. So what we're finding is, like in rate setting, when we sit down and talk to the DPS or the PUC about financial health, they said, well, utilities should have sixteen to ninety days of operating cash on hand for things that go wrong. But when you actually sit down to do the rate case, the rate case is based on what did you spend historically in what we call the test year. And then what do you know, what can you prove has changed in the upcoming years? If you have an employment contract or something that's you can document a change, then that's allowed in. Nowhere in that process does it build in sixty to ninety days of operating cash. So the municipalities are constantly feeling, I don't have any working capital to deal with. And it's a result of the way rate making has been happening in Vermont for at least sixty years. And then the cost of complexity, the $40,000 cost that I mentioned and having to have expert testimony and things like that. The combination of those really incentivizes municipal utilities, I think in particular, to file rate cases unless it's absolutely necessary. That's part of the reason BEPSO actually was the proponent of the bill to create two eighteen BN where local utilities can raise rates 3% because we thought that would with that flexibility would incentivize the municipalities to do more consistent rate cases. And we're starting to see that. But 3% now isn't annual costs go up a

[Eric Johnson, Commissioner, Vermont Department of Public Service]: lot more than that. Well, 10%

[Rep. Christopher Howland]: in only one year, up just general living. So

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: I think we'll be looking at potentially tweaking that going forward. So

[Rep. Kathleen James (Chair)]: Rep I'm sorry. Go ahead. Rep Campbell?

[Rep. R. Scott Campbell (Vice Chair)]: Yeah. I get it right. So I'm wondering whether not more regulation, but more consolidation perhaps, and the the commissioner arguing as consolidation, but more more work perhaps more work done by IPSA to support the the Viennese. Maybe I'm I'm wondering about other ways of of streamlining the system and and and and reducing reducing costs by, I don't know, some sort of consolidation, whether it's consolidating services or consolidating our utilities. You mentioned a number of communities are already working together to have the same software, have the same procedures or whatever. Is that the trend that you're seeing sort of over the long term? Is that a way of creating a more robust system?

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: Yeah, think there are three things. They're on the field operation and customer service side and and dealing directly with customers. We're seeing municipalities more and more talk about how do they use utilize the staff and the research that they've gotten better by cooperating and sharing staff. Just between Just muni to muni, not through BPSA. Not through BPSA. Correct. We're seeing that and I think it's gaining steam. Those conversations are happening more regularly, more frequently. At the same time, as I mentioned, for the civilians question, we've added four staff in the last three years and there's another staff member in this year's budget. And I expect there's gonna be a couple more going forward because on the technology, the cyber, and the regulatory side, it's all getting more complex. Not all from the state. I mean, there are federal guidelines that are starting to come down on the small moneys too. So we're adding staff, and we're providing more services. And you're seeing utilities that had left or weren't involved with us are asking to participate because they're running into the same problem. And I personally think that there is efficiencies that can be gained in the statutory regulation of utilities to push some of the responsibility and authority back down to municipal officials and and and clear up who's actually responsible for making this utility work. Well, that's the other part of

[Rep. R. Scott Campbell (Vice Chair)]: it is that the munis are effectively managed by by volunteer boards that we may not typically don't have the expertise, I guess, I'll go out and let them say, to to to do that kind of management. Yeah. Sure. So that's Way higher. This this this the whole atmosphere or landscape, I guess, of of of electric utilities is is is requiring more professionalization because of all the factors that have been cited. And and yet we're still relying on small whiteboards, bill trustees to to do this management. Is that the difference?

