Update from the State House #2015-2: RESET Costs Unknown, Siting Problems Persist

Mar 06, 2015 No Comments by

H.40 Will Repeal SPEED and Enact RESET

In our previous update, we described the questions of legitimacy that surround Vermont’s SPEED program. These questions resulted in the creation of H.40, a House bill that would repeal SPEED and establish a new energy program, called RESET. We noted that we support the repeal of SPEED, but cannot support RESET.

RESET would require that a percentage of electricity sold in Vermont to be “renewable.” RESET would also make Vermont utilities responsible for reducing the fossil fuel consumption of their customers.

RESET would require the development of more energy generation, but it fails to reform Vermont’s destructive and abusive energy siting practices.

RESET’s Cost

Nobody knows how much RESET will cost. Economist Tom Kavet characterized the economic analysis carried out by the Department of Public Service as “ cursory .”

We know what RESET’s cost ceiling is. The ceiling is established by the “alternative compliance payments” that utilities can make to buy themselves out of RESET’s obligations. We calculate the ceiling to be about $1.2B, statewide, over RESET’s 15-year life.

Preliminary House Approval

In spite of its uncertain cost, H.40 has been approved by two House committees and has received preliminary approval from the entire House on a roll-call vote.

H.40 will be brought up for final approval by the House after the Town Meeting break. If it is approved, it will move into the Senate Natural Resources and Energy Committee.

RESET is more complicated than SPEED

RESET is a very complicated, technical program made up of three tiers of electricity generation requirements, carve-outs, and “energy transformation projects.”

Most legislators have neither the time nor the expertise to carry out due diligence on RESET. Rather, they are relying on the Public Service Department and the two-page summary that the Department uses to explain the program.

RESET’s Tier 1: Total RE Requirement

Under RESET’s Tier 1, 55% of a utility’s 2017 sales must be renewable. That increases to 75% in 2032.

In Tier 1, “renewable” includes all of the usual suspects. Most importantly, Tier 1 also includes Hydro Quebec.

Hydro Quebec

Vermont utilities already buy enough electricity from Hydro Quebec to meet most of their Tier 1 requirements. They can easily make up the difference by buying “environmental attributes” from HQ. While these HQ certificates will be viewed as RECs in Vermont, they cannot be used to meet the renewable goals in other states. Vermont utilities should have no trouble finding an ample supply at low prices.

Vermont’s Wind and Solar Projects

The wind turbines in Sheffield, Lowell, and Georgia could be used to meet Tier 1 requirements. So could the large solar arrays that are appearing throughout the state. They won’t: solar and wind RECs have high value in other states, so it is likely that Vermont utilities will sell their valuable RECs and buy cheap HQ certificates.

RESET’s Tier 2: Distributed Generation

Tier 2 requires that 1% of 2017 electricity sales come from small, renewable generators. This would rise to 10% by 2032.

Tier 2 facilities would have a maximum capacity of 5MW and they would have to connect to the distribution infrastructure, not the transmission infrastructure. This means that:

  • They will be built in Vermont, near where their electricity is consumed.
  • They may help to lower Vermont’s share of regional transmission costs.

While some think that wind developers will see Tier 2 as an opportunity to pepper the state with 3-turbine installations, it is likely that most Tier 2 projects will be solar.

Unfortunately, without siting reform, Tier 2 developers will continue to fragment habitat, compromise wetlands, and misuse agricultural soils. Without reform, the Public Service Board will continue to uphold right of developers to bully their neighbors.

RESET’s Tier 3: Energy Transformation

Tier 3 requires Vermont utilities to carry out projects to reduce their customers’ fossil fuel use. In 2017 they will have to eliminate the use of about a million gallons of fuel oil (or equivalent amounts or propane or gasoline). By 2032, this will reach 6 million gallons.

Tier 3 is concerned with fossil fuels, not the biofuels that are added to heating and transportation fuels. As the biofuel content increases and the fossil fuel content drops, it will become more and more expensive for utilities to reduce our fossil fuel use. With Tier 3, we may see ratepayers financing a meaningless, but expensive switch from biofuel heating to electric heating.

Our Bottom Line

RESET is an enormously complex program that will have wide-ranging impacts for a long, long time. It could drive our electric rates significantly higher; it could drive more businesses out of Vermont.

The administration is in a tremendous hurry to enact RESET. The Department of Public Service has not had time to do a proper analysis. There are dozens of loose ends that will be left to the PSB.

RESET has the potential to be an expensive boondoggle, damaging our environment and spinning off all kinds of unintended consequences.

What You Can Do

Let your legislators know what you think about enacting a RESET program whose economic impacts are unknown.

On March 24th, a joint legislative committee will conduct a hearing on energy siting in Vermont. The hearing will go from 6:00 to 8:00 PM in Room 11 at the State House. This is your chance to tell legislators what you think about enacting a RESET program that does not address Vermont’s abusive energy siting practices.

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