Renewable energy bill gets last-minute overhaul

Senate President Pro Tem John Campbell

Senate President Pro Tem John Campbell. VTD/Alan Panebaker

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.

Read the PSB report.

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.

Corrections: We originally reported that Brock used Rep. Paul Ralston’s amendment. Though similar, it was not written by Ralston. Also, we reported that the state’s standard offer total of 127.5 megawatts would represent 10 percent of the state’s total energy requirements. It is actually 4 percent to 5 percent.

Anne Galloway

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  • Anne,

    “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.”

    OTHER states need an RPS, Vermont does not, because its CO2 emissions from energy generation are less than 4% of Vermont’s total CO2 emissions. Vermont is already LEADING the nation in lowest CO2/$ of Gross State Product, or per capita.

    In Vermont, the CO2 emissions are commercial 11.1%, energy generation less than 4%, industrial 23.8%, residential 7.9%, transportation 57.2%, per US EIA and per State Energy Data System.

    Each Vermonter consumes about 254.5 million Btu/yr; US average 308 million Btu/yr, Europe’s average about 145 million Btu/yr.

    Vermont (and the US) needs increased energy efficiency, the most effective and lowest cost way to reduce CO2 emissions.

    What Vermont needs is not RE, but:

    – Gas-guzzler tax, based on mileage (the lower the mileage, the higher the tax).
    – Strict, enforced building energy performance codes (Btu/sq ft/yr for heating, cooling and electricity).
    – Time of day, TOD, electric rate schedules. The rates would vary hour-by-hour as daily demand varies. This would flatten the daily demand curve more effectively and at less cost than Efficiency Vermont’s staff of about 180 people and $40 million/yr budget.

    These measures would require minimal public funds and subsidies, would quickly create jobs all over the state and would quickly and more effectively reduce Vermont’s CO2 emissions many times more at less cost than any RE buildout; for poor Vermont, increased EE is the most rational approach.

  • Mike Feiner

    You just have to love the ineptitude of a Democratic Senate, House and Governorship when it comes to getting progressive legislation passed!

    It’s always heralded as the panacea to all our legislative woes, if only we had control of Congress, and a Democratic Governor, you’d be amazed at the progress we could make. What’s amazing, is how much doesn’t get done, and how many “study committees” get passed to make sure nothing gets done!

    Imagine for a second how much would get done if Republicans were in control of Congress, and had the support of a Republican Governor.

    Yeah, amazing, isn’t it?

  • Anne,

    “The (SPEED) 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.”

    This standard is grossly inadequate. Vermont should be leading the nation by having competitive bidding to implement RE that has the lowest environmental, noise, health, real estate impacts (i.e., no utility-scale industrial ridge line wind turbines), and has the lowest cost per installed kW, and produces energy at the lowest cost/kWh.

    Anything else will be harmful to Vermont’s economy, will gratuitously raise electric rates for already-struggling households and businesses, will raise the prices of goods and services, will lower living standards, and will make Vermont less competitive relative to other states.

    The 127.5 MW SPEED program will artificially increase electric rates at exactly the wrong time given Vermont’s precarious economic conditions, and may actually INCREASE Vermont’s existing CO2 emissions.

  • Kudoes to VTDigger for this even handed, accurate explication of a very complicated subject.
    It’s a disgrace to the legislative process that this exceedingly complicated legislation should be rushed through the Senate in minutes.
    I can’t help but believe that 20 years from now, when twenty distributed 200Mw integrated fast breeder reactors are quietly churning out Vermont’s power needs by burning up the energy ion the spent fuel rods stored at Vernon, some of us will look back and say “what for did we subsidize all that high cost renewable energy, and leave Vermonters poorer, except those well connected energy developers?”

  • Kevin Jones

    As an environmentalist and renewable energy advocate with 25 years experience in the electric power industry I find myself in agreement with Senator Randy Brock’s assessment of this legislation. If the Vermont Democratic leadership continues the SPEED program and extends the Standard Offer program but continues to allow the utilities to sell the renewable energy credits out of state then the Vermont renewable energy program will continue to be one that has no net benefit to the global climate, it will raise customer rates, it will give ratepayer money to energy project developers whose projects will be registered by the utilities in out of state renewable programs (and thus cannot be called renewable energy for Vermont), for the ratepayer subsidy Vermont electric customers will get credited with purchasing dirty brown power (a mix of coal, gas, oil, nuke, etc.), and for all this Vermont legislative leaders will continue to claim ownership of the most fundamentally flawed and deceptive energy policy in the nation. So yes, I agree with Senator Brock’s comment below:

    Randy Brock, a Republican from Franklin and candidate for governor,…. 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.”

