Environment

Lawmakers look to bank on TDI money for Lake Champlain cleanup

Lake Champlain algae bloom
Lake Champlain algae bloom
House lawmakers are struggling to find funding for an initiative that would reduce phosphorus pollution in Lake Champlain.

One legislative panel has already floated a range of new taxes and fees, but it didn’t meet muster in the House tax writing committee, which has tried to keep new revenues at nil this year.

Lawmakers are worried about retaining tax capacity to make up for anticipated cuts by the federal government to a wide range of state programs.

That’s why Rep. Janet Ancel, D-E. Montpelier, chair of the House Ways and Means Committee, is asking State Treasurer Beth Pearce to consider bonding against multi-year payments to the state for a 1,000-megawatt electricity transmission line under Lake Champlain.

The power cable would bring hydropower from Canada and wind power from New York to New England states.

Ancel wants to borrow against future proceeds from Transmission Developers, Inc. and put the money toward the $25 million a year needed for lake clean up.

Pearce could not immediately respond Wednesday to say whether her office has had an opportunity to consider the question.

TDI aims to build a 154 mile cable from the Canadian border to Ludlow. The cable will be submerged underneath Lake Champlain for two-thirds of that distance. The project is backed by $330-billion financial firm Blackstone Group LP.

Environmental advocacy group Conservation Law Foundation won $120 million worth of concessions for the state from TDI in 2015 as part of the cable’s permitting process, with those funds designated for water-quality improvement efforts in Lake Champlain.

Should the cable be built, TDI is slated to pay for water-quality improvements in Lake Champlain to the tune of around $6.5 million each year, for 40 years, according to the terms of its agreement with the state, said Josh Bagnato, TDI’s vice president of project development.

Bonds issued by the state might be able to cut that 40-year time frame in half, Ancel said.

“I’ve had conversations with the treasurer about whether there’s some way to use [the TDI annual payments] to support a revenue bond,” Ancel said. “If [the TDI cable] gets built … that money would be paid out over 40 years; we would like to have that sooner if we can find a way to do it.”

A federal mandate requiring Vermont to dramatically reduce its phosphorus pollution into Lake Champlain will require nearly $1.2 billion from within the state over the next 20 years, according to estimates Pearce developed earlier this year.

Even if leveraged with bonds, those payments represent only a fraction of what legislators must appropriate, Ancel said.

Environmental advocates hope that a 20-year, dedicated funding source will emerge in legislation soon, Ancel said, but that might not be realistic. Lawmakers may need to adopt an approach where they revisit the issue every few years and put together new funding packages, she said.

“There’s a real commitment … but it’s hard to look 20 years down the road,” Ancel said. “It’s frustrating that we can’t make something happen, and have [a single, dedicated] source of revenue, but I don’t think it should be surprising, and I don’t think it reflects on our commitment to the work we need to do.”

It’s a frustration environmental advocates share, said Lauren Hierl, political director at Vermont Conservation Voters.

Investors, environmentalists and ordinary Vermonters want some certainty over Lake Champlain’s long-term health, Hierl said, and they want it soon.

“They want to understand that funding will be there so that we can actually plan ahead and stay on track to clean up our waters,” she said.

Pearce has outlined a two-year funding scheme that will pay for necessary expenditures to meet requirements to reduce phosphorus pollution into Lake Champlain, and legislators should take steps to ensure that at the end of that period they’re not where they began, Hierl said. One big step in that direction would put a per-parcel fee into effect if lawmakers can’t come up with a better solution, she said.

About a dozen organizations including the Vermont Farm Bureau, the Vermont Chapter of the Sierra Club, Vermont Conservation Voters and the Conservation Law Foundation signed a letter March 20 to the entire legislature, urging lawmakers to institute a simple per-parcel fee that would go into effect only if they can’t find a better funding source after the two-year window closes.

“We support spending additional time to develop an ‘all in,’ long-term funding source such as an impervious surface or per acre fee that is equitable and has a nexus to the pollution sources,” the letter states. “However, we cannot afford further delay without reassurance that funding for clean water will materialize once the short-term sources dry up.”

The impervious surface fee, tied to a per-parcel fee, is one Pearce recommended in her report.

She warned against a simple per-parcel fee, however, as she believed it lacked a clear connection between the source of pollution and the amount a Vermonter might be expected to pay to reduce emissions.

Pearce endorsed a per-parcel fee, however, if it were linked to the area of impervious surface (such as asphalt or pavement) that a parcel contains.

“It is the Treasurer’s Office’s opinion that impervious surface fees have a more direct linkage to nonpoint pollution, provide a strong nexus to the problem and are useful in promoting mitigation,” she wrote.

Lawmakers ought to institute something like this “as a backstop,” said Hierl, and require that it go into effect if they can’t come up with a better idea by fiscal year 2020.

Lawmakers should look into tapping the TDI payments as a dedicated revenue source for the pollution-abatement effort, Hierl said, but it’s not something they should plan on before knowing for certain that the cable will be built.

Others echoed that sentiment, including the Vermont Chapter of the Sierra Club’s Robb Kidd.

“This problem evolved over too many years where legislators and administrative officers have kicked the can down the road, and we can’t wait for another year or two years of inaction,” Kidd said.

“And the TDI money — we don’t even know if that’s coming to fruition, that’s something down the road,” Kidd said. Even if the project is realized, the revenues it would bring still won’t cover the cost of remediating Lake Champlain, he said.

Representatives of the company told Ancel’s committee that TDI would know for certain by fall 2017 whether the cable will be built. That gives lawmakers time to analyze whether bonds can be issued against payments from the cable, and to seek out other ways to use the money to greatest effect, Ancel said.

TDI contractors are drilling along the proposed route, taking soil samples and conducting engineering in preparation for construction, said the company’s CEO, Donald Jessome.

The state of Massachusetts is looking for a supplier for 9.45 terawatt-hours annually of renewable energy, Jessome said. TDI can provide 8.3 terawatt-hours of that, he said, and the company will be participating in the bidding process to win the contract from Massachusetts to supply that power.

Jessome did not say the project is dependent upon winning that contract, but said his company “is absolutely concentrating on that” contract, and said “it would significantly help the project” get built.

“That certainly is a great opportunity for the project to advance sooner rather than later,” Jessome said.

TDI already has arrangements with power producers who will export power through the cable, Jessome said. The company hopes to begin construction next year, and to have the cable in service by 2020, he said.

Gov. Phil Scott has outlined a $50 million investment in Lake Champlain over the next two years that hews closely to recommendations made by state treasurer Pearce.

The governor’s proposal does not include payments from TDI or potential bonding against the funds, but he supports the idea as a possible long-term funding source, according to Rebecca Kelley, his communications director.

Scott has said he will block any attempt this year to raise new taxes and fees for cleanup.

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