Vermont Legislature SmartTranscripts:

[Representative Christopher Howland (Member)]: All

[Representative Kathleen James (Chair)]: right, welcome everybody to the afternoon session of the House Committee on Energy and Digital Infrastructure. We will quickly go around the table and let the committee members introduce ourselves, And then we will turn it over to our guests to let you introduce yourselves for the record. So, my name is Representative Kathleen James, and I am from Manchester.

[Representative R. Scott Campbell (Vice Chair)]: Scott Campbell from St. Johnsbury. Mitch Morrow, Woodland, Windsor, Bennington. Michael Southworth, Caledonia two. Christopher Howellen, Rutland four.

[Representative Dara Torre (Clerk)]: Garrett Torrey, Washington two.

[Representative Bram Kleppner (Member)]: Graham Butner, fifteen thirteen, Burlington.

[Representative Kathleen James (Chair)]: For Starling, Windsor. For the record.

[Commissioner Eric Johnson (Vermont Department of Public Service)]: Eric Johnson, commissioner, Department of Public Service. Barry?

[TJ Poor (Director of Regulated Utility Planning, Vermont DPS)]: CJ, board director of regulated utility planning for

[Representative Christopher Howland (Member)]: the Department of Public Service. Great.

[Representative Kathleen James (Chair)]: Thanks for being here.

[Commissioner Eric Johnson (Vermont Department of Public Service)]: What we thought Madam Chair was I would provide got your comments and the direction. Thank you for sending the directions. So what I thought what TJ and I thought we would do is I would do some overall general comments. And then I think as we have discussed, TJ would walk through the specific spreadsheet which we provided to your committee to say, here's where the particular program by program to be as to try and be as responsive as possible. Yes. That's Okay. With that, if that makes sense, then I'll proceed.

[Representative Kathleen James (Chair)]: Sounds fantastic.

[Commissioner Eric Johnson (Vermont Department of Public Service)]: So with regards to trends in in federal funding and policy, fundamentally, what we have found, and I have this, and I'll share this if your staff would like. Essentially, it's just material. It's very hard to predict. It's hard to nail down facts. It's hard to understand what might be next. A lot of times, it's hard to understand exactly what the order has truly been issued. So that has led to uncertainty, difficult to execute and implement on projects, and difficult difficulties for budgeting. It's just a very uncertain environment to the degree that these federal programs impact our budget. I will say that and we'll get to that. And I would point out where that is especially true, given the nature of the impacts, is on tariffs. Because if you recall back last January, January and then April, Independent Freedom Day, whatever it's called 04/08/2025. Those tariffs, it was the exact impact on energy costs were a little bit hard to nail down. I think the Vermont utilities, my team working with World Trade Office and others, we got some pretty good impacts. Just to repeat there, largely what we determined is there's a important especially the Hydro Quebec contract, about 18 to 22% of Vermont's energy supply. But what we determined there, that would not be subject to the tariffs. But the ongoing tariff that, again, fluctuates fluctuates on assets and material, aluminum, steel, those kind of products have a direct impact on materials for grid investments, That is harder to quantify. It just depends and different manufacturers, suppliers have different they are absorbing different levels of the tariffs and each of the utilities are at different levels of capital investment. Quantifying the statewide number on that has been difficult. So tariffs have been particularly problematic to nail down. What we've also seen as a trend is specific opposition to diversity, equity inclusion initiatives, and that had a specific impact on the Vermont program, we simply simply zeroed out what we were trying to address those that I think we would all agree we don't get sufficient feedback for from Vermonters on public policy. We had a specific area where we're seeking to train our people. That's what the federal dollars would have gone to be able to meet people more where they are for those who might not have exact access and the like, for instance, to Vermont policy making, which I know, madam chair, has been important to this committee as evidenced by the procedures you've put in place. Those essentially were zeroed up. So that has been an issue. What we have what's very clear is what the agenda seeks to be, which is this energy energy dominance. There's a federal energy dominance council. I'm sure you're aware that's been established their stated mission or some of their goals increase American energy domestic production and to meet growing demand, which it is. And among the strategies they're seeking to pursue is to reduce permitting obstacles. Now within that broad rubric, there are things we think we can support. But we've also seen though, however, the way that those objectives had manifested themselves in Vermont and in New England. So what do we mean by that? So there has been a bias against renewables. And so we have seen in particular a hostility towards offshore wind. I think you've I think we've talked about in previous, but the revolution wind project, Massachusetts and road excuse me, Connecticut and Rhode Island, the project was 80% complete, stop stop work order from the Department of the Interior. They have sensed, and there was a lot of, I would say, very deep concern among all kinds of parties on a number of levels, including from other New England generators who are concerned if this can happen for a project 80 complete where you yank the permit, what what type of generation what type of generation would be safe under this administration or a subsequent administration? Now that particular project has enjoyed a a legal victory. They are nearing completion, so the work now continues. But what we've also seen as a result of that now is that other offshore wind projects now have a higher risk premium. Because when something like that happens, it sends a message to the market. And these are all equity and debt financed, huge amounts in the billions of dollars, and people are less willing to put money at risk unless you have the prospect of a higher return. Therefore, the net cost to customers from offshore wind, which this region, including Vermont, was hoping to be able to avail itself of, those are higher. What we're seeing is now the forward market cost looking to seem to be coming in higher. But again, that's very, very unsettled. But that was a specific trend that we've seen. What we've also seen, again, a corollary to hostility to renewables is support for oil and gas. That has manifested itself in our, broadly speaking, our region in New York. So for instance, there was an offshore wind project for New York, similar to the revolution wind off the New England Coast, the permit there was denied or revoked, excuse me, and then agreement was worked out whereby New York agreed, changed its position and agreed to support expansion of a natural gas pipeline, and then they were given the green light once again and work resumed on the offshore wind. So you can come to your own conclusion on exactly what that meant, but it was clearly unless there is support for oil and gas, there was was a reluctance to allow in any shape, form continuing construction of renewable generation. We've also seen that. What we also have seen is significantly more funding for advanced nuclear, traditional nuclear fusion, and rule changes to accommodate quickly getting large energy generators on the system mostly to account for or excuse me to serve data centers in service of just like energy dominance, there's this AI dominance goal objective in primarily identifying China as the key competitor there. So just I believe it was six days ago was filed at FERC, a rule from the Department of Energy, which would have really created a new lane for FERC to approve interconnection, I believe, of gigawatt and above loads intended to serve data centers. And there has been at least some effort to be able to seek control for states over that over data center in order to protect additional customers, other ratepayers, and at least the initial FERC ruling on a proposal that tried as an Out West company was that they felt they didn't have jurisdiction. So the point here is that there are sources that are favored, are sources that are not favored for energy, and there are rule changes being pursued both to better serve the favored energy resources and to serve data centers in the name of promoting AI, artificial intelligence.

[Representative Laura Sibilia (Ranking Member)]: You just explained the lane that you were talking about, FERC lane that's being created for the interconnection. Sure. Almost just what's different about that than how how

[Commissioner Eric Johnson (Vermont Department of Public Service)]: I'm gonna give it

[Representative Christopher Morrow (Member)]: Just for the right Yeah.

[Commissioner Eric Johnson (Vermont Department of Public Service)]: No. I well, I'm a civilian on this a little bit more too because it was it's just happened. Haven't had the analysis from our attorneys yet, so I've read the the press on what this means, the the informal press, I would say. Essentially, has always been a creative tension between the federal government in the form of Federal Energy Regulatory Commission and the states for citing transmission. And what is the role for those respective jurisdictions? Within New England, traditionally has been fairly worked out. And there's been in the past, there's been changes, for instance, there was identified critical energy corridors. And if you're in a critical energy corridor, a given transmission project, should they choose, could seek to avail itself of federal preemption of some state processes. Personally, I never thought that made sense because for all kinds of reasons. But there has been that kind of dynamic that is in place. This latest proposal that was, submitted to FERC was, under the, energy federal energy power act, there is a role for FERC to take forward the national security and energy independence and probably I think citing some other criteria. And we're gonna seek to avail ourselves and leverage that statutory power in a way that heretofore it hasn't. We're going to utilize that power to create a new category of interconnection that FERC will manage states. And here's what what FERC will do and that roughly speaking, a high level because it's up to FERC to develop the specific procedures, here's the rough criteria by which they'll make their decision. Is it a, I think a certain gigawatt size? So these are big projects and they're trying to accelerate the interconnection and approval time. Sound response? Sure. Okay. So that's happening. So as I said, for that. We've also seen though this another trend has been hostility towards energy imports from other countries. And in particular, what matters to Vermont and New England is hostility towards the province of Quebec, towards Canada. That has had impacts. We continue to work our team, and we just had a really good conversation to to identify areas where we could have collaboration, and there's real options there. But we're having to overcome some of the not sometimes optics, but also there are existing long time existing processes and permits that heretofore would have been viewed as a bit more pro form a. For instance, a presidential permit, which is what you need to secure when you're sending energy across the border of Vermont and and and and the provincial utility Hydro Quebec has a presidential permit to continue to send energy into Vermont. They will are looking to expand that by just eight megawatts. Just eight megawatts to get the full what was allowed under the presidential permit. There was a thought, hey, why don't we just go and re up that presidential permit, but not going to touch that. There'll be a Vermont certificate of public good process. But here again, what I'm saying is when we're having the conversations now about imports from Canada, there's a whole another level of obstacles and challenges that we need to discuss.

[Representative Kathleen James (Chair)]: Just to clarify, increase that they're seeking can be handled by the PUC here in the state? Okay. Yep.

[Representative Laura Sibilia (Ranking Member)]: That's the timeframe. So why is that being looked at?

[Commissioner Eric Johnson (Vermont Department of Public Service)]: Simply because the the idea was, it's it's not all that well known, but we have right now a bidirectional exchange of of energy is happening right now at the northern border. We're sending renewable energy north at the I'm not sure exact hours, but that that amount of time it happens is growing. And the idea is Hydro Quebec is looking to maximize flexibility because of the turmoil in the system. So there's two new transmission lines they're building, the New England Clean Energy Connect through Maine into Canada and the Champlain Hudson Power Express through New York. That will give them roughly 14 to 1,700 megawatts of new flexibility, which is a lot of flexibility to have. In addition, though, all interconnections matter, and there's specific benefits to their system too, and it's just a modest tweak, but just having a bit more to be able to send and receive from that high gate connection with Vermont is important as part of the big picture. Nothing's expired. Correct. This is this is great and provides great value to all concerned. Let's get that last little bit that we that we have already have permission to if you agree public utility commission. Okay, that's there. Impact. So those are those are the trends that I think were important to largely speaking to share with in terms of impact. One thing I think that's important. It isn't like these changes to federal program have changed core programs that for to which Vermonters have become a custom. Look, some of these are great programs, but they're additive. So so we try to keep that we try to keep that in mind. What we've seen is, as I've already told you, there's the impact is virtually every, I think, energy source now is has a higher increment of costs, whether that's inflation, supply chain ongoing supply chain challenges would seem to come and go depending again on the tariff pronouncements. That seems to be a challenge, but across the board, all energy sources seem coming in at a higher cost, and we're seeing a spate of rate cases where utilities large and small in Vermont are replacing some of their existing power supply hedging tools that they had in place to just guard against volatility in their power supply. The replacement tools they're seeking to get, the replacement supplies they're seeking to procure are more expensive than that which came to heretofore. And in most cases, I think they're higher than the, I'm gonna say higher than the rate of inflation, but it's harder these days to figure out exactly what that rate of inflation is. But we've seen that. Also, what we've seen is some regional transmission projects, again, which would have connected the region to renewable energy projects at scale, federal support for those, cancel. And those are roughly 15 to 20,000,000,000 worth of projects that were canceled. And that has an impact. I

[Representative Laura Sibilia (Ranking Member)]: don't know if you're going get to this or if this is related to this particular point, but Velco was in earlier this morning talking about interconnection between PJM and New York and ISO. And my question was, how would being connected to PJM, particular benefit Vermont ratepayers? I bet you know the answer.

[Commissioner Eric Johnson (Vermont Department of Public Service)]: Well, here's my quick answer. My quick answer is the greater sources that you can connect, the greater options you can A market functions best when it has more and more sources competing, more and more and wholesale energy costs compete to be able for customers. So the more if you can tie into a larger market, and we see this with Vermont, That's why we built the interstate, for instance. If you have an interstate transmission market that's connected to larger markets, you're bringing more options to the fore for the Vermont utilities to select, and they'll have a much greater option. So presumably, that will drive down costs. Secondly, the more the more regions you can call upon when you're having a supply challenge, if you can get out of the region where your storm is hitting or something, the further I can get to pull electrons in from there that might be outside of a given storm, that helps reliability. So you have neighbor helping neighbor, but it might be a neighbor a few houses away. So PJM is like one regional transmission organization away. That could be helpful, and that's been talked about for like fifteen years. So I would say those are the two main value.

[Representative Laura Sibilia (Ranking Member)]: So I definitely look forward to learning more about this going into the session and as part of the session, because we know that Vermont's rates are amongst the lowest in New England because we are regulated and less market reliant. And so that makes this question even more important to me about what happens when we open up this market.

[Commissioner Eric Johnson (Vermont Department of Public Service)]: Interesting. Yeah. Okay, here's what I would say to

[Representative Laura Sibilia (Ranking Member)]: There's a lot I don't know.

[Commissioner Eric Johnson (Vermont Department of Public Service)]: Okay. No, no, it's just in learning about And much more to come. However, I just have to respond to that simply to say this. And as someone who strongly, think I've said this before, strongly advocated and lost for retail choice for electricity consumers. It has really worked out for Vermont, but what I would say is because Vermont has placed a premium, we kind of the state and the regulators, give them full credit, those that came for it, certainly before me. They valued stability and Vermonters have paid a premium to have a source of energy that didn't go really high and didn't go really low. And that stability, solving for stability and price has turned out to be a real savvy strategy that resulted in lower net cost. We still Vermont, whether it's utilities go and have a proposed power supply contract, then they come to us and it has to be approved by the Public Utility Commission. But through this legislature and regulatory decisions, it's clear what what gets to yes for a power supply agreement. They still have to compete in the competitive wholesale market, but they're solving for different attributes than maybe other people. Other people went, hey. This seems to be the lowest price. We'll lock in for three years. Vermont said, look. We're gonna have a twenty year agreement. It may not be the cheapest. It's not the expensive. It's a reasonable business deal. We'll put this collar on it so it never goes really high or never really goes low. That that would seem to make sense. So my only point is we've been exposed to the competitive wholesale market all along. It's just what is our regulatory process required and said and given the indications of what it will say yes to, if that makes sense.

[Representative Kathleen James (Chair)]: Now we have the questions right and left.

[Representative Laura Sibilia (Ranking Member)]: Yeah, so last question. So would that interconnection bring more natural gas into the ISO system?

[Commissioner Eric Johnson (Vermont Department of Public Service)]: Good question. I think yes, I think it would.

[Representative R. Scott Campbell (Vice Chair)]: Yep, I

[Commissioner Eric Johnson (Vermont Department of Public Service)]: think it would.

[Representative R. Scott Campbell (Vice Chair)]: So not only would regionalizing or connecting to regional ISOs bring supply, but it would also bring load, wouldn't it? And so if the data center's located in New York and Pennsylvania, isn't that a threat also to our prices?

