Legislative Report 1/24/2018 - A Practical Approach to Pricing Carbon Pollution

Most people recognize that climate change is happening, that it is caused by burning fossil fuels, and that it has serious environmental and health consequences. The challenge to our generation is how to counter the trend of increasing concentrations of CO₂ and other greenhouse gases (GHGs) in the atmosphere. The most obvious action is to reduce our consumption of fossil fuels.

Our economy and lifestyle depends heavily on fossil fuels for electricity, heating and transportation. We successfully continue to transform our electric generation to renewable, clean sources, making Vermont's electric supply among the cleanest in the country while keeping our electric rates the second lowest in New England. However, despite our goal of reducing Vermont's GHG emissions by 25% compared to 1990 levels, our GHG levels have instead increased by 4%. We cannot be successful unless we address fossil fuel consumption in heating and transportation.

A proposal currently being considered called the ESSEX Plan, an Economy Strengthening Strategic Energy EXchange, was developed by a group of environmental advocates, business people and legislators over the last summer and has been introduced as Senate bill S.284. The goal of the plan is to move dependence on dirty fossil fuels to Vermont's clean electric energy by discouraging use of fossil fuels and encouraging a transition to electricity for heating and transportation. Here is how the plan works.

The EPA during the Obama administration calculated the “social cost of carbon pollution” to health and the economy to be $40/ton. Based on this number the plan starts at $5/ton of CO₂ (5 cents/gallon) and rises steadily to $40/ton (40 cents/gallon) over an 8 year period. The revenue generated goes back to Vermonters in the form of a rebate on electric bills. About $30M would be raised the first year and grows to $240M when the price tops out in eight years. This money would go into a special fund which would be drawn on for the rebates. Each month the amount collected would be allocated to each utility based on its electricity consumed for that month. That share would then be allocated based on whether the revenues came from the commercial, industrial or residential side of fossil fuel consumption. The rebates would be based on the amount of a customer's electricity usage. The revenues from the commercial and industrial customers would be rebated to them. The revenues from the residential customers would be divided based on income and geography.

Of the residential revenue 50% would be rebated to all residential customers, 25% would be rebated to customers in rural areas, and another 25% would be rebated to low income customers. Low income Vermonters in rural areas would get both bonus rebates. This formula is in recognition that Vermont is a rural state that requires longer commutes for rural residents and that low income residents pay a proportionally higher share of their income on energy costs. This strategy should encourage Vermonters to use less fossil fuel by transitioning to technologies like cold climate heat pumps, electric vehicles, mass transit, carpools and other strategies to reduce their carbon footprint.

So, how does this strengthen the state's economy? First of all, it makes Vermont more affordable. While electric rates themselves won't be affected, the carbon rebates, itemized on consumers' electric bills, will significantly decrease the net cost of electricity. Vermont's already low rates relative to our neighboring states will be even more attractive to businesses. Secondly, Vermont is not a source of fossil fuels, so 80 cents of every dollar spent on fossil fuels leaves Vermont. On the other hand, Vermont's electricity is increasingly sourced within the state or region, keeping millions of dollars of energy spending in Vermont. Third, transitioning from fossil fuels to electricity will add more well-paying green jobs to the 17,500 already created in Vermont. Finally, we are not alone. Vermont's New England neighbors and New York are poised to introduce their own carbon pricing legislation in the coming weeks making this a regional effort.

This method of carbon pricing is innovative and environmentally and economically beneficial. I look forward to a productive dialog about this plan and will host an informational forum on the topic at the Charlotte Senior Center on February 12 at 7:00 PM. I hope to see you there.

As always, I can be reached by phone (802-233-5238) or by email (myantachka.dfa@gmail.com).

Interview with Jon Copans, Deputy Commissioner of the Public Service Department

The November edition of the Chittenden County Democrats Show featured Deputy Commissioner Jon Copans from the Vermont Department of Public Service. Jon talked to host Mike Yantachka about the role of the PSD in energy policy, the difference between the PSD and the Public Service Board (PSB) and the status and challenges of energy and telecommunications in Vermont. The interview can be seen here.

Legislative Report 5/20/2015 - End of Session

Remember the Rubik's Cube? I always had a hard time solving that 3D, 3-axis puzzle. The last week of the legislative session seemed like trying to solve a giant Rubik's cube of legislation. Fourteen bills were assigned to Committees of Conference because the House and Senate could not agree on details in the versions each chamber passed. In addition to those bills, the Immunization bill (H.98), the Water Quality bill (H.35) and the Energy bill (H.40) still had not been settled.