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: I think most of the boards have been very effective at hiring professional management. Mhmm. Yep. And this this was a specific failure of a manager in one utility. Yep. But in general, I think having volunteer boards who hire professional manager to work with experts, including VEPS that help them navigate the environment, I think works. I don't see a As I put up before, some of the lowest rates, some of the best reliability, it's effective, but it takes all parties actively managing and understanding what their roles are. And there's some gray areas in the way we're we're set up. The the other thing that we have found and we're I think that this was a conversation at the board before High Park even came up. New trustees coming in, boards that turn over, because he mentioned a representative of Campbell. You know? People come and they don't know the first thing about utilities and how complex it is. A lot of municipalities are members of the VLCT. They're not only sitting in the towns, their boards go to VLCT trainings, they say, okay. I've been through the governance training. I'm good. They VLCT doesn't know or teach anything about electric utilities or electric utility regulation. So Hyde Park the VEPSA board was talking about this before and Hyde Park is really hit at home. There's a gap in training for local officials. So we're actively right now putting a training program together for Hyde Park to make them understand if you're gonna be a trustee and run electric utility, here's the things you need to know and do, Both in governance and in finance, it was shocking to me when we get into Hyde Park that there are four trustees. None of them knew anything about finance. They didn't know what questions to ask. And so the manager would provide information tool and they would take it at face value. They weren't getting monthly financial reports. They were getting the audit, but not the 115 letters, which are fully tell you what's going on. So we see that gap in being able to train new trustees when they come in and make them really understand as something VEPSA can step in and take over and both for Hyde Park directly and more generally have like an annual conference for the commissioners and trustees and go and run through that. And then I won't go into the financial metrics. That's the assessment that the DPS and BEPS have been working on. We're at the phase now where we feel we know what the ask is gonna be, and we're starting to gather data to be responsive to questions.

[Rep. Kathleen James (Chair)]: For Caled?

[Rep. Christopher Howland]: They filed a rate case in 2019. This is public. When would that rate case settle? 2021?

[Eric Johnson, Commissioner, Vermont Department of Public Service]: I don't know for sure. I believe it was mid to end twenty twenty. And then so now they have the two eighteen DN,

[Rep. Christopher Howland]: 10% max. That 3% at each time, who regulates that?

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: So the way the way it works is the Public Utility Commission put out guidelines for what information they feel needs to be included when you make that filing. The utility puts the information together and says, okay, we need 3% based on this financial information and this narrative of what's going on. And they have to file that with both the Public Utility Commission and the Department of Public Service. But it's set up to be the reverse of a normal rate case. When you file a normal rate case with the Public Utility Commission, you have to proactively put in testimony and exhibits and treat it like a court case. You do your test

[Rep. Christopher Howland]: year and your Rejector. Rate year. Yep. And and how many of the of the munis have facilitated the max of the 10%? Well, first, there's there's two questions here. The 3% set by the PUC and if you had a related year where it was just normalization, then update the sub 8% rate. Who set the 3% rate? Should that be increased to a larger number? Hopefully, we don't have those. But how many communities took advantage of the full 10% before they thought started preparing a rate case?

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: Yeah. Nobody has hit the 10% threshold yet. We've had, I believe, five municipal utilities have filed under this 02/18 approach for either two or 3%. The 3% is actually set in statute. To change that number, it would require an action of this body. And it started at 2%. I think it was increased to 3% a couple of years ago, and we're looking at it now and saying, that might not be enough going forward.

[Rep. Kathleen James (Chair)]: Yeah.

[Rep. Richard Bailey]: And those 3%, they can go in automatically? So it's

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: it's set up the so that the utility files, submits that request, submits what they're planning to do to the Public Utility Commission and Department of Public Service. There's a forty with its forty five day waiting period before it takes effect. And in that waiting period, the department or the commission can say, we want an investigation. If they do not take action, then it automatically goes into effect.

[Alex (Committee staff/IT)]: And that can happen multiple times a year?

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: Only once in a twelve month period.

[Rep. Laura Sibilia (Ranking Member)]: That's It's

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: a rolling twelve month period. So this the question was Just one other.

