Thermal Sector Carbon Pricing (S.5) - Feb 23, 2023

After sitting nearly a week, S.5 was brought up in the Senate Appropriations Committee on Thursday afternoon. June Tierney (Commissioner, Department of Public Service) testified that the $400K allocated in S.5 is not enough funding to achieve the goals for her department set out in the bill.

Tierney generally supports the idea of “potential study” to see what the impact will be and to discover if climate goals are practical and can be fulfilled. She pointed to questions like what is out there, what can be done, and at what cost?

The suggested study alone will cost $250k, and beyond that there will be a $200k annual expense for keeping the data up to date. She is asking for an addition 450K to fund two bureaucrats and an attorney for a total appropriation in S.5 of $850K.

According to Tierney, the cost analysis process has not been sufficiently robust to say if the foundation has been laid for the regulatory framework for a Clean Heat Standard. This is why a real check-back provision – one in which the legislature must affirmatively vote to move the program forward following the rule making process – is so important in her eyes.

Tierney outlined the steps that should be taken to be responsible: first, determine what is technically feasible. Next, determine what is cost effective using a cost/benefit test, a ratepayer impact study, and other similar tools. Finally, ask what is achievable for a program; considering workforce limitations, supply chain limitations, etc.

The way S.5 is currently written, the Public Utility Commission (PUC) will have a firm mandate to establish rules that will meet the mandates of the Global Warming Solutions Act (GWSA) with no discretion about whether or not achieving those goals is technically feasible. Feasibility needs to be determined first. Tierney is very concerned about this.

Chairwoman Kitchel asked if Department had asked for the study already. Tierney responded that they had not done so, at least in the context of S.5.

Kitchel followed by saying that what they’re trying to do is put forward a plan to reduce carbon emissions. She asked if there is an industry definition of “Clean Heat Standard.” Tierney responded that there is no official definition, but fundamentally it means to decarbonized the means of heating.


The sponsors of the bill, Senators Bray and Watson, testified later in the day. Bray expressed frustration about “misinformation” surrounding the bill. He assured the Committee that customer participation in S.5 is voluntary and claimed that they don’t eliminate any fuels. He also highlighted that this is a long-term program that goes through 2050. His justification for the measures taken in the bill is, we need to comply with the law (GWSA).

NOTE: Bray’s statements are demonstrably not true. Consumers have no say over whether they are participating in the program or even how much they pay into it. While the bill does not directly eliminate any specific fuels, the whole point of a carbon-pricing mechanism is to incentivize shifts away from carbon-based fuels by raising their costs over time until they are uncompetitive with other sources of heat (current just electric or wood).

Kitchel commented that they getting calls from senior citizens, and they are concerned. She noted that it’s unfortunate that they have created such anxiety, and questioned how they should proceed. She recognized that there is a desire to protect lower income households, but questioned where revenue would come from to do this. She suggested removing the word “Affordable” from the title.

Senator Starr questioned the veracity of some of Bray’s claims. “You can burn oil till 2050,” he said, “but at what cost?” He also pointed to the definition of “obligated parties” as confusing and misleading. Just say “oil is going to have a surcharge on it if it’s brought into the state,” he suggested. He also took issue with the statement that “fossil fuel money leaves Vermont”, he argued that if we all switch to electric, much of that money goes to Canada.

Starr also stated that he believes the Clean Heat Standard plan should come back to the legislature for a check-back. According to him, lawmakers should “have the backbone” to sell it to their constituents.

Bray repeated that “this is required by law” (the GWSA) and they want to make it as affordable as possible for as many Vermonters as possible.

To highlight the issues with the labor force, Senator Westman shared that he purchased a new, high efficiency furnace twenty months ago for $22K, “and it’s still sitting there” because he has not been able to find anyone to install it.

Julie Moore (Secretary, Agency of Natural Resources) was in the room but not an official witness. She was asked if she had anything to add. She responded simply, “the Report from Energy Futures Group due this summer.”

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