Early in the week the House Health Care Committee took a couple more days of impassioned testimony on whether to retain the philosophical exemption or to remove it before finally bringing it to the full House for a vote. The hours-long debate on the floor reflected the range of opinions heard in testimony. Several amendments were offered before the House voted to remove that exemption while retaining the religious and medical exemptions. The 85 to 57 vote crossed party lines as individual legislators made up their own minds on the legislation. Following the decision on vaccine exemptions, the House voted quickly to concur with the Senate on proposed amendments to the Water Quality bill, which will put Vermont on the path to reducing phosphorous runoff into its lakes and streams.

 

By Friday afternoon most of the conference committees reported agreement on all but the Budget, Revenue, Health Care, and Education bills, and the Senate was still debating amendments to the Energy bill. Earlier in the afternoon we passed the very important Child Protection bill (S.9) which requires any mandated reporter who reasonably suspects abuse or neglect of a child to report it to Department of Children and Families instead of to a superior, and it improves cross-agency communication for child welfare cases. Typical of the "hurry up and wait" character of the session's final days, the House was repeatedly recessed to await updates on the status of conference committee negotiations.

 

Friday evening we received from the Senate its amendments to the Energy bill, and the House quickly concurred in its passage. The Senate left the provisions adopted by the House and added provisions regarding siting of solar energy projects. They include giving municipalities automatic party status in Public Service Board hearings, defining minimum setback requirements, and allowing municipalities to define screening requirements. Passage of this bill satisfies the objections Connecticut and Massachusetts had regarding Vermont's double-counting of renewable energy credits (RECs) and avoids the loss of $50M in annual revenue for our utilities, thereby avoiding a potential 6% increase in electric rates.

 

Saturday brought the passage of the Education bill and the Health Care bill. The Health Care bill had been trimmed back considerably because of an inability to agree on funding. What remained was a 33 cent/pack cigarette tax increase and subjecting soda to the 6% sales tax. The package contains $3.2 million in new state health care spending, which is eligible for roughly another $3 million from federal matching funds. The money will be used to level-fund Vermont Health Connect subsidies for out-of-pocket costs, target increases to Medicaid rates, and invest in initiatives to strengthen the primary care system.

 

As late as Saturday afternoon negotiations were still going on among the House and Senate leadership and the Governor regarding how the agreed upon budget would be funded. $53M in program cuts had been agreed upon with the expectation that $30M in additional revenues would have to be found. This represents $3M more in cuts and $5M less in revenues than originally passed by the House. Finally, around 10 PM the final agreements were made and the House gave final approval to the Budget. After the traditional speeches from the leaders of the Progressive, Republican and Democratic parties, the Speaker of the House, and the Governor, the session was gavelled to a close just before 11 PM.

 

I can be reached by phone (802-233-5238) or by email (myantachka.dfa@gmail.com).

The Word in the House 2/18/2015 - Vermont's New Renewable Energy Policy

Q. What would lead to a 6% increase in Vermont's electric utility rates? A. Doing nothing.

 

For the last 10 years, Vermont has grown its renewable energy industry under a program called SPEED (Sustainably Priced Energy Enterprise Development). Under that program Vermont became a leader not only of utility based Renewable Energy (RE) development, but of distributed generation with net metering. Distributed generation means that the energy is generated close to where it is consumed. Set to expire in 2017, the SPEED program is in need of retirement now, however. As our neighboring states in the New England regional grid have set their own renewable energy standards, Vermont's SPEED program has come under criticism because we allow the Renewable Energy Credits (RECs) to be sold to utilities outside of Vermont while the energy that is produced is counted toward our in-state RE requirements. This “double-dipping” has become unacceptable to Connecticut and Massachusetts who claim that selling VT RECs to their utilities suppresses RE development in their states. 

 

The REC market operates much like a stock market with RECs associated with different types of RE generation having different values. Thus, a utility generating power with high-value RECs can sell those and buy back lower value RECs as long as that type of energy is considered renewable in the state the utility operates in. Utilities with excess RECs can sell them to reduce their operating costs.