[Rep. Richard Bailey]: So Hyde Park never went in for the 3%, or did they do it once or

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: twice? They did twice. So they they did the 02/09/2019 filing, got the answer on that. About two years later, they filed for 2%. Okay. And then a year later, filed for 3%. To be fair, the Public Utility Commission looked at the 3% and the financial information that Hyde Park had provided. It said, we think you need a bigger number, so provide us. But at the end of the day, the commission did not open an investigation. They asked for more information that was satisfied and then they let the 3% go into effect. Okay, thanks. Just to close out, Hyde Park, as was said before, it's a unique situation, very specific decisions made over a ten year period, two different managers. I think collaboratively between The PUC has to stay at arm's length because they're the court at the end of the day. But I'm having weekly conversations with the commissioner and trying to figure out how do we get through this in a way that meets the regulatory requirements while still getting what the village needs to actually keep operating. The goal here from our perspective is get Hyde Park back to a place where it can pay its bills, it's financially viable, and then the utility can have the conversation. Do we wanna continue doing this or not? But that's it's gonna play out over probably another year to year and a half. We have a filing in phase two that's due on April 15, and that really will kick off the next deep dive into how how we got to where we are. And I expect that investigation is gonna take several months to play out. So really looking at it's like the next biennium when this would come up again. If if there is any legislation needed or any changes, it would be really a conversation for next next year.

[Alex (Committee staff/IT)]: How about Morrow?

[Rep. R. Scott Campbell (Vice Chair)]: Do do you have enough information from your other members to be confident that no one's there are no red flags on other municipals at this point?

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: Yes. We actually get more information than the regulators get. We do see the audited financials pretty regularly. Each utility sits on our board of directors. We have some insight from those conversations and the projects that they're involved in. Because anytime they sign a contract with us, we have certain financial information that they're obligated to provide. So we kinda sit between the DPS and utilities. And I wouldn't say there aren't challenges. I mean, are some utilities that are struggling and we're helping them figure out how do they manage their cash flow and how do they pay especially power costs, which really bounce right now in this market. Winter and summer bills from ISO New England could be substantially different. And that's a real challenge for utilities, right? Because your the customer payments are lagged by up to sixty days from when you send your bill, but the ISO New England bills are coming in every week. So you're having to pay in the winter really high cost, but you don't collect revenue from your customers for those high usage months until spring. So we routinely have to help the members manage that cash flow how they get through year to year. But overall, I am not seeing any other VEPSA members or anybody we work with because we have others that aren't members that we work with having some situations.

[Rep. Kathleen James (Chair)]: Last question so we make sure to make time for

[Rep. Christopher Howland]: So you you manage the power supply or the integrated resource that may be power supply for the ongoing spot market or, you know, today in already contracted future. Are you sure on power supply and on energy so that you're buying on this spot market and sharing it amongst some communities that you

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: Yeah. Each utility really sets its own, what we call a hedging plan, so how much they wanna buy in advance and how much they're buying from the the open market. We have a conversation with the management and the trustees from each utility about what that looks like. And then our role really is to guide them as to understand what's the implications and then to purchase what they desire they want their municipality to have. So long way of answering, some municipalities like to be a little short and have some amount of power they buy from the spot market. Others wanna be overcovered and be in the selling position with the market. And it's really up to them individually how they manage that.

[Rep. Richard Bailey]: Sure. Just one quick. What did happen to Barton Electric? Did Orleans take that over or No. The EC take it?

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: So at the end of the day, the village trustees put to vote whether they should sell to the co op. The village residents pretty substantially voted that down. They voted to keep their utility. They have hired a new manager. They have a person who's managing the office, but they made the conscious decision that they didn't want their own wine crews. So they actually have a contract right now with Orleans Electric to provide all the line crew maintenance line extensions and things like that. Which is what I say, I mean, they looked at it and said, well, the most efficient use of resources is for Orleans to have the line crews and we just pay for the cost. And they're now talking about, well, do we share a financial manager? Do we start to run our books together because we can save money on on staff that way? Those type of conversations are going on all the time.

