John McClaughry: A big question about tomorrow’s energy plan: Who pays?

This commentary is by John McClaughry, vice president of the Ethan Allen Institute

The Vermont Department of Public Service has just released its 2022 Comprehensive Energy Plan. Aside from the “stakeholders,” it’s probably fair to say that very few Vermonters — and very few of their legislators — will be able to penetrate the plan’s acronym-ridden complexities.

Here are some of the informative nuggets contained in the 251-page document.

Like the Vermont Climate Council’s Climate Action Plan, the Comprehensive Energy Plan is determined to drive down 80% of today’s level of carbon dioxide emissions by persuading, subsidizing, or forcing Vermonters to use much less — or no — fossil fuel for electricity, vehicles and heating, until by 2050 90% of all energy use qualifies as renewable.

The Comprehensive Energy Plan states that “the (electric) grid must continue to… reliably deliver the energy needed to customers every hour of the year — to and from exponentially more distributed, diverse and variable resources (distributed solar, storage, electric vehicles, heat pumps, smart appliances), under increasing pressure from severe weather events and cyberattacks, while transitioning from fossil resources and remaining affordable.” That’s a sound operating principle.

Perhaps the key question is this: Where will Vermont find the electricity required to power 279,000 light-duty cars and trucks and install 300,000 electric heat pumps in homes and businesses by 2050 (Velco’s estimates)?

The Comprehensive Energy Plan foresees “at least half of Vermont’s future generating capacity being sited in-state, and in an electrified future being served almost if not entirely by renewables, equivalent to about 3,500 megawatts of additional solar panels, wind turbines, methane digesters, combined heat and power plants, and hydroelectric facilities than exist today.”

Making that happen will be quite challenging — and likely impossible — not to mention financing half a billion dollars of grid upgrades to collect and distribute that much new power.

Reducing current demand is essential: Weatherizing 90,000 more households in the coming eight years and requiring building construction to meet energy efficiency standards. But the Comprehensive Energy Plan acknowledges that there’s not nearly enough workforce to pull this off.

The plan also favors flexible load management of distributed energy resources. That means that high demands on the electric grid can be met by reducing demand in your home, barn or business by sending unavoidable “controlled outage” signals through “dynamic, reactive control devices” (your smart meter). 

The plan expects that today’s 4,360 electric vehicles can be made to increase to 55,000 by 2035. Electric vehicles are steadily dropping in price, but not enough to reach that ambitious goal. The plan recommends levying “feebates” — taxes on internal combustion vehicles to subsidize EVs enough that thousands of people will make the switch.

Gas and diesel vehicles provide around a third of the Transportation Fund revenues that pay for highway construction and maintenance. How will that be made up, when the motor fuel taxes disappear? To date, the Legislature has declined to require EVs to make equivalent contributions to the Transportation Fund, on the grounds that paying those taxes would dissuade people from buying thousands more EVs.

Subsidized EVs, the Comprehensive Energy Plan reports, have “largely been concentrated in more affluent and urban areas.” The obvious remedy for this injustice would be to pay people in lower-income and rural areas to buy EVs. But presumably those subsidies should not be directed to residents in rural areas, because that would run afoul of the plan’s insistence on achieving “compact and mixed-use settlement” enforced by a “decision-making framework,” a euphemism for the state land use controls recommended by the Vermont Climate Council’s Climate Action Plan.

Despite Gov. Scott’s repeated resistance to putting Vermont into the regressive Transportation Climate Initiative, his Department of Public Service, in the Comprehensive Energy Plan, urges moving toward joining TCI — even though none of the 12 states originally involved still wants to go through with it. 

The appeal to the Department of Public Service planners, obviously, is that taxing motor fuel in an attempt to drive down carbon dioxide emissions can yield millions of tax dollars. Those funds will be needed to subsidize all those EVs, and pay off disadvantaged groups in the name of energy equity.

The Comprehensive Energy Plan is also on board with the Climate Council’s plan for a clean heat standard. This complicated scheme would force fossil fuel wholesalers and Vermont’s natural gas company to buy Public Utility Commission-created credits from parties that earned them by weatherizing buildings and installing heat pumps, pellet stoves, and the like.

The wholesalers would add the cost of the credits onto heating oil and propane distributed to homes and businesses. This is just the latest scheme to impose a carbon tax where the taxpayers can’t easily see who’s doing it.

The Comprehensive Energy Plan is a competent and informative piece of work. It addresses the implications of the coming “90% renewable by 2050” crunch, and contains some useful ideas. What it doesn’t do is explain just who is expected to pay for this dramatic transformation.


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