Changes to Clean Heat Standard (S.306) - March 12, 2024

On Tuesday, the Senate Natural Resources Committee began taking testimony from the Public Utilities Commission, department of Public Service, and Vermont Energy Investment Corporation beating (very carefully) around the bush regarding their worries about the June 1 statutory date to hire a Default Delivery Agent for Act 18 (the Clean Heat Standard). At first it was comments like “we’re just sharing others’ concerns” or “we’re neutral on the date, but….” However, by the end of the conversation the language had become “It’s unrealistic” and “it’s not going to work.”

Ed McNamara (Chair, Public Utility Commission) asked to push the hiring date back from June 1, 2024, to 180 days after the Legislature approves the rules for the Clean Heat Standard (CHS), which will likely take place sometime during the 2025 legislative session (the rules are due from the PUC to the Legislature on January 15, 2025). The reasons for the delay are that:

  1. The PUC does not have time to adequately define how the CHS will work and get public input for and feedback regarding that plan before June 1st
  2. Without that information it is impossible to create a contract with any potential DDA(s),
  3. Changing this internal date should not affect the final (planned) implementation date of the CHS in January 2026.

See Written Testimony.

Sen Watson asked, even though it’s somewhat arbitrary, why 180 days? McNamara said it was to accommodate public feedback and accommodate any changes that might occur when the Legislature votes on the rules, but there was “no magic” to the number. He suggested that a specific date was preferred, that could work too. 

Senator White asked how the PUC is using the public comments it has received so far. Thomas Knauer (Policy Director, Public Utility Commission)

tried to answer, using an example about the question “Who Owns a Clean Heat Credit?” They would will put that question out to the public, get a variety of answers, have a workshop to go over them, weigh all the information, and try to come up with the best answer to the question.  

White, who seemed to be getting frustrated, said that the report seems to insinuate that the timeline is too fast. She wondered how arrived at that determination. Before they could answer she added “I just want to caution you that there will be voices… that are louder, more robust, and they may have interests that are financial rather than maybe the larger picture of what the situation we’re in with climate change is. And I would just caution you as you continue public engagement that you don’t weigh – that you weigh that consideration very carefully. Because you’re going to hear from the public, and I think the average Vermonter is in favor of us responding to the fossil fuel crisis we’re in now, and I would hope that one comment from one organization doesn’t outweigh ten comments from an individual.”

NOTE: She seems to potentially be instructing the PUC not to pay attention to anyone who wasn’t on board with the agenda. She assumes (incorrectly) that the majority of Vermonters are onboard with carbon-pricing and that only fossil fuel stakeholders would be opposed. 

TJ Poor (Director of Planning, Department of Public Service) thanked the PUC for the work they are doing on a difficult job with a lot of technical details. We are reaching a point where we understand what needs to be done and when. He felt that S.306 still complied with the end goal of installing the CHS in 2026. The

“interim goals are not as important,” he said “so long as we stay on track to meet the final 2026 goal.” They are supportive of the timeline the PUC put forward on the DDA or some other similar deadline that doesn’t push out the end goal.   

Poor did share concerns that the “general public engagement” is not what’s happening now with the PUC process. They do put stuff out, he noted, but it’s really only the people who are paying attention and have the inclination to participate who they are hearing from. It’s not what we would really consider “public outreach.” He noted that the Department of Public Service’s outreach on the Renewable Energy Standard (RES), took 18 months, included a scientific poll, focus groups, etc. They collated the information, weighed the comments and formulated a policy proposal. 

Peter Walke (Director, Efficiency Vermont) spoke next, sharing that they are considering whether or not they might apply to be a DDA, so have been paying close attention to the process. There is information they would need before making such a decision. Even if we’re not the DDA, he commented, Efficiency Vermont will still have a lot of interaction with the CHS. They need time to do the requisite work and the PUC is “doing all this from scratch.” The way it’s working now, “we are doing the sausage making and the public outreach at the same time,” he stated, “that’s unusual and challenging.”

 He closed by saying they are “not here to make any recommendations, just share concerns.”

NOTE: That is an emerging pattern here. Everyone seems to have concerns but lack solutions.

White expressed her concern that “we are running out of time to deal with climate change,” and disagreed with this “taping on the breaks” discussion. “We are not moving quick enough anyway,” she claimed. She asked Walke directly how much time there was in between Efficiency Vermont “being envisioned” and then delivering programing. He answered that it was “more than a decade.”

NOTE: It took over a decade for Oregon to set up their transportation fuel surcharge, which is a smaller scale than what legislators envisions with the CHS.

Ben Walsh (Climate & Energy Program Director, Vermont Public Interest Research Group) believes the “timeline in the bill is achievable.” He noted that having the CHS without a DDA is not something the law contemplates. The DDA is the “default” for retiring credits and is a “critical equity component.” So, the “180 days gives us some concern” he stated. If there is a veto of the rules, it would mean a June veto override. 180 days after that means the CHS doesn’t realistically start in January 2026. Their position is that mid-2025 is the latest they would want to see it pushed back to.

White asked what the goal of S.306 was. Chairman Bray responded that with crossover coming they needed to move if we’re going to move. They could also add this to S.305, or another “clean up” bill, he noted.

White reiterated that she doesn’t feel comfortable with the language of S.306 and the change of date. But she was comfortable with S.305 (increased staffing for the PUC).

See Coalition Letter.

Watson disagreed, saying that if we get to June and there is no DDA “that would be very bad.” She was okay with moving the interim dates.

McNamara reiterated that the June 1, 2024 date in the bill was not going to work. July 2025 is okay if that moves things along. Senator McCormack chimed in that “his mind can be changed about the timing, but it hasn’t been changed yet.”

McNamara (getting visibly frustrated) reinforced that they were not asking for a change in the ultimate start date. “In my mind, the June 2024 date, the PUC should have testified that’s unrealistic. We should have done that last year. I wasn’t here last year, but it’s unrealistic…. It’s not going to work. Even if we’re able to slap together an RFP, we’re going to say, ‘Does anybody want to be the DDA of a – we have no idea what you’re going to do, but please submit your bid!’ So, we’re trying to develop something that will actually work for the Clean Heat Standard.”

Walke added another point that if the DDA is appointed before the rules are finalized by the Legislature, work would be done by the DDA before the program kicked off and started generating revenue. So, where would the money come from to pay the DDA for that work? He also wondered what happens if the legislature does not end up approving the rules. 

Someone sitting on the side of the room raised the issue that obligated parties have 120 days to decide if they want to apply to opt out of DDA services and that also needs to be built into the timeline. 

Watson asked if there were any other deadlines would be necessary to push if the DDA date gets pushed. She suggested they would want come back to this later. 

They no answers or agreement, Bray state that they would come back to “all of this” tomorrow. 

Due to budget constraints, we were not able to continue this coverage. If you want more of this type of reporting. Conser becoming a supporting partner!

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