[Rep. Richard Bailey]: And are they a Epsom member now or They are.

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: Hyde Park is the only municipality that's not officially a Epsom member, and I'm going to their meeting tonight to explain to them what that would look like if they were to join. Yeah.

[Rep. R. Scott Campbell (Vice Chair)]: But they can't afford it then.

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: They'll actually save money if they don't.

[Rep. Kathleen James (Chair)]: Ken, thank you so much for your time.

[Rep. R. Scott Campbell (Vice Chair)]: Yeah.

[Rep. Kathleen James (Chair)]: For your testimony. Appreciate it. And we do need to adjourn by five of twelve.

[Rep. Laura Sibilia (Ranking Member)]: That'd be easy. Okay.

[Scott Johnstone, General Manager, Morrisville Water & Light (also assisting Hyde Park and Hardwick)]: Well, depends on your question, of course. I'm Scott Johnstone. I'm the general manager for Marshall Water and Light. As I said at the top, helping both Hardwick and IFR currently. So three electric utilities, two water utilities, two sewer utilities, and two general government entities. So busy, but actually in a broad scale, people always ask, you know, all in is less than 25,000,000. It's like thirty, thirty five employees. It's not a very big company. It's just complicated because of all the governance stuff. So it's it's not as big an onerous a thing as it sounds like. So I just wanted to let you know to give you some assurance that, like, it's actually doable, at least for some period of time. So I think we'll be alright there, but thank you for having me in to testify, Chair James and the rest of the committee. I'm not I'm gonna specifically I have provided written testimony. I'm not gonna repeat everything you've already heard and just burn up time. So I'll try to, like, pick through my notes and see what is value add.

[Eric Johnson, Commissioner, Vermont Department of Public Service]: Great. Thank you. As I go

