Green Mountain Power announced today a multi-year agreement with GlobalFoundries to provide more stable energy costs in a move both companies say will help ensure the chip manufacturer’s viability in Vermont.

The deal lowers GMP’s transmission class rate – of which GlobalFoundries is the only customer, using and maintaining its own distribution grid – by 2.73 percent starting next year. That rate will be frozen through September 2022.

In exchange, the chip manufacturer agrees to maintain a specific level of power usage on-site and will forgo rate cuts or credits that GMP will give the rest of its customers next year thanks to more than $27 million from the federal tax reform, a news release said. The plan is subject to review and approval by state regulators.

“As the state’s largest manufacturer, we consume more electricity than any other single customer, and energy costs are determinant of the competitiveness of our operations in Vermont,” said Dale Miller, GlobalFoundries’ Vermont senior location executive, in the news release. He added the company’s ability to purchase competitive energy in the state will factor into “future investment decisions.”

The deal looks to address GlobalFoundries’ longstanding complaints about energy costs in the state. While among the lowest in New England, costs here remain significantly higher than in neighboring New York, where GlobalFoundries has two other facilities, due to regional power costs.

Production at GlobalFoundries runs 24 hours a day, resulting in a high energy demand, totaling over 400 million kilowatt-hours in 2016 alone, according to Thomas Jagielski, director of site operations, who testified to the public utility commission in 2017.

That same year, Jagielski told the PUC, the company paid about $40 million in energy costs, including about $4.5 million to operate its distribution system. If the company used the same amount of power at its Malta, N.Y. facility, the cost would have been less than half that total.

“Our customers continually expect to buy more performance at a lower price,” Jagielski told the PUC. “Next year, the semiconductor customer will expect to get more technology performance than this year and pay less for it.”

In a news release, GMP said it has worked with state partners for years to support both IBM and now GlobalFoundries, noting it’s “critical” for high-tech manufacturers to have a predictable cost structure for energy.

“The positive economic impact of GF’s presence in Vermont is significant,” GMP president and CEO Mary Powell said in a news release. “We feel strongly that we, along with our state partners, should continue to do what is reasonable and responsible to support keeping these important manufacturing jobs here in Vermont.”

The GlobalFoundries campus in Essex Jct. has 30 buildings on more than 700 acres of land. Employing about 2,500 people, the company remains the state’s largest for-profit employer and represents a major economic stimulus in the state: The Greater Burlington Industrial Corporation has estimated the company adds $1 billion annual to the Vermont economy.

It’s also a sizable chunk of the town and village’s grant list, representing 3.1 percent of all property tax revenue in the town and a whopping 7.4 percent in the village, according to assistant finance director Sarah Macy.

Local officials lauded the news for its impact on both the state and Essex.

“GlobalFoundries provides thousands of good-paying jobs and has been a great employer for decades. We appreciate the hard work to support its ongoing success,” Reps. Linda Myers (R) and Dylan Giambatista (D) said in a joint statement.

Reached Tuesday, village president George Tyler said he knew the companies were negotiating for several years now and said the company’s viability in the state remains vital to both the state and Essex.

“This increases the likelihood that they will be making a more long-term commitment to staying in Vermont,” he said. “It’s excellent news. It’s a great win-win for both sides.”