The bill creating a carbon-pricing scheme, known as the Clean Heat Standard (CHS), reached the House floor on Thursday. Representative Sibilia presented the bill on behalf of the Environment & Energy Committee.

She described the bill as having the Public Utility Commission (PUC) develop the marketplace and rules for implementing the CHS. They will provide the 2025 legislature and Governor with the rules to implement the CHS. That is “all we are voting on today,” she claimed. She continued that “a yes vote today will not increase the cost of Vermonter’s fuel or protect the cost. We are not voting on those things today. We are voting on those things in 2025.”

She walked through the provisions of the bill, but they had not changed since the committee testimony earlier in the week.

Representative James offered an amendment that “deepens the intent around equity.” She sought to “clarify the intent” of the legislature for how the PUC is allowed to make rules (Section 6) inserts a new subdivision related to low-income Vermonters. She believed this made it “abundantly clear” that the CHS could not be implemented without a vote by the House, Senate and Governor in 2025.

Amendment to be offered by Reps. James of Manchester, Kornheiser of Brattleboro, Sibilia of Dover, Carpenter of Hyde Park, Farlice-Rubio of Barnet, Leavitt of Grand Isle, Noyes of Wolcott, Sims of Craftsbury, and Taylor of Colchester to the report of the Committee on Environment and Energy on S. 5 First: In Sec. 3, 30 V.S.A. chapter 94, in section 8124, in subdivision (d)(1), after “highest energy burdens,” by inserting “residents of manufactured homes,” - 1953 - Second: In Sec. 3, 30 V.S.A. chapter 94, in section 8127, in subdivision (d)(11), after “high efficiency manufactured home” by inserting “and weatherization or other efficiency or electrification measures in manufactured homes” Third: In Sec. 3, 30 V.S.A. chapter 94, in section 8129, by striking out subdivision (a)(6) in its entirety and inserting in lieu thereof the following: (6) providing information to the Commission on the challenges renters and residents of manufactured homes face in equitably accessing clean heat measures and recommendations to ensure that renters and residents of manufactured homes have equitable access to clean heat measures. Fourth: In Sec. 3, 30 V.S.A. chapter 94, in section 8129, in subsection (b), by striking out “community action agencies” and inserting in lieu thereof “a community action agency with expertise in low-income weatherization; a community action agency with expertise in serving residents of manufactured homes” Fifth: In Sec. 6, Public Utility Commission implementation, in subsection (f), by inserting a new subdivision (5) to read as follows: (5) The final proposed rules shall contain the first set of annual required amounts for obligated parties as described in 30 V.S.A. § 8124(a)(1). The first set of annual required amounts shall only be adopted through the rulemaking process established in this section, not through an order.

She noted that the Environment & Energy Committee voted 8-2-1 in favor of the amendment.

The amendment was moved on the floor and passed on a voice vote.

Representative Harrison also offered an amendment that would allow the PUC to pause the CHS rules due to “undue adverse financial impacts on particular customers or demographic segments, or if the average price of heating fuel in Vermont increases to more than 20 cents above the average fuel price in New England.”

Amendment to be offered by Reps. Harrison of Chittenden, Arrison of Weathersfield, Brownell of Pownal, Lipsky of Stowe, and Morris of Springfield to the report of the Committee on Environment and Energy on S. 5 In Sec. 3, 30 V.S.A. chapter 94, section 8124, in subsection (a), by striking subdivision (4) in its entirety and inserting in lieu thereof the following: (4) The Commission shall temporarily, for a period not to exceed 36 months, adjust the annual requirements for good cause after notice and opportunity for public process. Good cause shall include a shortage of clean heat credits, market conditions as identified by the Department’s potential study conducted pursuant to section 8125 of this title, undue adverse financial impacts on particular customers or demographic segments, or if the average price of heating fuel in Vermont increases to more than 20 cents above the average fuel price in New England. The Commission shall ensure that any downward adjustment has the minimum impact possible on the State’s ability to comply with the thermal sector portion of the requirements of 10 V.S.A. § 578(a)(2) and (3). The Commission shall determine how the long the - 1954 - average Vermont fuel price needs to be increased before taking action required under this subdivision. 

