House Brings Down Budget Axe On Efficiency Vermont

Mar 10, 2015

The Vermont House on Tuesday gave approval to a bill that aims to spark construction of renewable energy projects. But the legislation has claimed a high-profile political casualty, as lawmakers unexpectedly targeted Efficiency Vermont for a significant budget cut.

The official name for the legislation is the Renewable Energy Standard and Energy Transformation bill. But in Montpelier it’s generally known as RESET. And one of its key provisions asks Vermont’s electric utilities to help customers reduce their oil or gas heating bills.

“So they will be asked to help homeowners, to help businesses, work on energy efficiency projects. And ratepayers will be backstopping that effort,” says Warren Rep. Adam Greshin, an independent who sits on the House Committee on Ways and Means.

Greshin decided that if lawmakers are asking ratepayers to help subsidize thermal efficiency projects by utilities, then they ought to offset energy expenses somewhere else. He didn’t have to look far to find a target.

"We shouldn't be also then giving Efficiency Vermont more funds when we're asking utilities to do similar work." - Warren Rep. Adam Greshin, House Committee on Ways and Means member

“And we shouldn’t be also then giving Efficiency Vermont more funds when we’re asking utilities to do similar work,” Greshin says.

Efficiency Vermont is a 15-year-old program funded entirely by a surcharge on residential and commercial utility bills. Greshin’s plan would freeze those surcharges for three years, with the goal of freezing spending at Efficiency Vermont through 2017.

His amendment found surprising support in a Democratically controlled House, where Efficiency Vermont  is generally viewed as a keystone of energy policy. And the proposal was adopted as part of the RESET bill.

But Kelly Lucci, public affairs and communications manager at Efficiency Vermont, says Greshin’s amendment won’t deliver the fiscal benefits its proponents claim.

“Well, I think at heart this was put forward with a fairly minimal amount of process or consideration,” Lucci says. “And what we’re finding is that as we dig into this is that the likely impact of this amendment is that it is going to cost more than it would ultimately save.”

"I think at heart this was put forward with a fairly minimal amount of process or consideration ... The likely impact of this amendment is that it is going to cost more than it would ultimately save." - Kelly Lucci, Efficiency Vermont public affairs and communications manager

Greshin’s plan would effectively revoke the approximately $10 million in budget increases Efficiency Vermont is slated for over the next three years. But Lucci says the state would lose out on the $24 million in energy savings those expenditures would have yielded.

Darren Springer is deputy commissioner of the Department of Public Service, which opposes the cuts. Springer says the RESET bill asks utilities to help customers replace their fossil fuel heating systems with cold-air heat pumps powered by renewable energy sources.

The more electricity Vermont consumes, the higher a price it pays for those kilowatt hours. And Springer says that since the RESET initiative will put more pressure on the electric grid, Efficiency Vermont’s work will be more important than ever.

“So we are actually ... contemplating using the electric grid in new and innovative ways, and it’s even more important at that point to ensure we’re reducing our electric use overall, and our peak,” Springer says.

East Montpelier Rep. Tony Klein, the Democratic chairman of the House Committee on Natural Resources  and Energy, says Efficiency Vermont, which has an annual budget of about $50 million, is delivering good return on ratepayer investment. But he says no program is immune from the fiscal pressures on government programs this year.

"Nothing else in the state of Vermont at this point is having their budgets, or their ability to raise money, increase by 11 to 13 percent a year." - Rep. Tony Klein, House Committee on Natural Resources and Energy chairman

“Yes, we get a two-to-one payback on it. And it’s great,” Klein says of money spent at Efficiency Vermont. “But nothing else in the state of Vermont at this point is having their budgets, or their ability to raise money, increase by 11 to 13 percent a year.”

Klein says political calculations also figured heavily in widespread support for the Efficiency Vermont budget freeze. The broader RESET bill, according to Klein, might have failed to make it to the House floor for a vote without the Greshin amendment.

“And we were afraid that this bill was going to get locked up in the Ways and Means Committee and not be able get to the floor for a positive vote unless we addressed some of the concerns that people have had with the budget of Efficiency Vermont,” Klein says.

Lucci says lawmakers risk setting a dangerous precedent with the Greshin plan. Efficiency Vermont operates like a utility, and its budget is set by the three-person Public Service Board that also sets electricity rates for utilities.

The PSB approved the Efficiency Vermont budget a few months ago in a rigorous process that Lucci says was open and transparent. And Lucci says it would be legislative overreach for lawmakers to undo that rate-setting process with a floor amendment now.

“What this amendment essentially does is come in at the tail end of that [PSB process] and go against a decision that was already made,” Lucci says.

The bill now heads to the Senate, where Efficiency Vermont will look to have the cuts restored.