[Scott Johnstone, General Manager, Morrisville Water & Light (also assisting Hyde Park and Hardwick)]: down through here. I do wanna say though, even though it is a little redundant, that foundationally and fundamentally, there's nothing wrong or broken with the municipal model. As you've heard, it provides really low cost, reliable service and that's been the history of it. And and it and it's also not without its warts, but every model has its warts. Right? So ours have been challenges with management and governance and fiscal acumen. And they occasionally show up in different places. And in High Park, all three showed up at the same time. And that's really what makes it different. You find those sort of issues bounce up in any small business in Vermont from time to time. We're no different. But it doesn't mean that the model's broken. Again, we've been really good at delivering that that that historic value proposition. I think the other challenge we've had, and I know from my time in various roles in this building, it's been a matter of consternation sometimes in this building, munis, because of that frugality and that drive to keep costs low, have been accused of dragging their feet on technology and adopting new customer programs and and moving quickly and up on new policies adopted by this body. And let's just be honest and admit that that there has been some truth in that. Like, we are not as advanced on technology and certain customer programming as other utilities. And that somewhat explains why we're a little bit lower cost today. Right? Not right good or bad. I'm not trying to distinguish crucial things right or wrong. Just saying, hey. Let's expose it all. Right? I would say what's changed is, our local governance continues to this day to care a whole lot about the price of the bill and the level of the rate. That still matters a lot locally. But I think what's changed is it's not we're not gonna raise rates for any reason. It's what's the most cost effective way to advance on technology? What's the best way to advance on customer programming to meet the needs of our our customers in a way that makes the most economic sense? So I do think it would have been a pretty big change. Ken was noting some of the sorts of things going on at BEPSA, whether it's SCADA or DERMS or any of these other things that we can get into in-depth that are new investments. We've we've built out in our last integrated resource plan, mean, board reps had one for us all, a very detailed technology roadmap of how we were gonna move more or so down that path to really be able to serve not just to what's necessary today to run these utilities, but what's necessary to run it by, say, 2035 over really a part. We committed in our IRP to be at a 100% by 2030 before you change the date to 2035. So we're committed to getting there, and I'd say the munis generally are all moving faster than they have on all of these fronts. I think that's really positive and simply speaks to the fact that there's not something foundationally broke in the face of everything that's going on in Hyde Park here, which is important to think about. I would say only because in my testimony, you'll see slightly different numbers than shared with you about the current state of the challenge in Hyde Park. And that's because I asked his CFO to update the numbers yesterday. Since the new revenues aren't actually coming in yet, you know, the the the level of the accounts payable is continuing to grow because the imbalance hasn't shown up on the hasn't been remedied in the books yet. So the numbers I put in, I actually took the solar debt out because I think it's it's it is its own challenge, that solar debt. I mean, we can speak more about that. But we're actually encouraged by the department, the munis, and pushed to take on more project debt. They actually want us when we're making capital improvements and capital investments, they will the department believes we have not been taking on enough debt of that type, opting to pay cash debate as we go over time. So to include the project debt in with operating debt, to me, is masks the problem and overinflates it. So it really is very close to one year's worth of revenue stream for the electric is about the size of the operating debt. And you heard what most of those categories are. The one I would add, which is just another level of governance breaking, is that apparently and Ken would have to answer more specifics because this is not research of mine. But without really any internal paper being created, The the village borrowed money from its other two utilities to loan it to the electric utility, but didn't really paper that in any way that anyone can discern. So, you know, it has placed those other utilities financially more at risk, although they're stable. And this is just another form of of debt internal debt that they took on. So it's about 3,000,000 