Important legislation in Vermont – Call your Senators

Greetings friends and local energy committee leaders,

As you likely know, there is a bill under consideration in the Legislature — H.40   aimed primarily at avoiding a likely 6 percent rate increase if Vermont fails to address our current regulatory (double) counting of RECs, which some New England state’s – Connecticut in particular – have taken issue with. This bill would replace the existing SPEED program and address this problem, which is expected to avoid real financial risk to Vermont ratepayers and bring more renewables online in Vermont and New England. It not only will bring Vermont on par with 29 other states that already have a mandatory Renewable Portfolio Standard for electricity, but it will also help Vermonters start reducing their heating and transportation energy costs too.

There is far more information about the bill below, but I’m writing today because there is likely an effort afoot to add an amendment in the Senate today to strip the particular component of the bill — Tier III — which is the primary cost saving, greenhouse gas reducing component of the policy. YOUR SENATORS
(legislature.vermont.gov/people/all/2016/Senate) NEED TO HEAR FROM YOU TODAY TO PASS H.40 WITH TIER III INTACT. H.40 passed Senate Natural Resource and Energy and Senate Finance (just yesterday) unanimously.  

PLEASE CALL ASAP and leave a message for your  Senator  at the State House. Here’s how:

Tier I  – A Total Renewable Electric Requirement – 55% of a utility’s annual retail electric sales in 2017 rising to 75% by 2032. All existing or new renewable electric sources qualify to meet this target.

Tier II – A Distributed Generation Tier – 1% of a utility’s annual retail electric sales in in 2017 rising to 10% by 2032. All new community-scale distributed generation, starting in 2015, would be eligible.

Tier III – The Energy Transformation Tier –  2% of utility’s annual retail electric sales (BTU equivalency) in 2017 rising to 12% in 2032. This tier sets targets for additional utility-led or utility-partnership projects that reduce customer fossil fuel consumption and save money, such as weatherization, biomass heat, cold-climate heat pumps, transportation efficiency etc.

Tier III – requiring utilities to implement programs (or foster the implementation of programs) that reduce fossil fuel use – is also the significant cost-saving component of the bill.

The Public Service Department, based on recently released (reference case estimate of fuel prices/middle range) numbers of the Energy Information Administration, estimates RESET will save Vermonters $390 million over time. (The estimated savings if fuel prices were on the low end would be about $150 million net energy cost savings and for the high end over $900 million net energy cost savings.). This significant ratepayer savings happens because it will allow Vermont to use the existing grid more efficiently; getting more kWh from the same system.

Vermont ratepayers have already enjoyed the benefits of making better use of our grid. To date, Vermont’s ability to avoid investing in transmission and distribution upgrades has saved ratepayers an estimated $400 million. That’s what this program is aimed at continuing to do.

It is estimated that RESET will reduce Vermont’s GHGs by 25 percent — and this too will be helped significantly by Tier III, with its requirment that utlities focus on helping customers reduce their fossil fuel use, which means helping them seal leaky buildings (and stop wasting so much money, heating the outside).

The Bill Also Includes Many Safeguards for Tier III to Help Avoid Rate Impacts:

If utilities are unable to motivate their customers to take up the programs they advance under Tier III, there are 8 specific and essential parameters the bill puts in place to serve as a safety valve for Vermont ratepayers. They include:

1. The ability for utilities, after making a good faith effort, to petition the Public Service Board to waive the Alternative Compliance Payments (ACPs), as well as petition the board to reduce or even eliminate their Tier III requirement in a given year, period, if there was likely to be a significant rate impact at a given time.

2. The reduction in the ACP for Tiers II and III from 7 cents to 6 cents.

3. The language in the bill allowing all utilities to work together in compliance efforts.

4. The language providing that, if a utility can show through an RFP process that Tier II (the distributed generation tier) cannot be met cost-effectively through projects of 5 MW or less, the Public Service Board can allow the meeting of the requirements through larger renewable projects.

5. The provision that if ACP payments are made by a utility to the Clean Energy Development Fund, those funds are used to implement projects in the service territory of the utility making them.

6. There is also the ability for utilities to bank credits. If they do more than required in Tier III in a given year they can use the extra towards the next year’s requirement.

7. Delegation to the Public Service Board to implement various aspects of the proposed legislation through Vermont’s administrative rulemaking process; an arena where customers, utilities and other interested parties can participate in that process.

8. A requirement that the Public Service Department report annually to the General Assembly over the course of the term covered by the bill. That annual report shall include “An assessment of the costs and benefits of the RESET Program based on the most current available data, including rate and economic impacts, customer savings, technology deployment, greenhouse gas emission reductions actually achieved, fuel price stability, and effect on transmission and distribution upgrade costs, and any recommended changes based on this assessment. (2) An assessment of whether the requirements of the RESET Program have been met to date, and any recommended changes needed to achieve those requirements.”

Because it’s impossible to foresee the future, these provisions serve as an important package of safeguards for policy makers, utilities, ratepayer advocates and customers to help avoid or address any unforeseen issues or cost consequences of RESET, and the Energy Transformation Tier (Tier III) in particular.

This bill is not only helping to address a real and looming issue regarding a potential 6-cent rate hike, but it is also helping to meet customers where they are. They want to reduce their energy burdens across sectors – electricity, heating and transportation – and most are interested in starting first with conservation and efficiency (in part, taking some pressure off of the need to develop more in-state generation resources). With Tier III in particular, this bill is creating that opportunity and setting the stage for a more proactive, coordinated, cohesive response to how Vermont meets its energy needs. One of many results from this coordinated, more comprehensive policy direction will be to help better manage (and drive down) system costs.

Johanna Miller, Energy Program Director and VECAN Coordinator