As a proposed revision of the state’s renewable energy policy comes up for a vote in the House this week, lawmakers will have a new price tag to consider —- one that is less than half the one originally presented by Gov. Phil Scott’s administration.
Last month, the governor and policy staff at the state Department of Public Service took aim at a proposed update to Vermont’s statewide renewable energy policy, sharing their estimate that the changes could cost residents $1 billion over the next decade. A new legislative analysis suggests that number is at least $550 million too high.
That analysis, published last week, found that the updated renewable energy strategy is more likely to cost Vermont ratepayers between $150 million and $450 million from 2025 through 2035.
The bill in question, H.289, would revise the state’s renewable energy standard, which requires utilities to purchase a specific percentage of their energy from renewable sources. Right now, the law requires utilities to buy 75% of their energy from renewable sources by 2032.
The bill would speed up those requirements, requiring most utilities to source 100% of their electricity from renewable sources by 2030. Over time, it would also require them to purchase about 20% of their energy from small, in-state renewable sources and an additional 20% from regional renewable sources capable of sending power directly into the New England grid.
Advocates for the bill hope that requiring utilities to support new in-state and regional renewable power would displace natural gas, which currently accounts for a significant portion of the region’s power supply. They called the administration’s cost estimate inflated, and said it did not account for pieces of the bill that would bring the cost down.
After lawmakers heard criticism of the Scott administration’s estimate, they asked for a new analysis by staff with the Joint Fiscal Office, which provides the Legislature with cost projections for bills.
In an earlier analysis, the Joint Fiscal Office had used the Scott administration’s estimate as its basis, and therefore said the cost of the updated policy would be $1 billion.
“After investigating the overall costs of implementing the bill more thoroughly, the Joint Fiscal Office (JFO) has revised downward its February 22, 2024 estimates of those impacts, which were based on a Department of Public Service (PSD) memo,” states the new analysis, written by Joyce Manchester, a senior economist with the office.
Last month, Scott used the JFO’s earlier $1 billion estimate to criticize the bill. In a statement to the media, the governor wrote that Vermonters, already facing a hike in property taxes and other increasing fees, should not have to contemplate “the risk of another billion dollars of costs being imposed on them by this Legislature.”
Asked during his weekly press briefing in late February about the criticism of the Department of Public Service’s estimate, he said his office relied on the assessment by the Joint Fiscal Office. “JFO has come up with a number,” he said. “We have used them in the past, and utilized their data. It’s some place to start.”
This time, Scott is taking aim at the office’s analysis. Asked about the new estimate, Jason Maulucci, the governor’s spokesperson, said Scott is now concerned that the Joint Fiscal Office’s numbers are “undervaluing the cost of transmission upgrades, which could cost hundreds of millions.” (The administration’s own estimate has now been revised downward to $850 million.)
“It would be irresponsible for the Legislature to continue to impose additional costs on Vermonters when they admittedly are not confident of the impact,” Maulucci wrote before referencing the increasing taxes and fees. “Those impacts will be felt for years to come. Vermonters have had enough.”
Location, location, location
Both the Joint Fiscal Office and the Department of Public Service acknowledge that the bill’s actual cost will depend on a number of variables that are practically impossible to forecast now.
In a business-as-usual scenario, Vermonters are expected to spend $14.5 billion on electricity over that 10-year period, according to Rep. Laura Sibilia, I-Dover, a lead sponsor of H.289, citing a figure from the Department of Public Service.
“That’s really been the challenge in terms of narrowing down the potential cost impacts — and they are really all potential cost impacts — the biggest factor really being whether or not new renewables are optimally sited,” Sibilia said.
The cost of installing additional electric wires and poles to accommodate new local renewables could vary widely depending on where those renewables are placed, according to Sibilia.
For example, if new renewables are sufficiently spread out and placed in areas where residents and businesses readily consumed the energy they produced, the grid would require fewer upgrades, and that would lower costs, she said.
“If every new renewable is optimally sited in the state, we have the potential for really zero increased costs associated with the proposal,” she said, though she acknowledged that transmission upgrades would likely trigger some cost.
But members of Scott’s administration would rather see lawmakers pass their alternative proposal, which was constructed based on a long public input process, according to TJ Poor, director of the department’s Regulated Utility Planning Division.
Poor estimates the department’s proposal would cost $110 million. It includes a slower shift to in-state renewable energy compared to H.289, and it assumes new energy projects would be sited in a way that would eliminate the need to make upgrades to the grid beyond what’s already needed in a business-as-usual scenario.
Poor said that during the department’s public process, Vermonters said they would like to see affordability, reliability and renewable energy prioritized when considering how and when to advance Vermont’s renewable energy policy.
“It’s really a question of, how much do Vermonters want to pay for those societal emissions reductions?” Poor said. “People can have different different answers to that question that are all reasonable.”
Peter Sterling, executive director of Renewable Energy Vermont, a trade association that represents renewable energy developers and advocates, said he expects that the work to counter climate change will come at some cost. His organization advocates for rate protections for low income Vermonters.
“For a century now, we have lived on an economy, run on the burning of cheap fossil fuels, and now, we’re spending billions of dollars a year to mitigate those costs, as far as cleanup and flood recovery and things like that,” he said. “We have to accelerate our investments.”