[Commissioner Eric Johnson (Vermont Department of Public Service)]: I I think that is the flip side of saying there's more sources that you will have more people drawing. Yeah. Because I said the two attributes, well, guess what? It works both ways. Yes. There could be more pull. Yeah. But I I deferred. Here's what I understand from my transmission background. Yeah, it would absolutely have impacts. It's like how you handle that on a there's like the the engineering basis and the contractual basis. Right? The first order is reliability. So nothing by joining PJM would impact, would substantially impact, or excuse me, would not ever lessen the federal performance requirements for reliability. Those remain the same. But there could be contractual arrangements or there could be other emergencies where there could be, all things being equal, there could be a pull on Vermont Energy that might not otherwise have happened, but four, you had that additional connection.

[Representative R. Scott Campbell (Vice Chair)]: Seems like it could be a threat to stability.

[TJ Poor (Director of Regulated Utility Planning, Vermont DPS)]: It could be, but I think in most instances, would be more of an opportunity. First of all, the different regions, ISO, New England, PJM or Quebec, right, would be maintaining their electrical system as it is now. They would still be that grid that it's operating for reliability. And then there's an opportunity, for instance, while PGM might be peaking at a different time than ISO New England or ISO New England might be at a different time than Hydro Quebec. Right? Actually, Hydro Quebec and ISO, their peak is different 80% of the time. Right? So that creates an that creates an opportunity for us to send send power. And actually, when we have excess or power available, which then could actually have a depressing effect on rates. So I think it's more of an opportunity. I don't think there would be a requirement. ISO would manage our own system to ensure that we keep the supply that is necessary, and we don't send it away when at at the a time of critical need. So I yeah. I would see it more as an opportunity than a threat.

[Commissioner Eric Johnson (Vermont Department of Public Service)]: TJ, and there are any number of regulatory requirements, protocols that have already been established with New York, for instance, like that in in ensure exactly what TJ is talking about happens. Okay. Back to.

[Representative Kathleen James (Chair)]: Well, not yet. Tomorrow.

[Representative Christopher Morrow (Member)]: Can you just remind us roughly how much of our electricity is bought in the spot market versus these long term contracts? 15%, 20%?

[Commissioner Eric Johnson (Vermont Department of Public Service)]: I think it's less than that. It's utility specific.

[Representative Christopher Morrow (Member)]: It's time specific and all that sort of

[Commissioner Eric Johnson (Vermont Department of Public Service)]: Well, I would even just I would even stop at utility specific, and they they have may have some that's times I'm I'm thinking that the members of Vermont Public Power Supply, for instance, I think there's zero exposure. Remember when we had the terrorists first come out and had to do a lot of homework. And what I'm recalling is I had by you and I shared with this committee utility by utility what their exposure to the market was. And my recollection my recollection was that it was zero. VEC had probably, of the utilities, VEC has the most exposure, I think.

[Representative R. Scott Campbell (Vice Chair)]: Well, can I can I jump in?

[Representative Bram Kleppner (Member)]: Why don't we let the person actually

[Representative Christopher Morrow (Member)]: I don't have to see that. Fair

[TJ Poor (Director of Regulated Utility Planning, Vermont DPS)]: enough. It depends really what you're meaning by exposure to the spot market because really when you look, you know, day ahead or if you're talking about hourly real time, it's very little and probably close to zero. If you're talking day ahead or a month ahead or three months ahead, it slowly gets a little more of an open position. Overall, our utilities may so let's say on an annual basis are 85 to 90% as a statewide average hedged, which means the other increment is open, but then they fill that as you get closer and closer to the actual day that you need it. And on an annual basis, the kind of the net purchases from ISO New England are about 10% of our of our need on annual basis. So that changes again, monthly, daily.

[Representative Christopher Morrow (Member)]: But that's that was the last. Right. Okay. Yeah. What TJ said.

[Representative Christopher Howland (Member)]: Thank you. So Okay.

[Commissioner Eric Johnson (Vermont Department of Public Service)]: The only thing under the rubric of impacts, the only thing that shared, and I remember when this came up and we did a little work, but we didn't really see any real meaningful impact. Were the last fate, the last 5 or $8,000,000,000 that was cut from federal energy projects. There were two in Vermont. One was Beta Technologies and one was UVM Ag Extension. And I know those are there too. And I had back and forth among our colleagues within state or other agencies and state government. I haven't heard back anything in terms of like that level of impact, but at least what what I'm feeling like the reaction I seem to have gotten, including from those those entities themselves, wasn't that it was a huge deal, subject to correction. But as far as I know, those were the most specific discrete hits on projects. But it's unclear to me as to exactly the nature of the impact. I'll have to Madam Chair in terms of response and then we'll get to TJ on the list. Well, our department, what we're seeking to do is you hear all this noise is first as an order of magnitude. And then I'll say even maybe first is I'll speak for myself. I try not to let someone else own my emotional battery. A lot of there's a lot of emotion that can that be precipitated by some of the things that are said currently. There's there's just a lot of passion. And I'd like to think strong belief, strong beliefs are held very different views. So at least for myself, tried, okay, what do we know? So it has been a challenge and our first order of business is getting the facts straight. What exactly can we approve? Secondly is, okay, this is a change. Let's stay focused on Vermont priorities, exactly what we're trying to accomplish consistent with our statutory and regulatory obligations and the department's mission. One specifically I wanted to make sure I mentioned is in terms of a real impact, we've had to shift. I know it's it's 2.5 employees in in the parlance and vernacular that we have for management of of state employee time. Two and a half employees worth of of time has been shifted from being funded by the federal government to now being funded by state taxpayers, state electric rate payers. So that has been a little concrete change. But really what we're seeking to do is stay focused for Vermont priority on affordability. So where can we, for instance, our focus, which we've had many conversations, I'm so grateful to this committee for your support on this, on weatherization. There's no regret regret investments. There are funding sources still in place. Some of the pain we thought was coming doesn't seem to be coming. So there's I'm a glass half full person. There's relatively good news there. We we're working on ideas as we've discussed. There are regulatory proceedings under In in my judgment, that's the right place to handle some of the very detailed reallocation of dollars. We'll share everything with this committee, but that's what we're we're seeing happen on weatherization. And there just seems to be a groundswell of support for that, and thank goodness that is really welcome. Again, thank you for your support on that. Also, we're in beyond weatherization. And I think we've talked about this, but if you think of the components of a customer's bill, what comprises a customer's bill? And what can we do to address those components? So of late, say, the last three to five years, one of the big components is transmission. It's cyclical. But right now, it's back up to the 25% portion of a customer's bill. And in our judgment, and certainly in my personal judgment, there has been abuses at the regional level of the transmission cost allocation process by the larger out of state transmission organizations. With TJ's help and other people on our team, we've made demonstrative progress putting the protective mechanism, the reviews in place at the regional level to try and get after that cost. That is a real it's not a success story yet because it isn't done. But I will use that example to highlight there has been a level of collaboration with our New England partners. Now we have some disagreements with various states, but I am telling you in twenty five years, this is a once in a generation amount of collaboration among the New England states and it's productive, it's healthy, and we really do, I think we all recognize, we do need to stick together and identify ways that we can help each other succeed to reduce carbon even as we keep energy affordable. People have different priorities, but in general, that's been the approach and thank goodness for it. So working with our partners has been incredibly helpful. Another one that we're working on, we've already talked, I think somewhat about power supply options. What can we do? There are a number of regional initiatives, RFPs, RFIs. I mean, I think we started to try we have, like, a list of those. Again, that's great. It's just we have to keep track of them. So one is the Northeastern state that's speaking of PJM, all the way down to the PJM territory. Vermont is part of a a collaboration. Who has ideas on interregional transmission to increase reliability and bring affordable sources of power to the broad to the region? That RFI was issued now, I wanna say, three weeks ago. I think we have a number of responses were due Friday last, and so we're starting to review a response. That's a really good initiative. Connecticut is leading in charge on energy procurement. We're part of that. There's more work to do because the states are saying how big I mean, there's a bunch of questions associated with that RFP. Thirdly, TJ has been doing a lot of work with Maine, with their public utility commission. They're seeking to foment interest in creating an issue in an RFP for wind, terrestrial wind in Maine. Great. Another source. So in these things, we're trying to foment options. So Vermonters and where possible, other New England states, their ratepayers benefit because energy supply beyond transmission is a huge component of customers' bill. Another is the local utilities investment and storms and the like. What can we do there? TJ and a woman named Anne Margolis have done incredible work on a docket on resilience, and I would encourage I hope, madam chair, with your with your forbearance here that that this committee would take a look at that in here because that's a it's at a good spot for this committee to really become aware because we're starting to distill a year's worth of work plus. There's already been some great changes at the utilities. I mean, there was pain. I mean, this was a demanding proceeding, on top of everything else utilities were doing, and we heard some squawking candidly. But now we've seen some great behaviors on their part. I think the real meaningful, what does it all mean for performance? What is a meaningful increase in cost? How can we determine the methodology where it's actually gonna save Vermonters money? So we're gonna say we're gonna build something that's more robust that can withstand this storm, but it's gonna cost you more now. Okay. But how much protection does it buy us? And that cost benefit analysis work, that's the stuff where zeroing in and I really encourage, I think it'd be really interesting stuff for you and your constituents to be able to understand. So that's come.

[Representative Kathleen James (Chair)]: What will be the end product of that work? Will there be a final report or something we can read, or is it just testimony we would take to learn, just get people in to talk to us?

[TJ Poor (Director of Regulated Utility Planning, Vermont DPS)]: Think that will definitely help. There should be a real issue set of recommendations in the next month or so based on the, you know, the year long process that the commissioner talked about. And so we can provide those to you, to your committee when when they come out. So you have them.

[Commissioner Eric Johnson (Vermont Department of Public Service)]: The other thing I would we talked about the components of a of a customer's bill, and this has been this is very top of mind for me, and that is or excuse me, two things. One is we know now, I know personally about the ability of newer technologies to squeeze more value, to get more out of the grid that we have, and to help better match supply with demand among customers. To the degree, there's especially value to the degree utilities more closely collaborate. It takes software, takes data sharing, it takes looking beyond sometimes and seeing the longer term interest for individual utilities customers, but there's an opportunity there. There are some promising initial initiatives, but that's an area where I'm going to keep pushing because there is value that can be unearthed and realized through an effective and secure sharing of data to orchestrate loads to better match. There's all kinds of resources we're not fully utilizing that are connected to the Vermont grid that can be better utilized to serve customers. I think every utility would agree with that, but that isn't controversial. Complicated, because all this can be complicated, exactly who owns management of the assets, exactly how you do that, how you share the value of the like. But kinda I don't care. When we have found there's no state that can move as fast as Vermont to affect innovative ideas than Vermont. There's no state that's faster when we agree and we move. So I'm hoping to also ferment that. And lastly, Madam Chair, I would just say cybersecurity and line crew safety. There's a lot of stuff that's being built with these storms that we're seeing, with the attacks. And now that I have a better I've been better briefed on the nature of the cyber attacks facing all of us, it's scary, and there's great work that's being done, but it's mostly a question of when, not if, and exactly how much damage that might be done. So that is something I don't have a solution. I'm kinda just sharing I'm giving you a problem for which, like I said, I don't have a specific strategy, but something to be aware of. And it points to the fact that running a utility now is more difficult than perhaps it has ever been. When you're trying to find the right people to run it, when you're trying to maintain cybersecurity, when you are trying to maintain reliability standards, the reporting requirements that come to it, not just from us, but from the federal government, the change in energy supply, the change customer demands, the change in technology that's happening there, let alone the layer of federal uncertainty that's here. It is difficult, and we're seeing that stress show up in utility management. And that is something that will have impacts on Vermont ratepayers. And we are seeking to address those that we now know about and be a bit more and we already were now demanding a bit more information of all utilities to ensure that some of the things we've seen of late aren't replicated.

[Representative Laura Sibilia (Ranking Member)]: I have two questions, Madam Chair. The interregional transfer capacity, the three, and you have RFPs that have gone out for that. Is that where we are? One RFI. One RFI has gone out for that.

[Commissioner Eric Johnson (Vermont Department of Public Service)]: Northeastern States Collaborative.

[Representative Laura Sibilia (Ranking Member)]: So can you tell me about the time frame for decision making in that process?

[Jared Duval (Executive Director, Energy Action Network)]: No.

[Commissioner Eric Johnson (Vermont Department of Public Service)]: I don't remember. Honestly, don't remember. Yeah.

[TJ Poor (Director of Regulated Utility Planning, Vermont DPS)]: Do you remember? Don't have it off the top of

[Commissioner Eric Johnson (Vermont Department of Public Service)]: my head. We can get back to you, though. Happy to why don't we do why don't we do this? Because this will be useful for us to do. Why don't we give you a matrix? Here's the initiative, here's what it is, and here's the time frame.

[Representative Laura Sibilia (Ranking Member)]: I think that would be incredibly helpful, Commissioner, and also make sure that we're doing our job to understand how you all are, and grateful for the work of both of you. But we do have the job, making sure we understand

[Commissioner Eric Johnson (Vermont Department of Public Service)]: what you're feeling. Absolutely fair.

[Representative Laura Sibilia (Ranking Member)]: And just number two, since you brought up cybersecurity, the chair and I both serve on the House Joint IT Oversight Committee. And so just a particular pet peeve of mine, I shouldn't, that pet peeve is really an understatement. So for, and this is not just you, but your part of the administration on this, we have in the House, we've got someone who's in succession for governance of the speaker of the House. We do not have legislative connection, formal connections to the Governor's Advisory Council. There was legislation that was proposed. We didn't quite get there. We've definitely brought this forward to ADS, but I want to make sure that you're aware of that, that the legislature is disconnected from awareness about any significant cyber issues in any form of way. And I wanna make sure that you understand that I find that to be completely unacceptable, not your fault, but it really needs to be remedied. And hopefully we can make some progress on that this year. I understand we can't be chasing every little thing, but there have to be some formal processes in place to make sure that the other two branches of government are aware of your serious issues. And I would say a cyber issue with any of our utilities would get to that point. To be

[Representative Kathleen James (Chair)]: clear, you're talking about when the speaker is notified of what?

[Representative Laura Sibilia (Ranking Member)]: Yes, yes. There's no way of the panel process. Thank

[Commissioner Eric Johnson (Vermont Department of Public Service)]: you. No, that's good to know. One thing I just lastly before I kick it to TJ is, and I should have mentioned, another concrete thing we're doing in response to federal changes, trends, initiatives, is we are trying to work collaboratively with our sister agency, Agency of Natural Resources, to see if we can accelerate some permitting considerations for in state solar projects in particular. I think we can get there. I don't know if this is huge, but I've been around, so I know that it always matters the exact words. So I am optimistic that we'll reach some kind of accommodation, but that's something that we're working on right now. And with that, why don't I hand it over to Tietjen if there are any more questions?

[Representative Kathleen James (Chair)]: Thank you, Commissioner. That was grateful.

[TJ Poor (Director of Regulated Utility Planning, Vermont DPS)]: Chair, how much time do you have? We're

[Representative Kathleen James (Chair)]: running a little bit late. No, let me just check, Are folks okay with us running a few minutes fine? Hearing none or something like that. Yeah. Go ahead.

