Renewable Energy Standard (H.289) - May 3, 2024

The bill updating Vermont’s Renewable Energy Standard (RES), H.289, reached the Senate Floor on Friday. Senator Bray, on behalf of the Natural Resources Committee, recommended they concur with the House version of the bill. He called this an “incremental version” of the RES that they started in 2015 (a 2.0 as it were). He argued that times are changing, and needs are changing, this bill advances the timeline for reaching 100% renewable & in-state generation to 2030. There had been different stakeholders who do not agree (utilities and solar/wind developers) on how to do this. They formed a committee to look at this over the summer and came to an agreement. The result, he claimed, was H.289.

He noted that they were still going to get energy from Hydro Quebec, but the bill changes provisions around net metering addressing the scale at which we’re building (large scale net metering). There are costs with the RES, and there will be costs going forward. Bray calls these “modest and acceptable.”

NOTE: Estimates of these costs are anywhere from $140M-$800M+ over the next decade in additional transmission infrastructure required to site more generation in-state. Given this wide range of estimates, we would argue that this issue has not been sufficiently studied to provide a more accurate estimate of actual costs that will be passed through to ratepayers.

Bray added that Vermont is an importer of power and, to date, when we use electricity we “treat the air like an open sewer.” He believes this bill is saying “let’s behave more responsibly,” by cleaning up the power on our grid. We have the cleanest grid in the country, but still only 63% of our portfolio is renewable. This puts us on a path to 100% by 2030.

NOTE: There is more to consider than just air when siting energy production. Land, air, and water should all be part of the consideration. There are trade-offs regardless of which type of energy production you are pursuing. To this end, the least impactful siting would be rooftop solar because it’s not adding additional runoff and it’s generally point-of-use. However, this does not seem to be the type of generation contemplated in this bill, which was written by industrial wind and solar producers.

Bray continued that they want to make the transition to renewable energy as affordable as possible. This bill “allows” utilities to buy renewable power at the “lowest possible price.” The three utilities that are already 100% renewable (and others that may join that category) would be obligated to buy new expanded capacity power as renewable. Those who can’t or don’t want to buy renewable energy directly have the option of an “alternative compliance payment” (a REC).

There is a cost circuit breaker where the Public Utility Commission has the authority to adjust the alternative compliance payment rate so we don’t get out of line with other New England states.

NOTE: This only applies to the cost of power for utilities, it does not directly protect ratepayers who may be on the hook for both the generation cost AND the transmission cost.

There will be an outside group monitoring costs, projections, and impacts of the RES and reporting back to the legislature. Stakeholders will also look at recommendations for replacing net metering programs and impacts of these programs on low-income Vermonters.

Bray admitted that energy rates will be higher under the RES. The state will get more in taxes but will also pay more for its own power and there are lots of uncertainties about how these will play out. The fiscal note for the Joint Fiscal Office, highlights these uncertainties.

Senator Lyons questioned why Hydro Quebec would not be considered renewable under the new definitions. Bray responded that for existing contracts it would be considered renewable, but “large hydro” will not qualify going forward. The bill also excludes biomass plants less than 60% efficient.

NOTE: This is essentially a ban on biomass plants because their efficiency for energy generation tops out around 40%. However, it is still generally understood as sustainable and a much better alternative to fossil fuel powered plants -  

Senator Williams questioned the costs of the upgrades to grid had been accounted for in the Joint Fiscal Office (JFO) and report if so, what are those costs. Bray responded that the grid could handle another 1000 megawatts without an upgrade (this depends on where projects are sited though). Williams pressed further, asking what the total costs to ratepayers as a result of this. Bray believed they might see an additional rate increase between 2.2-6.7% between now and 2035.

Senator Hashim asked if there is any difference in how the bill treats in-state vs out-of-state businesses. Bray noted that there is a mandate to use in-state wood (for biomass), but not for other things in the New England Grid. Hashim followed asking whether or not nuclear was excluded from the definition. Bray confirmed that it was. Senator Weeks questioned why nuclear power was not considered viable. Bray responded that they “decided it didn’t meet the definition of renewable power.”

NOTE: While there is no explicit ban on out-of-state energy production, the bill would effectively do this since the New England grid is still largely reliant on natural gas and large hydro is also excluded going forward. Since our existing grid connections are with these two networks, this would in effect ban out-of-state generation unless utilities made ‘compliance payments’ to utilize a ‘non-renewable’ source.

Senator Wrenner noted that the Department of Public Service (DPS) came up with a “much higher cost estimate” than JFO. She asked which they should believe and why. Bray complained that she was making him “uncomfortable.” We’re going with the most recent report, he claimed, and trusting JFO. Wrenner was unhappy with that answer, saying that her constituents are “reeling from higher costs. This is unacceptable… We have no clear understanding of what this will do to our constituents.” She argued they should let the current RES “run its course.”

Senator Watson added the DPS did analysis of six different scenarios, but “none reflect what’s in this bill.” She believed the bill “strikes the right balance,” noting that sometimes moving to sustainability will cost us money.

Senator Collamore noted that the JFO report does say the percentage increase will be 2-6.7%, but in dollars and cents, that translates into between $150-$450M with “considerable uncertainty” remaining. Senator Ingalls added that, according to DPS, “it could be up to a billion dollars.” He wondered if there was “any help available” in this bill for low-income Vermonters. Bray noted that they wanted to make the transition to renewable energy in the most affordable way possible (no there is no protection for rate payers).

Senator Vyhovsky asked if the updated RES was “needed” to draw down federal funds. Bray confirmed that it did.

Ingalls, frustrated, stated that “We’re raising electric rates by maybe 7%. 20% property tax increase. Fuel oil by 70 cents a gallon. Food costs are up 35%. Insurance costs are going up. We’re passing these bills to save Vermonters. Who’s going to save Vermonters from us?”

The vote was called for and the bill passed 18-8-3.

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