The Vermont House on Tuesday passed a bill designed to
reduce residents’ carbon footprint, despite complaints from Republicans who
fear the new renewable energy targets will come at an unforeseen cost.
The House voted 121-24 to pass H.40, which
puts in place a renewable energy standard requiring utilities to sell
electricity from renewables and reduce the fossil fuel consumption of their
customers. The bill now goes to the Senate.
RESET, as the bill is known, requires utilities to sell a
certain percentage of their electricity as renewable. Some of that electricity
would have to come from wind and solar farms in Vermont. The percentage
increases from 50 percent of sales by 2017 to 75 percent by 2032.
The bill is likely to address a problem under Vermont’s
current SPEED program that has made it difficult for utilities to sell
renewable energy credits into a regional market. Without the revenue from these
sales, utilities’ rates would rise roughly 6 percent statewide. It is also
designed to foster the growth of local renewable energy generation and allow
the state to meet its long-term greenhouse gas reduction goals.
Utilities would also be required to reduce their customers’
fossil fuel consumption — a controversial provision in the bill known as Tier
3. The law gives state regulators nearly complete discretion to determine how
utilities meet this obligation.
The bill is designed to make is easier to pay for projects
that reduce fossil fuel consumption. Utilities could help customers cut down on
fossil fuel use by lending them money for weatherization and heat pump leases,
for example. But the bill allows utilities to increase rates if they decide to
meet these obligations by hiring staff or making direct capital investments.
If the bill passes, residents will be using more electricity
and less oil, propane and gasoline, but House Republicans worry that shift will
increase power rates.
“My constituents would have concerns that we are going to
raise their utility rates, potentially, to stop them from buying fuel oil for
their homes,” said House Minority Leader Rep. Don Turner, R-Milton.
The Shumlin administration estimates the proposed program
will slightly reduce rates in the long term. Also, customers would purchase
more electricity to power appliances, but they may save on other energy costs.
Turner is not confident in the Department of Public
Service’s analysis of the rate impacts. He did not cite any studies supporting
his claim, but said he has heard from residents concerned about the program’s
cost.
His amendment to remove the Tier 3 provisions was defeated
42-99. He said the vote was intended to say “slow down.” His amendment, he
said, would have addressed concerns from utilities in the region that have
stopped buying renewable energy credits from Vermont fearing they are invalid.
“The purpose is, I want Vermonters to see that we support
fixing this problem, but we’re not willing to go to the next step, which is
another aggressive, very ambitious program that makes a number of assumptions that
rates will be less in the future,” Turner said.
According to Darren Springer, deputy commissioner for the
Department of Public Service, eliminating the final requirement of the bill —
which would encourage consumers to reduce their fossil fuel consumption — would
eliminate $275 million in energy savings. It would also cut in half the
projected greenhouse gas reductions, reduce job growth associated with the
program and create a 4 percent rate increase, he said.
Springer said the Tier 3 section allows utilities to offset
their fixed costs with additional electricity sales at times when demand is
already low; as a result, they can make more efficient use of the existing
poles and wires. This drives down the cost to serve each customer, he said.
“It’s like a factory and you’re using two shifts. If we’re
able to do heat pumps and [electric vehicles], it’s like adding a third shift
in the same factory. So you’re going to get more production out of that
factory,” he said. “You’re going to get more production out of the same grid.
That’s a ratepayer benefit.”
The bill spurred a much broader debate about how utilities
should pay for their obligations under the policy. As it stands, Vermont
regulatory law allows utilities to recover money for prudent investments from
their customers. But some lawmakers say this is like a hidden tax that is going
to rise under the proposed program.
Rep. Cynthia Browning, D-Arlington, offered an amendment to
prevent utilities from recovering the cost of certain investments from
ratepayers. She said ordinary ratepayers should not have to finance projects
designed to meet state policy goals.
“This new program will inevitably end up in the rate base,”
she said. “I don’t consider this a good way to go forward. I like arm’s length.
I don’t consider it a good thing when we impose what are essentially taxes on
ratepayers to meet state goals.”
The amendment would have created a hurdle for utilities to
make investments necessary to meet their obligations under the bill, utility
officials say.
Another amendment by Browning would have added siting
standards on energy generation projects. As the state seeks to build more
renewable energy generation in Vermont, neighbors near wind and solar farms
have pushed back. Residents and towns have little say in the Public Service
Board Section 248 permit process. Attempts by lawmakers to change the process
have been opposed by renewable energy advocates.
Rep. Tony Klein, D-East Montpelier, chair of the Natural
Resources and Energy Committee, planned to take up an energy siting bill
Tuesday. He agrees that the state should do more to encourage responsible
development. There are at least nine energy siting bills introduced this
session. A hearing on energy siting will be held March 24 at the Statehouse.
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