Utilities Watch

The state of Vermont has decided not to bid on the 13 hydroelectric dams on the Connecticut and Deerfield rivers being sold as part of the bankruptcy proceeding involving electric generating company U.S. Gen-New England. The decision would end more than 18 months of considering the purchase.

David O’Brien, commissioner of the Vermont Department of Public Service and a member of a special authority appointed to consider the dam purchase, was quoted as saying that the state and the two Canadian companies that were its partners in the possible dam purchase decided not to go forward.

Aside from determining not to make the purchase with the partners, the state authority also decided not to recommend that the state submit a bid on its own, according to O’Brien.

A draft resolution circulated to board members said that a conservative forecast of the dams’ earnings indicated that they would make about $531 million in 2004 dollars during the next 50 years, about the same as the price with which the bidding is expected to open. A mid-range forecast of energy prices by a consultant for the Department of Public Service put the dams’ earnings at $788 million.

The state, however, will continue to help the town of Rockingham’s efforts to buy the Bellows Falls dam. The state authority is expected to act as escrow agent, holding the $72 million that is to be paid to U.S. Gen.

On the larger purchase, however, the state was reluctant to make bets based on energy price forecasting long into the future. This may have been due in part to some prior faulty forecasting done by the state on the economics of the 25-year contract it entered into in 1991 to buy power from Hydro-Quebec.

In addition, as with many other states, Vermont overpaid on long-term contracts with small in-state power producers.


The Federal Communications Commission has narrowly approved rules that phase out many of the government-mandated discounts the four major regional telephone companies must give rivals to encourage them to compete for local service customers.

This is the fourth time the FCC has approved rules aimed at encouraging competition. The three previous attempts, however, were thrown out by federal courts. Critics say the new rules will lead to higher bills for some 18 million customers served by AT&T, MCI and other carriers. The FCC’s chairman, Michael Powell, however, was quoted as saying that consumers would benefit in the long run.

The FCC vote was 3-2, with Republicans Powell, Kathleen Abernathy and Kevin Martin supporting the changes. Democrats Michael Copps and Jonathan Adelstein dissented.

Under interim rules, the regional phone companies — Verizon Communications Inc., SBC Communications Inc., Qwest Communications International Inc. and BellSouth Corp. — were forced to give their rivals access to their networks at reduced cost. The theory was it would be too expensive for a rival to build its own network to compete with a regional company. But the regional companies said it was unfair to force them to subsidize competitors. The rules call for gradually ending discounts in the residential market and for competitors of the regionals serving small and medium-size business customers in dozens of the largest markets. The discounts would remain for those business customers in other markets.

Competitors serving the residential market will have 12 months to install their own equipment or negotiate new leasing agreements at higher prices with the regionals.

Over the past eight years, the FCC has tried to come up with regulations to spur phone competition. Three previous attempts were rejected, most recently in March when the U.S. Court of Appeals for the District of Columbia Circuit ruled they were unjustified.

The FCC said the phone rules have been rewritten to take into consideration the court’s objections. For example, the agency has set up more targeted tests to show where competition is still needed for carriers serving smaller businesses. About 18 million people – roughly 15 percent of those with home phones – buy local service from a company other than the regional providers.

Doug Patch, former chairman of the New Hampshire Public Utilities Commission, is with the Concord law firm of Orr and Reno.

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