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Economics Division

The Finance and Economics Division advocates on behalf of the public in all utility finance and economic matters before the Vermont Public Service Board (PSB) by presenting its analysis of petitions by regulated utilities to:

• Change rates, prices and services to be offered to the public
• Merge with or be acquired by another utility
• Transfer assets
• Issue long-term debt
• Issue stock
• Construct facilities

The Division analyzes and evaluates the economic and financial impact of these petitions to ensure that the requests, if granted, will serve the general good of the State.

The Division also monitors the on-going financial and economic operations of Vermont Public Utilities to ensure compliance with existing Board policies, practices and established rate making rules and principles. Where warranted, the Division may recommend and advocate for modifications in: (a) a utility's rates and prices, (b) the utility's operations, (c) in petitions filed with the Board, or (c) in policies, practices or rules including alternative regulatory plans and utility market restructuring.

Utility companies that are more lightly regulated, utility companies that are operating in competitive markets with effective competition and other utility companies operating under alternative regulation agreements are also monitored regarding their overall financial and economic results, to an extent consistent with non-regulated markets and the general good of the State.

The Finance and Economics Division has general economic and financial supervisory responsibility for Vermont's approximately forty regulated public utility operators. Vermont currently has 21 monopoly electric distribution companies, one electric transmission company, ten incumbent telephone companies, one monopoly natural gas company and many small water companies that receive routine cost and financial performance review.

The Finance and Economics Division also monitors and lightly regulates competitive telecommunications operators, including both facilities-based operators and resellers doing business in the state.

Four Finance and Economics Division Responsibilities

1. Supervision of Rates and Financial Performance of Regulated Companies
The Finance and Economics Division is responsible for matters pertaining to the establishment of utility rates and earnings. The Division periodically reviews rates to ensure that charges by utility companies in Vermont meet the statutory definition for "just and reasonable." The Division reviews and evaluates utility petitions for new rates, changes in rates and new services. In broad terms, rates for essential monopoly or monopolistic services must permit utilities (a) the opportunity to recover their costs; (b) to earn a return adequate to attract necessary capital investment; and (c) to maintain financially sound and sustainable utility operations.

In "rate proceedings" the Division (a) analyzes rate requests to determine that the rates proposed are just and reasonable and (b) provides recommendations for use in settlement negotiations or for use in hearings before the PSB.

The Division must ensure that public utility regulated rates cover the firm's costs of providing the service and that special contract rates, economic development rates and rates set for competitive service offerings by regulated companies are reasonable and do not threaten competition in developing markets or subsidize other regulated or nonregulated services. The Division is also responsible for the review of financial and rate issues related to alternative regulation, major utility plant investments and other matters relevant to the ongoing financial performance of Vermont's electric, gas, telecommunications, and water companies.

In addition to rate supervision, the Finance and Economics Division supervises utility financing requirements, including debt and equity financings, indentures or other obligations that may encumber or place at risk the assets of regulated companies and the Division staff testifies before the PSB regarding a variety of economic and financial issues on behalf of the general public and Vermont's utility ratepayers.

2. Annual and Other Financial and Economic Reporting Requirements

The Finance and Economics Division establishes the financial regulatory reporting information requirements that regulated entities provide to the Department. The Division then prepares or makes available a variety of financial, economic and statistical reports relative to regulated public utilities.

The Division supervises the annual financial reporting requirements and the reporting requirements associated with each petition or request before the Public Service Board for rate changes, new financings (Sections 108 and 202 petitions) and petitions for approval to construct public utility facilities (Section 248 petitions). Additionally, the Division advocates and supervises the application of the Uniform System of Accounts for each of the respective public utility sectors.

From the data collected from Vermont's utilities the Finance and Economics Division prepares and distributes sector reports for internal use and for public review and analysis. Included among the periodic statistical reports available through the Division are:

• Vermont Annual kWh & Revenue Report
• Quarterly updates to the "Typical Residential Bill" analysis

The Finance and Economics Division also maintains records of electric and gas tariffs approved by the Board.

3. Power Purchases and Sales

The Finance and Economics Division administers wholesale power purchases for the State of Vermont that come from the New York Power Authority. The State of Vermont purchases approximately 12.2 megawatts of power from the federally-sponsored Niagara Falls and St. Lawrence Seaway hydro generating facilities and distributes this power to electric cooperatives and municipal electric companies throughout Vermont for sale to residential customers at favorable rates.

4. Collection of the Vermont Gross Revenue Tax

The operating costs of the Vermont Public Service Board and the Vermont Department of Public Service are funded by the public utility companies operating in Vermont through the assessment of a Gross Revenue Tax that is billed and collected by the Finance and Economics Division.

Within the DPS, the Finance and Economics Division is responsible for billing and collecting amounts owed to the Board and Department by the regulated operators in Vermont in amounts determined by statute to be necessary to fulfill the statutory obligations of the Board and Department.

Contact Finance & Economics Division Staff

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