James Volz, chair of the Public Service Board. File photo by John Herrick/VTDigger
An effort by lawmakers to cut future funding for the state’s energy efficiency programs may pose legal challenges, according to Jim Volz, chair of the Public Service Board.
In a rare appearance before lawmakers, Volz told the Senate Natural Resources and Energy Committee Wednesday to strike a House amendment to the state’s renewable energy bill, H.40, that puts a two-year freeze on the state’s energy efficiency assessment on electricity use.
The Public Service Board, a quasi-judicial regulatory body, approved a three-year budget for the state’s energy efficiency programs last year. Volz said the freeze would cut revenue for existing budgets.
“People may have already relied on those budget amounts,” Volz, speaking for himself and not the board, told the committee. “That could create a legal problem for this statute and for the state. There could be lawsuits.”
The energy efficiency charge funds Efficiency Vermont, the state’s efficiency utility. The regulated utility relies on the Public Service Board to issue predictable decisions, according to Kelly Lucci, of Efficiency Vermont.
The state’s energy efficiency utilities have not said they would take legal action against the state, but for some lawmakers, the freeze raises a legal question about the relationship between Legislature and the quasi-judicial board, which was set up to handle technical questions like setting electric rates.
Lawmakers should not change regulatory decisions because they don’t like the outcomes, according Sen. Chris Bray, D-Addison, chair of the Senate Natural Resources and Energy Committee.
“Out of respect for all the participants involved, I think it’s incumbent upon us to change the laws to achieve those different outcomes, and not wait until we get an outcome that somebody doesn’t like and then change it directly. It’s not good process,” Bray said.
“We do rely on a process that is predictable with the Public Service Board,” Lucci said. “We rely on that predictability to implement our programs effectively.”
Volz said the budget approval process takes months because it is designed to achieve the most cost-effective savings for electric customers. The last three-year budget was approved in July. It set efficiency program budgets at $52.2 million in 2015, $56.2 million in 2016 and $58.7 million in 2017.
Bill Driscoll, vice president of Associated Industries of Vermont, is among those calling for the freeze. He says there are more equitable and affordable ways to pay for efficiency besides the charge on electric bills, such as incentives like tax deductions for investments or lending mechanisms that have equal or greater returns without spreading costs among all customers.
As to the legal concern with freezing the cap, Driscoll said it was not clear that there was a definite legal problem.
“It’s always been my understanding that the budget may change for any particular reason and there is nothing legally binding in that sense,” he said.
Driscoll said it is still possible to change the timeframe of the freeze to after 2017 when the current budget expires. But he said he prefers to freeze the charges this year.
“Its an opportunity to take a timeout on the increases that have been coming down for the last several years and take a serious look about whether there are better ways to finance the program,” he said
Proponents of the freeze point out that since 2003, the charge on electric customers’ bill has increased 11.5 percent annually. And in a political compromise earlier this session to garner support from Republicans, the House passed an amendment that would freeze the energy efficiency charge at 2015 levels, despite warnings from the Department of Public Service that it would drive up electric rates.
Darren Springer, the deputy commissioner of the department, said the state will save $10 million by not paying the charge, but lose $24 million in energy savings over the next decade.
But now the Senate is poised to strike the amendment from the its version of the bill.
“My copy has it crossed out,” Bray said.
But Sen. John Rodgers, D-Essex-Orleans, who serves on the committee, said his constituents complain they pay the energy efficiency charge, but have not seen the benefits. He raised a concern about whether the charge is returned equally to all Vermonters.
“You have been participating in this program, you just haven’t known it,” said Michael Dworkin, a professor of law at Vermont Law School and director of the Institute for Energy and the Environment.
Dworkin said residents in Vermont save through the avoided costs of local and regional transmission upgrades and power purchases. He pointed to the example of deferred transmission line costs in Vermont. The state’s electric distribution company, Vermont Electric Power Co., or VELCO, says the state’s energy efficiency programs are mostly responsible for saving hundreds of million of dollars in deferred transmission costs since 2011.
“If one customer reduces their demand, everybody gets a benefit,” Dworkin said.
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