Legislation and Rules Impacting Energy Costs | Information and Engagement for Affected Companies

As the 2024 legislative session approaches, there are several ongoing and pending legislative and regulatory processes that will impact the cost of energy, both electric and fossil fuels, for manufacturers and other businesses. The following is a brief overview of two of these tracks, and we encourage you to contact us at info@aivt.org if you would like to be kept up to date on related developments and consider options for engaging legislators and regulators in the coming months.

Clean Heat Standard

The Public Utility Commission opened a proceeding this summer to develop rules implementing a Clean Heat Standard program, under which fossil fuel sellers (those who initially own the fuel imported into Vermont for sale) would have to purchase tradable credits in order to sell non-highway transportation fuels.  They could also earn credits through supporting certain types of efficiency or fuel switching projects.  What these credits will cost is not known and will not be until the program is developed – there is no cap on price impacts.  A very rough estimate from ANR earlier this year was that the initial price could be 70 cents a gallon roughly equivalent across fuel types, but higher estimates have been suggested.

During the development of the legislation creating this program earlier this year, the language and the policy discussion focused on heating and heating fuel.  However, as written the law would also include industrial and commercial processing fuels and the Legislature never fully investigated or discussed the economic impact of including these fuels, or the merits of including them in the first place given that opportunities to mitigate costs through efficiency or fuel switching are not available for these applications to the extent that they are for space heating.

Moreover, although the Legislature did adopt some amendments – or versions of amendments – offered by AIV with the support of other business organizations to call attention to the risk that industrial and commercial customers will not have equitable access to cost saving projects, they did not address a very significant problem for these customers.  Specifically, the bill does not allow credits for projects that switch from one fossil fuel to another.  This takes off the table support for projects, such as switching from oil to natural gas/propane, that could be the most likely options available for industrial and commercial operations, especially for processing applications.

The PUC is due to present the Legislature with proposed rules to implement the CHS in January 2025, and the Legislature is supposed to pass legislation to officially enact the program.  AIV is engaging in the PUC process leading up to that to identify changes or provisions to address commercial and industrial concerns, and to advocate for those that are within the authority of the PUC to include.  Those that are outside that authority will need to be brought up in the Legislature this coming session.

If your company relies upon fossil fuel for manufacturing and other commercial and industrial processing applications, or even just for space heating, we would encourage you to contact us at  info@aivt.org to discuss how you could be impacted, keep you informed about developments, and consider ways you might engage with the PUC or legislators to advocate for positive changes.

Renewable Energy Standard

The Legislature also passed legislation this year creating the Renewable Energy Standard Reform Working Group, a group of legislators and energy stakeholders, to consider and recommend changes to Vermont’s RES, including drafting legislation for consideration during this coming legislative session.

AIV is a member of the working group.

Some of the specific questions charged to the working group include:

(1) whether any changes to Vermont’s existing renewable energy requirements, or other energy policies, are needed to increase grid stability, resiliency, modernization, and reliability;

(2) identifying any barriers to moving to a 100 percent renewable standard for all electrical utilities by 2030;

(3) recommending cost effective procurement policies to increase new renewable energy, storage, and flexible load management to offset increasing in-state load, improve grid stability and resiliency, and that consider integrated resource planning electric load growth projections;

(4) whether increasing the requirement for out-of-state renewable procurements within or delivered into the ISO-New England territory can ensure affordable electric rates;

(6) evaluating the impact recommended legislative changes to procurement programs will have on Vermont jobs and the Vermont economy

The ultimate recommendations of the working group could have negative impacts on commercial and industrial ratepayers to the extent that new and/or more constraining mandates could drive rates higher than necessary.  But there are also opportunities to provide greater flexibility for utilities to find more affordable ways to meet Vermont’s energy needs with clean generation.

AIV will be engaging to move the working group’s recommendations toward embracing clean energy in addition to just renewables and allowing the utilities the maximum flexibility to find the best fits for affordability and reliability.  However, regardless of the draft legislation proposed, all related issues will be up for contentious debate in the new legislative session.

If electricity costs are an important issue for your company, we would encourage you to contact us at  info@aivt.org to discuss how you could be impacted, keep you informed about developments, and consider ways you might engage with legislators to advocate on these issues.