    • Avram Patt

      Just to be clear about something that isn’t clear in Kevin Jones’ comment:
      When a Vermont utility sells RECs associared with in-state generation it either owns or is purchasing, the RECs revenue goes to reduce the cost of service to the ratepayers. That’s why there’s more complexity to this than he states. The revenue is a direct dollar-for-dollar benefit to the ratepayers, in some caes a significant one, even if the renewable attributes are credited elsewhere on the New England grid.

  • Kevin Jones

    While Avram Patt is correct that revenue from the sale of renewable energy credits (RECs) is a revenue credit to rates his point is irrelevant to the arguments I make against the Vermont SPEED and Standard Offer programs. While selling the RECs results in a credit to rates, both the SPEED and Standard Offer programs, including this rate credit, result in a net increase in rates for Vermonters which is the point I made. Vermont is the only state in the union that sets a goal for utility purchase of renewable energy and then incents the utilities to sell that renewable energy out of state to meet other states renewable goals. The net result for Vermonters is that utility rates increase, there is no net reduction in emissions, and the Standard Offer energy and SPEED program energy that is left for Vermonters is brown energy not clean renewable energy. Every other New England State, New York, and many others use Renewable Portfolio Standards that require the retirement of the Renewable Energy Credits so their customers pay a premium for this energy but they also have a positive impact on climate change and other environmental problems. While Avram’s point seems to be we pay a smaller premium for this energy then everyone else there is no environmental benefit for this premium payment. Why pay more for no climate change benefit? That is why I argue that the SPEED and Standard Offer programs are both expensive and deceptive. It is bad public policy and no more complex than that.

    • Kevin,

      Not to defend wind on ridge lines, but Lowell does reduce avoid CO2 emissions.

      The RECs are sort of script given to GMP to sell to out-of-state entities that do not want to spend the money to ruin a ridge line with IWTs in their states.

      The net effect:

      – CO2 is reduced in the NE area
      – GMPs energy cost, likely higher than its “Alice-in-Wonderland” 10 c/kWh, is offset by about 5.5 c/kWh
      – the out-of-state entity is off the hook for another year

  • Randy Pratt

    To expand on Avram’s point, it seems Kevin Jones’ solution would be to do away with SPEED, which allows utilities to reduce the costs of renewable projects like Kingdom Community Wind that are substantially or already built. Stop SPEED now (by replacing it with an RPS, for example) and we will have truly built these projects without reason.

    Whether SPEED was good or bad policy seven years ago isn’t worth debating — it is what it is and the legislature was right not to end it. Hopefully we can now transition to a greener portfolio sensibly and without unnecessary extra costs.

    Randy Pratt
    Vermont Electric Cooperative

    • Randy,

      The cost of the SPEED program for projects 2.2 MW or less, appears to be on auto-pilot and is about to balloon, based on a spreadsheet analysis of published state data.

      The ballooning cost, plus the cost of grid modifications, will significantly increase the electric rates of already-stressed households and businesses.

      Using the CEDF to subsidize politically-favored, expensive, tax-sheltered SPEED projects (mostly owned by millionaires), that produce RE energy at 3.5 times grid prices, will cause the ballooning to accelerate.

      Solar project owners getting 30% federal cash up front, plus CEDF subsidy, plus accelerated write-offs, plus a 30 c/kWh feed-in-tariff, amounts to a license to evade taxes and to print money, at the expense of all others.

      Vermont aims to have 20% of retail consumption from RE by 2017 = 0.2 x 5,554,500,000 kWh/yr = 1,110,900,000 kWh/yr

      Assume 30% of it is produced by SPEED projects 2.2 MW or less = 333,270,000 kWh/yr

      The excess costs = (avg annual cost of SPEED RE – avg annual grid price) x annual production were:

      2010, $506,871
      2011, $2,204,334
      2012, $3,423,473

      The projected costs are:

      2013, $5,862,804
      2014, $10,036,478
      2015, $17,175,205
      2016, $29,381,491
      2017, $50,246,975

      These amounts will be rolled into electric rates, plus the excess costs of the SPEED projects greater than 2.2 MW, such as Sheffield, Lowell, etc., that will supply a total of 777,630,000 kWh/yr by 2017.

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