Ethan Allen Institute Energy Policy Recommendations  

The following is the concluding section of the EAI comments on the Comprehensive Energy Plan update of 2015, offered by the Public Service Department. The earlier sections analyzed the practicality of achieving Gov. Shumlin’s mandates of “75% of electric energy renewable by 2032”, and the overall “90% of all energy renewable by 2050”

As our frequently-ignored Constitution aptly observes, “previous to any law being made to raise a tax, the purpose for which it is to be raised ought to appear evident to the Legislature to be of more service to [the] community than the money would be if not collected.” (Ch I Art 9th).

In the past decade the passion for “renewables” has produced a long list of costly incentives, notably

  • Feed In Tariffs (standard offers), which require the utilities to buy up to 50 Mw of renewable power at prices from three to five times the current market price.
  • Clean Energy Development Fund, funded until 2012 by imposing special taxes on the state’s one nuclear plant, to distribute tax credits – and later, up front cash – to subsidize renewable energy installations, notably those stimulated by one of the Fund’s original board members.
  • RESET, the Renewable Portfolio Standard legislation (2015) that mandates utilities to purchase increasing percentages of renewable electricity

There is no question but what a state can achieve the decreed “90% by 2050”– if its political leaders can persuade its taxpayers and ratepayers to provide the enormous subsidies, and submit to the ever increasing mandates, that reaching that goal will require.

Whether the taxpayers and ratepayers could do more good for the people and economy of this state by making their own decisions on how to spend their own money (see Ch I Art 9th above) is an important question, which of course the Plan, like the 2011 CEP, will assiduously avoid.

In short, the CEP’s – and certainly the new Plan’s – vision of a state with 90% of its total energy produced by renewables by 2050 can only be achieved by heroic, costly government intervention into the energy market, over the growing protests of taxpayers and ratepayers called upon to finance the ever expanding renewable industrial complex.

It is significant that the “90% renewable energy by 2050” goal is not state law. It was simply decreed by Gov. Shumlin. It does not appear in 30 VSA 8001 as one of the goals of the state’s electricity policy. The “90% by 2050” goal was mentioned in Sec. 13 of Act 170 of 2014, but the fact remains that our elected representatives have never been called to vote on it. Because of the potentially enormous costs of achieving that goal, and the flood of taxes, mandates and regulations being put in place to achieve it, we recommend that the general assembly be asked to give this decree democratic legitimacy by a record vote in each chamber.

The CEP was rightly enthusiastic about distributed generation, as preferable to large central power stations and long transmission lines. What the Plan conspicuously refused to consider is a fleet of 100-200Mw factory-built modular nuclear plants, making use of new failsafe Generation 4 technology, on a dozen sites around the state. Such plants aren’t likely to be on the market before 2020 (unless the Chinese produce an exportable package before then), but a few states will be ready for them, and Vermont ought to among them.

Recommendations: the 2011 CEP included some useful proposals, including more net metering, ride sharing, local energy committees, state building efficiency improvements, smart grid investments, the voluntary local Property Assessed Clean Energy program, and maintaining an effective energy information clearing house.

But overall the CEP resolutely headed off in the wrong direction, anticipating enormous taxpayer and ratepayer costs, ever growing bureaucracies, and ever more extensive controls over the choices of the ordinary Vermonter, all to send Vermonters galloping after a wrong-headed goal of “90% renewable energy by 2050”.

Here are our 19 specific policy recommendations for the successor Plan.

  1. Abandon the “vision” of this Plan that state government must use its coercive powers to see that Vermont gets 90% of its energy from renewable sources by 2050 or any other date – at least until the General Assembly votes on the record to make themselves accountable to the voters who will bear the burdens.
  2. Replace that vision with this: “to set Vermont on a path to assure safe, reliable and competitively priced energy that will make possible a strong, competitive and growing economic base, both for creation of new wealth and income for the people of the state, and for expanded tax revenues to enable the state to meet its fiscal obligations.”
  3. Repeal the requirement that Vermonters be forced to reduce their greenhouse gas emissions to 50% below the 1990 baseline by 2028, or any other year. (Act 168 of 2006).
  4. Repeal the state’s “climate action plan”, inasmuch as nothing the people of Vermont can do, even at crippling economic cost, will ever have any detectable effect on any metric of “climate change” (formerly “global warming”).
  5. Repeal the RESET mandate that utilities meet a fraction of their demand with high priced renewables.
  6. Repeal the Feed In Tariff (Standard Offer) mandate that requires ratepayers to pay far above market prices to the producers of government-favored renewable electricity.
  7. Repeal the small business solar tax credit.
  8. Stop looking for inventive new ways to suck money into the Clean Energy Development Fund, such as a “compliance fee” levied on non-renewable energy (heating oil, truck and auto fuel, propane, natural gas etc.). When its current subsidy commitments are exhausted, abolish the Fund.
  9. Abandon the idea of authorizing issuance of Qualified Energy Conservation Bonds unless the entire risk of default rests with the enterprise favored by the financing (in which case the issue probably can’t be sold.).
  10. Repeal the ratepayer-financed PSB energy efficiency program, and let businesses and homes that wisely invest in energy conservation recover their costs from their own savings, instead of sending the tab to other ratepayers.
  11. Abandon the idea of instituting a carbon tax – a “climate pollution tax” to its backers. Such a tax, levied on gasoline, diesel, natural gas, home heating oil and propane, would, its backers say, include a rebate of 90% of the proceeds to people and businesses burdened by the tax; the remaining 10% would finance more renewable adventures like the CEDF. Opening an (eventual) $700 million a year revenue source would be an irresistible temptation to legislators to solve their chronic budget problems, not their constituents’ energy cost burdens.
  12. Abandon any temptation to subsidize any form of passenger rail in Vermont, especially after Gov. Dean’s $28 million Champlain Flyer boondoggle.
  13. Abandon any notion of requiring buildings to be “net zero” (100% energy self-sufficient) by 2030.
  14. Abandon any notion of restricting or taxing single occupancy vehicles (SOVs) driven by Vermonters.
  15. Abandon any notion of using land use controls to force Vermonters into downtown centers or other government-favored locations in the name of energy efficiency.
  16. Assess electric vehicle owners, who pay no fuel tax, a charge for using the state’s highways, instead of making gasoline and diesel fueled vehicles absorb all the costs. Require that publicly installed EV charging stations charge EV owners enough to at least cover the energy they are drawing.
  17. Continue to require utilities to purchase electricity offered through net metering connections, up to the point that grid stability becomes a problem; but set the rate of kwhr credit for net metering vendors so that they do their part in covering the fixed cost of maintaining power grid service.
  18. Consistently remind yourself that markets work, and that ordinary people usually turn out to make better use of their resources than what is prescribed for them by the experts who prepare “comprehensive energy plans.”
  19. Read Ch. I Art. 9th of our Constitution again, and post it in plain view at PSD headquarters. (Send copies over to the State House and the Governor’s office.)

Thank you for this opportunity to comment on the draft Comprehensive Energy Plan.

- Submitted by  John McClaughry, vice president of the Ethan Allen Institute. John served as a member of the Senate Natural Resources and Energy Committee and Joint Committee on Energy, 1989-92. A.B. (physics), Miami U.; M.S. (nuclear engineering) Columbia U.

 

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The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.
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