Harrison was concerned about the potential price impact on consumers. He noted that Julie Moore (Secretary, Agency of Natural Resources) had estimated a 70-cent-per-gallon impact on fuel prices from this bill. This amendment “spells out the reasons why the PUC may suspend the program,” he argued, explaining that cap on the increase of the price of fuel will be $0.20. He continued that two years ago the legislature had debated a 2-cent increase in the fuel tax and decided against it. The Act 62 report recommended an increase to 4 cents and then 6 cents. These recommendations were ignored because of “the politics” of raising regressive taxes. This bill has the potential to raise the cost of fuel by “many multiples of this,” he argued. “If you think the cost of the CHS has been exaggerated,” he added, “this is an easy yes vote.”

Sibilia countered with statistics about market volatility of price of heating fuels. Her argument was that the legislature was “just authorizing the PUC to make the rules,” and they revisit this issue in 2025. Her stance was that the proposed amendment would “put us at a disadvantage.” The Environment & Energy Committee voted 3-7-1 against the amendment.

NOTE: Market volatility should not play a factor here. The PUC will know the cost of the credits and what they are adding to fuel costs regardless of what the market price of fuel is.

Harrison responded that he was responsible to his constituents, and he had “heard loud and clear” that 70 cents is “scaring the heck out of them.”

Sibilia noted that she “didn’t say prices could be higher, but they could” (unclear if she was referring to $0.20 or $0.70 per gallon). However, she said that “$0.70 being put out there was irresponsible,” and that legislators should vote no on the amendment.

Representative Galfetti shared that she had to ask herself if there “is there any good reason to vote against this amendment.” She continued that “if voters have been misinformed (about the cost of CHS), why not put their minds at ease?” She argued that legislators should support this amendment.

Representative Bongartz spoke against the amendment, saying it “goes way out over its skis,” and that they would know more in 2025. He questioned why they would “put up obstacles to thwart this goal, which is to save Vermonters money.”

NOTE: It is unclear which savings he is talking about, but there are two areas that have been argued. One is that some clean heat measures, such as weatherization, will decrease Vermonter’s energy costs in the long-term, even if they are increased in the short-term. The second is that there will be cost savings from climate-change mitigation, which is incredibly hard to predict and also assumes that global emissions will decrease at the same rate Vermont is proposing.

Representative Oliver asked Harrison what the harm was in voting no on the amendment if “everything can be reconsidered in 2025.” Harrison responded that if $0.20 ended up being “too low” it could be adjusted. However, he noted that the Environment & Energy Committee could have offered to tweak the number to 25, 30 or 40 cents even, but “there was no such dialogue in the Committee.” This led him to believe that there “is no interest in controlling the increase.”

A roll call was asked for on the amendment and it failed 43-101. 

Representative Higley offered an amendment that would repeal the private right of action in the Global Warming Solutions Act (GWSA). He noted that the Climate Council has said that the state is not on track to meet these benchmarks. “We’ve had a lot happen since we passed the GWSA that has backed us into a corner,” he noted, pointing to the pandemic, the war in Ukraine, supply chain issues, workforce issues. “Boxing us into a corner, with no way out, is not in the best interests of our constituents,” he argued.

Sibilia pushed back, saying that the targets put into the GWSA were based on the Paris Accord. Even Governor Scott agreed to the Paris goals, she noted. The Environment & Energy Committee voted 2-8-1 in opposition to the amendment.

Representative Donahue commented that they have “heard so often that we have to do this heat act (S.5) because we can get sued,” she noted, however they “leave out the part that we made it so we can be sued.”

Notte argued that the GWSA language “shows our fellow Vermonters that we’re not just talking the talk. It has a clear path to accountability.”

Peterson chimed in that the language in the GWSA says “any person” from anywhere (not just Vermont) can sue. He believes that is unacceptable.

Representative Sammis noted that they were talking about accountability. The problem, he believes, here is that the “liability in the litigation comes out of our constituents’ wallets. We in this room aren’t accountable.” He continued that “the people of Vermont are going to be paying for our mistakes.”

A roll call was asked for and the vote was 41-103 against the amendment.

