Vermont's $4M Standby Tab: Ratepayers Pay Twice for Idle Oil Plants While Grid Investment Lags
VTDigger reports Vermonters spend nearly $4 million a year keeping seven petroleum plants on standby, which run only ~10 hours annually. The arrangement reflects a deeper pattern: ratepayers fund capacity that rarely runs, while the same utilities collect dividends and defer distribution maintenance.
VTDigger reported that Vermonters spend nearly $4 million a year to keep seven petroleum plants on standby, facilities that fire up for about 10 hours a year during peak demand. [1] The plants are a last resort when hydropower imports from Quebec and other resources fall short. But the story is not just about standby costs; it is about who pays, who profits, and what is not being built instead.
The seven plants are owned by utilities including Green Mountain Power and Vermont Electric Cooperative. Under cost-of-service regulation, ratepayers guarantee these plants a return on capital and recovery of fixed O&M, regardless of whether they run. This is the same mechanism that pays utilities to build and rebuild, not to keep the lights on cheaply. Meanwhile, the state has no performance-based reliability standard that would link rates to outcomes like SAIDI or SAIFI. The result: ratepayers fund idle capacity while distribution system maintenance, pole inspections, vegetation management, competes for the same capital.
Compare Vermont's approach to the control group: municipal and cooperative utilities elsewhere spend less per customer on standby capacity because they can rely on regional markets and demand response. Vermont's IOUs, however, collect depreciation on these plants and pay dividends to shareholders. The accountability chart, pairing SAIDI with distribution O&M per customer and dividend per customer, would show whether the $4 million standby tab is correlated with deferred maintenance on the wires that serve your home.
The alternative is not to shutter the plants overnight but to shift the regulatory framework. A performance incentive mechanism that penalizes utilities for relying on oil peakers during peak events would reward investment in efficiency, storage, and demand response. Hawaii's 2020 framework, which ties revenue to total expenditure (totex) and includes symmetric reliability rewards and penalties, is a proven template. Vermont could also pursue a multi-year revenue cap with a reliability performance incentive that puts the $4 million standby cost at risk.
The bottom line: Vermonters are paying twice, once for the idle plants, and again for the grid that fails to keep pace. The remedy is a docket at the Vermont Public Utility Commission to open a performance-based ratemaking proceeding with binding reliability targets. The calendar: the next rate case for Green Mountain Power is the natural vehicle. Until then, the standby tab is a tax on ratepayers for a grid designed for the 20th century.