Changes to Clean Heat Standard (S.305) - March 20, 2024

Senator Bray provided an overview of S.305 to the Senate floor on Wednesday afternoon. He described the bill as creating a number of fixes. He reminded Senators that they had passed the Energy Efficiency Modernization Act in 2020, which was a three-year pilot program allowing electrical efficiency utilities to use $2M of efficiency charge money for pilot projects focused on energy reduction. However, the climate crisis is being driven by the thermal sector and transportation so they asked them to see if they could find solutions in these areas.

This new version of the program was only funded for one year. He pointed out that this makes it challenging because of a lack continuity of funding. So, what the bill would do is revise the metrics used in decision making. In essence, switching the evaluation process from the Public Utility Commission (PUC) evaluating and approving the program, to providers themselves – Burlington Electric and Efficiency Vermont. These providers will “attest” that their programs meet the original design criteria.

NOTE: Isn’t self-regulation bad?

The second major change in the bill is to the Clean Heat Standard. Bray reiterated that the main implementation date is still January 2026. However, along the way there are many milestones that need to be met. This bill changes the date of the Default Delivery Agent (DDA) hiring from June 1, 2024 and pushes it out a year as this date is unworkable. The DDA will be the party responsible for retiring the CHT credits if an obligated party (fuel retailer) doesn’t retire them themselves.

This change was an additional change in timelines for obligated parties to opt-in or out of the DDA offering. Instead of 120 days, obligated parties will now have only 90 days to opt-out.

Additionally, it delays the dates that the PUC is required to present the first three-year plan and its budget, which is now no later than Sept 1, 2025. And need to change the timeframe obligated parties have to opt-in or out of the DDA process from 120 days to 90 days.

One final change related to the Fuel Dealer Registry. The original bill required the Tax Department to share information on fuel dealers once to establish the registry. S.305 changes this to an ongoing obligation. The purpose of this is to “true up” the list of fuel dealers on an annual basis.

Senator Kitchel noted that this bill was a “source of a lot of concern.” She wanted to clarify, on the record, that the changes here in no way change the nature of the requirement that the Legislature act affirmatively before the program is made operational. Bray concurred.

NOTE: Act 18 and the CHS is law. Yes, there will be a legislative vote on the rules, but that doesn’t have the force of repealing the law and credits will start to be accrued by obligated parties before that vote takes place.

The bill passed on a vote of 20-7.

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