Mark-up: Clean Heat Standard (S.5) - Feb. 9-10, 2023

The Senate Natural Resources Committee came back to S.5 on Thursday for mark-up of the bill. Chairman Bray thought they were dealing with mostly just minor corrections at this point, fixing typos and minor date changes, etc. Larger discussion points were deferred until later.

The Public Utilities Commission (PUC) had asked for additional language allowing them to use appropriated funds to hire consultants. That has been added to the appropriations section of the bill. The PUC also requested that they retain the option of using their own in-house public engagement processes rather than hiring them out, so the bill now reads the commission “may” hire a public facilitator as opposed to “shall.”

When creating the rules for the Clean Heat Standard, the PUC requested language in the bill be changed from the Commission “shall incorporate necessary changes” based on public input to “may consider.” The Committee agreed to this change.

Senator McCormack requested that the first word in the title of the bill be “efficiency”. He wants to make sure that is the priority - make sure that we are not trying to find cleaner ways to do the same thing but rather are trying to find ways to do things differently.

Chairman Bray and Legislative Counsel pointed out that it is not so simple to change the title of a bill. They are skipping this for now.

Senator White brought up a request from the fuel dealers to change their reporting dates. As written, the dates are “smack dab” in the middle of heating season. The Committee will re-visit this.

The Committee recognized that there will need to be more discussion about the Default Delivery Agent (DDA) and that the PUC has looked at language provided by Efficiency Vermont. There will be language in play, but the Committee will re-visit this at a later time.


Mark-up of S.5 continued on Friday with still plenty of confusion over key aspects of the bill, such as who the obligated parties are, how the credit system will operate, and unresolved controversial issues.

Senator McCormack wondered if they should change the language of the bill regarding adverse impacts. He questioned if this means the bill is bad and we anticipate it will have adverse impacts, or if they are talking about the adverse impacts of climate change.

Chairman Bray noted that there has been some discussion of how the credit system will be implemented. Particularly in question is whether the credits should handled by just the Default Delivery Agent (DDA) or if people will be able to create and own their own credits.

Legislative Counsel identified that if you are creating a tradable credit system there will be a lot of elements necessary – especially if you are going to allow “early action” credits.

Bray said that the PUC is trying to come up with language that executes what they’re asking for in a way that is as simple to administer as possible.

Senator MacDonald called out that they definition of “fuel pathways” needs to be reconsidered in light of testimony on biofuels. This definition refers all fuels and their origins.

There was much confusion among the committee as they discussed what an “obligated party” is in the context of the bill (generally anyone who sells energy products used for heat). Some members of the Committee members were still trying to understand definitions for “heating fuels” and “thermal sector.”

NOTE: It is very concerning that this level of confusion exists around a $1.2B spending bill a week for the Committee of origin intends to pass the bill.

McCormack wondered how we “actually determine if we are on pace to meet the Greenhouse Gas (GHG) reduction goals.” In the bill, the mechanism is that the issuing of credits is a proxy for GHG reduction.

Bray opined that there will be a formula created to evaluate what activities are anticipated to reduce GHGs and by what amount.

Senator Watson wants to beef up the requirements helping the economically disadvantaged.  McCormack wondered if Legislative Counsel had run this this by the state equity director. There was some additional discussion but it seems like the Committee is hesitant to add additional cost to the program by introducing more

NOTE: They likely will rely on bolstering the LIHEAP program in a separate bill to address this so that not all the spending appears related to this policy.

McCormack questioned if they are crossing a line in constitutionality by delegating legislative authority to the PUC. Legislative Counsel didn’t think so from a legal perspective, saying there were sufficient guardrails, but they Committee could provide more details in the bill.

Bray flagged the tradeable credits issue. The Committee wants to hear from the PUC but seem to be leaning away from this model.

Watson wanted to remove Green Hydrogen from the list of credit generating activities. Bray conceded he understand the point but wanted to learn more about the implications of taking it out. His understanding is that the process laid out in the bill would assess a value for a clean heat measure.

Watson also flagged the language surrounding “pathways” for renewable natural gas. She was unsure she understands the language as written and may need to study it some more and come back to this issue. White added that there is concern an out-of-state gas company could be used to “greenwash” natural gas and wondered if that’s what the language here was trying to address. Legislative Counsel was unsure but said they would come back with an answer.

The Committee plans to continue marking up the bill next week in preparation for passage.

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