The Vermont House gave preliminary approval to a new program Friday that would establish renewable energy standards for the state’s utilities. The vote was 127-11.
The bill, H.40, requires utilities to sell renewable electricity, some of which must come from new in-state generation resources such as wind, solar and bio-methane. The program also requires utilities to reduce their customers’ fossil fuel consumption.
RESET, as the policy is known, is likely to reduce the risk of a 6 percent statewide electricity rate increase expected next year under the current renewable energy program. The new program is also necessary if the state wants to achieve its greenhouse gas reduction goals.
The bill needs final approval in the House and Senate and drastic changes are likely that would alter the cost of the policy to electric customers and the state’s long-term greenhouse gas reduction goals.
When lawmakers return from town meeting week recess, House Minority Leader Rep. Don Turner, R-Milton, said his party plans to introduce a strike-all amendment that will eliminate the so-called “innovation tier” of the program.
This tier may require most utilities to offer incentives for weatherization projects and new heating technologies in order to reduce their customer’s fossil fuel consumption, as required under the bill. But some lawmakers contend that these are services already offered by the state’s efficiency utilities, Efficiency Vermont and the Burlington Electric Dept.
“We feel it creates a duplicative process and now the utilities will be competing with Efficiency Vermont,” Turner said.
The bill allows utilities to partner with Efficiency Vermont to take advantage of existing infrastructure and reduce the cost to comply with the program. But Turner said this drastic overhaul of the state’s energy policy is not needed at this time.
“We’re saying slow down. Time out,” he said.
The removal of that portion of the bill could come at a cost, according to Darren Springer, deputy secretary of the Department of Public Service.
“If you lose tier three, you lose the $275 million in customer savings, you lose half of the greenhouse gas emission benefits of the bill, and you turn what would be a fairly neutral to modestly positive rate benefit into something that is a more significant rate impact,” Springer said.
Environmental groups, who widely support the bill as a whole, oppose the measure to strip the efficiency piece. More than three-quarters of Vermont’s greenhouse gas emissions come from the heating and transportation sectors. The bill aims to replace fossil fuels with electricity generated from renewables.
Taking this provision out of the bill will be “costly and shortsighted,” said Johanna Miller, energy program director for the Vermont Natural Resources Council. “It will help Vermonters comprehensively reduce their fossil fuel consumption and save them money over time.”
The Republican leadership is not convinced by the department’s calculation. An economist for the Legislature said the rate impacts of the program are unknown.
According to Tom Kavet, an economist with Kavet, Rockler and Associates, “Net State fiscal impacts from direct program expenditures are likely to be roughly offsetting, representing less than plus or minus $2 million per year, depending upon assumptions.”
Turner doubts the department’s analysis. The department forecasted that without tier three, rate’s would likely rise up 4 percent by 2032.
“That’s the assumption,” he said. “I’m not sold on that.”
Lawmakers passed an amendment to H.40 offered by Adam Greshin, I-Warren, to freeze the state’s energy efficiency charge placed on customer bills, which is used to fund incentives and projects that reduce electricity demand. The amendment will cap the revenue source for the state’s efficiency utilities for two years at current levels.
Speaking before a Republican caucus Friday, Greshin said H.40 will increase demand for electricity, and therefore the price customers pay for the efficiency programs would rise. He said even with the cap, the state’s efficiency utilities will have enough resources to administer their programs.
He said the budget for efficiency programs has grown faster than any other state program – a concern that has many lawmakers questioning whether Efficiency Vermont has spent ratepayers’ money wisely. The rate charged to electric customers is set by the Public Service Board with consultation from the Department of Public Service, which represents ratepayers, and is approved based on performance measures.
The Department of Public Service said the provision will save electric customers about $10 million over the next two years, but cost up to $24 million in lost energy savings over the next decade.
Rep. Chris Pearson, P-Burlington, defended the state’s efficiency program because it saves $2 for every $1 investment.
“This is a case of being pennywise and pound foolish,” Pearson said of the amendment.
Tony Klein, chair of the Natural Resources and Energy Committee, a leading proponent of the state’s efficiency program, supported the amendment in a compromise to garner broader political support for H.40.
“The importance of H.40 is unquestionable,” Klein said.
Gov. Peter Shumlin said in a statement Friday that the bill “will grow jobs, reduce energy costs for Vermonters and make tremendous progress in our efforts to fight climate change.”
“We’ve made incredible progress growing a clean energy economy in Vermont, which currently supports over 15,000 jobs. The legislation the House passed today will strengthen Vermont’s energy innovation leadership, create over 1,000 jobs, save Vermonters a net of $275 million on our energy costs, and reduce our greenhouse gas emissions at the same time,” Shumlin said.
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