Accelerating Vermont’s transition to cleaner electricity is going to be costly — on that, most can agree.
Less certain is how much it will cost if utilities are required to sell only renewable electricity by 2035. That’s the goal of H.289, a bill that raises the state’s renewable energy requirements. Cost estimates have ranged from as little as $150 million to as high as $1 billion.
The uncertainty about the bill’s true impact on ratepayers is fueling a political firefight in Montpelier and is likely to spark another veto battle between Gov. Phil Scott and lawmakers.
The House of Representatives gave final approval to the bill on Thursday, following an earlier 99-39 vote. The measure now heads to the Senate, where it is also expected to receive strong support.
Lawmakers argued that the bill would ensure the state supports the expansion of new renewable energy and reduces its reliance on electricity made from fossil fuels in New England.
“Vermont isn’t too small to feel the brunt of climate change,” Rep. Kari Dolan (D-Waitsfield) said. “And we are not too small to take on some responsibility and do our part to address the rate of greenhouse gas emissions we release into the atmosphere.”
The state’s existing renewable energy standard requires utilities to get 75 percent of their power from renewable sources by 2032. The bill would increase that to 100 percent by 2035. Utilities would also have to get 20 percent of that power from local sources, double the amount in the existing law.
The complex bill also requires some of the energy to come from new renewable projects in New England — but not from large hydro or new, inefficient biomass plants.
Several Republicans argued that the bill would unfairly burden ratepayers at a time they can least afford it, especially in light of other less expensive energy options put forward by Gov. Scott’s administration.
“H.289 represents another initiative that will unduly penalize Vermont ratepayers under the guise of meeting climate change goals,” Rep. Gina Galfetti (R-Barre Town) said.
Gov. Scott argued that the bill would increase costs on ratepayers at a time when they are struggling with so many other cost pressures, including a new $100 million payroll tax for childcare and property taxes set to soar an estimated 18 percent.
“While we share the goal of using more renewable energy and reducing emissions, it doesn’t mean there’s an open checkbook,” Scott said on Wednesday during his weekly press conference.
The Department of Public Service initially pegged the cost of the bill at about $1 billion, with about $500 million in new power costs and $500 million in grid upgrades needed to safely move that power around. But the department was forced to walk back those numbers after admitting errors in its initial calculations of the new power costs.
Peter Sterling, executive director of Renewable Energy Vermont, said the cost confusion has been exacerbated by the “very imprecise models” the Department of Public Service used that “exaggerated the cost of H.289.”
The Joint Fiscal Office, which analyzes the cost of proposed legislation, relied on the Public Service Department’s $1 billion estimate in its initial bill analysis.
But it later revised that estimate downward to $150 million to $450 million. The office estimates $150 million to $250 million in higher power costs and zero to $200 million for transmission costs.
That would amount to an increase in customers’ power bills of between 4 percent and 7 percent by 2035, or $4 to $16 per month for an average household, according to the JFO analysis.
There are enough unknowns, however — about future changes in electricity demand and the way renewables will be integrated into the New England grid — that financial analysts warned of “considerable uncertainty regarding the overall cost” of the bill.
June Tierney, commissioner of the Department of Public Service, said there was a cheaper option. She noted that her department spent 18 months talking to Vermonters about their energy priorities and coming up with a plan that accomplished similar goals for an estimated $110 million, far less than the likely cost of H.289.
The lower cost is what Vermonters said they wanted, she said, and what will encourage homeowners and drivers to truly reduce their carbon footprints by switching to electric heat pumps and electric vehicles.
“We need to keep the rates of renewable energy as low as we can so folks won’t shy away from switching to electricity,” she said.
While some lawmakers remained troubled by even the revised cost estimates, others downplayed them.
Rep. Mark Mihaly (D-East Calais) said the rate increases amounted to a “rounding error” compared to the $1 billion the state spends annually on electricity. While there are upfront costs associated with switching to electric heat and transportation options, he noted, studies have shown that people save money in the long run, reducing carbon emissions and keeping their money local.
Others, such as Annette Smith, executive director of Vermonters for a Clean Environment, have called such estimates exaggerated and the emission reductions miniscule.
“Fiscal responsibility, or the lack of it, by House leadership and members is causing tremendous financial harm to Vermonters,” Smith said.
To those who argued that Vermont is too small to do much good in the fight to slow climate change, Mihaly called that a cop-out.
He asked colleagues to recall the 1870 painting that hangs in the Statehouse, depicting Vermonters during the Civil War fighting with valor at the Battle of Cedar Creek in Virginia, and to ask themselves what might have become of the nation if states such as Vermont had sat out the fight against slavery.
“They chose to lead on slavery and, so far, we have chosen to lead on carbon,” he said. “Let’s continue that effort to reduce carbon emissions. Not only will it save Vermonters money, it’s the right thing to do for us and for the nation.”
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