Lawmakers approved a two-year freeze on the state’s energy efficiency charge, despite warnings from the Department of Public Service that it would cost ratepayers millions in lost savings.
The House Ways and Means Committee approved an amendment to H.40, a proposed renewable energy program, to cap the revenue source for a state’s program used to drive down electricity consumption. The energy efficiency charge is a percentage fee placed on electric bills.
In a compromise to gain political support for the RESET program, which is expected to reduce greenhouse gas emissions and avoid a looming rate hike as soon as next year, Tony Klein, chair of the Natural Resources and Energy Committee, supported the amendment.
“We did what was necessary to do,” said Klein, who expected a partisan vote on the bill otherwise. “We took one for the team.”
The committee voted 8-2-1 to approve the amendment and 8-2-1 to pass H.40 out of committee.
The purpose of the amendment would cap the energy efficiency charge at 2015 levels — which currently raises $52.2 million — for the next two years. The freeze would affect the energy efficiency programs offered by Efficiency Vermont and Burlington Electric Department, which are considered to perform better than average, a study found.
Since 2003, the charge on electric customers’ bill has increased 11.5 percent annually, according to Adam Greshin, I-Warren, who offered the amendment. He said lawmakers should take the next two years to review how that money has been spent.
“The amount we have invested in energy efficiency is unparalleled,” Greshin told other committee members. “Let’s just time out.”
Environmental groups oppose the measure because it creates the need to build more generation and poles and wire, among other reasons. But it was welcomed by commercial and industrial manufactures who view the temporary pause as a way to re-evaluate how the state pays for energy efficiency.
Manufacturers benefit from the current programs, but some might benefit more under a different financing structure, according to Bill Driscoll, vice president of Associated Industries of Vermont.
“Are they spending too much for what they get? That speaks to our concern about the funding mechanism,” Driscoll said. “They may be able to achieve the same sort of savings but have more money left over to do other things.”
But the so-called “time out” is expected to come at a cost to electric ratepayers totaling up to $24 million in lost net benefits over the next decade, according to Darren Springer, deputy secretary for the Department of Public Service.
Over the next two years, the state’s efficiency program will be level funded — a drop of 6.5 percent over expected budgets, equal to about $10 million. Ratepayers will no longer have to pay this amount, but it will come at a cost later on.
Springer said the state will have to purchase more electricity and will lose earnings it receives from the region’s grid operator for reducing consumption at times of peak demand. The total net benefits equal $20 million to $24 million, he said.
In other words, according to George Twigg, director of public affairs for Efficiency Vermont, “What you would save from this amendment is going to come at a price that is twice as high. That does not seem like a good deal for Vermont ratepayers.”
Another amendment to the bill that is being considered would strip funding for Efficiency Vermont’s thermal program that could amount to $6 million in lost annual funding.
Rep. Patti Komline, R-Dorset, said she might introduce the amendment on the House floor. She would redirect the money into water quality restoration efforts. As for thermal efficiency, she said Vermont’s proposed renewable energy program would require utilities to make such investments under the so-called “tier three” obligation.
“Tier three is going to be doing what Efficiency Vermont does with their thermal efficiency program,” Komline said. “I’m just saying you don’t need two people doing the same thing.”
But opponents of the measure say the proposed renewable energy program is complementary to Efficiency Vermont’s existing program. They say some utilities would be allowed to partner with Efficiency Vermont and build on their existing infrastructure. Others say it would hurt the existing programs.
“If I’m looking to upgrade my boiler, if I’m looking to weatherize my home, if I’m looking to install clean heating technology, such as a biomass system, every program that’s out there that offers me a rebate is funded through these thermal efficiency funds,” Springer said. “You talking about taking all of that off the table.”
Proposals to change the state’s efficiency program have circulated for years. Now, lawmakers who support efficiency programs say at least there will be a conversation about the benefits of energy efficiency to the ratepayers — that is energy efficiency cost half the price as electricity, officials estimate.
“We welcome the conversation,” Twigg said. “I just think there is a way to do it that doesn’t cost $24 million.”