 

If CT and MA stop buying Vermont RECs, a significant revenue stream for our utilities that has helped to keep our rates among the lowest in New England will disappear. The immediate impact would be a 6% increase in our average electric rates. To prevent this the House Natural Resources and Energy Committee with the help of the Department of Public Service has written legislation to replace the SPEED program with what is known as a Renewable Portfolio Standard. It would set the goals for RE generation for our utilities and require the RECs to be retained, thereby bringing our policies in line with those of our neighbors. Already the potential for passage of this legislation has led CT to hold off on legislation preventing its utilities from buying VT RECs.

Our bill, H.40, establishes the Renewable Energy Standard and Energy Transformation (RESET) Progam. It is designed to grow the share of Vermont's electricity consumption that comes from RE sources, to support new community-scale distributed generation, and to promote innovative projects that reduce fossil fuel use and save Vermonters money. There are three tiers:

1. Total Renewable Electric Requirement – 55% of sales by an electric utility in 2017 rising to 75% by 2032 will be from renewable sources. These goals are already in law, but will now require REC retention. Utilities may still sell RECs in excess of the mandated requirement.
2. Distributed Generation – 1% of sales in 2017, rising to 10% in 2032, will come from distributed generation including net metered solar, wind, hydro, and bio-fuels as long as the RECs attributed to that generation are retired by the utilities benefiting from them.
3. Energy Innovation Projects – 2% of sales in 2017 rising to 12% in 2032 would come from energy transformation projects. This tier sets targets for utility-led or partnered projects that save fossil fuels for heating or transportation and save money for consumers. Measured in BTU-equivalents (thermal units of energy), projects which save fossil fuels by either conservation or transformation can be counted toward this RE requirement. Examples include weatherization, cold-climate heat pumps, geothermal heat pumps, electric vehicles, and biomass heating. These projects would count only if they are in addition to those already happening through existing regulatory programs or state funding.
   

 

By proactively adopting the RESET Program, rate increases are projected to rise by less than 0.5% by 2017, more than 1000 new jobs will be created in the industry, more than 400 megawatts of new distributed generation will be added, and by 2032 about 15 million metric tons of greenhouse gases emissions will be avoided and $275M will be saved on Vermonters' energy bills.

 

I continue to welcome your thoughts and questions and can be reached by phone (802-233-5238) or by email (myantachka.dfa@gmail.com)

The Word in the House 1/19/2014 - An Energetic Start

After a general election the legislative session usually starts pretty slowly as new legislators are oriented and start to learn the subject matter of the committees they have been assigned.  Every bill is born into existence from scratch and the numbering starts from “1”.   However, the beginning of the second session of a two year term is very different.  Bills that were passed by one chamber are already waiting for action in the other.  Some bills that were passed by both chambers with differences that could not be resolved before the final gavel fell last May have been negotiated over the summer by conference committees, and the resulting compromise language is ready to be voted on by both chambers.  Bills that were not acted on last year may find new life.  And many new bills will be introduced.  Committee work starts at a full run, and by the end of the first week, despite the ceremonial joint sessions with the Governor, it seems like we’ve been here a month. 

As I’m writing this at the end of the second week of the session, my committee – the House Natural Resources and Energy Committee – has crafted a bill that will ensure that Vermont’s solar energy industry will continue to grow and create clean energy and jobs.  Net-metering was instituted in 1999 as a way to allow small generators of renewable energy to run their meter backwards.  By 2001 there were 33 net metered systems in Vermont, including 6 small wind and 27 solar systems.  By the end of 2010 this number grew to 153 small wind and 1112 solar systems plus 6 farm methane systems providing a combined total of 12 megawatts (MW) of electric generation capacity. 

In 2009 Green Mountain Power started paying their net-metered customers an additional 6 cents per kilowatt-hour (kwh) for electricity they generated because GMP calculated that it had a net savings attributable to net-metering.  This savings was the result of not having to buy expensive electricity from other generators in New England during periods of peak electric demand.  These peak periods occur during the summer air conditioning season.  As a result the legislature passed a law in 2011 requiring all Vermont electric utilities to pay a “solar adder” which is the difference between 20 cents/kwh and what the utility would normally charge their customers. So for each kwh generated by a net-metered solar system, the customer will be credited 20 cents on their bill. Since then, with the cost of solar panels dropping, solar net-metering has become extremely successful, growing to 39 MW of capacity with more than 2100 systems.  Thousands of jobs have been created in Vermont as part of this industry.

