Act No. 45
(H.446)
Renewable energy and energy efficiency
This act is designated as "the Vermont Energy Act of 2009."
Secs. 2 through 4a contain amendments to the existing Sustainably Priced Energy Enterprise or "SPEED" program to require the public service board (PSB) to issue standard offers for renewable energy plants sited in Vermont.
Sec. 2 adds to existing law new definitions related to the standard offer. Among these definitions, the term "plant" is defined as renewable energy, with a group of common facilities such as a wind project being one "plant." The term "commissioned" refers to when a plant is put into operation. The term "SPEED facilitator" refers to the entity already appointed by the public service board, under existing law, to implement the SPEED program.
Sec. 3 amends existing law to allow municipal utilities that are members of the Vermont Public Power Supply Authority to meet the standard offer requirements as a group rather than individually.
Sec. 4 contains the central provisions regarding the standard offer. It:
a. Requires the PSB to implement the standard offer through the SPEED facilitator.
b. Requires the PSB to put a standard offer program for renewable plants in effect by September 30, 2009.
c. Sets the term of a standard offer contract at 10-20 years, except that contracts for solar power will be for 10-25 years.
d. Caps each standard offer plant at 2.2 MW and the total capacity allowed for all standard offer plants at 50 MW.
e. Establishes four criteria for determining a cost-based price to be paid under the standard offer: (1) set generic costs for each category of renewable energy, (2) subtract a generic assumption reflecting reasonably available tax credits and other incentives (e.g., grants), (3) add a rate of return for the plant owner on its capital investment equal to the highest rate of return paid to a Vermont utility, and (4) make an adjustment up or down if needed to provide a sufficient incentive for rapid development of renewable energy.
f. Establishes an initial set of prices and requires that the PSB review them before they go into effect on September 30, 2009. The PSB is to conduct an informal review by September 15, 2009 of the initial prices to see if they represent a reasonable approximation of the price that would be paid using the act's pricing criteria and is to set an interim price if it concludes the prices do not constitute such a reasonable approximation.
g. Requires the PSB to set prices based on a full analysis under the act's pricing criteria no later than January 15, 2010.
h. Provides that the PSB shall reevaluate the cost-based prices at least every two years starting in 2012.
i. States that once the PSB sets cost-based prices, those prices shall be in effect for new contracts after the prices are set. Previously signed contracts shall remain at the price set out in the contract.
j. Requires all Vermont utilities to purchase the power generated by the plants that accept the standard offer, with the costs distributed pro rata according to a utility's share of retail electric sales. The purchase shall include all capacity rights associated with the standard offer projects, allocated according to the same formula. Utilities shall receive a credit against these costs for renewable plants that are 2.2 MW or less that they put into operation after July 15, 2009 and shall recover from ratepayers their reasonable costs associated with these contracts. The PSB shall determine how the costs of the standard offer are allocated among a utility's ratepayers.
k. Provides that all renewable energy credits associated with the plants that accept the standard offer shall be transferred to the utilities, except that the owner of an agricultural methane plant shall keep those credits and be able to sell them on the market.
l. Requires the PSB to determine: how the SPEED facilitator's expenses are allocated among the utilities and the plant owners, the manner and timing of payments to plant owners and by utilities, reporting requirements, and the interconnection and metering of the plants that accept the standard offer.
m. Requires that any wood biomass plant that wants to participate in the standard offer shall achieve a fuel efficiency of 50 percent.
n. States that a Vermont utility is not eligible for the standard offer, and that the standard offer does not preclude a voluntary contract between a utility and a plant owner.
o. Protects the state from liability for the costs of the SPEED program, including the standard offer.
p. Requires the PSB, starting in 2011 and every two years afterward, to report on the standard offer program.
Sec. 4a changes existing law to make utility renewable energy pricing programs voluntary instead of mandatory.
Sec. 5 amends the Clean Energy Development Fund (CEDF) statute to allow the fund to finance thermal energy and geothermal projects and to direct that the funds appropriated to Vermont by the federal stimulus legislation under the "state energy program" (approximately $21 million) be deposited into the CEDF. Sec. 5 of this act was superseded and replaced by Sec. 93 of Act No. 54, which in turn was further amended by Sec. 4 of Act No. 2 and Sec. 13 of Act No. 3 of the June 2009 special session.
Sec. 6 adds the following concerning rate incentives for regulated electric utilities: they may recover prudently incurred permitting costs for renewable energy projects, whether or not the permit is granted; and the PSB may grant such utilities a reasonable incentive on their capital investment in renewable energy projects. The section requires that the projects be sited in Vermont.
Sec. 7 allows a wind developer, when applying for a permit from the PSB, to provide the maximum dimensions and decibel levels for its proposed wind turbines and rotors rather than specifying the exact make and model.
Sec. 8 concerns the agency of natural resources' current policy against siting large-scale wind projects on state lands. The section:
a. States that it is reasonable to site wind turbines on state lands, including turbines of commercial scale.
b. Recognizes that wind turbine siting on state lands should not conflict with legal restrictions on the use of those lands and should be environmentally responsible.
c. Provides that the agency's policy does not bar the agency from considering commercial-scale wind development.
d. Requires the agency to revisit its existing policy if it receives significant new information.
e. Requires the agency to report to the general assembly on whether it revisits or revises its policy, whether it receives any proposals for wind turbine siting on its lands, and what its response was to any such proposals.