a piece of of revenues per year and what they've accumulated over ten years in pure everything else out of the way operating debt. And on the accounts payable, if you think about this, for those of you that know business management, the hair is going to go up on your neck or on your arm soon because it turns out on the on the accounts payable to be about a net one twenty is what we're pulling off right now today in terms of paying vendors. We we are figuring out who to pay every day and who is willing to continue and help us and extend with us. Once this rate case gets it is in effect and the first bills have started going out with it in place, or will in another week or so. When that happens and people start paying, that imbalance will at least come together and it won't get worse. Then we have to get through phase two that you've heard about before you can really start making progress on that accounts payable. So fortunately vendors have stayed with us. They understand that at some level we have an obligation to keep asking for rate increases until we can actually meet our obligations. So that goes a long way with most folks and we don't want to take advantage of the goodwill of people, but right now that's just the world we're living in terms of what it takes to keep the doors open. Morrisville was mostly brought in really just to, as I say, keep the lights on and the water running both ways. So that's what we've been doing on a day to day basis. The reason I say that is because it's the old, but wait, there's more. So the debt issues you've heard about are all of those past issues. But there also have been operational issues that have not been addressed at this utility for a really long time, equally as long as at as as the deck. From a reliability perspective, they I don't what the staff tell me is they really haven't done any proactive vegetative maintenance in a decade. They they sit in a hollow, and so they're pretty protected from all directions from wind. So they actually don't have a whole lot of outages as a result of that. That doesn't mean it will always be the case, and that doesn't mean they shouldn't be keeping their right of ways clear. I will tell you why I got very nervous a week ago when we were projected to have a big ice storm, because if something like that were to hit their system right now, a 1998 ice storm, for those of you that remember that, you wouldn't just have trees on the on the line. You would have you could have a miles worth of holes on the ground. And because of the level of of inactivity that's occurred on that line. So there's a whole lot of catch up to do on that front. They also had which was subject to an early order from the department as well, included in all that early work was to look at their substation. They have one substation to serve their whole system. It had been experiencing difficulty and had not been well maintained. About two weeks into our stepping in, it got to a certain state that it became clear it was in failure mode. My electric superintendent in Mooresville and I decided that it had to be not only taken offline but red tagged, meaning it can't be used again until it meets certain requirements. We shifted the entirety of high power pond in the Morrisville system and bypassed the substation. That creates other operational difficulties which we've addressed in the process of that. We also learned that every time new service was necessary for any reason, they have what's called a three phase line. So three taps you can run off of and you're supposed to keep those balanced to be most operational. In their case, had 60 amps on, units don't really matter. You'll get the map. They had 60 amps on one, sixty five on another, and a 170 on the middle phase. So not surprisingly, as soon as they were on the Morrisville system, that middle sis that middle phase started basically melting the fuses consistently. We've got it figured out. There's currently a 140 amp fuse on those which should hold it for now. We're we have data loggers all over the system and we're figuring out all the work that has to be done to now redistribute all those loads and that won't be free. So we're hoping we can do an interim step on their substation for $30,000 that would allow it to come back online. One of the things we learned is that the transformer was not full of oil and therefore wasn't full of gas on top of the oil. And that's largely what was causing the issue, we think. It was literally having a lightning storm inside the transformer. It was arcing. The experts told us if we hadn't taken the action we did, we were probably six hours. That meant most from it exploding and taking out all the switching gear too, which probably would have been a many week outage at that point. It would have been quite challenging at that point because those substation those transformers, we don't have access to those. Just to get one,

