MONTPELIER — As state regulators on the Vermont Public Service Board prepare to decide the merits of a politically explosive, $700 million utility merger, two opponents in the case — Green Mountain Power and AARP — squared off in documents submitted to the board Monday that form their most comprehensive arguments yet.

Green Mountain Power and its Canada-based parent company, Gaz Metro, which hope to buy out Central Vermont Public Service, said in a proposed decision filed with the Public Service Board that Vermonters will reap huge rewards from the merger.

Vermont electricity ratepayers will receive $144 million in savings in the first 10 years and an estimated $500 million in savings after 20 years, Green Mountain Power says. The proposed deal also calls for the creation of a public entity to ensure no one utility can unilaterally control the state’s transmission grid and proposes the creation of a “solar city” program in Rutland, the filings point out.

“The board should approve the merger because it has so many clear benefits to customers that could not be achieved other than merging these two companies and operating as one,” said Dotty Schnure, a Green Mountain Power spokeswoman, in an interview.

Green Mountain Power spends several pages of the 70-page document defending its plans for returning $21 million to the CVPS ratepayers who were forced to pay above-market power rates in 2001 because of an “imprudent” power deal the company inked with Hydro-Quebec.

Green Mountain Power proposes repaying ratepayers by investing $21 million in weatherization and other efficiency programs, which it says will achieve $25 million in ratepayer savings.

The company also believes the $144 million in savings from the merger will itself satisfy a “windfall” mechanism.

AARP, on the other hand, wants Green Mountain Power to repay ratepayers by sending checks to CVPS customers.

The utility’s proposal for repaying the $21 million has grown into the most controversial element of the merger, and a group of four House lawmakers has spearheaded a movement to pass an amendment that would send checks to CVPS ratepayers.

Their effort has made the merger one of the hottest political issues of the year as Gov. Peter Shumlin and leaders in the House try to quell efforts to intervene in the merger deal before the Public Service Board.

The greatest sticking point for opponents of Green Mountain Power’s plan is that the utility wants to recoup the $21 million it invests in weatherization and efficiency by charging the same ratepayers that bailed them out higher rates in the future.

In its filing Monday, Green Mountain Power defended the proposal on several fronts, arguing that writing checks to customers is a bad idea.

“Upfront payment to CVPS customers would fail to leverage the $21 million with other public and private funds, thus losing the opportunity for CVPS customers to receive additional benefits,” the utility wrote.

The company also wrote that forcing an immediate payback could imperil the merger.

“At a minimum, it would result in protracted litigation and could delay or derail the proposed merger, effectively eliminating many of the benefits it would otherwise provide,” the company wrote.

AARP, in its filing Monday, launched a two-pronged attack on the proposal for the $21 million.

First, the group said the concept that the $144 million could satisfy the windfall requirement is erroneous because ratepayers are already due the savings achieved in utility mergers.

“Ratepayers would be ‘repaid’ their $20.9 million by providing them with $144 million in savings to which they are already entitled,” according to AARP.

As for the proposal to invest in efficiency and weatherization, AARP argues that does not meet the requirement of the 2001 order that included the windfall requirement, and said to conclude otherwise “one must cast aside the English language.”

“The concept of raising rates to extract additional funds from ratepayers, investing those ratepayer funds in projects that eventually will have a benefit for ratepayers, and awarding to the company a rate of return on those ratepayer funds, simply cannot be squared with an ‘immediate … one-time full-value repayment’ by shareholders ...,” AARP wrote.

AARP spends a portion of its 29-page filing pointing out the differences between Green Mountain Power’s current proposal and a 2007 Public Service Board ruling on the windfall mechanism that also involved Green Mountain Power.

Advocates for the utility’s position in the current case have pointed to the 2007 case to argue that state regulators have previously allowed investments to be used to repay a bailout.

But AARP says there are major differences, including the idea of investing more than half the $21 million in weatherization “which will have no electric system benefits.”

The filings Monday, which follow technical hearings on the merger in March and earlier this month, represent one of the final steps before the Public Service Board has all the evidence it will use to make its decisions.

Reply briefs from the parties are due May 4, and then the board “will have all the information it will need, and will hopefully issue a decision sometime in June,” Schnure said.

The action surrounding the merger and the $21 million is scheduled to continue today at the Statehouse.

The House Committee on Commerce and Economic Development is scheduled to vote today on an amendment that would require the utilities to issue checks totaling $21 million to CVPS ratepayers.

The amendment will fail in committee, likely by a wide margin. But backers of the proposal plan to reintroduce the measure when the underlying legislation — an otherwise unremarkable regulatory bill — heads to the House floor, which House Speaker Shap Smith said probably will happen later this week.

thatcher.moats @timesargus.com