S.5 - AN ACT RELATING TO AFFORDABLY MEETING THE MANDATED GREENHOUSE GAS REDUCTIONS FOR THE THERMAL SECTOR THROUGH ELECTRIFICATION, DECARBONIZATION, EFFICIENCY, AND WEATHERIZATION MEASURES

PASSED
in the State Senate
on March 2, 2023, by a vote of
19-10

Purpose: S.5 obligates Vermont’s Public Utility Commission (PUC) to design and implement a "Clean Heat Standard" (CHS) program (renamed the Affordable Heat Act in 2023). S.5 directs the PUC to undergo a “study period,” and submit its initial plan for approval by the Legislature in 2024 and its final plan in 2025. The PUC is directed to highlight costs to Vermont consumers, of which there is little agreement from government and nonpartisan sources. The Heat Standard would go live in 2026. S.5 would cost Vermont $1.7 million in 2024 to pay for 3 new full time government employees, and for an economic modeling study requested by the Department of Public Service, with costs in 2025 and beyond expected to be higher.

The Clean Heat Standard (AHA) is one of the central components of 2020's Climate Action Plan (CAP), drafted by a majority body of solar/wind energy advocates. S.5 authorizes Vermont’s Public Utilities Commission (PUC) to create a market for “clean heat credits.” These credits can be generated by any Vermont company or individual weatherizing businesses and homes, or through replacing fossil fuel appliances with renewable-powered heating appliances, with the price set annually by the PUC each year. If heating fuel sellers do not create enough credits themselves through such installations, they must purchase credits generated by others on a marketplace to stay in business.

Example: Whenever a fossil fuel heating supplier sells a gallon of heating oil to a customer in Year 1, that gallon generates an obligation for Year 2. In Year 2, the fuel seller can choose to fulfill their obligation by installing weatherization and renewable heating appliances. Or, by purchasing clean heat credits from installers on the AHA market.

S.5 states, “The Commission (PUC) shall establish the Clean Heat Standard Equity Advisory Group to assist the Commission in developing and implementing the Clean Heat Standard in a manner that ensures an equitable share of clean heat measures are delivered to Vermonters with low income and moderate income. And that Vermonters with low income and moderate income who are not early participants in clean heat measures are not negatively impacted in their ability to afford heating fuel.”

Analysis: Those voting YES believe the Affordable Heat Act will help Vermont achieve its GWSA 2025, 2030 and 2050 greenhouse gas reduction mandates, which is especially important since Vermont bears a heavy moral responsibility to reduce its emissions.

Those voting NO believe AHA is a regressive carbon tax, punishing low and moderate income Vermonters who have to the least disposable income required to pay the heavy upfront cost in switching away from fossil fuels. S.5’s complexity necessitates a high administrative burden, both for government workers enforcing S.5 through tax collections and for fuel dealers who are required to carefully measure every gallon of fuel they sell. Vermont’s smallest fuel dealers will likely go out of business, leaving many consumers without winter heating options while they wait for unreliable renewable heating options to be made available to them. While a study period delays the severe impact on thousands of Vermont households, it also gives proponents the chance to tip the scales for such studies in their favor.

As Recorded in the Senate Journal, Thursday, March 2, 2023: "Shall the bill be amended as recommended by the Committee on Natural Resources and Energy as amended?” Was decided in the affirmative. Thereupon, third reading of the bill was ordered, on a roll call, Yeas 19, Nays 10" (Read the Journal, p. 248 - 274).

Watch the floor debate on YouTube.

Related:
 Governor Phil Scott on S.5 (transcript), 3/1/2023
(EAI Commentary) A Victory for the Opponents of the Affordable Heat Act: Potentially a Poisoned Chalice
 EAI President Myers Mermel testimony to Sen. Natural Resources (with financial analysis) on S.5.
 Roll Call! Senate Passes Underpowered 'Check Back' for Delaying Clean Heat Standard (23-7), 2022
 Joint Fiscal Office analysis.

How They Voted

Philip Baruth (D-Chittenden Southeast) – PRESIDING
Christopher Bray (D-Addison) – YES
Randy Brock (R-Franklin) – NO
Brian Campion (D-Bennington) – YES
Thomas Chittenden (D-Chittenden Southeast) – YES
Alison Clarkson (D-Windsor) – YES
Brian Collamore (R-Rutland) – NO
Ann Cummings (D-Washington) – YES
Martine Gulick (D-Chittenden Central) - YES
Ruth Hardy (D-Addison) – YES
Wendy Harrison (D-Brattleboro) - YES
Nader Hashim (D-Windham) - YES
Russ Ingalls (R-Essex-Orleans) – NO
Jane Kitchel (D-Caledonia) – YES
Virginia Lyons (D-Chittenden Southeast) – YES
Mark MacDonald (D-Orange) – YES
Richard Mazza (D-Grand Isle) – NO
Richard McCormack (D-Windsor) – YES
Robert Norris (R-Franklin) - NO
Andrew Perchlik (D-Washington) – YES
Kesha Ram Hinsdale (D-Chittenden Central) – YES
Richard Sears (D-Bennington) – YES
Robert Starr (D-Essex-Orleans) – NO
Tanya Vyhovsky (D-Chittenden Central) – YES
Anne Watson (D-Washington) - YES
Dave Weeks (R-Proctor) - NO
Richard Westman (R-Lamoille) – NO
Rebecca White (D-Windsor) - YES
Terry Williams (R-Rutland) - NO
Irene Wrenner (D-Chittenden North) - NO

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