Until now no utility was allowed to accept more than 4% of its total peak demand in net-metering installations.  In 2013 several small utilities ran up against this cap and had to turn away customers who wanted to install solar systems.  The bill our committee developed over the last two weeks addresses this problem and will carry this growth momentum forward allowing consumers to take full advantage of the federal solar incentive tax credits that are anticipated to expire at the end of 2016. It amends the existing solar net-metering program through December 31, 2016, and sets the framework for a future program that would take effect on January 1, 2017.  It increases the cap on participation from 4% to 15% of a utility’s peak load, allows streamlined permitting for solar systems up to 15 kilowatts, and keeps the solar credit at $.20/kwh for smaller projects of 15kW or less while achieving cost savings for utilities by reducing it to $.19/kwh for projects over 15kw. 

The bill also sets the framework for a future net-metering program. It requires the Department of Public Service to undertake a study of net-metering in 2014, and requires the Public Service Board to develop proposed rules for a new net-metering program by January 1, 2016.  These new rules would not be effective until January 1, 2017, giving the Legislature an opportunity to review the rules during the 2016 session.  The bill is scheduled to be voted on this week in the House.

The Word in the House 5/2/2013 - Siting of Electric Generation Facilities

The Legislature is in the final weeks of the session, and the number of bills coming to the floor for a vote each week number in the dozens.  Many are technical and non-controversial in nature and are passed after an explanation of their provisions by a member of the committee that had primary responsibility for the bill.  Some bills, previously passed by the House that came back with changes made by the Senate, have been voted on again, either to concur with the changes and to send them on to the Governor, or to disagree with the changes and to commit them to a conference committee.  Conference committees consist of three members of the House and three members of the Senate.  If a compromise is agreed to in conference, the bill comes back to the floor of each body and is voted up or down with no other amendments allowed.

Last week one of the Senate bills that were voted on by the House was S.30, which deals with the siting of electric generation plants.  S.30 started as a call for a three year moratorium on wind generation projects along Vermont ridgelines.  By the time it was voted out of the Senate, it had been reduced to requiring a study of environmental, health and economic effects of wind projects to be conducted by the Department of Public Service with the assistance of the Agency of Natural Resources, the Department of Health, the Department of Taxes, the Agency of Commerce and Economic Development, the Public Service Board, and several other entities.  It was not clear whether this was to be a study of studies or would consist of original research.  Furthermore, only $75,000 was allocated for the study and it had to be completed by November 15, 2013. 

The bill was assigned to the House Natural Resources and Energy Committee on which I serve.  We took two weeks of testimony, hearing 50 witnesses including property owners near the Lowell and Sheffield wind farms, health experts, and representatives from the affected state agencies and departments, from environmental organizations, and from regional and local planning commissions. Several witnesses reviewed with us studies dealing with many of the topics included in the bill.  We also heard from the Governor’s Energy Generation Siting Policy Commission, which had been established to study exactly the issues raised by the Senate and which was about to issue its report.  The common threads we heard throughout included:

·         Keep the conversation going.  All the concerns need to be considered and addressed.

·         Use the recommendations of the Governor’s Siting Commission.  Many experts have done a lot of work to examine the problems and propose solutions.

·         Maintain a balanced approach.  Make sure the legislative process is not weighted toward a pro- or anti-wind bias.

After reviewing the testimony, our committee decided unanimously to alter S.30, limiting it to a review of the Siting Commission’s recommendations with the goal of developing appropriate legislation on the siting of any electrical generation facilities taking into consideration Act 250 and the PSB’s Section 248 process, regional and local plans, setbacks from residences, and other concerns. This work will be done by the Natural Resource Committees of the House and Senate meeting together up to six times between now and December.  The bill passed the House on a vote of 140-3 and now goes back to the Senate which is expected to concur.  I look forward to being part of this effort later this year.

The past week and a half also saw legislation passed that requires public employees’ unions to assess a “fair share” fee on non-union members for the benefits they receive through the bargaining process and for grievance representation which unions are required to do.  A supplemental education finance bill, H.538, was also passed which is expected to save about $5.5M of education spending if implemented.  The various provisions of H.538 have different levels of support from different constituencies.  While everyone seemed to find something they didn’t like in the bill, overall it received overwhelming support and passed on a vote of 110-24.

I have heard from many of you on a variety of topics and continue to welcome your input.  You can email me at myantachka.dfa@gmail.com or call me at 425-3960.