By Bruce Parker | Vermont Watchdog
This past week, the House Natural Resources and Energy Committee voted 10-1 to make utilities provide 75 percent of their power from renewable sources by 2032 while working to reduce the state’s overall energy consumption.
Far from being proof of the policy’s merits, state Rep. Warren Van Wyck, R-Ferrisburgh, says the lopsided vote proves only that Vermonters can expect to pay more on their energy bills.
“The bill would lead to more expensive electric rates and economic malaise,” Van Wyck told Vermont Watchdog.
“I have a concern about these renewables. Businesses rely on energy 24-7. If the sun isn’t shining, and if there’s snow on solar panels, you’re not getting that energy. Where’s it going to come from, and at what price?” he asked.
As passed by the committee, H.40 would establish a renewable energy portfolio standard for utilities and enact a statewide energy transformation program.
As part of the bill’s three-tier program, utilities will be required to deliver three-fourths of all power from renewable sources over the next 17 years. In addition, they must meet targets for reducing consumers’ energy consumption or else pay an alternative compliance payment, or ACP.
The bill has support from Vermont’s renewable energy industry and the Vermont Public Service Department, as well as from environmentalists worried about global warming.
For observers of the legislative goings-on at the statehouse, H.40 is an unusually big solution to a rather narrow problem — namely, the shady double-counting of carbon credits in Vermont.
Vermont and other states are part of a carbon-trading scheme that forces nonrenewable energy companies to pay fees to renewable energy companies, as a kind of penalty for not producing green energy. In exchange for paying the fee, these entities get a renewable energy certificate, or REC, saying they are renewable-energy compliant.
However, Vermont has been selling renewable certificates to entities in other states while at the same time counting them towards their own renewable energy requirements. The accounting trick hit a snag recently when other states caught on and said they won’t buy RECs from Vermont unless the state changes its policy.
“Other states saw that as double counting and would not accept Vermont’s RECs, so something had to be done,” Van Wyck said.
Willem Post, founding member of the Coalition for Energy Solutions, explains how the double-counting system operates in Vermont.
“People in Vermont are claiming they are putting up renewable energy systems and therefore Vermont has renewable energy, but at the same time they are selling the RECs to out-of-staters,” Post said.
“And now these out-of-staters, having bought these pieces of paper from Vermont, can say they have satisfied their renewable portfolio standard in their state. All of that, of course, is bookkeeping.”
The potential loss of $50 million in REC revenues would force Vermont utility companies to raise electric rates overnight — possibly by as much as 6 percent this year, and even more in subsequent years.
While the REC crisis might have been remedied through a brief, stand-alone bill, lawmakers have instead crafted a 50-page bill that launches a comprehensive overhaul of the state’s energy system.
“Something had to be done to correct the RECs, but I don’t believe that meant the state should now set up these very ambitious renewable energy goals, and also these distributed renewable energy goals, and also the energy transformation portion of this, which I believe would actually cause electric usage to increase quite a bit,” Van Wyck said.
In recent years, Vermont has been on a renewable-energy kick and is experiencing higher electricity costs as a result. As shown in the following data from the U.S. Department of Energy, the average retail price of electricity in Vermont has gone up every year since 2008 while surrounding states have seen prices go down.
Over a recent five-year period, electricity prices in Vermont have risen from 12.3 cents per kilowatt hour to 14.2 cents per kilowatt hour, or about 15 percent. The cost can only go higher as H.40 replaces low-cost energy with high-cost renewables.
When asked why the committee passed a comprehensive overhaul of Vermont’s energy system to fix a broken REC trading system, Van Wyck said it was part of a larger environmentalist agenda.
“In Gov. Shumlin’s inaugural address, he talked about his energy innovation program, and I think this bill in many ways incorporates what he was speaking about,” he said.
“I agree just to fix the RECs could have been simple, but this I believe is in many ways an implementation of that program of his.”
Van Wyck added that the push for a comprehensive change to Vermont’s energy system is also coming from the Department of Public Service.
“In many ways this bill was (produced in) communication with members of his Department of Public Service — that has come out in committee more than once. The people who wrote the bill were in communication with the Department of Public Service.”
Regardless of who or what is behind the passage of H.40, Post says there’s plenty of irony to be found in the REC controversy.
“Vermont is building renewable energy and reducing CO2 — it just can’t take credit for it. In other words, we’re ruining our meadows, we’re ruining our ridgelines, but Connecticut can take credit for it.”
Contact Bruce Parker at [email protected]