by Geoffrey Norman
For the last couple of weeks, a controversy has been slowly coming to a boil in Montpelier and, indeed, out in the beyond where the voters and citizens live and toil. The dispute is over the way some $21 million owed to people who paid for electricity from CVPS, and were compelled to bail the company out when it made some bad business decisions, will be paid back. The debt is not based merely on a handshake and good faith dealing – surely an element of what Governor Shumlin calls “Vermont values” – but also by contract. But, of course, those things mean less and less these days. As the contortions of the utilities and their friends in Montpelier are vividly demonstrating.
For backgound, there are the postings by Representatives Oliver Olsen, Patti Komline, Cynthia Browning and others who have written on the subject. The essential fact, in all of the accounts, is that CVPS owes the money and its new ownership wants to repay it not by cutting checks to customers or, even, cutting their rates. It proposes, instead, to invest the money … in itself. This will, spokespeople explain, shower all sorts of efficiencies and other “societal benefits” on ratepayers and the Vermont enterprise in general.
It is a good deal, according to the people who run the utilities and the agencies of government that regulate them. The same people – or same sort of people, anyway – who managed things so skillfully that the ratepayers had to rescue them from bankruptcy in the first place and, thus, create this debt. Their response to the demand that the money simply be treated like any other debt – paid back, that is, to the people who loaned it by the people who borrowed – has been one of near indignation.
How could those rubes not understand the benefits of what we are doing for them?
Followed by a bit of corporate hardball:
Well, if that’s how they are going to play, maybe we won’t do the merger deal after all.
This would lead to much grief among the stockholders of CVPS as there has never been any question that they would get their windfall. For ratepayers it would be a case of … business pretty much as usual and so what. Vermont has never shied from actions that would make its citizens electric bills higher than they would be otherwise. For example: shutting down Yankee and building windfarms.
So far, the benefits of the merger are mostly conjectural. You can’t take them to the bank. The bailout money was – and is – real dough. If ratepayers don’t get theirs, why should the stockholders make out?
Whatever the downstream economic costs to Vermont if the deal were to die, it might be a fair price for imposing a little discipline on a political class that increasingly takes what it needs and never mind inconveniences like law.
Consider, for instance, the bailout of General Motors, which the political class likes to trumpet as one of its finer moments. In a normal bankruptcy, bondholders have first claim on the assets of the entity being liquidated. They are not owners, like those who hold common stock in the company. They have loaned the company money and are entitled to be paid back.
But not in the case of the GM bailout where bondholders were stiffed to the tune of $27 billion while the UAW was protected. It was a naked political taking by a political class that was looking out for its own long-term interests.
And, then, there was the tempest caused, last week, when it was revealed the Government Services Administration – one of those massive, gray, bureaucracies with a budget that grows ceaselessly – treated itself to an $800,000 conference in Las Vegas where the attendees munched on $7 sushi rolls, took part in a $75,000 bicycle building project, and were entertained by a $3,200 mind-reader. Among other extravagances.
The details of this bureaucrats’ bacchanal somehow became public and a couple of heads rolled in ceremonial fashion, followed by lots of talk about how this was an aberration and nothing like would ever be permitted to happen again.
To which anyone who has ever worked in government said, “In a pig’s valise.”
Not all government bureaucracies send key personnel to Las Vegas in order to waste taxpayer money. Most stay at home and do it less conspicuously. But they will spend ever more because no bureaucrat who budgets less to run his agency or department next year than he spent last year will last long.
For government and the political class, growing and spending is almost a biological imperative.
That $21 million CVPS owes the ratepayers? Found money that should be spent by professionals, who have the training and expertise.
Not something for amateurs to try at home.
(My weekly column for the Caledonian Record, slightly edited and reprinted here with permission.)