By Bruce Parker | Vermont Watchdog
A bill that requires a green energy takeover in Vermont skated through committee and a preliminary House vote despite no clear estimate of what the legislation will do to electricity rates or the state’s pristine landscapes.
But Republican lawmakers hope to strip parts of the bill Tuesday, and poor modeling on the bill’s true impact could invite fresh scrutiny in the Senate.
Prior to the mid-session break, H. 40 sailed through the House Committee on Natural Resources and Energy by a vote of 10-1. In the House, the bill received a preliminary vote and passed by a 127-11 margin.
At that time, lawmakers had no information on the economic impact of the legislation.
On Feb. 23, a memorandum sent by state economist Tom Kavet to the Joint Fiscal Office and the House Ways and Means Committee said “the full economic impacts of the program have yet to be modeled.”
Kavet, who reviewed estimates from the Department of Public Service, reported in the memo that the estimates are “are sensitive to relative energy prices, the mix of assumed renewable energy investments, (and) uncertainty regarding actual vs. projected savings per investment.”
The Department of Public Service, widely viewed as the originator of the bill, claims H.40 will deliver energy-bill savings of $275 million, a 15 million metric ton reduction of CO2 emissions, and 1,000 new jobs.
While Kavet’s memo notes direct costs to the state might be in the $2 million range, it said “fiscal gains or losses from secondary impacts are impossible to estimate.”
Referred to as RESET, H.40 requires that 75 percent of electricity sold in the state be generated from sources like wind, solar and biomass. Utilities must provide 55 percent of power from renewables starting in 2017 and reach the 75 percent target by 2032.
The bill’s speedy approval so far is likely owed to Vermont’s carbon-credit crisis. Over the past year, the Green Mountain State was caught double-counting carbon credits sold to other states. A boycott of Vermont’s carbon credit sales would cause an immediate 6-percent rise in electric prices, as utilities would lose $50 million in carbon trading revenue and be forced to raise rates.
Despite the easy ride so far, H.40 may be about to hit some turbulence.
House Minority Leader Don Turner, R-Milton, told Vermont Watchdog on Monday that a “strike everything amendment” will be introduced Tuesday to remove “tier three” of the bill. That “innovation tier” requires utilities to reduce customers’ energy use through the sale and installation of high-efficiency equipment, such cold-climate heat pumps.
“We don’t think utility companies can just be turned into efficiency companies,” he said.
Turner added the financial impacts of the legislation need vetting as the bill moves on to the Senate.
Dave Hallquist, chief executive officer of the Vermont Electric Cooperative, said H.40 requires utilities like his to get into a new line of business.
“Typically, a distribution utility’s strength is keeping the lights on. But getting into actually providing home appliances is something we as a co-op haven’t done since the 1960s. … We have to think about how we can compete in a market we haven’t competed in,” he said.
Hallquist said he is researching how VEC might promote, finance and lease hybrid air-to-air water heating systems to customers.
While Hallquist says the appliances work, he said utilities likely would need to outsource the work to Efficiency Vermont, a state-sponsored efficiency utility.
“The last thing I want to do is be going into our members’ homes and be installing systems. But I would love to partner with somebody who would do that,” he said.
When asked if it was the state’s job to require efficiency upgrades for private homes and businesses, Hallquist said the state could “create a market where a market may not exist.”
“(Take) for example the Northeast Kingdom. Without this bill, would anybody be going up there and promoting hybrid hot water heaters? It’s questionable if the business case is there without this bill,” he said.
The business case, according to Hallquist, is that customers could purchase efficiency appliances and finance them over 10 to 20 years. Over that time period, the customer would supposedly save as much on energy bills as the appliances cost.
If the business model doesn’t get enough consumers to bite, utilities could face a stiff penalty. The alternative compliance payment in H.40 amounts to a penalty of 6-cents per kilowatt hour.
Vermont Electric Cooperative’s chief said if it doesn’t work out, utilities might have the option to negotiate changes through the Public Service Board.
“There are a lot of assumptions, and there’s a lot that can go wrong. But there are carve-outs (in the bill) if things do go wrong. We’ll go to the Public Service Board and make our case. The bill has off-ramps built into it.”
Contact Bruce Parker at [email protected]