May 18, 2012

Vermont renewable energy bill gets last-minute overhaul

It was do or die for the energy bill on Wednesday. After a fight on the Senate floor over the House proposal to expand the buildout of renewable energy projects over the next 10 years, the legislation was on life support by Tuesday night.

The options? The legislation would either pass, die in committee or delay the end of the session.

Wednesday morning a whirlwind of closed door meetings in the governor’s ceremonial office, cursory committee testimony and whisperings in hallway ensued.

A handful of lawmakers hammered out a plan with the Shumlin administration in the morning, a lawyer from legislative counsel then redrafted the bill and lawmakers in Senate Finance spent less than an hour taking testimony from the commissioner of the Department of Public Service. By day’s end the Senate was set to debate the hastily reworked legislation. The bill passed 21-4 late in the evening.

Can you say sausage?

When S.214 (H.468) landed from its missile-like trajectory onto the Senate floor, the legislation, formerly known as the Renewable Portfolio Standard bill, it no longer contained renewable portfolio standards. Presto change, the requirements for utilities to retain renewable energy credits had vanished. Instead, the legislation calls for another study (the RPS recommendations came from a Public Service Board study conducted last year per a legislative request) and expands the “standard offer” program for small renewable projects.

The upshot? Power companies in Vermont can continue to sell renewable credits to out-of-state utilities, defraying the cost of building wind, solar, methane and biomass infrastructure in Vermont. Environmentalists say allowing Vermont utilities to sell credits discourages the development of renewable projects in other states. They call Vermont’s renewables program “brown power.”

Businesses and groups with Associated Industries of Vermont, including the Vermont Chamber of Commerce, the Vermont Ski Areas Association and the Barre Granite Association oppose any new renewable energy mandates.

The state’s largest employer, IBM, is a little happier with the new version of the bill. The last-minute maneuvering gave the company a better guarantee that rates won’t go up dramatically as a result of renewable initiatives.

Janet Doyle, director of site operations and government programs for IBM, said the company pays $36 million a year in electricity rates. The original energy bill would have driven up costs another $4 million.

“The costs are significant,” Doyle said. “We are concerned that if the bill had passed in its current form, it would impact the competitiveness of the site (in Essex) and the workforce.”

Doyle anticipates that other factors, including the expiration of Vermont Yankee and Hydro-Quebec contracts and the implementation of the remaining 42 megawatts of standard offer renewables will already have the effect of increasing rates.

“We didn’t think the state needed to do both RPS and the standard offer,” Doyle said.

The new bill, she said, strikes a “better balance between support for renewables and cost impacts on rates for existing businesses.”

The original energy bill, which included the cost of the renewable portfolio standard and the standard offer, would have increased electric rates by $267 million to $316 million over a 20-year period, according to estimates from the Department of Public Service and Green Mountain Power.

The new, RPS-free bill would cost significantly less, but how much less was an unknown on Wednesday, as Department of Public Service data wasn’t available by press time.

The Shumlin administration wants 75 percent of the state’s power to come from renewables by 2032. Electricity from Hydro-Quebec would account for 40 percent of that total.

The state currently has approved 50 megawatts worth of small, distributed renewable energy projects (2.2 megawatts or less) under the standard offer program and has 8 megawatts online so far. The expansion of the standard offer would increase by 77.5 megawatts. In all, the state would generate 127.5 megawatts or between 4 percent and 5 percent of its power from small renewable projects. The projects would be approved by the state through a competitive bid process instead of set rates based on generation type. The projects would be phased in over a decade: 5 megawatts the first three years, 7.5 megawatts the following three years and 10 megawatts for the last four years.

The investment in renewables would lower the state’s overall carbon footprint by less than 3 percent, according to Asa Hopkins, director of Energy Policy and Planning at the Vermont Department of Public Service. It would account for about half of electricity related emissions. Most of the state’s carbon emissions come from transportation and winter heating.

Elizabeth Miller, commissioner of the Department of Public Service, said the energy bill compromise was necessary if the Legislature was going to move forward this year. She said the questions raised about the RPS deserve further study.