[TJ Poor (Director of Regulated Utility Planning, Vermont DPS)]: Nobody wants to say no to you. Okay. So I see most of you have this color coded spreadsheet in front of you. Yours is printed out bigger than mine. Actually, I'm a little jealous, actually. So no. I'm I'm okay. I have good ass.

[Representative R. Scott Campbell (Vice Chair)]: Thank you.

[TJ Poor (Director of Regulated Utility Planning, Vermont DPS)]: I so what what this is is a listing of the federal dollars that are flowing to or through the Department of Public Service here. And all credit to Melissa Bailey, who is of the state energy office, who manages most, if not all, of these funds here through she couldn't be here today or else she'd be giving this testimony.

[Commissioner Eric Johnson (Vermont Department of Public Service)]: Excuse me. For the record, Derek John, because she is with her our colleagues, like minded colleagues. This is a clean energy state. National Association of State Energy offices, and they're collaborating to figure out and they are almost assuredly aligned largely with Vermont policy. So they're what do you know? What strategies are working? So it's a so that's what she's doing.

[TJ Poor (Director of Regulated Utility Planning, Vermont DPS)]: Great. And it fits

[Commissioner Eric Johnson (Vermont Department of Public Service)]: the her agenda of that agenda for that event fits perfectly what we're trying to accomplish. Right. Yeah.

[TJ Poor (Director of Regulated Utility Planning, Vermont DPS)]: So you're stuck with second best here with me explaining this. What we have here is it's over $200,000,000 of funding, that federal funding that's coming through. And it's color coded in kind of the stoplight fashion of green, obviously, are fundings that we are confident in or is already flowing. Yellow is cautious, cautiously optimistic in most cases, but at some risk, and red is that we're pessimistic or it's just not flowing right now. And so where would you like to start? Optimistic, flowing, or the stuff that's not happening?

[Representative Kathleen James (Chair)]: How about if we go down the sheet?

[TJ Poor (Director of Regulated Utility Planning, Vermont DPS)]: Okay. Perfect. Okay. So the other way that this is organized is by funding source. So the top section here is from the building infrastructure law. BIL is the acronym. On the top line here is funding for the we call them GRID. It's GRID formula grants to states. So we we didn't have to apply initially. We were just allocated funding, about 8 and a half million dollars to star potential future funding with a focus of protect preventing outages and enhancing the resilience of the grid. A little related to the proceeding commissioner was talking about. We are optimistic about this actually, even since we marked this yellow, we just got approved for the first funding to actually hand out to a utility for Vermont Electric Co op for a project to increase their resilience. And really this is grants through the department to utilities for resilience projects, whether that's speeding up their vegetation management to storm hardening, you know, spacer cables on lines or even undergrounding. We have a whole range of applications and we need to then submit those applications to the DOE, which is what creates risk because the DOE is still Department of Energy, Federal Department of Energy needs to give us that approval. But just either Monday or late last week, we got that first round of approval. Even during the shutdown, the Department of Energy still has a a large number of staff that work through federal shutdowns because they're funded, just a nuance of how they're funded. But so we are we are seeing progress there. Next, I'll I'll talk about the next two together because they're both green here and in good shape and both affected to municipalities. The first is fund our funds that were directed by the legislature to the municipal revolving loan fund. And so that passes through us to building of gen buildings and general services. That money is in kind of state accounts, and we're just awaiting some loan applications. And then energy efficiency and conservation block grants, those are grants that are issued to municipalities. We've issued about 17 of those ranging from EV charging at a municipal building to ebikes to studies to better manage their transportation flow and municipality money flowing. So good good news here at the top of the chart. The next is state energy program. It's the building infrastructure law really juiced the state energy programs that already existed. And are we made a proposal. This was also formula funding, about $3,000,000. We made a proposal to support workforce development, a contractor for solar for all planning. That part is on hold. We'll hear about that later. And the remaining funds to support staffing for various of some of these other funding sources and other initiatives at our at our office. We are planning to issue a request for proposals for workforce development help later this year. We had to kind of amend the plan that we submitted, and that's under review by the Department of Energy now. And so we're cautiously optimistic that that will continue. And I should note, when I say formula funds, that's a formula that all states get a share and usually small states get a minimum. And so small states end up getting more than their, you know, load ratio share. But all states are kind of in the same boat with these formula funds. So red states, blue states. And so it they're for that reason, that's one reason to be a little more optimistic about them because it's not something that you can just cancel for blue states.

[Representative Laura Sibilia (Ranking Member)]: Madam Chair, please. So just Soapbox. Yeah. A very brief intermission here. There are red people and blue people and purple people in every state, and we're not the first person to use that terminology today. And I'm asking people to really consider that over generalization of the people that live in a state.

[TJ Poor (Director of Regulated Utility Planning, Vermont DPS)]: Thank you. That is a fantastic point. And I will stop doing that. Moving down, this is kind of in an other category because there's mix of funding sources here, a lot of which at least started as federal funding. We have what is a sustainable energy in schools and public buildings. We originally had this was congressionally directed spending for renewable heating for schools and municipalities. We have grant agreements issued to municipalities and school districts. Really, it's wood heat and heat pumps being installed for school districts. The state energy program annual formula funds, this is what I was referring to that was I use the word juice, like really primed with the building infrastructure law. That's money that we've gotten annually for decades, I believe. And really, we've traditionally allocated that to support for updating our building energy codes and for staffing for programs, for programmatic staffing. That's probably the smallest, one of the smallest numbers on this chart. And then the last one that's in the green here is started as ARPA funds and through processes that I am not the best person to explain have been modified to be general funds. But really, it's a lot of money, dollars 60,000,000 directed to weatherization. Some of it has been used for flood recovery, for panel upgrades, load management. There's a number of different buckets for this, but that money is flowing and we're implementing through 2026. A lot of those are through grants or contracts to VEIC leveraging their role as efficiency Vermont to kind of build on it, to efficiently deliver programs building on the avenues that they've already created using state funds.

[Representative Kathleen James (Chair)]: Some HPWH. Heat pump hot water heaters.

[TJ Poor (Director of Regulated Utility Planning, Vermont DPS)]: And so, Okay, so now we'll go to the Inflation Reduction Act, which is a little more sketchy in terms of the money flowing. The first one, though, we are cautiously optimistic. This is the homes program, whether really directed to supplemental funding for our weatherization assistance program through the Office of Economic Office of Economic Opportunity, almost $30,000,000. There's, you know, as far as status, there's a memorandum of understanding with OEO between our office in progress, and we expect to launch that early in 2026. We're cautiously optimistic about this one. We've seen other states get this money. And so we're and the reaction from our project officer from the Department of Energy leads us to believe that this money will flow. And then we get to the money that is not flowing. And one of the distinctions here, there's a column in the middle that designates whether the awards were conditional or not. And so conditional really just means that there's it's awarded, but with specific rules that are necessary to meet the use of the funds. And you have to come back with another, you know, a showing that you have met those rules. And so these last four here were conditional awards, and that really gives a lot of discretion to the federal government to say, well, you didn't really meet the condition because not all the conditions are crystal clear. And so that it makes us a little more a little less optimistic that this money will actually flow. These include funding for heat pumps. This was gonna go to the office of economic opportunity and to efficiency Vermont to heat pumps in low and moderate income homes. And that was that was a big one, 30,000,000. We are not super optimistic about this one, in particular, because it was a conditional award. And then continuing down contractor training for weatherization and heat pump installs and staffing to support increased code compliance in Vermont. Those two also were conditional awards that we're not optimistic under the IRA that these will come come through. And then the last one is the big one, $62,000,000 for the Solar For All program. This is probably the most public of all the federal funds, right, or publicly discussed. And as I am sure you know that we, the department, really the administration has joined the attorney general and suing the federal government for the unlawful stoppage of these funds. And so they're on pause until the resolution of that and then maybe even then after because it still is a conditional award, even if the money comes, there's still gonna be uncertainty about that. So I do have one more that's not on the sheet, but do you wanna ask a question first?

[Representative R. Scott Campbell (Vice Chair)]: Just a quick question on what are the conditions? So for example, for the one next to the bottom there, the energy code update and zero energy code adoption project, what kind of conditions? Just, you know,

[TJ Poor (Director of Regulated Utility Planning, Vermont DPS)]: maybe. Often, so I don't have the specifics. Melissa would be able to answer that specifically, but they're usually conditions on resubmitting a budget because they wanted to see a budget a different way or they didn't like one piece of the program plan and said, well, not that, propose something else.

[Representative R. Scott Campbell (Vice Chair)]: The submission was rejected pending some changes or something like that.

[TJ Poor (Director of Regulated Utility Planning, Vermont DPS)]: The inverse, it was it was actually approved pending resubmission. But because we have to resubmit then and some of the guidance on what exactly was wrong or if it was a new budget, you know, little inaccuracy or perceived inaccuracy is potential grounds for just canceling the whole thing.

[Representative R. Scott Campbell (Vice Chair)]: Okay. Close enough. Thank you.

[TJ Poor (Director of Regulated Utility Planning, Vermont DPS)]: Okay. The other one that I want to mention because it's not actually flowing through our office directly. It's another point of collaboration that New England states jointly responded to. It was building infrastructure law funding one of the programs, and it was what was called the Power Up Project, and it was for largely for transmission and substations to facilitate the offshore wind development and having the ability to get more offshore wind into the grid and then move it throughout New England. And most of that project, it was about $300,000,000, I believe, was the award. And most of that was for the transmission portions of it. There was also a component that was for a long duration storage battery in Maine. That was it actually was conditionally approved, but all the signals, as the commissioner said, is say, hey, it's for offshore wind, you might as well forget about it. And so the states are working together to modify the grant to really just narrow it in on the long duration storage, which seems to not have a negative connotation right now or negative perception around it federally. And so there's a lot of money, there's a lot of collaboration there and something that could really provide value to the grid and to Vermont by, you know, lowering charges that would otherwise come to come to the state. That is that's the list here. I know we're way over time now. So stop.

[Representative Christopher Howland (Member)]: We're we're

[Representative Kathleen James (Chair)]: running late as a group. So my fault. If folks can pass on further questions, I I know that you guys are frequent flyers with our committee. In fact, they're pondering what will feed the new mug. So yeah. I don't know.

[TJ Poor (Director of Regulated Utility Planning, Vermont DPS)]: I use that all the time.

[Representative Kathleen James (Chair)]: You didn't?

[Representative R. Scott Campbell (Vice Chair)]: I did not.

[Representative Christopher Morrow (Member)]: Oh, you was in. I wasn't in the committee. Thought

[Commissioner Eric Johnson (Vermont Department of Public Service)]: that I No. TJ earned it.

[Representative Kathleen James (Chair)]: All right. Well, you so much for being here. I'm sure we'll be in touch. And we really appreciate your time.

[Representative R. Scott Campbell (Vice Chair)]: Thank you. Thank you.

[Representative Kathleen James (Chair)]: Folks are okay with skipping our break, and we'll just forge ahead. Okay. Solar. Right, okay. Megan's not here. Well, don't know what they probably I think they have an order of operations. I think that the person who's going first is supposed to go She might be in the seat, so then I'm getting a three minute break. No, not for you. Here she is. Sorry, Megan. Sorry. We had a change of plans. We're skipping our break. It's just a few minutes ahead of our solar folks, I think our first witness awaits in this ether. Hello,

[Representative R. Scott Campbell (Vice Chair)]: this is Thomas Hand.

[Representative Kathleen James (Chair)]: Hi, Thomas.

[Jim Merriam (CEO, Norwich Technologies/Norwich Solar)]: Can you hear me all right?

[Representative Kathleen James (Chair)]: We can hear you. Are we going to also see you or are we just going to hear you?

[Thomas Hand (MHG Solar)]: Hopefully, you're going to see me here.

[Representative Kathleen James (Chair)]: Okay.

[Representative Christopher Howland (Member)]: All right.

[Representative Kathleen James (Chair)]: Here we are.

[Representative Christopher Howland (Member)]: There we go.

[Representative Kathleen James (Chair)]: Thomas, welcome. Sorry we're running late. Yeah, if you could just introduce yourself for the record. We're going to shift our focus of attention to Vermont's solar industry. Take it away.

[Thomas Hand (MHG Solar)]: My name is Thomas Hand. My company is MHG Solar.

[Richard Giddings (Heating & Utility Assistance Program Director, DCF)]: I have a couple of

[Thomas Hand (MHG Solar)]: things I'd like to talk about today. I did provide some notes, which hopefully you've all received. Yes, Okay. So quickly, a bit of background, MHG Solar started in 2017. I have been developing and building solar projects in Vermont since 2010. MHG has developed approximately 60 megawatts worth of PV projects in Vermont, ground mounted projects ranging from 500 kW net metered systems up to five megawatt AC projects that sell directly to Vermont utilities. Those 60 megawatts are either all operational or will be within the next few weeks. We have additional projects in development looking forward, which I'll talk about in a little bit. So moving to the topic of today, you all have heard quite a bit, I'm sure, about projections on rate increases. We have seen broad increases across the country. My company, we look quite a bit at other states to track trends, talk to folks developing projects in other markets to understand constraints that they're seeing, compare with what we're doing. So we have conversations ongoing kind of all the time with folks in kind of markets across the whole US. And what Vermont is seeing is really not much different than a lot of other places. The one thing I would say that is a little bit different is that, at least from what we've seen so far, there does not seem to be a significant amount of AI and data center development within the ISO New England grid compared to what we're seeing in some other places. PJM, in particular, has seen a tremendous amount of development, and it has created very serious, very near term rate pressure. That may show up in ISO New England, but at least so far, it has not shown up to the degree it has in other markets. Shifting a little bit to what's driving that rate increase. We have seen demand growth, but we've also seen just inflation across the board, right? Everything from everyone knows you go to the grocery store, everything's more expensive. If you walk in an electrical supply shop, the same thing is true. Transformers, wire, utility poles, pretty much every single thing that we would buy to build a solar project or someone else would buy to build a gas plant or really any type of electrical infrastructure, the cost of everything has gone up. Certainly part of that was initially COVID and then it was war in Ukraine and more recently it's tariffs. I mean, if you go and look at tariffs on major materials that my company would purchase steel, copper, aluminum, those all have 50% tariffs. And so regardless of whether we use domestic suppliers, which we almost entirely do, the domestic suppliers raise their prices as soon as their competitors prices go up. So when a tariff goes on to steel, U. S. Steel manufacturers just raise their price, which then shows up for consumers. So we currently, if you just think about raw materials, everyone thinks solar project, well, what is the cost of solar panels? We spend as much on steel, copper and aluminum as we do on solar panels. Total cost, total dollars spent. We spend as much on those three sort of basic materials as we do on solar panels. So solar panels obviously are also heavily tariffed and have been for a long time. That's something we've been used to for at least a decade. But those other items, that's relatively new. So if we switch to sort of what's the impact of that and then what do we do about it and what does the future look like? We are continuing to MHC solar, we are continuing to develop projects in Vermont. We have nearly 10 projects in development, in various stages of development that add up to approximately 50 megawatts worth of capacity. We are some of those are already contracted to sell power to Vermont utilities, and some of them hopefully will be in the near term. Those projects are obviously exposed to changes at the federal level. So we've seen tax credits go away or they're planned to go away. We, though, are able to start construction. It's obviously a lot of legal language that goes along with that term. But by starting construction, we're able to preserve tax credit eligibility for those projects. And so for at least the next couple of years, we expect to continue to build large scale, well, large for Vermont. So five megawatt and smaller ground mounted projects in Vermont that will be tax credit eligible and the value of that. Those tax credits being applied to those projects will flow to Vermont ratepayers in the form of lower PPA prices than we would otherwise see if those tax credits didn't exist. So for the next couple of years, at least, it's I wouldn't say it's business as usual, but we believe that we can continue to build projects cost effectively and help to Vermont help Vermont to meet its renewable energy goals. A couple of things thinking about sort of how we got here and and why we're able to do that. The fact that the legislature passed an updated res was critical. If we didn't have that policy backbone, it would be extremely difficult for us to spend the hundreds of thousands of dollars that we are currently spending to safe harbor those projects and to continue to deliver renewables for the next few years. So that having that policy there and knowing that that we have utility partners that are going to want to buy renewable energy is critical. Absent that, we probably would have shut down. So the fact that the legislature did that was extremely important, and it's hard to overstate how important that was. As we look forward, we do hope that there can be some small tweaks and improvements around the edges. And for us, that is single plant, which I know the legislature has already started to address and hopefully we'll see some resolution on. And then I think, you know, and this is mentioned by the Department just a few moments ago. Hopefully we'll see some reform in the February process. That process certainly could benefit from reform and the timelines that we see have not come down at all. They continue to be quite long. We have a project now that is had one neighbor that had comments. The neighbor is more than 400 feet away through 200 feet of mature trees on the other side of a hill. So there's no actual potential for visibility. It was the only neighbor that commented on the project, and we have been waiting. We're more than a year into the CPG process. And we don't have a permit issued and we don't know when it will be issued. So that just kind of an example, like we feel that there's potential for two forty '8 reform and streamlining. With that, I'm going to pause and see if there's questions that I can answer.

