Official: Vermont’s vertically integrated utilities and long-term contracts have kept rates lower, but transmission and REC costs pose pressure

At a Jan. 29 hearing of the House Committee on Energy and Digital Infrastructure, TJ Poor, director of regulated utility planning at the Vermont Department of Public Service, told lawmakers that Vermont’s vertically integrated utility structure and long-term supply contracts have helped keep electric rates lower and more stable than in other New England states — but that several regional and policy-related cost drivers could push rates higher.

Poor told the committee, “At any given point, our utilities are between 85–95% hedged,” and he pointed to the 2022 price spike in other New England states after Russia’s invasion of Ukraine to illustrate how hedging reduced Vermont’s exposure: “In 2022, prices for the rest of New England shot up. What happened in 2022 is Russia Invaded Ukraine.”

Why it matters: Committee members heard that while Vermont’s mix of owned and contracted generation has smoothed short-term market volatility for consumers, transmission charges, the state’s renewable energy standard (and the cost of renewable energy certificates, or RECs), and the expiration of several long-term contracts could raise rates or require new procurement decisions that reshape supply through the 2030s.

Key points from the presentation

- Rate drivers and hedging: Poor said power supply and transmission together account for roughly three-fifths of a typical Vermont retail rate, with transmission alone about 17% of the total. He described utilities’ long-term contracts and ownership stakes — some lasting decades — as the…