“It ensures the standard offer program continues,” Miller said.

Environmentalists were stunned by the legislative reversal. Selling the renewable credits turns Vermont’s green energy “brown” in their view and undercuts the state’s attempt to shrink its carbon footprint.

Sandra Levine, a lawyer with Conservation Law Foundation, said the renewal portfolio standard is “very important to ensure the energy bill will benefit the climate in a state that has suffered severely from climate change impacts, including Tropical Storm Irene and a terrible winter for ski areas.”

The bill is a “far cry” from what it should have been, according to Paul Burns, executive director of VPIRG, a consumer advocacy group.

“It’s hard to say we’re doing our part to address climate change without joining dozens of states (29 in all) that have an RPS,” Burns said.

“At some point you have to question whether the (renewable energy) targets are achievable if you aren’t taking the necessary steps to get there,” Burns said. “Technology was never the primary hurdle, it was political will.”

Rep. Tony Klein called the dispute over “brown power” an academic argument. He said the decision to pull RPS out of the bill was a “sound decision.”

“We’re the only state doing projects on a wholesale basis,” Klein said. “If that’s what it takes, so be it.”

The most important part of the bill, he said, is the standard offer.

“When we were constructing the bill, we were never hook, line and sinker on RPS,” Klein said. “We always thought the standard offer was the most important part of the bill.”

Did he buckle under pressure from IBM? “IBM always complains,” Klein said. “They complained about everything in this bill. They always come to use every year to tell us what the impact is on them. They are a massive user of power. Anything we do has an impact on them.”

Klein said Vermont can’t compete with New York, IBM’s home turf, because the Empire State gives the company subsidized power at the expense of residential ratepayers.

IBM works with other states, including New York, that have renewable portfolio standards in place, according to Levine. The Vermont law would have created a level playing field, she said.

“They (IBM) should be making investments to reduce their climate impact as a responsible, environmental corporation,” Levine said.
Senate passes energy bill, drops wind and CVPS merger amendments

Senators were testy about the denouement of the energy bill on Wednesday. The Senate Finance Committee had less than an hour to review the bill and get a 30,000 foot view from Commissioner Miller.

A few hours before the Green Room debate, Sen. Tim Ashe, D/P-Chittenden, was perturbed by the alacrity with which the bill was rewritten and ushered into the Senate. Only a handful of lawmakers, he said, actually knew what was in it — despite its potential impact on “every Vermonter.”

When asked what he thought of the bill, he said: “How would I know?”

“If this was a $300 million tax increase, the committee of jurisdiction would have more than five minutes to look at it,” Ashe said. “This $300 million comes out of people’s pockets, just like a tax.”

On the Senate floor, Ginny Lyons, the Chittenden County Democrat who helped to shape the bill, said the legislation would help to create jobs and would benefit small companies investing in solar and wind. She argued the standard offer would lower rates.

“What is in this bill are small, local and distributive generation that’s going to help keep our grid going and help reduce costs related to generation and transmission,” Lyons said.

Randy Brock, a Republican from Franklin and candidate for governor, wasn’t so sure that would be the result.

He called it “an extreme transfer of wealth for a negligbile environmental benefit.”

“Poor working Vermonters are paying the same kilowatt hour charge as wealthy Vermonters do,” Brock said. “Where’s the money going? To a small group of well-connected renewable energy developers.”

The Senate blocked two amendments to the energy bill.

One provision, proposed by Brock, would have prohibited utilities from raising rates for “any costs incurred in satisfying any obligation imposed by the public service board to protect against the unjust enrichment of shareholders.” The amendment was designed to prevent Green Mountain Power from recovering $21 million worth of investments in energy efficiency and weatherization in lieu of a payback for a 2001 ratepayer bailout through rate increases.

The amendment was found not to be germane to the energy bill.

Another measure would have required the “examination of the full environmental impacts of renewable energy plants in Vermont, including specifically the aesthetic and land use impacts of wind generation facilities sited at high altitudes.”

The amendment, proposed by Sen. Joe Benning, R-Caledonia, was defeated, 9-16.


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