[Representative Kathleen James (Chair)]: I'm good. Does anybody have questions for Thomas?

[Representative R. Scott Campbell (Vice Chair)]: Well, I guess I'll ask a question. Regarding February reform, are you talking mainly about timelines that are required in statute or are there other things?

[Thomas Hand (MHG Solar)]: Well, there aren't any timelines required in statute. So kind

[Will Eberly (Director of Weatherization & Climate Impact Programs, Capstone Community Action)]: of. Timelines should be required in statute?

[Thomas Hand (MHG Solar)]: I mean, there are many ways that we could go about reform, right? But if we have a process that doesn't have any timelines and it drags on, I think sort of all options are on the table for how that could be addressed. Timelines might be an appropriate way to force issues to be addressed in a reasonable manner.

[Representative R. Scott Campbell (Vice Chair)]: Well, if you have specific thoughts on that after this, would be great to hear from you.

[Thomas Hand (MHG Solar)]: Well, Sorry. So we

[Representative Richard Bailey (Member)]: Yeah. Good afternoon. Thank you for your testimony. If all the credits disappear, won't go away, and you folks have to and you have to pay the utilities, pay you market rate. Are your projects viable?

[Thomas Hand (MHG Solar)]: What's market rate?

[Representative Richard Bailey (Member)]: Whatever they're paying for HQ kilowatt.

[Thomas Hand (MHG Solar)]: So if if we're talking is a new build energy generator competitive against a fully depreciated asset? Absolutely not. Like, so I think the question maybe I could rephrase your question. If we have to build new power generation, what is cost competitive? I think that solar in Vermont is cost competitive. Vermont solar is the lowest cost at present, is the lowest cost renewable generator in New England. New solar in Vermont is the lowest cost. It's cheaper than in New York. Obviously, it's not New England, but it's a neighbor. Cheaper in New Hampshire, cheaper in Massachusetts, cheaper in Connecticut, cheaper than Maine. New build solar in Vermont is the lowest cost renewable energy capacity that you can add.

[Representative Kathleen James (Chair)]: Professor Selkman?

[Representative R. Scott Campbell (Vice Chair)]: Chair, seems like we're

[Representative Zucker]: getting off topic. Isn't the idea of this meeting supposed to be about the impacts of the federal cuts?

[Representative Kathleen James (Chair)]: Yes. It

[Jared Duval (Executive Director, Energy Action Network)]: seems like we're going away from

[Representative Zucker]: that and getting into more policy, and I just think we need

[Representative R. Scott Campbell (Vice Chair)]: to bring it back into what we're supposed to be here for.

[Representative Kathleen James (Chair)]: Yeah, and we are running behind. So thanks, Rep. Zucker. Any other questions for Thomas? Okay. Next up.

[Representative Bram Kleppner (Member)]: Thank you, Thomas.

[Representative Kathleen James (Chair)]: Thank you very much.

[Mike McCarthy (President, SunCommon)]: Madam chair. Hello. Thank you all for having me. My name is Mike McCarthy. I'm the president of SunCommon. I've worked there since 2013, and I took over as the chief executive just this summer. I have some slides that I that I sent and shared with you. You guys have those printed. Mhmm. Okay. Great. Then I'm going to just tell you what I'm talking about the next one because I have written testimony that goes with those at all. Try not to just read to you like a robot. But I wanna get through a bunch and then give you a time to ask me some questions, hopefully. I'm here today to talk with you about the impacts of HR one and what specifically that impact will be on Vermont homeowners and the renewable energy professionals in our industry who serve them, as well as what US policymakers might consider doing in response to really this unprecedented assault on this part of the solar industry. Renewables were particularly impacted at the kind of residential and small scale level by HR one, the legislation that passed this summer federally. So on that second slide, I really wanted to highlight that, you know, Vermonters have been supporting and going solar, increasingly pairing that with solar that solar with battery storage and storing that energy over the last decade plus. And, at Suncommon, we've got more than 50 Vermont employees and hundreds of colleagues who work at other installers across the state. Since 2012, we've helped thousands of Vermonters go solar on their rooftops with carport canopies and backyard ground mounts, providing clean energy for their homes and their neighbors. I'm a solar homeowner, and I know that some members of the committee are as well. And all of us were eligible to take advantage of a 30% tax credit that helped make our systems affordable, from the outset. HR one, the biggest impact it has on us is that it eliminates that federal support for homeowners, whose projects are go online after December 31. The inflation reduction act in 2022, which most of our policy and the business planning of our industry was grounded in, was supposed to keep these tax credits in effect until 2032, then being pulled January 1 with this new legislation rather unexpectedly is pretty tectonic. On the next slide, I I talked about some of the the things that are at stake here. So green jobs and solar energy, energy storage, other renewables, They're at stake because of equipment restrictions that come in HR one that'll go into effect on January 1 and and actually increase in the restrictiveness of what we'll be able to actually deploy and install for Vermonters as well as these rapid phase outs and elimination on January 1 of the residential tax credit. Businesses like Suncommon are already planning on reducing our projected forecast of the revenues that's affecting our hiring, but we're getting creative to continue to find value for homeowners and diversify the things that we are installing beyond solar PV as we've already done. Our state needs more solar to offset the shift to electric vehicles, heating and cooling, other electrification. I think earlier today, you talked about the fact that we're not on track to meet our energy goals. The resilience that we provide from solar, especially when paired with battery storage, is good for homeowners and it's good for the grid. On the next slide, I talked about over the last several years about how there's been a decline in value in Vermont, in what solar is worth per kilowatt hour since 2017, especially for residential projects. There are two major categories of incentive that solar projects have relied on on policies that have supported the industry being viable. One being the federal tax credits that are available, the other being utility policy that, you know, allows for us to get certificates of public good and do net metering at a rate that makes the projects make sense for homeowners. And, as you can see, the value for the vast majority of Vermonters has gone down with each rate review. Currently, we're on a biannual schedule. Most of probably know that, and that'll be reviewed again in 2026 by the Public Utility Commission. And given that so much of the consideration of the value of solar and the rate we want to see of deployment of more solar and other renewables, that it's really been based on the assumption that these projects would be economical because of the support of that federal tax credit that's now going away at least for residential solar and is becoming much harder to access for commercial projects. I think that we should consider the need to adjust our state policy in the face of the shifts, and we wanna continue to deploy solar on-site where it's most useful, we'll have to do that. While solar got an adder for the first ten years with with older projects that went online prior to 2017, Over the last few rate reviews, we've actually phased into now the typical solar project gets 4¢ left than what they're paying for the power that comes down. So there's a haircut on the blended rate of power, and we call this the negative adder. You've probably all heard that. So every bit of power, whether it's being consumed by the home, put in a battery, or exported on the grid, essentially gets taxed 4¢ per kilowatt hour in Vermont. So I have four quick slides that I'll just run through that have some scenarios for you to consider about what a typical project looks like and the economics of that. So a typical 10 kilowatt array that costs $34,000 to install and today gets a $10,200 tax credit, this system would produce about $1,600 per year in power credits. And off of the blended rate, which is about 19¢ a kilowatt hour, that means it's worth a net of about 15. That equates to roughly a fourteen year period where it takes for the solar to pay for itself in Vermont today. After the removal of the 30% federal tax credit, that pushes it out to more like twenty years for a typical project. Some comment has a head oh, go ahead.

[Representative Kathleen James (Chair)]: Sorry. Did just have a question, Mike. So total invoice, you're not showing that changing. Right? So you're assuming that the cost to the customer remains the same.

[Mike McCarthy (President, SunCommon)]: Yeah. And actually, with the dynamic that the previous witness talked about with equipment costs going up, it's very difficult to maintain those prices in light of HR one. So another impact here is that we've got pressure from tariffs and other policy driving the equipment costs up at the same time that the incentive policy is driving the value down, and that's a recipe for these projects not being as viable as they have been

[Representative Kathleen James (Chair)]: Gotcha.

[Commissioner Eric Johnson (Vermont Department of Public Service)]: For this year, it's

[Representative Kathleen James (Chair)]: really yeah.

[Mike McCarthy (President, SunCommon)]: That's a really good question. So because our company has a headquarters in New York, I oftentimes in comparing policy, and I think it's useful to look at the state support in our neighboring states for these projects in what we're doing here. A couple of big differences you'll see on that slide comparing us to New York, is that they have a state based incentive, a tax incentive that, for most projects, equates to $5,000. And the really critical for what I'm about to suggest is that they, credit solar at one to one. So if you're paying 20¢, you get 20¢ for what you produce. After HR one goes into effect, the typical the New York solar customer still has a better deal than a Vermont solar customer does today. And one of the things that's driving that is they have much higher utility rates, so good job on us for keeping rates reasonable compared to our neighbors. But the a big driver and an even bigger driver is that that difference in of of where we take that negative adder and actually lower the value per kilowatt hour for the solar that's produced. And when we think about the fact that that applies not only to the export, which I think there's a policy rationale for there being a lower value for the solar that gets pushed out onto the grid, we're asking Vermonters to electrify and use a lot more electricity generating that on-site where you use it. We're essentially disincentivizing that behind the meter consumption by taking that haircut not only on the export, but also on everything that they consume on-site. So if I was doing some efficiency measure, like, got a more efficient refrigerator, I wouldn't get sort of taxed 4¢ a kilowatt hour on what I had saved. Right? But when you generate your own power behind the meter, every single kilowatt hour you generate, even if you use it instantaneously, it doesn't just lower your bill by the rate that the cost that you're paying for kilowatt hours coming down. It takes a haircut on all of that consumption. So it sort of disincentivizes the exact behavior that I think all of Us utilities, everybody in the renewable energy industry wants to see happen. So on that last little chart, I show a comparison between what it would be like for that same project to take away the tax credit. It's got about a fourteen year payback that goes to a twenty year payback. But if you replace the tax credit by eliminating that negative adder, it's roughly the same payback. So one bucket of policy solution that I think we might consider in Vermont in response to h r one to support small distributed generation would be to consider eliminating or reducing, the negative adder. So we have a statutory goals to produce clean power. There's a framework that you all, you know, with the res supported to have in state renewable generation. That framework is really under threat. Like, one of the foundational assumptions for the next few years, for this industry by the elimination and the reduction in federal support that went into the law this summer. I think that most stakeholders agree that behind the meter consumption at the very least should be encouraged, and we encourage Vermonter to electrify their lives and lower their carbon footprint. So, yeah, I think I basically covered that last paragraph. So I will just say that thank you very much for listening to suggestion and would love to take any questions you all have if you have time.

[Representative Kathleen James (Chair)]: Yeah. Brett Howard.

[Representative Christopher Howland (Member)]: The negative 4¢ you referred to, that's if the individual doesn't sell his threats to the military.

[Mike McCarthy (President, SunCommon)]: Actually, it would be negative $07 It would be even less if they didn't have the utility count that as part of their renewable portfolio. So this is even with the transfer of the renewable energy credit to the utility, the net value is still 4¢ less. That's the siting adjuster.

[Representative Christopher Howland (Member)]: That was the August '24. Yeah.

[Mike McCarthy (President, SunCommon)]: That was effective August 24. Exactly.

[Representative Kathleen James (Chair)]: Representative Kleckner and then Tory.

[Representative Bram Kleppner (Member)]: Do you happen to know that New York so they're paying homeowners homeowners are getting just paid market rates for the power they produce one to one. Right? Like it says the market rates. Do they have off-site net metering? And what rates does that power get bought at?

[Mike McCarthy (President, SunCommon)]: Yeah. So they have a very complicated thing called the value stack in New York. So you have the ability to essentially choose or blend net metering where you do one to one to encourage on-site, or you can go with a value stack. And so they have a big calculator. It's like a 45 megabyte spreadsheet you can download to say, okay. I'm in this utility with this thing, and I'll get this rate. And so it's similar to the sort of, like, avoided cost, and there's a few other things in there. But for most utilities, it it ends up being that you might have something like 20¢ value if you're using it on-site. And then if you remote credit it with the value stack, it might be between 10 and 15¢ or something like that at today's rates. Thank you.

[Representative Dara Torre (Clerk)]: Victoria, thank you. I'm just curious how the payback varies for a home that does solar plus storage. If they're a utility that values their storage and they get to realize that?

