Some lawmakers were caught off guard when the state’s energy efficiency utility pitched a plan to go into the business of air-source heat pumps and electric cars – technologies that use more electricity but cut down on fossil fuel emissions.
“What does the future hold in 10 years?” said George Twigg, director of public affairs for Efficiency Vermont, a subsidiary of the national company Vermont Energy Investment Corp. “We don’t necessarily know,” he continued.
Early this session, the utility presented the Senate Finance Committee with a proposal to penetrate the budding industry of electric cars.
“What is an electric car except for a big appliance on wheels?” Twigg said. But lawmakers had little appetite for the proposal to expand the utility’s offerings.
Later, the utility came before the Senate Natural Resources and Energy Committee with a proposal to install heat pumps in homes – a technology to heat homes in mild weather at a third of the cost of propane and half the cost of heating oil. (Heat pumps are not designed to replace traditional heating sources.)
The committee was hesitant to approve the plan. Questions remain over how much demand the new technology would put on the state’s electricity grid and how much it actually would save residents, details the utility would work out later with the Vermont Public Service Board, Twigg said.
But the opportunity to enter the market is now, he said.
“Most of the time there is a huge amount of capacity not being used,” he said, referencing the state’s power grid. “That excess capacity could be used to bring economic savings to Vermonters.”
Sen. Bob Hartwell, D-Bennington, chair of the Natural Resources and Energy Committee, which has been asked to approve the plan, wants to see the state invest more money in insulating old homes before Efficiency Vermont takes on new technologies. Vermont has the second oldest housing stock in the nation.
Hartwell introduced a bill, S.202, designed to put more money into weatherizing Vermont’s buildings. The bill, which died in committee, was a platform that would have allowed Efficiency Vermont to get into the business of heat pumps. Green Mountain Power is starting a heat pump pilot program in Rutland.
Committee member Sen. Mark MacDonald, D-Orange, said the low cost heat pumps would undermine the incentive to invest in thermal efficiency.
According to a February report by the Department of Public Service, propane and heating oil costs $46 million and $34 per million British thermal units (MMBtu), respectively. Heat pumps cost $14 per MMBtu, about equal to wood fuel.
“If you cut the cost of heating your home in half, you just cut in half the homeowners’ savings of doing thermal (efficiency),” he said. “That is what makes this a quirk,” MacDonald continued.
And that is why the committee wants homes sealed up before heat pumps are installed. But the utility does not think that will always be practical given customers’ financial realities.
The utility’s new paradigm may use more electricity – some of which would be generated from renewable energy sources – but save residents money, Twigg said.
“If you can displace a good portion of your propane or oil use with a heat pump, you save a lot of money and you also reduce your carbon footprint dramatically,” he said.
This model works as long as it does not put unnecessary stress on the state’s power grid, he said. The utility proposed working with Green Mountain Power, the state’s largest electric utility, to manage peak demand on the grid.
The committee is auditing the utility. Part of this review is to discover why so few private businesses are retrofitting their buildings.
All businesses, except IBM, pay into the state’s energy savings account, which is money generated from an energy efficiency charge on ratepayers’ bills. Larger businesses can choose to keep 70 percent of these funds for energy efficiency projects. Any remaining money goes to Efficiency Vermont.
According to a December 2013 report by the Department of Public Service, approximately 300 customers qualify for program funds, but few businesses have the resources and staff to embark on energy efficiency projects.
Since the program was launched in 2009, two businesses have made energy efficiency improvements. The committee wants to know why more are not taking advantage of program.
“I thinks it’s a fair thing for the Legislature to ask, and we would be glad to take part in this understanding why more aren’t participating,” Twigg said.
Darren Springer, deputy commissioner of the Department of Public Service, said the department wants to know why so few businesses use the money. He said it could be due to a lack of awareness of the program or the funding scheme.
The committee OK’d a bill Tuesday to allow the department to study the program.
Efficiency Vermont ended the year with a $4 million budget surplus, about 12 percent of the utility’s 2013 budget. The money was raised from the energy efficiency charge. The utility has requested authority from the Public Service Board to carry the surplus over to the following year.
Twigg points out that the utility operates on a three-year budget cycle, and the surplus comes in the budget’s second year.
He said the company has a good track record of ending with a balanced budget every three years. Also, Twigg said, “we are actually ahead of pace on meeting performance goals in terms of energy savings.”