Every utility in Vermont would have to source all of its power from renewable resources by 2035, under a bill that passed the Vermont Senate this week. Gov. Phil Scott is expected to veto the bill, over concerns about how it would affect electric rates. But Democratic leaders in the Statehouse are hopeful they’ll be able to mount a successful override of that veto.
The legislation was drafted in the House and passed through that chamber with strong support. It was not amended in the Senate — which is highly atypical for a bill of its complexity and economic impact.
Three Senate committees gave their approval to the policy without making any changes to what House lawmakers proposed, despite hearing testimony from several entities calling for changes.
Utilities and almost all environmental groups in the state support the measure.
What does the policy propose?
Currently, Vermont electric utilities are required to source 75% of their power from renewable resources by 2032, with 10% of that power coming from relatively newly built renewables in Vermont.
This bill would require the biggest utilities in the state demonstrate their power portfolios are 100% renewable by 2030. The deadline for smaller, municipal utilities and cooperatives, as well as GlobalFoundries, would be 2035.
Additionally — and most controversially — the bill doubles the amount of power utilities must source from new in-state renewables by 2035, and creates a new requirement that they purchase power from new renewables in the New England region. Most of the in-state renewables are expected to come from solar, though town-owned utilities are allowed to count existing power from small-scale hydro dams.
Notably, the bill doesn’t prevent utilities from complying by purchasing power from Hydro-Quebec or from biomass — though the bill effectively excludes those resources from counting towards the requirements for “new renewables.”
The policy’s supporters say it is the product of a grand compromise between many stakeholders who have historically been unable to agree about how to update the standard.
Opponents in the Scott administration and at Vermonters for a Clean Environment say it’s been rushed and that lawmakers should focus more energy on containing electric rates.
How much would the policy reduce emissions?
Vermont is part of a region-wide electric grid shared by all New England states. On that grid, electricity generated from a natural gas plant in Massachusetts gets jumbled together with electrons flowing from Hydro-Quebec and net metered power from rooftop solar.
As a result, Vermont utilities are directly dependent on power from natural gas plants outside the state’s borders, even if the contracts they hold for their power purchases are largely for renewable resources.
Because of this, the only way for Vermont to make its electricity less emitting, from a climate perspective, is for utilities to purchase power from new renewables, built in places where there is demand for more electricity nearby and where there is suitable grid infrastructure and potentially storage for the power they generate.
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This is something that is broadly agreed upon — by lawmakers, by environmental advocates and by the Scott administration.
Estimates are all rough, but the trade group Renewable Energy Vermont, which represents renewable developers in the state, and Vermont Public Research Interest Group, an environmental nonprofit that often advocates for renewable energy, have estimated the bill would do the equivalent of taking 160,000 to 240,000 cars off the road by 2035.
However, critics of the bill, including officials in the Scott administration, have pointed out that according to the state’s own accounting, Vermont’s electric sector accounts for just 2% of the state’s total emissions.
As a result, the policy would have little impact on Vermont’s progress towards complying with its legally binding commitment to reduce greenhouse gas emissions in the coming decades.
How would the bill affect electric rates?
Purchasing power from new renewables is more costly than purchasing power from existing resources, like Hydro-Quebec. However, once renewables are built, long-term, their costs tend to be lower and less volatile than electricity derived from fossil fuels.
Vermont’s grid is very old and constrained in some places, and would likely require costly transmission and distribution grid updates to accept new renewable power.
VELCO, the state’s grid operator, says Vermont’s aged grid will need massive upgrades in the coming years regardless of whether lawmakers update the Renewable Energy Standard this year.
However, requiring utilities to purchase twice as much power from new in-state renewables as they do now would almost certainly add cost for ratepayers because the state has no policy to ensure those new renewables are built out in places where there is existing infrastructure capacity for them.
VELCO says two major inter-state transmission projects in the works could help to ensure electric ratepayers don’t shoulder the brunt of those costs alone.
The Joint Fiscal Office predicts the policy would increase electric rates between 2% and 6.7% over what they’re projected to be anyway by 2035. The Scott administration and those who oppose the legislation allege those numbers are too low, and supporters of the bill, including renewable energy developers, say they are too high.
Heated debate over affordability
The question of affordability boiled over at an event late last month in a Statehouse room, where more than 100 people rallied in opposition to a swath of environmental bills including proposed changes to Act 250, a bill that restructures the governance of the Fish and Wildlife Board and updates to the Renewable Energy Standard.
Speakers alleged the proposed bill would do more to benefit developers than Vermont residents.
They pointed to grid constraints in the Northeast Kingdom, which have forced grid operators to curtail power at Lowell’s Kingdom Community Wind. Regulators at the Department of Public Service have said that new solar development in those constrained areas effectively cannibalizes power generated by existing resources, and at a cost to Vermont ratepayers.
The Department of Public Service pitched its own proposal to lawmakers earlier this session, which would have required utilities to buy all of their power from renewables or nuclear power by 2030, and required about half the additional new renewables the current bill calls for.
DPS argues its policy would have saved Vermonters hundreds of millions in transmission upgrades by requiring about half the new in-state renewables lawmakers have endorsed. (Environmental advocates with Conservation Law Foundation and VPIRG contest the department’s math and fiscal analysts in the Statehouse have put forward very different figures.)
Vermont has some of the highest solar penetration of any state in the country, with an aged rural grid and huge disparity in who currently owns and has access to renewable power.
TJ Poor, director of regulated utility planning for the Department of Public Service, told members of the Senate Finance Committee in late April that if electric rates go up too much too fast, it could slow Vermonters’ adoption of electric appliances, which is currently the state’s primary plan for reducing greenhouse gas emissions in its two most emitting sectors — home heat and transportation.
Poor said there has to be a balance — policies should push electricity to be as low-carbon as possible, while keeping it affordable, so that people save money when they switch away from fossil fuels. He said that’s especially important for bringing low-income households along.
Sen. Anne Watson, a Democrat from Washington County who voted for the bill Tuesday, argued the policy lawmakers just sent to the governor does just that.
“This bill, I believe, strikes the right balance between affordability and moving towards a more sustainable future,” she said.
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