Vermont: Committee starts over on renewable power bill

Legislation that would require utilities to purchase green energy will go back to the drawing board, according the chair of the House Committee on Natural Resources and Energy.

The bill, H.468, would have required utilities to purchase 80 percent of their power from qualifying renewable sources in 2025.

The bill set out ambitious goals for utilities, but after weeks of testimony, the second draft eased these qualifications by requiring 75 percent renewables by 2032. Thirty-five percent of those would have to come from “new” generation that came online after Dec. 31, 2004.

That draft, Rep. Tony Klein, D-E. Montpelier, said, is history.
“Where it would end up is by 2032 we would have a renewable portfolio standard, which would make all the techno geeks and academics happy,” he said. “Would it do anything? Not in my estimation. In my estimation we need to move faster. We need to move further.”
Klein’s bill would require utilities in Vermont to purchase renewable energy and retire the renewable energy credits. Under current law, utilities have to meet a percentage of their electric load from renewable energy projects. Power companies in Vermont can then sell the renewable energy credits. Other states require utilities to retire the credits.
The result is lower rates, but because utilities in Vermont are double dipping, the power is considered “brown” power — even if it comes from something like a wind turbine. This is a result of selling the credits or “environmental attributes.”
Utilities and some business groups have lobbied for the ability to keep these credits. Requiring utilities to retire them in the state will raise costs for ratepayers, they claim.
The renewable energy bill has seen somewhat of a softening in recent weeks. Klein said he plans to go back to the original version of the legislation.
Klein said he plans to propose that “new” renewables include projects that go online in 2012, not 2005, and that by 2025 utilities carry 30 percent of these “new renewables” in their portfolio.
Klein said he plans to propose another “standard offer” for small renewable energy projects that will guarantee long-term contracts between producers and utilities.
Environmental groups have questioned what the Legislature plans to do about energy from large-scale hydroelectric projects like those in Quebec. Vermont is the only state in New England that does not distinguish between small and large hydroelectric projects and deems both types “renewable.”
Klein proposes limiting the “new renewable” category for these dams to those online after 2012 and limiting the amount of what a utility can claim in its portfolio as an even smaller percentage of that “green” power.
“Hydro-Quebec is never going to be able to build a new dam and say all the power they are selling to Vermont came from that dam,” Klein said.
The concern among environmentalists has been that energy from Hydro-Quebec would essentially flood the New England market and produce an abundance of cheap renewable energy credits, undermining the entire accounting system for renewable energy credits.
As for these renewable energy credits, which utilities currently sell in large part to Massachusetts or Connecticut, they must be paired with the electricity at least for new projects, Klein said.
Klein said people should expect new proposals soon.
“We were not happy with the first two drafts,” he said. “They were way too complex, way too long and they did not deliver enough.”
While Klein and his committee got kudos from some local businesses at a press conference Thursday by Renewable Energy Vermont, at least one business group said the legislation goes too far.
Bill Driscoll, vice president of the Associated Industries of Vermont, said the proposed legislation raises cost and reliability concerns.
Excluding Hawaii and Alaska, Driscoll said, commercial industrial electric rates are already more expensive than most other states.
“Why are we trying to make things more expensive and more risky for businesses,” he said.
With Vermont’s small size and limited industry, Driscoll said, it absorbs more carbon than it emits. That’s according to a study by the Douglas administration three years ago.
With programs like the standard offer, Vermont already has a great deal of renewable generation, Driscoll said, and more small renewable projects can lead to reliability issues in addition to the increased costs.
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