John McCormick: S.5 is leaving the station. What’s next? 

Nov 05, 2023

By Opinion

Jun 4 2023June 1, 2023

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This commentary is by John McCormick of Bristol, an associate with the Louise Diamond Committee to Protect Next Generations.

Full disclosure: My family lives in a two-floor, log, Bristol home with no drywalls. It cannot accommodate a heat pump. We rely on sweaters, oil and the wood I cut. No other options. Wood is free and oil backup puts me in S.5's crosshairs.

Now, the Vermont Public Utility Commission begins a two-year study to determine costs/benefits and whether S.5 can achieve reductions to warrant increasing fuel costs. It was written to increase fuel prices to motivate divesting.

Renewable energy companies and advocates should be at the table.

Quoting Sen. Becca White's May 11 commentary: "… people don't have to do anything if they don't want to." More pointedly: "Any increases in the cost of fossil fuels will translate into lower costs for cleaner alternatives." The former is obvious. The latter is a bet that higher oil and propane costs will create the shift. Technology costs would not be lowered. Comparing economics might motivate owners with reliable credit and capability to install alternatives.

Putting the quotes together, there is a potential the reduction goals will not be met as heating fuel prices increase.

Vermont has a history of trying to increase fuel costs to encourage alternatives. The carbon tax was dead on arrival. Vermont joined the RGGI that put an additional charge on the electric bill. The now-defunct Transportation & Climate Initiative would have required gasoline distributors to buy "allowances" (no cost — no enforcement) that would increasingly raise pump prices to encourage shifting to EVs. It died with the $4 pump price.

What is the real fuel cost motivator?

The PUC must be sensitive to choices low-income seniors are forced to make in this chaotic economy. An overview of EV sales will help.

In 2022, EV sales were 1.7% of total. The Global Warming Solutions Act calls for 27,000 EVs in 2025 and 126,000 by 2030.

Vermont's five highest-median-income counties have 67% of registered EVs. The five lowest have 18%. Vermont's 938 chargers lead on a per-capita basis. $3.50-$4 pump price was not a factor. Wealth was the motivator.

The rate of shift to alternatives is customer-controlled. That is true for S.5. Compliance will take years to affect Vermont's 7,715 buildings and 337,214 homes. The Global Warming Solutions Act calls for 90,000 home weatherizations by 2030.

The PUC must also evaluate what is already working, like the low‐income weatherization assistance program, to determine the rationale for expanding it. Since 1980, the weatherization program has been operated by four Community Action Agencies and the Northeast Employment and Training Organization — all struggling to find additional workforce.

The low‐income weatherization assistance program has weatherized 27,000 homes, reducing average energy cost by 28%, or $500, depending on prices and usage. It's a dedicated funding stream since 1990. The Weatherization Trust Fund revenues include: two cents per gallon tax on fuel oil, propane and kerosene, 0.75% of the gross receipts tax on natural gas and coal and 0.5% gross receipts tax on electricity — a stable funding source for low‐income weatherization.

To accelerate progress, Gov. Scott's Climate Action Commission recommended doubling the low‐ and moderate‐income weatherization from 2,000 to 4,000 homes. Vermont's Low Income Advocacy Council endorsed, in 2019, passage of H.353, which I drafted for my representative, Mari Cordes. It passed the House 81-60 and doubled the fuels tax to 4 cents.

In Act 62's January 2021 Legislature's report, the PUC recommended a "Thermal Efficiency Benefit Charge" be assessed on oil, kerosene and propane. It would draw revenues for thermal efficiency programs (Efficiency Vermont, etc.) that benefit users while supporting existing thermal-efficiency programs for all income levels, with priority grants targeted to low-moderate income Vermonters.

The PUC proposed increasing the fuel tax from 2 cents per gallon to 4 cents and, in 2023, increase the tax to 6 cents. It provided potential revenue for $0.04 at $8,936,000 then $10,043,000 and $0.06 at $13,404,000 to $15,064,000, depending on state fuel import.

The existing 2-cent tax will end June 30, 2024. That is the opening for a realistic and smart approach to thermal energy efficiency. Rep. Mari Cordes could reintroduce H.353 next January. The House passed it in 2019.

In her Jan. 26 Senate testimony, Julie Moore, secretary of the Agency of Natural Resources, used the Global Warming Solutions Act's Cadmus Pathways Report to estimate projected costs of S.5: Total cost (1/01/26-12/31/30) $2 billion plus the appropriated $825,000 for PUC and $900,000 for the Public Service Department. She also estimated heating oil increase of 70 cents/gallon.

The "Thermal Efficiency Benefit Charge" is a higher-order alternative to S.5. It is far less complicated, expands existing state programs, and has a smaller energy burden than S.5. Annual revenue amounts will provide clean heat measures at a reasonable rate while the workforce gradually increases. The General Assembly could adopt Act 62's recommendation next January.

The PUC can also use the study to determine how Vermont can lower electric rates: by expansion of a stronger grid, demand-side management, robust solar deployment and tapping Maine offshore wind. Isn't that what we all want as our legislators mandate a shift to electricity?