Commentary: Legislature Moving to Increase Electric Rates (February, 2015)

By John McClaughryJohn McClaughry

The 2015 legislature, and of course, Gov. Peter Shumlin, are hard at work contriving yet another way to make Vermonters pay more for their electricity. The vehicle is H.40, spearheaded by Rep. Tony Klein and just now emerging from the House Natural Resources and Energy Committee. It’s the bill to – finally – impose upon Vermont electric utilities a Renewable Portfolio Standard (RPS).

Why are they doing this? To achieve the state’s renewable energy goal of 90% renewable-sourced energy by 2050.

Where did that goal come from? It was proclaimed by Gov. Shumlin in 2011. It became the centerpiece of his Comprehensive Energy Plan that same year, and has been implicitly accepted by the legislature.

Did any legislator ever vote on the record to impose this challenging goal?  No, but a majority of the legislature is intent on driving up electricity prices to reach it.

Why do we need to meet this rather drastic goal? Because Vermont must do its part to defeat the menace of “climate change”.

How does the governor expect to make us meet his “90% by 2050” goal and thereby deal a blow to “climate change”? Here’s where it gets complicated – and expensive.

Let’s focus for now just on electricity. Rational people who are dependent on electricity – that would be everybody – are willing to absorb somewhat higher electric rates caused by Clean Air Act requirements for pollution control (from fossil fuel plants, especially coal). They are not so keen on paying premium prices for the same electricity imposed by a government hooked on the increasingly dubious “humans cause catastrophic climate change” theory. This is increasingly so when NASA scientists report that satellite-measured global temperatures have been level for the past seventeen years, even though carbon dioxide emissions have steadily increased.

Simply sending taxpayer dollars to subsidize wind, solar and landfill electricity generators will not sell politically. (For years Vermont ducked this problem by extorting money from Entergy Vermont Yankee to cover the “clean energy” checks, but that cash flow is now gone.)

The Believers need to find some way to keep subsidies flowing to their pet renewable-industrial complex without alarming the ordinary electricity consumer. The solution: the Renewable Portfolio Standard, now relabeled RESET (Renewable Energy Standard and Energy Transformation.)

Its central provision would force Vermont utilities to get 55% of their electricity sales from qualified renewables by 2017, and 75% by 2032. They are at about 40% now, most of it from cheap Quebec hydro. If the utilities fail, they’ll be hit with “alternative compliance payments” (aka “tax”), the proceeds of which will refill Gov. Shumlin’s favorite receptacle, the Clean Energy Development Fund.

The RESET bill repeals the SPEED program. This program, launched in 2005, requires the utilities to meet their load growth by increasing their purchases of renewable energy. These purchases earn them Renewable Energy Credits, or RECs.

According to Vermont Law School energy expert Kevin Jones, Vermont is the only state in the nation whose utilities sell RECs and also count the same renewable energy toward their SPEED requirements. Lyndon State science professor Ben Luce calls this “basically a blatant fraud.”

This double counting has been a lucrative arrangement for Vermont utilities – they pocketed $46 million in 2013. But in May 2014 the Florida-based Next Era Energy Marketing, a large trader in RECs, blew the whistle. It announced that it would no longer trade in Vermont RECs because of this dishonest double counting.

The Shumlin administration realized that if the sale of RECs were curtailed, Vermont’s rate payers would be forced to pay higher rates – probably six percent higher – in addition to the already high rates driven up by state-mandated high prices to make renewable energy projects economically viable. Hence the urgency to pass RESET, which would allow utilities to sell RECs that they don’t  need to meet their RESET goals.

Something like this almost passed in 2012. The RPS provisions were scrapped at the last minute in the House, after the Public Service Board estimated that that RPS would cost Vermont ratepayers $311-435 million over the next 30 years.

If you believe that human caused greenhouse gas emissions are causing catastrophic climate change, and if you believe banning fossil fuel combustion would somehow stabilize or reverse “climate change”, and if you believe that forcing Vermont electric ratepayers to pay premium prices would depress fossil fuel combustion enough to make a detectable contribution to that global goal, and if you believe that state must require utilities to buy the high priced renewable electricity at far above market prices to get enough to meet the “90% by 2050” goal – then the RESET bill is for you.

If you don’t believe any one of these propositions, then it’s not.

- John McClaughry is vice president of the Ethan Allen Institute (www.ethanallen.org).

{ 3 comments… read them below or add one }

guy flatley February 17, 2015 at 6:44 pm

tell me please is the hydro from Quebec not renewable , hydro is the best way to go , add water and your all set, taxing us Vermonters more is crazy , people are leaving this state in droves , look at the school enrollment, less and less each year , stop taxing us to death .

Reply

Jim Sawhill March 15, 2015 at 12:40 pm

generally hydro older than 10 years is NOT renewable – you can thank the American Wind Industry for successfully lobbying that definition

Reply

Pete Gummere February 18, 2015 at 4:53 am

Excellent analysis,John!

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