[Mike McCarthy (President, SunCommon)]: Yeah, it's a little complicated. So the battery storage itself doesn't have the kind of like, it pays for itself the same way. The real advantage with the battery storage is the resiliency that you get from it. Right? The ability to never have an ad outage to do whole or partial home backup. So it's hard to kinda quantify that with payback the same way you do with just, like, what is the power? With, the programs that utilities have done both the bring your own device program and programs like the lease that Green Mountain Power offers, we've been a big installer of batteries as well as PV. That makes it so affordable to get that resiliency. And with what we're seeing come online in terms of the kind of virtual power plant use with that, where those utilities are able to sort of dump that solar power into the grid when they need it, we're looking at a future that has a much more dynamic grid than what we're used to. So I think a few years ago when we were talking about net metered solar, it was like, okay. We have to think about all this power is getting dumped into the grid whenever the sun is shining, and then utilities have to manage that as the deployment goes up. Well, now we actually have this very dynamic thing happening where there are more and more batteries on the grid, both in homes and in our cars. And the utilities now have the ability and are really participating, being forward thinking about using that power well. So what I'm kind of saying is when we look at the trying to get private dollars to do this distributed generation investment, to invest in solar and batteries, we're doing a great job with batteries because GMP and other utilities with those programs are really making it affordable to get the batteries installed, and that helps with all kinds of things, outage resiliency, you know, decreasing the cost of having to rush out there to the last home. And I know, you know, the utilities are thinking about all kinds of great ways to use batteries. But getting people to invest in the generation, aside of that now with HR one rug pulling the 30% tax credit, our policies and our valuation for solar as a state has fundamentally been built on the assumption that that tax credit is there for the next seven years, and it's not gonna be there. So I I really imploring your committee and other policymakers to think about the value of the green economy that we have, having homeowners invest their private dollars in some of the small generation, and at least making it so that we're not discouraging people to use the power on-site, especially as they increase their electrification. When I did my solar, I did not have an electric car, and now my solar that I have at my house is only covering about a third of my power, but I'm not using any gasoline. So we've really changed in the last few years the way that Vermonters are adapting to new technologies. It's saving people a lot of money, but our policy, I don't think has quite caught up with the reality, and this is a major tectonic shift in the valuation of all of this that we've got to respond to.

[Representative Kathleen James (Chair)]: In

[Representative Christopher Howland (Member)]: absence of an electric car and the like, isn't a 10 k w system pretty big for a home?

[Mike McCarthy (President, SunCommon)]: It's interesting. So our our average home a few years ago before people had gotten heat pumps and electric vehicles at the rates that they have was more like six or seven kilowatts. So when you look at a three or four kilowatt increase in the average system, you could basically say that's directly related to the increase in electrification or at least people planning to electrify. It also has to do with the fact that the the panels themselves have gotten more efficient. So a lot of people who are doing their six and seven kilowatt systems weren't even covering all of their bills. I was a super efficient energy minded person, and I was able to cover, like, 90% of my bill with a four kilowatt system, but then I got an electric vehicle, and my my usage went a lot higher. But but that's the dynamic that a lot of households are gonna just be able to save a lot of money by electrifying even if they don't have solar. If they're generating a lot of the power that they're using on-site, that's really the best thing for resiliency, especially the batteries, and they're they're they're doing that dynamic virtual power plant kind of thing with the utilities being able to use some of that power to feed their neighbors when the utility really needs it as opposed to just whenever the power is being dumped on the grid.

[Representative Kathleen James (Chair)]: Mike, thank you so much.

[Representative Laura Sibilia (Ranking Member)]: Thank you for having me.

[Representative Kathleen James (Chair)]: Yeah. Thank you for coming down. Jim.

[Jim Merriam (CEO, Norwich Technologies/Norwich Solar)]: Thank you. I'm Jim Merriam. I'm the CEO of Norwich Technologies, also known as Norwich Solar. We do work in Maine, New Hampshire, Vermont, and New York. We're based out of White River Junction, Vermont. We employ 40 people. And, you know, sometimes we get labeled a renewable business, but first and foremost, we are a small business. So before we get into the impact directly on the renewable industry, I will say, like all small businesses in Vermont, we face the threat of tariffs, the random threat of tariffs. And I'm also concerned from that bill the impacts of health care costs and what they're gonna translate to us. We at our company provide a 100% premium coverage for all of our employees, departments, and families. And so when I see massive changes to the health care system, I get a little concerned that as a Vermont business, we're not be able to uphold the ideals we want to have for our employees. I know that's not the purview of this committee, but I do wanna make it important to state that renewable businesses are still Vermont businesses. So I did my first project, in 1992. It was a wind, solar, and storage project in Antarctica, And I have been hooked on renewables since then and have been in the industry, for that whole time with the exception of about a five year stint as director of efficiency Vermont. So it's a polite way to say I have some perspective polite as opposed to saying I'm old. Because I've seen these some changes in the industry over time. What I wanted to say first and foremost up top, and I'm talking quick because I know you're behind, is we work in the ground mounted commercial nonresidential solar sector, very much like what Thomas does, not what, Michael does in terms of installation of solar. We've got a good solid four to five years ahead of us to be able to take advantage of the investment tax credit. So there's a lot of discussion out there about the tax credits ending in 27 for my sector. But there is a thing that Thomas talked about, which is called safe harboring. And safe harboring means if you start constructions, which is a very arcane set of rules from the, treasury department or IRS, you're actually able to hold that project and place it in service up to four years, four tax years later, from when you started construction. Yes?

[Representative Kathleen James (Chair)]: I do have a question about that. I was gonna ask Thomas, but just briefly, what does start construction mean? Well, I assume there's a it's clearly defined.

[Richard Giddings (Heating & Utility Assistance Program Director, DCF)]: Yeah. Pretty much. Yes. It is.

[Representative Kathleen James (Chair)]: I was joking.

[Jim Merriam (CEO, Norwich Technologies/Norwich Solar)]: No. No. It is it is very clearly defined because people invest hundreds of millions billions of dollars into this, and they don't wanna have their their tax credit at jeopardy. So this is, gone over by lots and lots of lawyers. So after the bill passed in July, there were certain, Republicans that were not pleased with the treatment and thought that it could have been harsher. So there was an executive order to update the definition of startup construction to make it harder. They did put that in and out in August, but the rules weren't that harsh. So startup construction is an IRS rule, much like rules different from legislation. And that basically gave developers, large scale owners, developers to September to utilize the old rules or fall under the the changes that would be in the new rules. So, basically, the old rules, if you had 5% of the cost of the project committed, you could save harbor. So a lot of large, organizations, organizations that ultimately buy some of our projects that we work with, we install for, bought panels. And then they will use those panels over the next four years to safe harbor their projects. You can also do things like buy a transformer. Transformers are a very long lead. That's called off-site construction. And as long as you show some general progress towards construction, that gets you your four year period.

[Representative Kathleen James (Chair)]: Thank you.

[Jim Merriam (CEO, Norwich Technologies/Norwich Solar)]: So bottom line is just, you know, residential has its challenges, obviously. Offshore wind, wind in general has challenges, and large projects on federal land have significant challenges. Our sector, a lot of what Vermont utilizes, is got that four to five year runway. And so, that's very important, and it's very different from sometimes the headlines you hear that say that we're all going out of business. I know we're not explicitly talking about policy here, but I think it is important to emphasize the value of the investment tax credit. So the investment tax credit utilizes federal tax dollars to bring down the cost of our solar projects. If the ITC goes away, there are studies that show that nationally we're gonna see, by 2030, four to 6% rise in electric premiums. In Vermont, we're gonna see some or in New England, we're gonna see something on the order of three to 6%. This is just if the ITC goes away. I like the ITC for a variety of reasons. Obviously, some self serving for our business, But it utilizes federal tax code that even after this bill is still more progressive than a flat tax applied through rate increases to every rate payer. So it's important that we try to maximize our use of the investment tax credit so that we can more equitably keep our rates down than just letting them float up. And I really resist some in the industry that say, well, we'll wait till, you know, after the ITC expires, rates go up, then everything will be back to parity, and we'll be able to be competitive again. If you use that argument, that basically means a lot of people got hurt in the in the path to getting those higher rates. So really think that the ITC is an important tool from particularly from an equity standpoint. So, again, to be quick here, my response and ask would be very much like others. One would be, let's not back off. We've got four to five years. Let's utilize the investment tax credit. Let's send a message of stability. You know, again, as a small business, people, you know, people ask me questions how things are going, and I often feel it's like, so when are you going out of business? And the fact is we're not. We're strong. We've got a runway ahead of us. Keeping our renewable energy standard strong and intact helps send that message to the broader market that we're viable. Again, take advantage of the four year window we have with ITC. And then I would say, similar to what Thomas was talking about with respect to regulatory reform, is there an opportunity to look at how we've addressed the housing crisis and what we've learned from underinvesting and under build under utilizing, tools to be able to invest in housing? We have the same thing coming with energy. And are there lessons learned that we could take from the investigation into housing and the changes that we're making? I'm on my planning commission. I can see a lot of those coming from the legislature down to improve increase the volume of housing stock. What of those things can we apply here so that we're not caught flat footed like that as well? So to me, timelines, as as as Thomas had mentioned, very even though we've got a four to five year window, flexibility is really important. So if we can get a permit earlier, we can dodge and weave permits and other things I'm sorry, tariffs and other things that come up to be able to make sure we can put some of those projects in place. So that is my fundamental pitch that I wanted to make today.

[Representative Kathleen James (Chair)]: Great. Do we have further questions before we move on to weatherization and lighting? Right. Thank you so much for Appreciate joining it.

[Representative Christopher Howland (Member)]: Thank you.

[Representative Kathleen James (Chair)]: All right. Thanks to everyone who has patiently waited to provide testimony. I know we're running half an hour behind. From where do we go? Yeah. Jeff, thank you so much for joining us. Sure. And thank you for being patient.

[Representative R. Scott Campbell (Vice Chair)]: I'm gonna start. Sure.

[Representative Kathleen James (Chair)]: Yeah, for the record, if you could introduce yourself.

[Jeff Wilcox (Office of Economic Opportunity, AHS/DCF)]: Sure. My name is Jeff Wilcox. I work for the State of Vermont's Office of Economic Opportunity, part of the Agency of Human Services and Department for Children and So you've got my handout. I see you're handing that around. Our handout. There's a couple of links to some references. One's the legislative report that we do each year. We're working on that for this year, January. And yes, so we were asked to address some questions. And that's what I'll do. It'll be fairly quick and then have time for questions or interrupt me as we go. That works. So what's happened so far with our federal funding? So a lot of our funding is federal in the last number of years. It used to be ten years ago, only 15% of our funds were Department of Energy and now it's like 50%. We've had some changes in the staff at the Department of Energy, the project officers that we work with regularly to implement funds. Our previous project officer, I'd worked with her for probably eight years, and she retired during kind of the turmoil. We've had four since in the last six months. They've all been good and have been working with us and tried to help us navigate. There's been some new regulations put in place. An example is the financial audit letter with our annual core DOE funds. I won't go into the details, but it added some administrative burden and some if we didn't have state funds mixed with our or braided with our federal funds, it would be a roadblock or an obstacle, but we're able to use our state funds to address the issue. Probably don't want to hear all the details. So we had a delay, a significant delay in our annual state plan for the Department of Energy about a $1000000.1800000.0 grant we get each year. Typically, we can start spending on July 1. Our state plan is approved by then. We didn't get it approved until late September this year, which is the latest ever by far. And again, Richard Giddings will talk about the LIHEAP, which is a component of our program. What funding changes do we anticipate? To be honest, we're not anticipating any. We're moving forward our annual DOE grant. We did get our state plan approved. That month is accessible. The other one time funds for multiple years is the previously called BILT Bipartisan Infrastructure Law. It's changed to IIJA. And I need to look because I can never think of that Infrastructure Investments and Jobs Act. It doesn't roll from the tongue. But that's about $14,000,000 We've spent approximately 30% of that so far and there appears to be no obstacles. We're still drawing down that funds and spending it today if someone's out there weatherizing homes with those funds in Vermont. ARPA funds will be expended by the end of state fiscal year '26. So that's kind of where we're at with our federal funding except for the IRA funds and Department of Public Service. I was here, they talked about that, but I'll reiterate what they said. So that's the inflation reduction act. And that's the homes funds that they've we really appreciate have wanted to implement that $29,000,000 through the Office of Economic Opportunity, our office and the five agencies to weatherize homes with it. And DOE did approve the homes program in September. We're still waiting. They're still waiting. We're still waiting approval to launch from DOE. They've been working with the project officer there, who have been responsive as well as our project officer, even during the government shutdown, as has our project officer still getting is working with us and getting paid. And it's on track for approval. Our goal is to start implementing and spending those funds January, February this year. While nothing's certain by any means with any federal funds, with these funds, the IRA funds, we anticipate stable funding through state fiscal year '29, which is 06/30/2029. Without those IRA funds, 29,000,000, the program anticipates a reduction in funding at 06/30/2027. So that would be a decrease in the annual available funds off and of workers at the six weatherization agencies. What have we been doing?

[Representative Kathleen James (Chair)]: So Jeff, sorry, just want to double check. So we had at one point last year taking some testimony and I just remember a concern about an impending cliff or a drop off that was anticipated in overall funding for weatherization work. And is that, at this point, no longer a concern? Is the money that we were worried about looking more stable now or does something change?

[Jeff Wilcox (Office of Economic Opportunity, AHS/DCF)]: So it all hinges on these IRA funds like I tried to explain it didn't do a good job. It all hinges on that. If the $29,000,000 comes through, we will have stable funding at about 22,000,000, 23,000,000 a year, which is what we're spending in the last two years through 06/30/1929. So that is a big if I mean, but we're planning moving forward. They did get initial approval. They just we haven't gotten approval to launch. So without those funds is when we do have a cliff, and it would be significant June.

[Representative Kathleen James (Chair)]: Okay, you did it. Just wanted to reiterate I

[TJ Poor (Director of Regulated Utility Planning, Vermont DPS)]: know, glad

[Jared Duval (Executive Director, Energy Action Network)]: you did.

[Representative Kathleen James (Chair)]: It was a very big concern. A lot of us were thinking and hearing a lot about that. And sounds like since we've adjourned to now, things are feeling a little bit more or maybe since we last took testimony, things are feeling a little bit more stable or more hopeful about that critical $29,000,000

[Jeff Wilcox (Office of Economic Opportunity, AHS/DCF)]: Yeah, like TJ had mentioned, other states have gotten approval and are implementing it. I think I still worry about it, but we're going to stay positive and keep moving forward with our funding plan.

[Representative Kathleen James (Chair)]: Little more

[Jeff Wilcox (Office of Economic Opportunity, AHS/DCF)]: in January, February.

[Representative Kathleen James (Chair)]: Okay.

[Jeff Wilcox (Office of Economic Opportunity, AHS/DCF)]: So what have we been doing? We've been tracking and assessing spending across all funding sources. So each of the five local weatherization agencies have four funding grants, three are federal ones, a standalone state, we're tracking all that funding like we always do, to ensure stable spending and full spending throughout the year, communicating with the Department of Energy and our project officer, other states, national partners, you know, to tackle some of these things like the financial audit letter as they pop up and hear what they what are they hearing, what are they doing. Working with Efficiency Vermont, Vermont Department of Public Service on potential future funding sources for home repairs in vermiculite work. So that is one funding cliff that's coming due to the it's not any the ARPA funds expire March 30, June at the latest, and that's what we've been using for significant home repairs and vermiculite funds. Those will go away, and that is an issue we've been working on with Department of Public Service and EVT. We're continuing to provide training and technical assistance to support the six local agencies and three d Thermal, our statewide multifamily agency. We implemented a training center in Barrie this past year and that's going well and helping to keep the workforce well trained, doing the work properly and providing the benefits to the clients. Goal of the program, save money, put it back in their pockets. That's all we had to present.

[Representative Kathleen James (Chair)]: I apologize, I know I have this somewhere, but what's the hole that's going to be left in annual spending that we're currently spending? The ARP money is what I'm trying to get at. So right now, we're spending x amount per year on the kind of critical home repair and you know the stuff that often needs to happen for somebody to weatherize, right? How much do you think is that a year that's going to be not there anymore?