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: we would have had to

[Scott Johnstone, General Manager, Morrisville Water & Light (also assisting Hyde Park and Hardwick)]: find one. We would have rebooted all the switching. All those sort of things would happen. We think we turned it off in time to at least make temporary repairs. We're getting the vendor out to check that out. Ultimately, to replace that system and update the transformer, it's a fairly good sized transformer. That whole project will probably be another $707,150,000 dollar investment to to bring that up to code and bring it up to snuff from what that's what our power engineer's telling us currently. You have a question?

[Rep. Christopher Howland]: Replacing the transformer also?

[Scott Johnstone, General Manager, Morrisville Water & Light (also assisting Hyde Park and Hardwick)]: 700,000? Yeah. So it's just to let you know that there's another wave. So you've heard of phase A and B, but then there operational deficiencies that are gonna have to be addressed going forward. And those are the ones we've uncovered so far. So we'll see where that leads us on that front. Scrolling down through here, we've talked about technology. I would say, you know, there's been some discussion about the scale of utilities. I thought it'd be useful to weigh in on this in a couple ways. First, I would say I've been at Morrisville since 2022, and about two months into my tenure, I went to the Morrisville board and said, you know, there is as you look forward to the regulatory and policy construct of Vermont, and not just Vermont, but New England and other parts of the country, so we're not the only people adopting this thing to say that out loud. There's going to become a certain scale of utility that is minimum. I posited at the time that I thought Morrisville was probably about the tipping point of what might be viable. Since then I've thought much more about that. It's not as simple as, you know, how much is your revenue. It's your revenue. It's your personal resources. How how much of your systems commercial, industrial versus residential? How rural are your lines? How many many customers per mile do you have on those lines. There's there's a so there's no formula that's gonna give you the answer of what's viable. But what's really clear to me is that, you know, at 1,200 customers, I I find it challenging to to see that a a utility that small, if they're not a uniform, like, say, a stow and they have, you know, 70% commercial and therefore really big revenues with very little to maintain, You're gonna see these challenges come up with the the very, very small. It's why when Hardwick recently asked Morrisville to have a conversation about all the ways we could collaborate from, you know, sharing manager for now all the way to possible merger is why the Morrisville board said yes. Because we wanna make sure that we are one of the people that can meet that test going forward as we approach 2035. And we're fine today. I think most of the municipals are. But it's why it's just some color on why are all these conversations happening around the state. I'm not the only one that's come to realize that is what I'm telling you. I think it's generally accepted across most of the reps of numbers that these sort of dial is just they're about being able to do right by our customers and have a viable future for our customers. That makes sense. So that's all happening. I also would share some of what Ken had talked about, about the process of rate making as as one of the challenges that we face. And what I I just wanted to add a couple points of color on that as well. One is I I think it's worth acknowledging as we say, perhaps it's time to rethink some of the rate making process, that it worked really, really well for a very, very long time. In the old days, the electric industry was pretty doggone static. Right? Very few sources of energy. Know, you got your distribution lines. There wasn't a lot of growth, and it all just kinda worked. So looking mostly backwards was not a terrible idea. And part of what I would say is that doesn't work anymore. In addition to all the things you heard from both the commissioner and then Ken, the one I would add is when so in addition to those pieces, there's also the piece of the cost of electrification, cost of adopting technology, the cost of implementing programs. That's those are not usually considered known and measurable looking forward. So when we take those on, we're expected to figure out to fund the money. We're not allowed to have any net revenues sitting in cash or it's the level of the rate increases reduced. That the presumption is you're gonna use that cash that you have if you have any days cash on hand. So you have to figure out a way to front the cash when it may be years before you can actually recover it in a rate case. That's on top of all the other things that Ken had raised. So I I again, it doesn't mean that looking backwards shouldn't be part of it and and that checks and balances to make sure that customers are only paying that which is reasonable for them to pay. Of course, we all want all of that. But there has to be another component with the policy construct and the regulatory construct that we're all driving towards today and in the next ten years in Vermont that enables a utility to be financially healthy by being able to incorporate some of those costs that are coming in the current year, not five years from now. Like, you actually have a plan. It's in your IRP. It's in your budget. You're you're you're doing it this year. There's gotta be some way to start pulling some of that in. And I've had this conversation with commissioner, so I'm not speaking out of school, to be clear. And and so we wanted to add that as a little bit of color as well. So, yeah, I I'll stop there and see if we have any questions. I think there is a way forward for Hyde Park. Again, I'd like my guess is it includes talking to somebody. It doesn't have to be more so. We're not there for that. We're there really just to help a neighbor because that's what the communities do. They've got a lot of options. They could talk to Johnson. They could talk to BDC. They can talk to us. I think their trustees are aware that they're gonna have to have those sort of talks and that thinking. What they have is an amazing community. They have a great staff that are trying really, really hard and are weathering through all this with just a brutal, you know, story to tell their customers right now. And having been the person who stood in front of the community forums we've been having, as you heard from the commission, we decided to run to the fire immediately. It has been so incredibly respectful and just solution oriented and wanting to find a way. With time, frustration is going and we're getting some of what some of the worst that happens in 2026 in the world with social media. So is that beginning to happen? Yes. But when you actually go talk to people and, it's been so constructive. It speaks really well of the community and and their interests. So that's what gives makes me believe that there's a a useful way forward that will end up in good solutions both for them, but also more broadly for the way that we all move forward as munis and frankly a broader energy system in the state.

[Rep. R. Scott Campbell (Vice Chair)]: Yeah. Well, I guess I would ask a question about you. We're talking about the need for incorporating more prospective analysis of what costs are coming coming down to spike in in rate making. At at the same time, I'm I'm thinking about strategies for driving rates down. If we're if we're going to be successful at at electrification over a long term, we've got to we've got to make that attractive economically for people. What are the strategies for spreading cost of our of our more entities so that the incurred unit cost is a lot more.

