Vermont regulators, VPSA and towns move to stabilize Hyde Park Electric as statewide utility review begins

Representative Kathleen James convened the House Energy and Digital Infrastructure committee on Jan. 15 to hear testimony on the fiscal health and oversight of Vermont’s municipal electric utilities, with attention centered on an ongoing investigation into Hyde Park Electric.

"I understand that news regarding Hyde Park Electric helped prompt today's session," Ed McNamara, chair of the Vermont Public Utility Commission, told lawmakers as he outlined the PUC’s role and the rate‑setting process that governs municipal utilities. McNamara explained that utilities file Integrated Resource Plans every three years and that the PUC and the Department of Public Service (PSD) review filings and may open contested investigations when warranted.

Cara Johnson, who identified herself as commissioner of the Vermont Department of Public Service, said the department launched a formal utility assessment this year — starting with members of the Vermont Public Power Supply Authority (VPSA) — to evaluate each utility’s financial status, operational condition and staffing. "The idea is to look at… financial status, operational take, and people," Johnson said, and she gave the committee a schedule that aims to complete interviews by June 30 and issue findings by October 1.

Johnson told lawmakers the Hyde Park situation surfaced after an Efficiency Vermont email in early September warned Hyde Park was not remitting customer‑collected program dollars. "I saw the email. I gathered my staff. This is bad," she said, describing a Sept. 9 meeting after which Hyde Park was directed to file an explanatory notice with the PUC. The PSD described a two‑phase approach: a Phase 1 triage to restore immediate solvency and stop the financial “bleeding,” followed by Phase 2, a comprehensive investigation and workout that could include special rate treatment, loan restructuring or other remedies.

Ken Nolan, general manager of the Vermont Public Power Supply Authority, said VPSA stepped in this fall to provide back‑office management and financial due diligence for Hyde Park after the village left VPSA in 2019 and later sought help. "As of today, with Scott's help, we're essentially managing a utility," Nolan said. VPSA’s review and Morrisville Water & Light’s interim management are already handling vendor payments and short‑term operations.

VPSA and PSD witnesses provided financial context: Hyde Park Electric’s annual revenue is roughly $3 million, while total liabilities including project debt, lines of credit and accounts payable were reported at about $4.5 million, with approximately $2 million tied to a large solar project that leaders said absorbed financial and operational capacity. Nolan and other witnesses said the utility repeatedly relied on short‑term borrowing and rollovers that accumulated over roughly a decade.

Scott Johnstone, Morrisville Water & Light general manager who is acting as interim manager for Hyde Park, described operational deficiencies VPSA and Morrisville uncovered after stepping in. A substation was taken offline and "red‑tagged" for safety; Johnstone said temporary repairs could cost about $30,000 while full replacement and upgrades could run in the hundreds of thousands. He said crews are rebalancing three‑phase loads and auditing outstanding projects and deposits to determine which obligations are valid.

Committee members asked how regulators and municipalities could better spot similar failures. Witnesses pointed to legal limits on automatic receipt of audited financial statements (a Vermont Supreme Court decision limited prior practices) and to resource constraints at the PSD and PUC that make proactive monitoring difficult. The department has agreed with VPSA on a set of questions and data to request from utilities during the assessment, including auditor letters and more granular enterprise‑fund reporting.

Officials emphasized multiple potential outcomes. Johnson said restoring solvency for Hyde Park ratepayers is the immediate goal, but Phase 2 could recommend changes in governance, consolidation or even transfer of service delivery if the utility cannot be made sustainable. "It is almost inevitable that there's going to be an ask for special treatment…to avoid, in my opinion, bankruptcy," Johnson said, adding that who ultimately pays — Hyde Park ratepayers, other municipal customers, or taxpayers — will depend on the investigation’s findings and any negotiated workout.

Lawmakers were told the PUC has statutory authority to require information and to set rates under 30 V.S.A., and that the legislature would need to change statute if it wants to adjust the simplified 3% annual increase cap (currently capped so it cannot exceed 10% cumulatively). Witnesses urged improved trustee training, better financial transparency at the enterprise‑fund level, and more active collaboration among municipals to share staff and specialty services.

The PSD and VPSA said they will provide the committee examples of Service Quality and Reliability Plans (SQRP), an IRP outline, and the assessment materials they plan to use. The broader investigation and Phase 2 filings are expected to continue through the spring; DPS witnesses said an April 15 filing would kick off the next deep dive and that formal PUC processes could take several months.

The committee concluded the hearing with no votes; witnesses will submit written materials and follow up with the legislature as the PSD and VPSA continue the assessment and the PUC’s investigation into Hyde Park proceeds.