[Jeff Wilcox (Office of Economic Opportunity, AHS/DCF)]: It's about 1,500,000.0 to 2,000,000 that we're spending on home repairs and vermiculite and heat pumps and hot water heat pumps and wooden pellet EPA certified wooden pellet stove. So we knew we'd have to stop doing the pellet stoves and the heat pumps at some point. The really important work is avoiding obstacles for clients that would get deferred, like the home repairs, leaky roofs and vermiculite. I put that about million to a million and a half. At least that the Department of Energy does provide about 200,000 through their annual core grant to us. So that's only 40,000 per agency. It's not enough. So that is something we're working on. But it would be a real detriment to the clients out there who have not only need to save energy money on heating and cooling, but they also have a leaky roof or vermiculite in their attic or their basement sill is rotted or have water in their basement, which currently we're able to address and then get them served with weatherization.

[Representative Christopher Howland (Member)]: Like important money. Yeah, that's very important.

[Representative Kathleen James (Chair)]: Great. Jeff, thank you so much. Sure. Thank you. Yeah.

[Richard Giddings (Heating & Utility Assistance Program Director, DCF)]: Good afternoon. Richard Giddings, Department of Children and Families, Heating and Utility Assistance Program Director. And my slides follow right after Jeff's. And Miranda I wish she could stay, but she's testifying in the other room, Commissioner Gray, Deputy Commissioner Gray. So I'm going to go it alone. The first slide that I provided was tied to our funding and benefit stats. And I'll just walk you through just the 25 line just so it makes sense. We get about $23,000,000 of LIHEAP funds in our block grant. We had 2,200,000.0 in carryover. We had 3.066 of state funds, which brought us to 28.3 total. We then issued benefits out to 16,296. Those numbers are final. And the average benefit was 11.67 at the average price of $3.41 The three forty two is the number of gallons a household could potentially buy, given the average price. And the 45% is how much of their heating need we're able to provide with federal dollars. The next slide is talking about the major components that we use the LIHEAP dollars for. We do heating assistance, of course. We put in crisis assistance, which is administered through our five community action agencies. We do weatherization. Jeff and I work a lot together. He's a good guy. We do a lot of furnace repair and replacement and fuel tank repair and replacement. Doesn't do us a lot of good if we give folks a heating benefit and they have a tank that is either not up to standards or not safe for them to use. So we really try to get on top of those and work to get them. We also partner with DEC and other folks around that. Seasonal fuel uses 185% of poverty, and that's the income guideline down below on the left hand side, and crisis fuel uses 200% of HOM. So those are the income guidelines in correspondence to the number of folks in your household.

[Representative Kathleen James (Chair)]: The crisis fuel is short term.

[Richard Giddings (Heating & Utility Assistance Program Director, DCF)]: Crisis fuel, if you receive a seasonal fuel benefit, you can get one crisis fuel assist. Okay. Just going to go to the next slide. I hope I'm not going too fast. If I am, just stop me. National level updates. Basically, we continue to process applications. Today, we have seven twenty six pending applications as of today. We're, of course, waiting upon our federal funds, which typically the year for the federal fiscal year starts October 1, but we have not received our notification of that yet. Our big benefit run, which will take place the November, issues rate about $13,000,000 out to our certified dealers who then apply those credits to households' accounts. Changes at the national level. There was, of course, significant changes with positions being eliminated, the Health and Human Services reduced from 28 to 15 divisions, and the Department of Energy Assistance, the 20 staff that supported the states was eliminated and they brought other staff in from other programs to try to manage that. As far as funding updates, the Senate Appropriations Committee in June passed $4,045,000,000 which was an increase of $20,000,000 And the House in September passed $4,350,000,000 which is, again, a $10,000,000 So a slight difference between the two. They'll do a conference committee in the end if this stands and figure out what that final number looks like. We're very positive about that though, because both US House and US Senate had passed a lot of committees and they were actually waiting to be voted on on the floors, but just didn't get there until we have a CR basically. Like I mentioned, we're preparing for just our normal heating season. We're going to do our big benefit run here the November. Then we continue to issue benefits every single night. So if it applies the day after we do this and we find the mailable, that benefit goes that night through ACH, which is bank transfer to the bank, to dealer's bank account, then they apply that credit the next day. They get a text message every single day from us for anybody new who has come onto those roles. And always people who have accounts with them. I mean, I can't just pick a dealer and say, I'm going to go with you. It's someone who already established an account, has an account, because we do require account numbers. Our state actions and communication, we just continue to work proactively. We're communicating a lot with the administration. Yesterday was the eBoard meeting. LIHEAP was supported through that. We talked with our fuel dealers and our folks around the state just to keep them informed of what's happening, our community partners, and of course, consumers that are calling on a regular basis concerned about the different things that they're hearing in the news. And then our contingency planning really has to do with we're anticipating this money. If the money doesn't come through, then we'll have to come back and seek what type of funding we could get to replace that. That is the current issue's plan, to be able to do that as a way to ensure that we can get the benefit out so it helps people now. There are then four extra slides in case there's anything you ever want to know about my program, heating and utility assistance. I won't go through them because I know you're pressed for time, but I did stick them just in the appendix.

[Representative Kathleen James (Chair)]: It just seems that despite concerns and scary articles in the press that might keep this feeling fairly stable right now?

[Richard Giddings (Heating & Utility Assistance Program Director, DCF)]: Yeah, all indications prior to October 1 was like these have come out of committees and they're supported. We use it for heat up here mostly, but Southern states use it for cooling assist. So it is something that has historically always had bipartisan support.

[Representative Kathleen James (Chair)]: And I'm sorry, remind me, I think you said this, but with the shutdown, how does that impact the flow of money?

[Richard Giddings (Heating & Utility Assistance Program Director, DCF)]: Right now, we have the spending authority to be able to issue the funds for our big benefit run. So we're going do that. And then when the money comes back in, we will replenish that money that we spend

[Representative Kathleen James (Chair)]: next week. So we've got the money. The benefit run can be covered. And then all indications are that Vermont will be reimbursed, the Senate. Correct.

[Thomas Hand (MHG Solar)]: That's correct.

[Representative Kathleen James (Chair)]: Super, well, some good news today. Do we have any questions? Okay, well, yeah, thank you for coming. You

[Will Eberly (Director of Weatherization & Climate Impact Programs, Capstone Community Action)]: guys need a moment to turn up the heat on the chair or redirect the lights towards my eyes. It's fine.

[Representative Christopher Howland (Member)]: I'll get settled here.

[Representative Kathleen James (Chair)]: Get out of floodlight?

[Will Eberly (Director of Weatherization & Climate Impact Programs, Capstone Community Action)]: Exactly. So you have some materials that are good for you, and I'll give you another set of numbers and visuals to take a look at. It's fine to make pop music videos, but we've only got several to share at

[Jared Duval (Executive Director, Energy Action Network)]: the moment. Take just a

[Will Eberly (Director of Weatherization & Climate Impact Programs, Capstone Community Action)]: moment to thank the committee for giving me the opportunity to speak today and to thank a lot of the folks in the room that are the giant whose shoulders I'm standing on in this role. My name is Will Eberly. I am the director of Weatherization and Climate Impact Programs at Capstone Community Action. And the the two programs within my purview, one of them is essentially founded by the person sitting immediately to your left over there, representative Scott Campbell. So it's somewhat awkward to talk about that program for the director of OG. That said that said, I'd like to just begin by telling you guys some stories. So you have no shortage of numbers in front of you, and I really like the human connection of this work. So the first thing I'll talk about is how every one of you represents a community in Vermont that really counts on you as champions for that community. And And here to take a look at this green sheet, which is passing around, you'll see that over the past four decades, there is a conglomeration of communities that have been served by this program that really reaches across the the depth and breadth of the state of Vermont. And you can see details about just how much of that work has been completed in each community. So that only begins in 1985, prior to which we did not have longitudinal data. So really, there's quite a bit more impact than is even represented by that green sheet. So that's a nice place to start. What I'll start by talking about in the nuts and bolts of the program really has to do with the compounding economic effect of this work. So I'm a privileged person that's able to begin my workday after dropping my kids off at school. So I start my day at about 08:30 in the morning. At the point that I get there, there are 27 or so folks who started their day ninety minutes earlier. Some of them drove an hour and twenty minutes to get to our headquarters. We're waiting at 06:55 to begin the day at seven every single morning. Once they've done that, what do they do? They drive the trucks to the local gas station. They get breakfast burritos. They get coffee. They're spending money that circulated to local community from the small business owners that they serve every single day. They're going to the hardware stores. They're buying materials that will be used every single day across the regions that we serve. That's an important that isn't always captured in some of the numbers that you see in front of you that I think is really This has a rippling, compounding effect on the economy of the entire state and so many of the communities across the state. That said, we've heard quite a bit about what it is that weatherization is at this moment. There's a beautiful book, the tech manual, and their federal statutes would make it very clear what we're allowed to do. What we don't talk about all the time is what we're not allowed to do. And I'll take just a moment to tell you about that. So recently, I had the opportunity to go to a home, which to many folks in this room would maybe be thought of as a shack, and you wouldn't be wrong for thinking about that based on a lot of the expectations that we have about what a home should look like. So the person who I was there to help that day had no running water, no power, no indoor plumbing. They had a a dug well in the back, which was circulating in a little bit of garbage that had flown from the cracks in the floorboard. There were gusts of wind coming from underneath the house. They had another disabled family member living in a different cabin, not too far from there. And we were there to talk about how the things that they wanted done could not be done within the statutes of of weatherization. Right? And so initially, it was a somewhat antagonistic situation because they wanted a thing which I had no path forward to to get to them. After spending a few hours talking and really getting to the heart of the matter, it became clear to me that it was just simply not possible for me to leave there without supporting this person in the multiple ways that they needed to be supported. So we're very fortunate as a community action agency to have the opportunity to draw down some flexible funding from time to time from donations and things of that nature. With those funds, we were able to then put some of those pieces back together to say, what would it look like if we installed a safe heating system for you? What would it look like if we help to pay some of these back taxes so you don't lose the home that we've spent the last six months weatherizing, etcetera? So we managed to do that for that individual. A similar situation transpired across the entire county on the other side of some other mountains involving a leaking roof and some leaking windows and some mold and some things like that, which we're not allowed to handle within this particular program. Again, we found the financial resources to take care of that type of a situation. Those two situations could just as easily have been some of the 8,000 people that we did do the tech manual regularization work for, but we found out more about the story and found ways to really meet that unmet need for a person falling in the cracks. Those two situations cost us just about $20,000, which took up just about half of all of the money in the world that we have access to to handle those types of situations. So I lead by mentioning that because it's so important for people in this room to realize that while there's a whole lot of good that we can do within the weatherization programs, both on the single family side and on the three e thermal multifamily side. There's a whole lot more that is needed outside of that.

[Jared Duval (Executive Director, Energy Action Network)]: So when you think

[Will Eberly (Director of Weatherization & Climate Impact Programs, Capstone Community Action)]: to the future and you think to the funding climate, I want to take just a moment to magnify that lens even a little bit greater. There is a saying that I heard recently that resonated with me tremendously, which is everyone has 99 problems until they are hungry. Then they have one problem. As much as I'm here to advocate for weatherization and climate related things, I would be a bad human if I didn't talk about the need to ensure that people have some food in their bellies. If you have to make very difficult decisions, you move in the direction of getting people food,

[Representative Bram Kleppner (Member)]: that would not make me mad one little bit.

[Will Eberly (Director of Weatherization & Climate Impact Programs, Capstone Community Action)]: That said, you also have 99 problems until you're freezing cold, until there's wind coming through your house, until you no longer have electricity that's stable enough to plug in your refrigerator, things of that nature. One final story that I'll share with you is I was driving home the community that I live in in Northfield one day after working in Capstone Community Action, bury all day. And I had the opportunity to build into my day stopping at one of our job sites in the community that I live in and to chat with the crew and and see what the situation was. We stopped at the house, and I was talking to the to the folks in the driveway. And they were joking about how we were gonna set the record for the most cellulose insulation that had ever been used on a job in the last forty years, and they were laughing about how much cellulose is going in the house, and I didn't understand why that could possibly be. So we started to talk about, well, why is that? Why why could that be? And they said, well, it is because if you look at this huge old New England farmhouse and you look at the walls and the floor and the ceiling and the roof and the thing, there is not one scrap of insulation in this entire home and there never has been. And so this is the second day that we have been here and already our machines are showing a tremendous improvement, and we're seeing that that heat that used to just pour out of the building is now in here. And the day that we were here, the second day in the morning, the kids who had always grown up in that house ran into the kitchen and they said, mom, why are we warm in this room? This room has never been warm before. What's wrong with our house? It's it's warm here now. Right? So that's the kind of stuff that this work does. And we can talk about the return on investment and how we wish it didn't cost as much and how there's difficult choices to make, a sort of oppression Olympics. Do we fund early childhood or food? Or do we support a local grid? Or do we give people access to broadband? Is really difficult to pit those issues against each other, but I want you to think about the compounding economic effect that this work does have and how if we had to make this difficult choices, if the infrastructure did not go in the way that we hope and suddenly we are making these cuts, those five crews of people that drive every single day to be at work at seven in the morning to support these local businesses, half of them are suddenly gone. Or those families with those kids who have never been warmed, half of them have to say, we're sorry, you got to keep being cold. So we know it's really difficult choices to make in this room, but I want to keep this front of mind to you as you make some of those difficult choices down the road. And I'll leave you with these numbers to perseverate over, and feel free to ask me any questions you might like. Thank you.

[Representative Kathleen James (Chair)]: I just have one question, Will. Just we're thinking a lot today and talking a lot today about federal funding and the loss of federal funding and the impact on the Vermont landscape. So we learned today that federal weatherization funding is, knock on wood, in pretty decent shape. Very relieved to know that Lightning is looking fairly solid. So I just wanted to return a little bit to the ARPA money that's running out. The 1.5 to $2,000,000 a year that OEO has had at its disposal to spend on of health and safety work or pre weatherization work, things like leaky roofs and vermiculite repair. If you can't do that to a home, there's no point in weatherizing it, and certainly no point in trying to look at a heat pump or something. So is that funding that you guys have been able to tap into and use? How do you

[Will Eberly (Director of Weatherization & Climate Impact Programs, Capstone Community Action)]: So this was the one extra thing I was hoping got talked about today. So thank you so much for bringing this up. So as much as we share the hope that that funding will be stable, the thing that is important to note is that even the best case scenario transpires, our understanding is that we will have to shift the funding mechanism we rely on within the three d thermal program, which currently provides that team type of support for larger, you know, five unit plus buildings, large affordable housing development, shelters, things in the public works. You will have to ship from the ARPA funds, which are very flexible and allow us to do things like take a 40 unit building and determine that something like 42 22 of those units meet the fair market affordable housing standard threshold and then fast track going through that project to then having to manually guarantee that each individual person is eligible through somewhat of a penetrating process of having to show the worst day of your life and the documentation, everything bad that ever happened to you, improving that and all that, every single person that lives there every single time. And if there was a mechanism for us to instead access flexible funding, which allowed us to main maintain the the essential nature of our program, which is both very nimble and fast, that would allow us to continue to do the type of scaling of good that we're seeing in the community. Whereas we would be very grateful for any amount of funding from any source to maintain our status quo. It would be a sort of a tragedy if we had to lose a lot of the flexibility in the way that that program is administered as a result of that. So again, we have an incredibly deep partnership with our state, funders, people in the nonprofit sector. We really appreciate that so much, and we'll be happy with any amount of funding from any source that we can get. But to preserve that flexibility would be incredibly helpful if at all possible. Thank you.

