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Vermont might get into dam business

By Susan Smallheer
The Rutland (VT.) Herald

Gov. James Douglas said Thursday "there's a good chance" that the state, along with a private partner, will bid on the hydroelectric dams on the Connecticut River.

"We are looking at the possibilities," he said. "There's a good chance that we will."

Douglas made his remarks during his weekly press conference, and said there will be news "soon" on the dams. Those facilities, as well as others on the Deerfield River, are owned by USGen New England, a subsidiary of energy giant PG&E National Energy Group.

"I said at the outset that the numbers would rule the decision," Douglas said.

The governor's statements came only two days after the town of Rockingham announced it had struck a $72 million deal with USGen for its dam at Bellows Falls.

The town has established a municipal utility and wants to buy the hydro station so it can sell power to its residents.

The governor said Rockingham's deal with USGen might "complicate" the state's effort, since the Bellows Falls dam is one of the six linked dams that stretch from the massive Moore reservoir outside St. Johnsbury down to the hydro station at Vernon, about a mile from the Massachusetts border.

The Vermont Renewable Power Authority was formed by the 2003 Legislature and spent last summer and fall studying the idea of the state owning the dams.

Its consultant, Lexecon of Cambridge, Mass., came to the conclusion that it was an extreme long shot, but VRPA agreed to pursue possible private partnerships with utilities to buy the dams.

Sen. Vincent Illuzzi, R-Essex/Orleans, one of the chief proponents of the state purchase, said he was pleased with the governor's support.

"I'm encouraged by the words spoken today by Gov. Douglas," he said. "We need to translate those words of encouragement into an action plan. And sooner rather than later."

Illuzzi added, "Energy is going to be a major political issue in the 2004 election. When you have more and more groups coming forward and criticizing the governor because of his energy policies, the governor needs to take an affirmative step."

Administration Secretary Michael Smith, who is chairman of the Vermont Renewable Power Authority, couldn't be reached Thursday to comment on the state's next step.

David O'Brien, commissioner of the Department of Public Service and a member of the power authority, couldn't be reached either.

USGen spokeswoman Natalie Wymer said that while the bankrupt company had recently reached a tentative agreement with Rockingham to sell the Bellows Falls dam and generating facilities for $72 million, it didn't mean the other dams were formally up for sale.

USGen filed for protection from its creditors in July 2003. Prior to that, its New England system - which included the hydro dams and coal-fired plants in Massachusetts and Rhode Island - had been put up for sale by its parent company.

"We're treating Rockingham separately and it remains to be seen whether the dams are for sale," Wymer said. "There's been no decision about selling the USGen facilities."

Wymer noted that the company's reorganization plan was due in U.S. Bankruptcy Court in Maryland by mid-March.
Wymer said the company had been told by the court to negotiate with the town of Rockingham, which had filed eminent domain proceedings against USGen and both Green Mountain Power Corp., and Central Vermont Public Service Corp., the owners of the electrical distribution system.

Illuzzi said the renewable energy authority had not met since late December and that there were no meetings set up.

"We need to put words into action, immediately," he said, noting that the state was negotiating with a private partner.

"Since December we've received more concrete information from one of our potential partners," Illuzzi said.

One scenario would see the state owning 25 percent of the dams initially, and then having the option in 2015 for 50 percent ownership, when the state's energy contracts expire with Hydro-Quebec.

The state's utility contracts with Entergy Nuclear, the owner of Vermont Yankee nuclear power plant, expire in 2012.

The state's consultant, Lexecon, had said that a major problem with a state purchase was that the state didn't need power for several years.