Lawmakers and advocates clashed with Gov. Phil Scott’s administration this week over a cost estimate for a bill that would increase the amount of renewable energy in Vermont’s electric portfolio.
On Tuesday, Scott took aim at the bill, H.289, in a statement to the press after his administration estimated it could cost Vermont ratepayers $1 billion over the next decade.
But advocates and lawmakers who support the bill say the estimate is flawed, likely inflated and not based on data specific to the bill. The planner behind the number later acknowledged it was inexact.
In fact, interviews with department officials, advocates, lawmakers and economists show that despite its progress toward passage, there is not yet an accurate cost estimate specific to H.289.
In his statement to the media, Scott wrote that Vermonters are already facing a jump in property taxes and other increasing fees, and should not be subjected to “the risk of another billion dollars of costs being imposed on them by this Legislature.”
Meanwhile, proponents of the bill accuse Scott and members of his administration of fear mongering.
“The flawed modeling used for (the Department of Public Service’s) estimates greatly overinflate the fiscal impact that H.289 will have,” Lt. Gov. David Zuckerman said his own statement to the press on Thursday. “Those who are deeply involved with the bill and its impacts indicate that the costs would be a fraction of the Governor’s inflammatory estimate.”
Officials in the public service department have proposed a different framework to transition more of Vermont’s portfolio to renewable energy, which department officials claim would be a fraction of the cost of the bill lawmakers are considering, at $164 million over the next decade.
In the midst of dueling statements, the bill is on the move. H.289 has already passed through two House committees and currently sits before lawmakers in that chamber’s Appropriations Committee, where questions of cost come to the fore.
Power supply costs
Lawmakers are trying to reform the state’s existing renewable energy standard, which requires the state’s electric utilities to purchase an increasing amount of power from renewable sources over time. Right now, utilities must purchase at least 75% of their power supply from renewable sources, such as solar, wind and hydropower, by 2032.
H.289 would speed up that process, requiring some utilities to purchase 100% of their electricity from renewable sources by 2030. In the next decade, utilities would also need to purchase 20% of their power from small, in-state renewable projects built recently, and an additional 20% from newer, regional sources. The goal is to bring new renewable energy online and thereby displace power from fossil fuels and reduce emissions.
The Department of Public Service’s estimate of what H.289’s changes would cost ratepayers contains two categories: the cost for the renewable power supply itself, and the cost to transmit that energy to the grid and the people who consume it.
TJ Poor, director of the department’s Regulated Utility Planning Division, told lawmakers the changes to the power supply and transmission envisioned in the bill would each cost an additional $500 million over the next decade, totalling $1 billion.
Critics have taken aim at both of these calculations. For power supply, critics say — and Poor acknowledges — that the estimate is not based on the specifics of the bill.
Rather, Poor said the department derived its estimate for the power supply on the results of a different public process the department used to map out possible future directions for the renewable energy standard. He based his cost estimate on the scenario that most closely resembled what would happen under H.289, but acknowledged that its $800 million price tag was too expensive.
“Assuming about 2/3 of the modeled power supply cost is a reasonable estimate of the impact of H.289,” he stated in a memo describing his cost estimate, and arrived at $500 million.
Meanwhile, H.289 includes individualized timelines for each utility to achieve the new standards, which is expected to lower the cost to ratepayers.
The department’s model does not account for those unique pathways, said Peter Sterling, executive director of Renewable Energy Vermont, a trade association that represents renewable energy developers and advocates.
Rather, “the Department of Public Service just relied on a crude estimate,” he said. “They never did that specific work to actually figure out how much it’s going to cost ratepayers.”
When Renewable Energy Vermont adjusted the department’s model with utility-specific timing, the organization found that most customers would experience a rate increase of between $3 and $5 per month by 2030, but also warned those estimates could still be high. They don’t agree with other assumptions in the department’s model.
Poor acknowledged that the department’s cost estimate isn’t meant to predict the precise cost of the bill.
“Does it exactly model H.289? The answer is no,” he told VTDigger. “But there has been no other estimate that anybody has testified to of the cost of H.289.”
The point, he said, is that the bill will almost surely come with significant costs, and “we need to really work to mitigate those costs. And the Public Service Department has a proposal that we believe really does mitigate those costs.”
