The full economic impact of Vermont’s proposed renewable energy program is unknown, according to an economic adviser for the Legislature.
Tom Kavet, an economist with Kavet, Rockler and Associates, reviewed the cost to ratepayers of H.40, a proposed renewable energy program to require utilities to sell renewable electricity and reduce their customers’ fossil fuel consumption.
“Energy prices are notoriously difficult to forecast. They’re all over the map,” Kavet told the House Ways and Means Committee on Tuesday.
Under the proposed RESET program, utilities would be required to purchase renewable electricity or offsets to comply with state standards. They would also be required to reduce their customers’ fossil fuel consumption either through efficiency projects or new technologies like heat pumps or electric vehicle infrastructure investments.
The Department of Public Service, one of the architects of the bill, said the program would increase rates by half a percent in 2017, but reduce rates by half a percent in 2032. The only cost impact assessment of the program publicly available is a two-page document presented to the House Natural Resources and Energy Committee in January.
This analysis includes a host of assumptions, such as the price of fuel oil at $3.25 per gallon, electric rates of 15 cents per kilowatt-hour, and weatherization energy efficiency savings per house of 25 percent, for example.
“Is it flawed? No,” Kavet said. “But I think you want to run more expansive scenarios so you can understand the risks.”
Some lawmakers were not convinced the program would not drive up rates. Adam Greshin, I-Warren, said the entire thrust of the policy is to use more electricity: to use electricity to heat homes and drive cars.
“And here we don’t have a reasonable assumption of what the economic cost will be,” Greshin said.
In order to avoid any unintended rate impact, the bill requires annual reporting on the program that would be used to assist lawmakers in adjusting the program.
Utilities also have the option to put off their compliance obligation until later years, bank extra credits, or petition the Public Service Board to reduce or eliminate their obligation under the program.
“That type of flexibility is unprecedented,” said Darren Springer, deputy commissioner for the Department of Public Service.
Some utilities have had trouble selling credits for renewable electricity generated in Vermont to other power suppliers in New England. These credits, known as renewable energy credits, or RECs, make up $50 million in revenue for utilities. Without them, rates could increase 6 percent statewide.
Connecticut regulators will decide whether the state will continue to purchase credits generated from facilities in Vermont, a decision now about one week past due. But Kavet said the proposed program would allow utilities to continue selling RECs. He said he spoke with officials from Vermont and Connecticut on the issue.