Fascinating story in this week’s edition of The Hardwick Gazette, which merits follow-up coverage of the implications by our larger media outlets. (And I’m not saying so because of my role with the paper. This is all about the merits of the story.) As The Gazette’s Paul Fixx reports, the Hardwick Electric Department just replaced its general manager in a completely opaque fashion: no public notice, no agenda item at a board meeting, no explanation whatsoever. Nothing.
So what’s going on here?
We don’t know, but I have my suspicions. I see the current drive to de-localize management in our public education system, and I wonder if the same forces are at work in Vermont’s electric power system. In short, is there an effort underway to consolidate Vermont’s community utilities — up to and including the Burlington Electric Department?
For the good folks of Hardwick and environs, the most immediately important thing is the total mystery around the replacement of Sarah Braese as general manager less than a year after she was hired. What does it say about the organizational health of HED?
For the rest of us, the big piece is the identity of HED’s new interim (apparently) general manager. Scott Johnstone was the utility’s interim chief last year, plus he’s been chief of Morrisville Water & Light since 2022, plus he was recently installed as head of the financially troubled Hyde Park Electric. (The best source for coverage of Hyde Park’s perilous situation comes from, shocker I know, The News & Citizen. Local journalism FTW.)
That’s a hell of a portfolio: Johnstone now runs three small utilities in northern Vermont. Things that make you go hmm…..
Johnstone is a deeply experienced manager with a civil engineering background. He was in Howard Dean’s cabinet as Natural Resources Secretary. He’s also been Director of Public Works for Burlington and head of the Vermont Energy Investment Corporation, among other things. In short, a creature of the establishment. I’d suspect him of late-career slumming in taking on some of Vermont’s smallest utilities. Either that, or he’s a change agent on a mission.
Coincidentally or not, the Scott administration’s utility regulator has just initiated a thorough financial review of Vermont’s 14 municipal utilities. As Vermont Public reported on November 25, “Department of Public Service Commissioner Kerrick Johnson has asked all of the state’s small public electric utilities to submit data on their finances, grid reliability and staffing issues.”
The timing simply stinks. Johnson has concerns about these utilities, and a veteran administrator now controls three of the 14?
The suspicions only grow when you consider the curious and secretive nature of Johnstone’s (re)installation at HED. As Fixx tells the tale, Braese gave the general manager’s report at the HED board’s October 21 meeting; Braese did not attend the board’s November 18 meeting and Johnstone delivered the GM’s report. Also at that meeting, Fixx reports, Braese and Finance Manager Beth Essary “were removed as authorized signers on bank accounts and replaced by Johnstone.”
There is no indication in the public record of when, how or why Braese was removed and Johnstone (re)hired. Fixx reached out to three HED board members for comment, and none responded. The only person from HED who replied was Johnstone, who unhelpfully served up this platter of glop:
“Hardwick Electric Department does not discuss personnel matters and is committed to sharing any public information at an open meeting as soon as it is available, regarding any and all of the business that HED conducts.”
Yeah, well, “personnel matters” is one of my least favorite excuses for keeping information locked up. I mean, is it not in the public interest to know why Braese was cashiered and Johnstone installed?
If there’s no funny business going on, then why all the secrecy? Why the reluctance of public servants at a municipal entity to tell their customers what the hell is going on?
It sure seems to be a “looks like a duck, quacks like a duck” situation. Is the Scott administration gunning for Vermont’s municipal utilities? I wouldn’t bet against it.
The Vermont Political Observer. 
You’ve consistently disappointed me, John, with your reporting on utility matters in the state. some months ago, you misunderstood entirely what was going on with the proposed wind development in Bennington and I’d say you’ve done it again with this piece today. You’ve indulged your usual response to what seems to be a cover-up. They’re not talking. There must be a conflict of interest, if not a conspiracy, lurking somewhere. I can’t say that neither is a part of this story, but, having some idea of how utilities operate and how they’re regulated in Vermont, my first reaction is a bit more considered. I find that incompetence and bad decision-making, generally well-intentioned, are more often the causes of distress than malfeasance. I counsel you to dig a little deeper and, as Deep Throat might have said, follow the money.
I’m not suggesting for a moment, without evidence, that there is corruption here, but rather I’m inclined to think that there’s been a failure to carefully and conservatively manage the finances of the municipal utility. Start there. Look into that. This is certainly what happened in Hyde Park, where Mr. Johnstone was recently brought in to clean up a dire mess. And it’s a mess that’s easily diagnosed: an utter failure of rate-setting, for which the utility’s board of directors (i.e., the town’s selectboard) is ultimately responsible (although one might ask why the Department of Public Service didn’t petition the Public Utility Commission to open an investigation into Hyde Park’s rates or the PUC to open one on sua sponte). Perhaps Hardwick finds itself in a similar position and is just now taking action.
A reluctance to raise rates is altogether understandable. . . and altogether unjustifiable if the financial health of the entity that provides an essential service is at risk. But it’s not simply about setting adequate rates. Networked industries, those that rely on extensive fixed-asset distribution systems–e.g., electric, water, and gas utilities–are regulated so as to prevent them from abusing the economies of scale that give them “natural” monopolies, that is, price gouging. The interesting question is what to do with them, when those economies of scale are exhausted. Smaller utilities (in terms of both customer base and sales) are especially at risk. All the talk about consolidating several of the state’s municipal utilities is not a conspiracy of rich against the poor, but a facing-up to the difficult financial position into which the evolution of technology and power system operations–that is, the changing economics of electricity–has put small utilities. The laws of natural monopoly may in fact tell us that consolidation is precisely the right response to the significant jumps in average costs they confront.
Frederick Weston
N.B. One might be tempted to see similarities here to the challenges we’re facing with our educational system, and therefore a justification for school-district consolidation, but that’d be a very long stretch. And a much longer conversation.
I don’t pretend to understand the utility regulatory system, nor do I contend that any one of my blogposts is the final word on any subject. This was more of a “see something, say something” situation. We may ultimately find out that nothing unusual was going on at HED, but the secrecy is troubling.