MONTPELIER – The House passed an energy bill Wednesday designed to expand the amount of electricity Vermont gets from renewable sources like wind and solar, despite concerns from some lawmakers that the legislation would hurt businesses by raising electricity rates.
The bill passed on a 91-46 vote, sending it to the Senate, where questions about how much the expansive and complicated legislation will cost Vermonters are expected to persist.
The bill creates a “renewable portfolio standard” that requires Vermont utilities to get 35 percent of their electricity from clean energy sources by 2032. The legislation also sets a goal of having 75 percent of the state’s electricity from renewable sources by 2032, but that loftier target is not a requirement.
Vermont is the only New England state without a renewable portfolio standard.
The new mandate itself doesn’t necessarily mean solar panels, wind turbines and biomass plants will start cropping up around Vermont in the next few years.
The mandate would be implemented gradually over the next 20 years under the bill, and Vermont’s utilities have several methods for meeting the 35 percent requirement.
They can buy renewable energy from facilities in Vermont or out of state. They can also build their own projects.
There are also “renewable energy certificates,” or RECs, that are attached to renewable energy.
Vermont utilities currently sell RECs to utilities in other states, but to meet the new renewable requirement, utilities could retain their RECs or buy RECs from other electricity companies.
In addition, utilities could make “alternative compliance payments” to the Clean Energy Development Fund to help meet the 35 percent target.
The House Natural Resources and Energy Committee heard from 51 witnesses as it created the legislation, including representatives of utilities, environmental groups and the energy-intensive manufacturing sector.
The committee tried to balance the desire to reduce greenhouse gas emissions and promote jobs in the renewable energy sector against a determination not to create a major increase in the cost of electricity, said Rep. Margaret Cheney, a Democrat from Norwich who is vice chairwoman of the committee.
Cheney argued that the committee achieved that balance.
“The pace is deliberate, balanced and some would say slow, but in 20 years we will be the clean-energy state we want to be, the clean-energy state we need be in our fight to reduce greenhouse gases,” said Cheney.
Republicans, however, said the bill risks hurting businesses by raising the cost of electricity.
The Department of Public Service said the renewable portfolio standard would cost Vermont ratepayers an estimated $267 million to $300 million over 20 years. The energy legislation would increase electricity costs by about 4 percent in 2025, the department said, the year the department says the legislation would have its greatest impact on costs.
At least one utility, Green Mountain Power, came up with a higher estimate. By 2030, rates will be about 7 percent higher as a result of the legislation, said Green Mountain Power spokesman Robert Dostis.
“That’s our best estimate,” he said.
Both the state and Green Mountain Power said that rate projections are based on assumptions – the future price of energy – that could change.
Rep. Tony Klein, chairman of the House Natural Resources and Energy Committee, acknowledged that increasing the amount of renewable energy Vermont uses costs money but said other benefits like reducing greenhouse gases and creating jobs in renewable energy make it worthwhile.
“We’re not selling this as this has no rate impact,” said Klein.
Bill Driscoll, the vice president of Associated Industries of Vermont, said the costs far outweigh the benefits because Vermont will make little impact on greenhouse gas reductions through the bill.
“It’s not really addressing climate change, but it is making electricity more expensive,” he said.
High electricity costs are bad for businesses, said Driscoll, and deliberately raising rates “seems to be a fundamental mistake for the future of our economy.”
According to a Department of Public Service estimate, the legislation will reduce greenhouse gas emissions by about 5 million tons over the course of 20 years. Vermont currently emits about 8 million tons a year, the department said.
The Vermont Public Interest Research Group is among those arguing the renewable portfolio standard needs to be more aggressive and plans to try to alter it as the Senate takes up the bill.
Ben Walsh, an energy advocate for VPIRG, said he would like to see the renewable portfolio standard have a 75 percent requirement by 2032 rather than having that merely as a target.
Walsh, however, praised the legislation’s tripling of the “standard offer program” over the next 10 years. The program requires utilities to buy power at above-market rates in order to cover the cost of developing renewable energy projects, making them economically viable.
“We look at this bill and it gets a lot of renewables built in Vermont and on balance is a big step in the right direction,” said Walsh. “Does it need to be stronger? Yes. And we’re going to try to make that happen in the Senate.”
Four lawmakers tried to amend the legislation to require Green Mountain Power and Central Vermont Public Service – which are pursuing a merger – to make a $21 million payment directly to ratepayers.
Advocates, led by AARP, have argued that ratepayers are due the money because early in the last decade CVPS hit a financial rough patch, and to stave off financial calamity, the Public Service Board granted the utility a rate increase.
The board, however, stipulated that ratepayers would be made whole if CVPS ever became financially healthy enough to attract a takeover bid.
The $21 million AARP says is due to ratepayers amounts to $76 for each of CVPS’ 137,000 residential customers. Commercial customers would enjoy payouts of about $352 on average, and industrial businesses could see checks in excess of $12,500.
GMP says it has satisfied the windfall protection clause by offering to invest $40 million in an efficiency program that officials say would reap ongoing savings for all ratepayers. AARP and many lawmakers say it’s a bad deal, however, and want cash in the pockets of customers.
House Speaker Shap Smith ruled that the attempt to amend the energy bill out of order because it was not relevant to the legislation.
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