[Representative Kathleen James (Chair)]: Will?

[Representative R. Scott Campbell (Vice Chair)]: Scott. I was going say thanks, Will, for your stories. I think it's really real time to the human side of best fusion modernization. Can't tell you how many I'm the director of TVA and others probably now before I was a three d film. Can't tell you how many people whose lives we changed. I mean, it wasn't just a matter of insolescent and heating systems. It was it it was really a change in life. It made a huge difference. And we thank you for that. Thank you so

[Will Eberly (Director of Weatherization & Climate Impact Programs, Capstone Community Action)]: much for recognizing that, representing Kappaella. I really appreciate it. Thank you all so much, and don't hesitate to reach out to any questions that emerge later. All my best. Thank you. Considering

[Representative Kathleen James (Chair)]: today's amazing and packed lineup of witnesses, Jared, I'm sorry that we're running half an hour behind, but I'm happy that we're only running half an hour behind. So we can wrap up with our final witness today, who is going to give us a general picture of Vermont's energy landscape.

[Jared Duval (Executive Director, Energy Action Network)]: Thank you, James. Just a logistical question before I start. I could get on Zoom and share my slides. But if you already have them in front of you, then maybe it's more efficient to just go through that way.

[Representative Kathleen James (Chair)]: I think we have this is your packet, right, Jared?

[Representative Christopher Morrow (Member)]: Yep.

[Representative Kathleen James (Chair)]: Okay, great.

[Representative R. Scott Campbell (Vice Chair)]: I

[Representative Kathleen James (Chair)]: think Jared brought a copy. Yes. Maybe it's from Bob over here.

[Jared Duval (Executive Director, Energy Action Network)]: Yeah, I'm planning to hand them out to the end. So for the record, my name is Jared Duvall. I serve as executive director of Energy Action Network. Thank you, Chair James, Vice Chair, Campbell, Rankin Member, Sebelius, members of the committee for the opportunity to speak with you today. And thank you, Megan, for all of your help organizing and preparing for today. So for folks who may not be aware, I know members of the committee are, but there's other folks watching and other folks in the room. Energy Action Network is really two things. It is a network of members across the state of Vermont working to help meet Vermont's energy and climate commitments. And and we collaborate in a in a number of ways. And in support of that network of member organizations over 200, we have a very small backbone nonprofit organization that plays a couple of key roles. One is doing research, data tracking, and analysis on energy, economics, emissions to help inform the state's energy and climate conversation, to help, make sure that across our network, which has a very diverse array of members with different viewpoints, different priorities that we're starting from grounding with the latest and highest quality information, data, and evidence and facts. So that we can have a really you know, a fact based conversation about where we stand and where we're trying to go and what that will require. So because we have such a diverse network of members and to serve as that independent research and analysis role, As a nonprofit, we commit that we don't do any lobbying. So we don't you will not hear EAN or me as EAN executive director take a position on a piece of legislation before you. That said, I should also note that I have appeared before you in the past as an appointed member by the senate of the Vermont Climate Council. And there are times when as a counselor, I am asked about recommendations in the climate action plan, very much do relate to policy. So I always wanna be really clear about what role I'm appearing in or speaking in. And and today, it's just in my capacity as executive director of of EAN. So I wanna do two things today. One is just is step back and take a higher level view about energy costs and energy affordability. So many of you are familiar with Energy Action Network's annual progress report for Vermont. We often track energy use, energy expenses, climate pollution. This year, our report is primarily focused on the on questions of energy affordability. How much money do we spend on energy as a state? How has that changed over time? What would be opportunities to save Vermont and Vermonters money on energy? So what's the status quo compared to other options? What are those? Affordable for whom? Because that varies and is really important. And importantly, when we talk about energy affordability, oftentimes we need to make this distinction about do we mean one time fleeting affordability, or do we mean durable affordability in terms of lowering costs year after year and over the lifetime, say, of a piece of energy equipment? So I wanna talk about that, and then I wanna use the example of transportation, our largest source of energy cost burden in Vermont, as a way to look at some of the impacts of federal policy changes and the changes in state and federal funding. So that's what I have planned. And at the end, I was planning to to hand out we have just received yesterday our first box of printed copies. They may still be warm from the printer of our 2025 annual privacy report for Vermont. I'm happy to to share those, afterwards. So right now, I'm on I'm on slide five looking at total Vermont energy expenditures. And before we even talk about energy, I mean, has been the major focus of household conversations, kitchen table conversations, conversations in the legislature. And so I I wanna think about energy affordability in a broader framework first, which is that when we look at average household costs for Vermonters, transportation is on average the second largest expense for most households. The largest is housing, and a major component of housing is is heating. So if we're gonna talk about affordability in Vermont, we energy affordability is is crucial. And so talking about energy costs. The first slide shows the latest year for which we have full data. Over $3,000,000,000 was spent on energy in Vermont, about 2,000,000,000 of that on fossil fuels primarily for transportation and heating. And I and what he I think it's important to note that this is just energy costs, the costs of fuels and of electricity. It does not include the additional costs, which are even higher for equipment, like vehicles or heating systems or the maintenance of that, year after year. Okay. So the next slide, slide six. The amount that we're paying for energy as a state has been fluctuating significantly over the years primarily because over two thirds of that cost comes from price vol fossil fuels that have historically exhibited a large degree of price volatility. So you can see that if you look, for instance, comparing the years 2021 to 2022 on the graph titled fossil fuel price volatility has led to large cost swing swings for Vermont despite relatively flat consumption. So if you look at that orange line on the graph, that shows fossil fuel consumption measured in trillion BTUs. You see that total fossil fuel use was basically flat between 2021 and 2022. But the cost increase of those fossil fuels was over $700,000,000 to Vermonters because of those price spikes. And so we've seen over the last from 2022 to 2024, total fossil fuel costs in Vermont have remained above $2,000,000,000 a year. Now I really appreciated Will's testimony, and I think it's really important that we take these big numbers, $2,000,000,000 a year in fossil fuel spend. What does that mean for Vermonters, for an average household? Slide seven shows the example cost of the effect of that price volatility, those price spikes on a a representative Vermont household that uses fuel oil, which is the most common heating fuel in Vermont, using fuel oil for heating, and a household that has two gasoline cars. In that situation, using average, you know, heating heating load, using average vehicle miles traveled, and and a household in that situation would have seen their energy costs increase about $2,500 from '21 2021 to 2022 because of those fossil fuel price spikes. And they have gone down since some since 2022, but they have remained elevated far above what they were in in 2021. But those are those those prices are always moving with quite a degree of volatility. You can see this. This is looking over time. Slide eight, annual energy costs for an example, Vermont household. Average Vermont household has been at over $7,000 a year in total energy costs. Again, most of that is fossil fuels for transportation and heating. You see in the at the the smaller part, which is what most of the testimony today was focused on was electricity prices. But I think it's really important for us to remember that electricity is just one component of energy costs and affordability, and it's a relatively small component as compared to the amount of money and the cost burden that fossil fuel dependence presents for Vermonters. The next slide is is slide nine. It's from a wonderful report that Efficiency Vermont produces, the Vermont Energy Burden Report. And you can see, you know, even though I was using an example of a house that hits with fuel oil and has two gas cars, those are very representative numbers to the statewide average, that they show, again, over $7,000 a year just in energy costs, the fuels and the electricity, not including the equipment as of 2023. So one of the really important things that we found in this report is looking not just at questions of the future, but what are the costs of the status quo? And I think there's four four key features that we need to recognize and grapple with when it comes to fossil fuels. They are expensive for Vermonters. They are price volatile. They are part of a global commodity market subject to significant price spikes and fluctuations. They drain money out of Vermont because they are 100% imported into the state, and they are heavily polluting, harming human health, and worsening climate destabilization. So I wanna just pause on each of those four key points about fossil fuels. Number one, on expensive. And this gets to this question of expensive for whom? And we have this dynamic that is really challenging for lower and middle income Vermonters, which is that so this is slide 11, transportation expenditures and burden by household income. You can see that lower lower income Vermont households spend much less money on transportation than upper income households. They generally travel fewer miles. They generally have fewer vehicles. They generally have lower vehicles that cost less. But that even at that lowest amount of total spending on transportation, for lower and middle income Vermonters, transportation costs make up a far higher share of their household expenses. So, you know, you look at folks' household income under 40,000, the lowest transportation expenses of any income group in Vermont, but that relatively small amount is over a fifth of of household income that it takes up. So transportation costs, really important. And the next slide, slide 12, it looks at the share of annual energy costs by the expense type and income category. And the reason I bring this up is that for Vermonters with lower and middle incomes, you know, if you look at the first two rows, for instance, a much higher share of their transportation costs comes from the cost of fuel and maintenance. Where for upper income folks, of their total transportation spending, they're spending a lot more on vehicles, on more expensive vehicles. So if we wanna reduce the energy cost burden for lower and middle income Vermonters, it's especially important to be able to reduce fuel and maintenance costs, which take up a larger share of their transportation spending than for upper income folks. That's a bit about how expensive our our fossil fuel dependence is currently. The next slide, slide 13, gets to this point about the price volatility of fossil fuels. You see, over time, over the last about twenty years, the costs of gasoline and diesel in Vermont in the orange and the blue lines. And on the bottom, you see the comparable cost of charging a vehicle an electric vehicle, both in the light green line at the statewide average electricity rate, and in the darker green lines, the the cost of charging at the EV rates offered by Green Mountain Power and Burlington Electric. And so what this what this means is that there's an opportunity to get from off of a high cost roller coaster curve onto a lower cost and more price stable curve to save money month after month, year after year, and over the lifetime.

[Will Eberly (Director of Weatherization & Climate Impact Programs, Capstone Community Action)]: Yes, chair.

[Representative Kathleen James (Chair)]: I have a question for you. It's interesting to see the relative stability of electric rates, and I think we've learned a lot about why that's the case. Is there anything happening at the federal level right now? And I just really haven't been following this. Or

[Representative Dara Torre (Clerk)]: at

[Representative Kathleen James (Chair)]: the international level that we would be expecting to impact the price of gas?

[Representative R. Scott Campbell (Vice Chair)]: That's a that's a

[Jared Duval (Executive Director, Energy Action Network)]: great question. I wish Dylan Giambattista was was still here. I think he would have a better answer than than I do. You know? Oh, do you mean gasoline?

[Representative Kathleen James (Chair)]: Yeah. Gasoline.

[Jared Duval (Executive Director, Energy Action Network)]: You know, historically, we've seen price spikes when there is a lot of like, the most recent price spike that we see there in 2022, 2023 was after Russia's invasion of of Ukraine. And so oftentimes, when there is uncertainty or constraints in global fossil fuel supply, then we see spikes in all types of fossil fuels, but especially gasoline. So some of it's difficult to predict. Some of it, you know, is affected by, the practices of OPEC and other oil exporting countries. But predicting the future price of gas and impacts to it is very difficult to do. I the thing I'm most confident predicting is that there is a long history of price volatility, and so it's really difficult for people to plan budget wise with that.

[Representative R. Scott Campbell (Vice Chair)]: One dynamic that this chart illustrates is what happens when there there's a there's a drop in demand, like happened during during COVID, and the petroleum industry doesn't find it economic to invest in production, so they dial back on production. And then when demand returns, there's a shortage of supply, so that drives the spike in prices. It it it's it doesn't last forever, but it does it is it is a huge impact at the time. Yes. And so we might be seeing that now because right now, the global price for a barrel of oil is pretty low. I think it's $60 or something like that. And so it's not economic for investing in production. So that might lead to another shortage at some point, but just that imbalance is a big.

[Jared Duval (Executive Director, Energy Action Network)]: So the next slide, slide 14, speaks to that third feature of thoughts.

[Representative Kathleen James (Chair)]: Sorry. So

[Representative Christopher Howland (Member)]: these this figures with the electricity, that's the equivalent cost per gallon of gas

[Jared Duval (Executive Director, Energy Action Network)]: That's correct.

[Representative Christopher Howland (Member)]: Of Yes.

[Jared Duval (Executive Director, Energy Action Network)]: So slide 14 speaks to this question of dollars in and out of state and how relative to electricity, fossil fuels represent a major drain on Vermont's economy. Fossil fuels are a 100% imported into Vermont. The vast majority of those costs are are paying the wholesale cost of the price of fuel, and and relatively little is going to things cost that expenditures that end up recirculating in Vermont, like gas stations or, you know, moving that moving that fuel. And in in contrast, when we spend a dollar on electricity, much more stays in state. And then the the fourth thing, you know, is is the pollution difference. This this matters for for human health, for respiratory health. It matters for environmental health and quality. It also matters in terms of climate pollution. And, yeah, slide 15 shows the life cycle greenhouse gas emissions of gas versus electric vehicles in Vermont is gas vehicles being seven times more climate polluting over the lifetime. So there are significant opportunities to move to less expensive transportation, more price stable transportation, transportation that keeps more dollars staying in and recirculating in Vermont and supporting Vermont workers, and less polluting transportation. And I would be happy to go through at some point in the future a lot of this analysis as it relates to our heating sector. But because we're short on time, I just wanted to focus on one one of our energy sectors, our largest energy sector by cost as in transportation today.

[Representative Laura Sibilia (Ranking Member)]: I just wanna say, this is great. Thanks.

[Representative Kathleen James (Chair)]: Oh, awesome. Thank you.