Transmission costs
The second category in the department’s estimate is the cost of building the transmission infrastructure that would be needed to support more in-state renewable power.
In this category, the department drew from a draft plan issued by the Vermont Electric Power Company, which manages Vermont’s electric transmission system. The plan estimates that, in a worst-case scenario — if all solar projects were poorly sited and needed new transmission infrastructure, for example — the cost could be as much as $1.4 billion.
Poor reasoned that H.289 would cause some, but not all, of those worst-case-scenario costs to become reality, he said. He guessed it would cost $500 million over the next decade to upgrade transmission infrastructure, bringing the bill’s total cost to ratepayers to $1 billion.
“The way to take that is not that it’s going to be exactly $500 million,” Poor said. “It could be $400 million. It could be $350 (million). It could be $600 million. It could be $700 million. But in-state development at that scale creates a lot of risk and uncertainty around transmission investment costs.”
Shortly after Scott issued a public statement about the department’s total estimated cost to Vermonters, the Vermont Electric Power Company issued a memo to lawmakers stating that their plan was not intended to be used to estimate H.289’s costs.
The plan “serves as a long-range planning document, not a project-specific cost estimate,” Shana Louiselle from Vermont Electric Power Company stated in the memo. She added that the high transmission costs “could be avoided in part with storage, load management, grid-informed generation siting, and generation curtailment.”
The Scott administration’s alternative proposal, which the department said would be cheaper, does not include transmission costs. It includes a slower shift to in-state renewable energy and assumes new energy projects would be well-sited, eliminating the need to make upgrades to the grid beyond what’s already needed in a business-as-usual scenario.
Sterling, with Renewable Energy Vermont, said the state should not assume for the sake of its own proposal that renewable projects would be well-sited and therefore cheaper, then assume projects would not be well-sited in the framework established in H.289.
Asked about his level of confidence in the $1 billion estimate of H.289, given that the power supply costs are not modeled on the bill and that the Vermont Electric Power Company said its numbers should not be used to estimate the bill’s transmission costs, Poor said that “we can be very confident that the costs of this bill are going to be greater than zero.”
‘Something to react to’
One other body has attempted to calculate the cost of H.289: the Joint Fiscal Office, which is charged with determining the expected cost of proposed legislation.
On Feb. 20, the office issued its fiscal assessment on H.289 largely based on the Department of Public Service’s estimate. Gov. Scott cited and linked to the note in his public criticism of the bill to the press, then pointed to the note again on Wednesday during his weekly press conference.
However, following questioning from lawmakers on the House Appropriations Committee last week, the Joint Fiscal Office decided it needed to “dig more deeply into the numbers,” Joyce Manchester, an economist with the office and the note’s author, told VTDigger on Wednesday.
Asked whether the analysis will result in a new or revised fiscal note, Manchester said she’ll have to see what the numbers show. She declined to comment further.
Rep. Kari Dolan, D-Waitsfield, was one of the committee members to question Manchester. She said the committee is waiting for updated numbers before it takes additional action on H.289.
“I think the fiscal office reviewed the situation and the differences between what was modeled … and realized that obviously, fiscal notes need to reflect the bill in front of us,” Dolan told VTDigger.
While lawmakers and advocates have criticized Scott’s administration for what they characterize as a flawed estimate of H.289’s cost, to date, the only analysis of the potential cost of the legislation are the department’s cost estimate and the Joint Fiscal Office’s derivative of that estimate.
Annette Smith, executive director of Vermonters for a Clean Environment, which often advocates for transparency in public processes, participated in the department’s process that developed scenarios and on which the state’s estimate of power supply cost is based. She called the issue “enormously complicated.”
Trying to find answers about costs “seems almost impossible,” she said, and “should not be a mystery.”
“You have to start somewhere,” Scott told reporters on Wednesday. “So the billion dollars is something to react to, and if it’s less, then I think the utilities, who had a lot of input into the bill, should tell us what it is.”
Dolan said she does not believe the bill would cost ratepayers $1 billion over the next decade. She called Scott’s statements about the bill’s cost “unfortunate, because it doesn’t reflect the bill in front of us.”
Poor said his department is “not trying to overestimate any costs.”
“It’s just that we think the costs are greater than zero,” he said. “Choosing to say that there’s zero is not correct. And so we want to come up with an estimate so we can understand the potential impacts going forward.”
