Rutland Herald: Better idea for renewable energy

Apr 20, 2011 No Comments by

Reposted from the Rutland Herald.

JOHN MCCLAUGHRY – Published: April 20, 2011

The long-running saga of Vermont’s “clean energy” subsidies took another interesting turn last week, featuring the duo who gave us last summer’s distasteful rent seeking exhibition, Peter Shumlin and David Blittersdorf.


Then, it will be recalled, the Clean Energy Development Fund was preparing to hand out tax credit subsidies to wind and solar electricity projects. The available credits came from $12 million extorted from Entergy as the 2006 Legislature’s price for allowing Vermont Yankee to store spent fuel rods on its own property at its own expense, over the six years that remained to the nuclear plant before the 2011 Legislature voted it off the island forever.


Actually, Vermont Yankee is now being non-voted off the island, since the leadership of the present Legislature refuses to risk a recorded vote that might come back to haunt some anti-nuclear legislators when their constituents examine their electric bills in the months just before the 2012 election.


Then-Sen. Shumlin had named entrepreneur David Blittersdorf to the board of the Clean Energy Development Fund. There was some logic to this, since Shumlin had earned the nickname “senator from VPIRG,” Blittersdorf had been a major VPIRG fundraiser, and VPIRG had aggressively lobbied for ever more renewable energy subsidies.


As a board member, Blittersdorf was in a position to influence the awards process to favor enterprises linked to his company. When that became apparent, the CEDF chairman asked Blittersdorf to leave the room when the awards policy was under discussion. Taking note of the potential conflict of interest, Shumlin asked Blittersdorf to resign from the board.


Blittersdorf did so, but only after voting to direct the executive director to set the preference policy for tax credit awards. That official promptly established the first-come, first-served policy that favored Blittersdorf’s enterprises. Two months later CEDF announced the award of $4.3 million in tax credits to those enterprises.


Now the Clean Energy Development Fund is running out of money. With Vermont Yankee scheduled to go out of business in March 2012, it can’t be made to pay millions more when it will no longer have the revenues earned by selling Vermont’s lowest cost baseload power to the state’s utilities.


To the fund’s rescue came Rep. Tony Klein, the very green chairman of the House Natural Resources and Energy Committee. On April 5 he brought out a bill to replenish the dwindling CEDF subsidy coffers. It proposed to levy a regressive 55-cents-a-month tax on everybody’s power bills. The Republicans protested. No matter. The Klein plan handily advanced to third reading.


But then the media asked now-Gov. Shumlin if the Klein electric poll tax violated his campaign pledge not to increase broad based taxes. Ouch! Shumlin quickly reversed course. He told his legislative friends to scrub the 55-cent-a-month tax and declared that he would come up with a better plan shortly. So the House that voted 99-39 for the new tax on Tuesday, enthusiastically voted 134-0 to delete it on Wednesday.


Five days later Shumlin unveiled his new plan. Instead of the CEDF making annual payments over five years to successful subsidy seekers, he proposed that it offer them half the amount of their credits on Day One. The other half would then be available for the fund to hand out in later years. This would replenish the fund and make the Klein tax unnecessary.


Who thought this up? Shumlin’s friend and former CEDF board member David Blittersdorf. And what’s the advantage to the Blittersdorf-linked clean energy credit applicants? They can’t get private financing for their installations, because commercial lenders rightly think that projects so heavily dependent on deep subsidies are not creditworthy investments. To most applicants, getting even as little as half of the subsidy value as a grant up front, instead of tax credits that may not turn out to be useful in the future, looks like a bird in the hand.


Rep. Patti Komline has reported that of the 68 (of 92) approved tax credit applicants responding to a query, four preferred the tax credit and 64 wanted the upfront grant. Of those 64, 62 are Blittersdorf’s projects.


There’s a far better path out of this ever more complicated politically infected subsidy swamp. Forget taxing everybody’s electric bills, scrap the Clean Energy Development Fund, approve 20 more years of low-cost nuclear electricity from Vermont Yankee, and let David Blittersdorf’s upscale customers pay for their boutique energy investments out of their own pockets.




John McClaughry is vice president of the Ethan Allen Institute (


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