The House on Tuesday approved a proposal to allow the state’s energy efficiency utility to subsidize electric heat pumps. The bill, S.202, passed the House on a voice vote.
Efficiency Vermont uses money raised through the state’s energy efficiency charge – a fee placed on utility bills – to support energy and thermal efficiency projects. The bill would allow the utility to also offer subsidies for efficient heat pumps.
Modern air source heat pumps can heat homes during the winter months. When temperatures fall below single digits, the heat pumps can supplement traditional home-heating fuels – such as oil or gas – and reduce heating costs.
The Senate Natural Resources and Energy Committee this year drafted the bill requiring any heat pump installation to benefit ratepayers and users, reduce greenhouse gas emissions and not stress the region’s grid during peak electricity demand periods.
According to the Department of Public Service’s April fuel price report, heat pumps costs $14 per million British thermal units (MMBtu), the same as heating a home with wood. This is less than half the cost of other heating fuels, such as propane, gas and oil, which costs between $35 and $45 per MMBtu, according to the report.
Renewable energy businesses, environmental groups and fuel dealers support the technology as a way to reduce energy consumption.
Vermont Public Interest Research Group said electric heat pumps use less energy – and reduced total carbon emissions – than the other available alternatives in a typical Vermont home, even if the electricity is coming from fossil fuels.
“This is actually, in and of itself, essentially an efficiency measure,” Ben Walsh, a clean energy advocate for VPIRG, told the House Natural Resources and Energy Committee last month. “It’s reducing the energy use in total even if you’re not weatherizing your house.”
The House Natural Resources and Energy Committee later this year made minor changes to the bill.
Because the technology uses electricity during the summer months to cool air, Rep. Curt McCormack, D/W-Burlington, wanted to ensure it does not contribute to summer peak demand periods.
When Vermont’s electricity demand peaks, the region’s grid operator calls on more expensive fossil fuel-powered generation plants to meet the demand on short notice. That drives up rates because these fuels cost more to generate electricity.
Other lawmakers saw the bill as an opportunity to expand Efficiency Vermont’s business beyond the authority to subsidize efficient heat pumps to offer a wide range of services.
Rep. John Malcolm, D-Pawlet, introduced an amendment in committee that would expand Efficiency Vermont’s services to include anything that reduces total energy demand.
But the Public Service Department said last month Malcolm’s amendment would be a fundamental change to the program that could have serious implications.
“That change in scope would be pretty huge and fundamental,” said Asa Hopkins, director of energy policy and planning for the department. “And I think this may not be the time, at this point, to jump to that level of fundamental change and how we spend these funds.”
The state’s utility regulator, the Public Service Board, reviews Efficiency Vermont’s energy performance to ensure the program benefits ratepayers when approving the utility’s three-year budget.
Efficiency Vermont ended the year with a $4 million budget surplus, about 12 percent of the utility’s 2013 budget, and is currently seeking approval to carry over that amount. The utility this year also pitched a proposal to offer financial incentives for the purchase of electric cars. The committee rejected the proposal.
The Senate is expected to review the House changes Wednesday.
