Act No. 170 (S.214). Energy; public service; conservation and land development

An act relating to the Vermont Energy Act of 2012

This act makes the following changes to Vermont laws that affect energy:

Renewable energy goals. The act amends the state's renewable energy goals to encourage distributed renewable generation and to promote renewable energy plants that are diverse in size and technology and that use natural resources efficiently. The act requires the integrated resource plans of Vermont's electric utilities to be consistent with these goals.

SPEED program; generally. The act revises the goals of the Sustainably Priced Energy Enterprise Development (SPEED) program. It clarifies an existing SPEED goal that 20 percent of total retail sales statewide in 2017 be from new renewable energy, and it adds a total renewables target for each electric utility of 55 percent starting in 2017 rising to 75 percent by 2032. Utilities are required to manage their supply portfolios to be reasonably consistent with the total renewables targets. Consistency with the targets is to be reviewed as part of cases before the public service board (PSB).

SPEED; standard offer program. This act codifies the existing standard offer program in its own separate statutory section, clarifies eligibility for the program, and expands the program from a "cumulative capacity" ceiling of 50 megawatts (MW) to 127.5 MW in annual increments over the next 10 years. The PSB is required to reduce the annual increments to account for "greenhouse gas reduction credits" created by an eligible ratepayer (see below). The PSB is also authorized to allocate regulatory costs to both utilities and renewable energy project developers.

The act exempts three types of plants from the cumulative capacity ceiling: farm methane plants, new standard offer plants that have substantial benefits to the operation and management of the electric grid, and existing in-state hydroelectric plants that are five MW or less and that meet other eligibility requirements. The PSB is required to make a standard offer contract of 10 or 20 years available to these existing in-state hydroelectric plants, at a price of no more than $.08 per kilowatt hour adjusted for inflation.

Starting in 2013, for new standard offer plants, the PSB is instructed to set prices annually for each category of renewable energy using either a "market-based procurement" or "avoided cost" pricing mechanism. The act also tightens requirements for participation in the standard offer program in order to discourage developers from filling program capacity with projects unlikely to be built. If a standard offer project does not meet the requirements of the program in a timely manner, its contract terminates, and any capacity within the program is reallocated to other eligible plants. Further, the PSB is required to submit a report and action plan on any factors to date that have, relative to the standard offer program, caused delays in placing plants in service or increased the costs to ratepayers.

Biennial report on renewable energy programs. This act requires the PSB to submit to the general assembly biennial reports providing detailed information and analyses on the SPEED and standard offer programs. The required report also must compare Vermont's electric retail rates to inflation rates and to rates in other New England states. If Vermont rates are increasing at a comparatively faster pace, the report must assess the contributions to the rate increases from various sources such as the cost of energy and capacity, transmission and distribution infrastructure, and the standard offer program.

Further study and report on mechanisms to promote renewable energy. This act requires the PSB, in consultation with the department of public service (DPS), to submit a further study and report on a potential renewable portfolio standard for the state and other potential mechanisms to encourage renewable energy.

Greenhouse gas reduction credits. This act allows greenhouse gas reduction credits generated by an eligible ratepayer to adjust the cumulative capacity of the standard offer program and establishes a methodology for calculating such credits. Eligible reductions are reductions in emissions from the eligible ratepayer's manufacturing process that are not energy-related, so long as the reductions result from specific projects, are otherwise required by law, are quantifiable, and are verified by an independent third party. Electricity providers are required to pass on savings realized through these credits proportionally to the eligible ratepayers generating the credits.

New gas and electric purchases; criteria for approval. This act amends the criteria applied by the PSB under 30 V.S.A. § 248 to determine whether to approve new electric generation and transmission and natural gas transmission facilities, purchases, and investments. It clarifies that the determination of whether a facility, purchase, or investment is needed is based on an assessment of environmental and economic costs performed in the same manner as for utility integrated resource plans. For the siting of an in-state facility, the act requires a determination that the facility will not have an undue adverse effect on the use of natural resources, and that due consideration is given to greenhouse gas impacts. For an in-state generation facility using woody biomass, it requires compliance with applicable air pollution control requirements, achievement of a reasonable design system efficiency for the type and design of facility, and compliance with fuel harvesting guidelines and procurement standards that are consistent with those developed by the agency of natural resources (ANR) (see below).

Total energy report. This act requires the DPS to report on proposed policies and funding mechanisms that would support achieving the DPS's recommendation that, by 2050, 90 percent of energy consumed in Vermont be renewable energy. The report is to address Vermont's "total energy" consumption, including electricity, thermal energy, and transportation. The report also is to consider development of a science-based public information campaign on the causes and risks of climate change.

Greenhouse gas accounting. ANR is required to adopt rules for life cycle accounting of greenhouse gas emissions, to be used across state and local government.

Smart metering. This act establishes that utilities may, on prior written notice, install wireless smart meters for their customers. Customers may opt out of the installation at no charge. Further, DPS and the departments of health must submit a joint report on wireless smart meters and their potential health effects.

Biomass heating systems. This act establishes that high-efficiency biomass heating systems, whether they use wood or other biomass, are qualifying systems for the thermal efficiency services delivered by Efficiency Vermont. Under prior law, only woody biomass heating systems qualified.

Harvesting and procurement standards. This act directs ANR to develop wood harvesting guidelines to be used for wood energy purposes and other harvesting. These guidelines would be voluntary for private landowners, except that they would be incorporated into forest management plans and practices for lands in the use value appraisal program. The commissioner of forests, parks and recreation also is required to ensure that wood product harvests on state lands are consistent with the purpose of the guidelines. The act further directs ANR to develop procurement standards to be used in the state procurement of wood products, including biomass energy. These procurement standards would be available to other institutions on a voluntary basis. The act directs ANR to seek implementation of regional harvesting guidelines and procurement standards.

Resource mapping. This act requires ANR to complete resource mapping based on the geographic information system to identify natural resources throughout the state that may be relevant to energy projects and to consider these maps when providing evidence or making recommendations to the PSB and to district commissions.

Biomass energy demonstration project. This act authorizes a biomass energy demonstration project to be implemented in Chittenden County. The demonstration project will be subject to forest harvesting guidelines and procurement standards and must provide pellets at a reduced cost to low income households.

Solar energy devices; exemption; flat roofs. This act exempts solar energy devices installed on flat roofs from regulation under municipal land use bylaws.

Multiple effective dates, beginning May 18, 2012

Also see: Taxation and Fees; Act No. 127 (H.679); An act relating to creating a uniform capacity tax for solar renewable energy plants

See: Education; Act No. 156 (S.113); An act relating to prevention, identification, and reporting of child abuse and neglect at independent schools