The debate moved on to the underlying bill.

Representative Mrowicki shared a personal story about heat pumps. They had heated their house with wood but put in a heat pump. “It works well. We are saving money,” he said, Vermonters “can save money and be cleaner.”

Donahue encouraged them to look at the effective dates of the bill, the first effective date is January 2023 for early credits. She noted that the language allows the PUC to adopt “by rule or order” any actions necessary to establish the PUC (before the 2025 check-back.) She further pointed out that credits may start accumulating immediately and that the PUC has enforcement authority over all the rules starting before the 2025 legislative vote. Finally, the PUC is required to identify potential revenue streams and sign a 12-year contract, In June of 2024, with a Default Delivery Agent. Additionally, the obligated parties (local fuel dealers) are required to register in 2024 also. Both of these requirements happen BEFORE the legislative check-back occurs.

NOTE: This essentially ensures that the CHS mechanism WILL go into effect and the only major point of debate in 2025 will be the value of the credits and small tweaks to how the “marketplace” will work.

“What exactly are we voting for,” she questioned, noting that “this isn’t a study. We aren’t gathering all the information to make a later decision.” Instead, she argued, they should be doing the “potential study” first before passing this bill. She agreed that “we need to be active and aggressive in our attempts to address climate change, but we should have an idea of what the costs will be.”

Sibilia conceded many points to Donahue, however “we are going to get in here, establish the standard, and vote on the rules.” She argued. Continuing, she stressed that the 2025 vote will not be “an up or down vote,” comparing the process to the failed single-payer initiative. She concluded that legislators need to “stop wildly speculating about price,” and pass the bill to start implementing the rules.

Donahue quipped that they were “wildly speculating by passing this bill.” She argued that they should do the “homework first and not wildly speculate.”

Representative Oliver commented that he had heard “a number of times” the legislature could choose to “do nothing in 2025,” but didn’t see that happening. He noted that he represented more Abenaki constituents than “anyone else” and they had asked him to remind the legislature that Hydro Quebec had “flooded thousands of acres of land.”

He was worried about what this bill would to “future electricity demand and prices.” Further, his constituents were worried about what this will do to the future price of oil. He noted that “volatility means prices go up, but it also means that it goes down.” He pointed to a 200% increase in the price of electricity, saying that “the price of electricity only goes up.” Further, he claimed that the state is already a climate leader and that we use “90M gallons of gasoline less today than we did 14 years ago. We need to tell our young people that story.”

Representative Beck believed that they had “lost sight of the big picture.” He noted that electric heat is most often generated by fossil fuel energy. He cautioned that moving towards electric heat may not actually realize the carbon savings that some legislators are pointing to. In some circumstances it may actually lead to higher carbon emissions.

NOTE: This was also recently pointed out by Campaign for Vermont in a report on carbon reductions in the thermal energy sector.

One of the members from Lydon noted that his sister had bought an electric heating system during the electrification push in the 70’s and then a few years later electricity got so expensive that she had to put in a boiler. He continued that solar panels were “supposed to be the answer,” but they got an estimate of $20,000 even with the subsidy. He noted that “not many” low-income people have solar panels.

As an aside, in Lyndon they supposedly did “such a good job” of reducing energy usage that their energy co-op had to raise rates. He went on to note a number of potential issues including that you need backup heating sources for heat pumps, the “ever-increasing” costs of electricity, the lack of technicians to install heat pumps, and the cost and availability of repairs.

Representative Mihaly shared that his elderly neighbor “cries about her current oil bill.” He sees the CHS as enabling her neighbor to “be approached by Efficiency Vermont or a DDA with an offer to weatherize her home and install heat pumps.” The subsidies will cover “much of the cost,” and she would have to “pick up” the remaining balance which she would pay off with a monthly payment. “That will be a good deal for her,” he believed.

A number of other legislators spoke both for and against the bill. Common themes were meeting the GWSA goals, moving to “lower cost” heating options, weatherization, carbon sequestration, and the unknown impacts of the bill on fuel prices and low-income Vermonters.

A roll call was asked for on the underlying bill (with the approved amendments) and it was passed 98-46.