Secs. 9, 9a through 9e, and 10 concern solar energy tax credits. They clarify, for investments made on or after January 1, 2009, that the tax credit for individuals must be attributable to Vermont property and that a taxpayer may either use a grant from the CEDF or the tax credit, but not both. They also provide that, for investments on or after October 1, 2009, the tax credit will apply only to that portion of the investment not funded by a grant or similar funding. They further provide that unused investment tax credits and solar energy investment credits may be carried forward no more than five years. They repeal the state tax credit effective January 1, 2011, but allow taxpayers to carry forward for up to five years the unused portion of credits claimed prior to that date. They require the CEDF to make the general fund whole for the cost of the tax credits.
Secs. 11 through 13 amend the residential and commercial building energy standards statutes to require that, by January 1, 2011, the department of public service (DPS) revise the standards to conform to the federal American Recovery and Reinvestment Act (ARRA). These statutory revisions ensure compliance with that act so that Vermont can receive stimulus funds.
In accordance with ARRA, Sec. 11 of the bill requires that new residential construction comply with the 2009 edition of the International Energy Conservation Code. Similarly, Sec. 12 of the bill requires that new commercial construction comply with the so-called "ASHRAE" 90.1-2007 code or the 2009 edition of the International Energy Conservation Code, whichever provides the greatest level of energy savings. These will become effective on or before January 1, 2011, when the DPS is to complete rulemaking to change the existing standards.
ARRA requires that states create an energy code compliance plan that will ensure 90 percent compliance by 2017 and establish active training and enforcement programs for energy standards and a system for measuring the rate of compliance. Sec. 13 requires the DPS to produce that plan by September 1, 2011, after seeking comments and recommendations from potentially affected parties and persons with expertise. DPS also is required to set up the training and enforcement programs and the compliance measurement system by June 30, 2012.
Sec. 14 enacts a three-year pilot project for a self-managed energy efficiency program for very large transmission and industrial ratepayers. Among other things, the section:
a. Requires DPS to propose the program to the PSB, which would adopt it by December 31, 2009 for effect January 1, 2010.
b. Exempts approved participants from the statewide energy efficiency charge.
c. Provides that eligible participants are those who had an energy efficiency charge bill of at least $1.5 million in 2008.
d. Requires an approved participant to commit to a three-year investment of an annual average of $1 million in electric or other energy efficiency improvements.
e. Requires verification of energy savings claims in a manner consistent with the procedures established for the energy efficiency utility.
f. Includes requirements for annual accounting by the participant and reporting by the PSB to the general assembly.
g. Requires the PSB to terminate the participant's eligibility if it found the participant was not living up to its commitment.
h. Requires the participant to pay the difference between its investment and what it would have paid under the energy efficiency charge if either one of the following occurs: (1) the PSB determines, during the course of the three-year pilot, that the participant is not meeting its commitment; or (2) at the end of the third year, the participant has not met its commitment.
Sec. 14a amends an existing mandate for the PSB to establish criteria and procedures for an energy savings account for customers who pay an overall annual energy efficiency charge of $5,000. Under existing law, a percentage of the customer's energy efficiency charge would be applied to the customer's own energy efficiency. The section requires that the PSB establish this program by December 31, 2009.
Secs. 15 and 15 create a Vermont Village Green Renewable Pilot Program to consist of two district heating projects using renewable fuels to serve end users in designated downtowns or growth centers in Montpelier and Randolph. Other municipalities may participate in the pilot if either or both of those towns decline. Projects may but do not have to include district power. If wood is used as fuel, the project shall meet minimum fuel efficiency requirements. On certification by the DPS, end users connecting to the project are eligible to receive funds from the CEDF to be applied to the cost of connecting to the project, and the CEDF is required to provide at least $100,000 in incentives for this purpose, Also, if district power is included, special electric rates can be set by the PSB. Reporting requirements by the host community and DPS are included.
Secs. 15b through 15d forbid municipalities from adopting a bylaw, ordinance, resolution, or other enactment that prohibits or has the effect of prohibiting the installation of solar collectors, clotheslines, or other energy devices based on renewable resources. They also adopt a similar prohibition applicable to deed restrictions, covenants, or similar binding agreements. However, installation of these energy devices may be prohibited on patio railings in condominiums, cooperatives, or apartments.
Secs. 15e through 15k authorize municipalities to create clean energy assessment districts to finance eligible renewable energy and energy efficiency projects undertaken by the owners of real property within the boundaries of the municipality. The creation of such a district would be subject to voter approval. Upon approval by the voters, a municipality would be able to incur indebtedness for or otherwise finance eligible projects. Only property owners who have entered into written agreements with the municipality will be subject to a special assessment. The sections require the participating municipality to follow underwriting criteria and establish other qualifying criteria to assure that property owners will be able to meet assessment payment obligations. The property owners shall repay the assessment no later than the end of the expected lifetime of the project. In the event a property subject to the assessment is transferred, all past due balances shall be paid and t he requirement for future payments shall constitute a lien on the property. Before a written agreement is entered into, an analysis of project costs, energy savings, and estimated carbon impacts must be performed or reviewed and approved by the energy efficiency utility. Participating owners are responsible for the costs of operating the districts. A municipality may establish a reserve fund, funded by participating property owners, for use in the event of foreclosure on an assessed property.
Sec. 16 states that the act takes effect from passage with exceptions concerning the solar energy tax credit provisions that are reflected in the discussion above of Secs. 9, 9a through 9e, and 10.
Date Signed by the Governor: Governor did not sign the bill and allowed the bill to become law without his signature
Effective Date: On passage (May 27, 2009, the date on which the governor allowed the bill to become law without his signature)