[Scott Johnstone, General Manager, Morrisville Water & Light (also assisting Hyde Park and Hardwick)]: We mentioned some of that, which is the ways that we want to collaborate, I think there's other pieces like group purchasing and other ways we can look at those things. I would say though that I think not just here in Vermont, but across the whole energy landscape. If we're really going to electrify most everything over time, and that's not just a Vermont bill or a Vermont decision that's happening all around us. Right? Yeah. Electricity is going to cost more. And and if you do the math on that, which I have for our system, electricity can actually go up in cost a fair amount, and the resultant output still be cheaper than gasoline or propane. So while the electric bill will go up, the total energy bill does not have to. And to me, that's a different definition of efficiency that we should consider. And I also think that this has been sort of of the conundrum, and it's not the reason you're saying it. And and so but I'm gonna say how it plays out often with discussions with trustees and select board and community members. This drive to have a lower rate actually compels you to not make technology investments and not make investments necessary to to get ready for electrification. So I actually think we have to I don't know what the right words are, but I think we've gotta change the words we use so that it's more about what the energy bills are going to be. The real challenge in that to me, and again, because I've done the math, is how do you time the new investments in reconducting all the lines and upgrading the size of the transformers and all the other stuff we have to do to when people actually are making the decisions to electrify so that new revenues are coming in to pay the bills. And it's not on put on the backs of those that might be laggards and not like the idea of having an electric vehicle or wanna keep their wood stove and don't wanna have a heat pump. Maybe we would all wish people would come to the new world at the same time, but some people wanna see others lead and adopt once you get past a certain tipping point. And so there's a real serious timing problem here that I'm not smart enough to figure out on my own. Can tell you about it. About it be able to tap with this. I think about it all the time, about how are we going to work our way into this. One of the things we did is we, and I I don't know if others have done this, but in Mooresville, we have done a full analysis of if our whole system was a 100% electrified, what is every project we have to do and what is the cost? So we actually know what the end game looks like for cost and that's when I did the math to say, Oh, this should still be cheaper for people if they all agreed to adopt, right? It is all about the timing. Yeah. I know this is getting a little far field from my part, it all actually matters in terms of that, Are we gonna be capable enough to the task? When I get to that, there's gotta be a scale and a gravitas and an ability. We need a much stronger DEPSA. I'm always the person at the board saying, Ken, you gotta hire more staff faster. And others are like, no, we're pretty good where we are. And Ken sits there and tries to find a way to keep us all happy. We need a stronger reps, and we need more capable and more cooperative utilities, and we just happen to be focused on what that future looks like.

[Rep. Kathleen James (Chair)]: Thank you. So Yeah.

[Rep. Richard Bailey]: Just so can you give me approximate what the price per kilowatt would be for that?

[Scott Johnstone, General Manager, Morrisville Water & Light (also assisting Hyde Park and Hardwick)]: I I think that we're gonna be in the 30¢ kilowatt hour 30¢. When we actually get to that place. You know? And I think there's a lot of headroom over that before you're into gasoline, propane, and oil prices. Now if you're in Chittenden County or where there's natural gas, the economic analysis is different. I haven't done that one. But probably you can't get to 30 because natural gas generally has been pretty close to on par with electricity of today. Last I did that math, which was admittedly five years ago when I was doing global energy consulting all over the place.

[Rep. Kathleen James (Chair)]: Quickly, How last

[Rep. Christopher Howland]: many of these utilities are associated with on smart meter, automatic meter reading? Today none. Morrisville and

[Scott Johnstone, General Manager, Morrisville Water & Light (also assisting Hyde Park and Hardwick)]: the Hyde Park will be have AMI in place by the end of this year. Hyde Park is going will unfortunately be the only one in the state that will not have it because they've never participated in any process. So, we're going to have to figure out another one of those costs. They are not on the technology game and the other things I've talked about, those coming costs. They're going to, at some point, have to catch up on that as well. But that's the first big technology investment we're all making as NEPSA members. All NEPSA members will have those in place, should be by the end of the year.

[Rep. Kathleen James (Chair)]: Scott, thank you so much. If folks have more questions for Scott, I'm sure they should That follow-up with them was a really interesting morning for once, I guessed right. I allowed a ton of time.

[Rep. R. Scott Campbell (Vice Chair)]: And we did. That was great. Yeah.

[Ken Nolan, General Manager, Vermont Public Power Supply Authority (VPPSA/VEPSA)]: And Thank you.

[Rep. Kathleen James (Chair)]: Yeah. It was a very useful morning. So thank you so much for being here. We are adjourned. You're all flies.