[Jared Duval (Executive Director, Energy Action Network)]: So I know that I and EAN are known for lots of graphs and numbers, but I'm gonna mix it up a little bit before I move on. So I wanna read an excerpt from a book that has always really resonated with me as somebody who grew up in a lower income family and feels that the expression it is expensive to be poor is incredibly accurate. This is an excerpt from the book, Men at Arms, and this is the character Sam Vimes speaking. Said the reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. Take boots, for example. He earned $38 a month plus allowances. A really good pair of leather boots cost $50, but an affordable pair of boots, which were sort of okay for a season or two and then leaked like hell when the cord cardboard gave out, cost about $10. Those were the kind of boots that Vimes always bought and wore until the soles were so thin that he could tell where he was on a foggy night by the feel of the cobbles. But the thing was that good boots lasted for years and years. A man who could afford $50 had a pair of boots boots that'd still be keeping his feet dry in ten years' time, While the poor man who could only afford cheap boots would have spent a $100 on boots in the same time and would still have wet feet. When it comes to energy, housing is not different than boots. Home heating is not different than boots, and transportation is not different than boots. Why is that? I wanna go to slide 17. This is one of the most important things to understand about the opportunities in front of us as we look at beneficial electrification, moving away from a very expensive and inefficient fossil fuel based energy system to a more efficient, more electrified system. Modern electric technology uses far less energy to achieve the same results. Energy is the ability to do work. And when we can use less energy to do the same amount of work, that provides massive opportunities to cut costs. So here's the example again on the transportation side. A gas vehicle, of the gasoline energy put into the vehicle, only about 16 to 25% of that energy actually ends up moving the vehicle, being productive work. The vast majority of that energy gets lost through heat and other engine losses. On the flip side, when we look at electric vehicles, because of the efficiency of electric motors, because of things like regenerative braking, 87 to 91% of the energy put into an EV ends up moving the vehicle. So you need far less energy to move the same amount, which leads to the massive potential for cost savings, which you see in the next slide, which is titled with an electric vehicle, your dollar takes you farther farther. So just to break this down at a very simple level, $1 spent on the average gasoline vehicle, average fuel efficiency in Vermont moves seven miles. If you spend that same dollar charging an EV at retail electric rates, you move more than twice as far, 15 miles. And if you're using an off peak rate, which more than 80% of Vermonters have access to currently through Green Mountain Power and Burlington Electric Department, and more utilities are developing EV rates, then that same dollar can take you three times as far. And when you add it all up,

[Representative Kathleen James (Chair)]: the

[Jared Duval (Executive Director, Energy Action Network)]: the estimated in both EAN's analysis has found this specific to Vermont. AAA has found this when they look at the your driving cost study, that it's often between 6 and $10,000 in lifetime savings on fuel and maintenance from an EV versus a gas vehicle because of that efficiency. Now the challenge is like the boots challenge. Right? A more efficient vehicle, a better vehicle often costs more upfront, and you can see that on slide 20 in in the green. This is comparing an apples to apples Chevy Equinox gas vehicle on the left versus an EV on the right. I should note that this analysis is is very conservative in that it doesn't show a lot of savings that are available. It understates the the savings related to EVs. It does not account for the incentives that still exist. So while we've lost the federal EV tax credits of $7,500 for a new vehicle, while all of the state incentive dollars for electric vehicles have been fully expired and are gone, we do still have utility incentives. Darren Springer spoke to those earlier. And in Green Mountain Power case, which is, you know, around 80% of Vermonters, still available at $2,200 incentive, and even higher, 30 up to 3,200 for income qualifying folks who are under 80% of area median income for their household. And this is also conservative in that it assumes average electricity costs across Vermont rather than the EV rate, which can bring these costs even lower. But even with those very conservative assumptions of no incentive taken using retail rates rather than EV rates, we still see, you know, about $10,000 in fuel and maintenance savings over the life of the table because of fewer moving parts and because of more efficient and lower cost energy use. The next slide shows that look. There's variation here. These are averages, and this speaks to the slide that representative Sibilia held up. You know, we often hear, you know, it's fine to use a statewide average. It's fine to point to GMP, but we have Vermonters who have access to all sorts of different utilities which have widely varying electric rates. You know, it's the the highest electric rates in Vermont are about twice what the lowest are, spanning from 12 to 25¢ a kilowatt hour. So you can see what those annual vehicle fueling costs would be depending on what utility territory you're in or what EV rates you may have or take advantage of, and all of them are are far lower cost than a gas vehicle.

[Representative Bram Kleppner (Member)]: We also have this pretty wide variety of price at the pump for gasoline across the state.

[Jared Duval (Executive Director, Energy Action Network)]: And so this is a slide that hasn't been fully designed. But again, when we talk about affordability, we just talking about what is less expensive at one point in time to purchase upfront? Yes. You can get a less efficient gas vehicle used or new. But over time, that's gonna cost more. And you see that comparing these two lines where the annual costs added up lead to a steeper curve that results in higher lifetime costs for transportation with gas vehicles as opposed to that flatter orange curve with EVs. So what we if we wanna think long term, big picture, and identify opportunities for durable affordability, then using energy more efficiently and moving to more price stable, lower cost energy sources is really important. This is where it gets into this question of federal policy and federal and state funding because there's been massive differences, massive changes in the last year in the incentive environment, especially for these EVs that can save folks significant amounts of money over time. So slide 23. If you were looking for What slides?

[Representative R. Scott Campbell (Vice Chair)]: That's right. Numbers.

[Representative Kathleen James (Chair)]: This one?

[Jared Duval (Executive Director, Energy Action Network)]: Yep. That's correct. You know, about two thirds of Vermonters buy used rather than new vehicles. So it's really important to look at the cost of used vehicles. And a year ago, this is what a Vermonter looking to purchase a used vehicle. The this was the array of options in front of them. A federal tax credit, electric utility, that's the only rebate still available. State programs like MileageSmart and Replace Your Ride, and also there there were state incentives. So, you know, you could significantly reduce that upfront cost so that buying a used EV was lower cost upfront than a gas vehicle. Now

[Representative Kathleen James (Chair)]: Sorry. This is at less than 57 household income?

[Jared Duval (Executive Director, Energy Action Network)]: That's on the right hand side. Yeah. The income qualifying household. And the left hand side shows the standard incentive.

[Representative Kathleen James (Chair)]: Okay. Gotcha.

[Jared Duval (Executive Director, Energy Action Network)]: Sorry for not explaining that. But then on the next slide, you see how drastically this environment has changed in just a year. There's the federal tax credit expired September 31, so that $4,000 is gone. The state MileageSmart and replace your ride incentives and the state utility incentive, all those funds were fully expended as of the 2024. And so now the only thing left is the is the utility rebate in terms of being able to help folks bring down that upfront cost that they can lower their annual and lifetime transportation costs. You can see the effect of this on slide 25. What this shows is of all the state incentives for electric vehicles that were issued from 2020 to 2025, it shows two things. The blue is is incentives that went to lower income Vermonters in terms of the income qualifications, and the orange is to middle income Vermonters. The state incentives did not pro the state did not provide incentives to higher income Vermonters, and we can get into, you know, what those definitions were. Low income is basically less than 50,000 in household income. I mean, it varies a little bit program by program. But for the state incentive, it's less than $50,000 in household income is defined as low income, middle income being 50 to 100,000, and

[Will Eberly (Director of Weatherization & Climate Impact Programs, Capstone Community Action)]: there

[Jared Duval (Executive Director, Energy Action Network)]: were not state incentives for household income, over 100,000 for new vehicles is the understanding. So a couple of things that are really important to point out about this is that over that five year period, 62% of all incentives for electric vehicles went to lower income households in Vermont. And because there's a higher incentive for lower income households, 80% of the total funds that Vermont spent on EV incentives went to to lower income folks. But you look at 2025, and now that is down to zero. And so there will be a lot of people who talk about the importance of incentive policy, whether it's for solar or EVs or heat pumps, as being about the the challenges that that presents to businesses and market clarity and business development. That's fine. That's important. But I one thing I wanna make sure that we don't lose sight of is how important these incentives are from an equity and accessibility perspective. Because there are many Vermonters represented in this graph who would not have been able to get a used or a new electric vehicle and reduce their annual and lifetime transportation costs without those incentives to help overcome that upfront barrier. And so it's entirely possible that we're we'll continue to see, you know, EV adoption in the coming years. But unless there is intentional policy to help overcome upfront cost hurdles for folks who don't have, you know, extra cash or disposable income, then we are likely to see not just in transportation, but when it comes to heating systems, this divergence of the haves and the have nots. And the the folks who can most afford the upfront investment, the most the folks who can most afford that $50 pair of boots, benefiting from better and least cost heating systems, transportation options over time, and the folks who would most benefit from reducing their energy costs locked out of those opportunities because those incentives have been so critical to helping, folks with less income be able to move to lower cost energy. So that's something I wanna make sure that we don't lose sight of. This isn't just about markets and businesses. It's also about equity and the distributional impact on, you know, Vermonters of different household incomes.

[Representative Kathleen James (Chair)]: Good. Thank you. The charts to me are always so clear that I really have questions. Do folks have questions for Jared? I know you said your new report's hot off the press and handing them out. Committee members have questions for Jared before we ask for the day? Okay, thank you. Well, Jared, thank you for being here for us. Yeah, to your point. Yes,

[Representative Laura Sibilia (Ranking Member)]: thank you again for this report. It's always so helpful to have this data in that format that means it's really accessible by

[Representative Kathleen James (Chair)]: Can I saw some hands creeping up? Yeah. Representative Bailey.

[Representative Richard Bailey (Member)]: Yeah. I just had a question about replacement battery. Is that factored in the lease cost?

[Jared Duval (Executive Director, Energy Action Network)]: So these are average maintenance costs as reported by AAA. But I want to go to the question of battery costs in particular. So those would be factored into those averages. But I I think it's important to know that EV batteries are typically covered by warranties for eight to ten years or a 100,000 to a hundred and fifty thousand miles, whichever comes first. And there was a recent study by Recurrent, a company that analyzes EV battery data, and they found that for EVs built in 2016 or later, there's less than a 1% chance the battery will need to be replaced over the lifetime of the car. So they're, you know, less than less than 1%. And and most of what we've seen for battery replacements was the very earliest first generation of EVs. The data is showing that that's either it's a vanishingly small issue for folks and the extent to which it is and it does come up as an issue, it's almost always covered under warranty.

[Representative Bram Kleppner (Member)]: Will say that Tesla has told me that the limiting factor on my electric vehicle is the same as the limiting factor on your gas powered vehicle in Vermont. It is not the battery or the engine. It is road salt, which will eat the body of my car before anything else fails.

[Representative Richard Bailey (Member)]: And that's factored in which chart, which one is

[Jared Duval (Executive Director, Energy Action Network)]: that that you just on slide 20, which uses the AAA, your driving costs study, which does average maintenance costs for different types of vehicles.

[Representative Kathleen James (Chair)]: Tori, I saw your hand creeping up.

[Representative Dara Torre (Clerk)]: Thank you for this. I'm just talking, I think about slide eight, I was really struck by the fact that people are spending twice as much on gasoline than they are on electricity. And that just really goes to, we've been hearing all day about threats to our electricity rates and things like that, but you've really underscored how taking away those incentives for EVs, diminishing is just a huge driver of any affordability for Vermonters. And it's a real loss. And then it also underscores for me the importance of all of our utilities offering an EV date. So that for those people who have been lucky enough, especially low and moderate income Vermonters to get their hands on an EV, they need to be paying EV rate when they charge it. Not everybody has that choice right now.

[Representative Kathleen James (Chair)]: Yeah, it's Rob Marrow.

[Representative Christopher Morrow (Member)]: I just want to mention that the prices of EVs are coming down. There's certain new entries in the market which are comparably affordable as fuel gas cars. There's some very affordable EVs coming on the market now, which doesn't undermine your argument, but it's

[Jared Duval (Executive Director, Energy Action Network)]: So it's even larger. Right.

[Representative Christopher Morrow (Member)]: From a market perspective, the barriers to entry are getting lower. Right.

[Jared Duval (Executive Director, Energy Action Network)]: I I still think that for a lot of lower and middle income folks that even as the prices come down there, in order to afford that upfront cost, there'll still likely be a need for incentives or grants. But I I if it's okay, wanna go back to the point that you made, representative Torrey, about because, you know, a lot of the analysis that we're looking at is our latest data or it's it's looking back in time for what we know. And it's really difficult to project future energy costs, certainly on the fossil fuel side, but also as we heard today on the electricity side. I've I've heard I I believe this is accurate. I subject to correction by commissioner Carrick Johnson. But I believe I've heard him say that there's a possibility that, you know, given what is projected, you know, across the region, that there's a scenario in which Vermont sees 25% increase in electricity prices by 2030. So, you know, that sounds and is significant for Vermont and and Vermonters. But when you look at it in comparison to the price fluctuations that we see in fossil fuels, it's still a relatively more price stable point. And you know, if you look at this graph on page 13, for instance, you know, a a 25% increase still has you know, the the equivalent cost of charging an electric vehicle is still, like, what is it? A a still a dollar a gallon or more less. So even in a scenario in which there is uncertainty and there's somewhat upward press price pressure on electricity, those efficiency advantages of modern electric equipment and the relatively greater price stability over time is something that could be a massive benefit to us if if we have the foresight to help shift in that direction.

[Representative Christopher Howland (Member)]: Chris, are you using 70 rate 74 or rate 76 to charge your car at home? I'm using 75. No. I'm kidding. Okay. Right. But you're using an electric charging.

[Representative Christopher Morrow (Member)]: Yeah. The green manpower rate And is

[Representative Christopher Howland (Member)]: on how much intelligence do you have to have to make sure does it do it does this car do

[Jeff Wilcox (Office of Economic Opportunity, AHS/DCF)]: it itself? Yeah. It's all all

[Representative Christopher Howland (Member)]: all matter. Without any input. So it's a conversation between the electronic control of the vehicle and the electric.

[TJ Poor (Director of Regulated Utility Planning, Vermont DPS)]: Right, I think it's actually the charger.

[Will Eberly (Director of Weatherization & Climate Impact Programs, Capstone Community Action)]: Yeah. Yeah. And the utility seal. But but it

[Representative Christopher Morrow (Member)]: just shows in its line item on your bill, like, how much you charge with your vehicle, how much you get credited back, and then what the new rate is.

[Representative Christopher Howland (Member)]: But the if you get home, haven't had power for a while, need to charge your car, and you move outside that, the charges are significant. If you're absolutely drained and you can't charge within that rate structure, recharge rate, you override it, the charge is hurting.

[Representative Kathleen James (Chair)]: They really aren't. I've got an EB2 and well, we should.

[Representative Christopher Howland (Member)]: No. It's okay. It has to do it's not with the plugging in and so forth. I don't do that. Mine doesn't do that. So it's with your it's with your rate two or rate a level two or level three charger. And I haven't seen too many electric vehicles on the used lot, but nor have I been looking. And some of the conversations I've had with people are that these there, three year or four year lease on their vehicles, do they get the same tax credit?

[Jared Duval (Executive Director, Energy Action Network)]: It was possible for the value of the tax credit to be passed through to the customer in the form of a lower lease payment, but the actual tax credit would have been claimed by the That the company. Exactly. Yeah. Well, or by the the auto dealer or the manu or the Right. Financing company. But in my understanding, speaking to the point that you brought up earlier, representative Mauro, is that a number of car dealers, when they had unsold EV inventory at the September, bought those so that they could claim the tax credit. And then they're now still doing leases that incorporate the value of that tax credit. They're gonna pass it, but we'll see how long that lasts. But that was one interesting thing that they did.

[Representative Christopher Howland (Member)]: And then there's some EVs that still have limited range.

[Jared Duval (Executive Director, Energy Action Network)]: Yeah. There's there's a wide variety of EV makes and models, shorter range, longer range, all wheel drive, two wheel drive. But I think it's really one of the thing I think is really important to note about EV adoption in Vermont is that, know, Vermonters are are frugal and thrifty. And so oftentimes in national media, we'll see EVs, I think, unfortunately and mistakenly presented as this kind of, like, the this thing about, like, elite or wealthy toys. And there are some luxury electric vehicles, of course, just like there are luxury gas vehicles and sports cars. But if you look over time at what are the EVs that Vermonters are actually buying, mostly using those incentives for that were mostly low and middle income Vermonters, it was two of the lowest cost EVs on the market. It was the Nissan Leaf. It was the Chevy Bolt. You know, that's been you know, that that shifts over time as new makes and models come out. But historically, the best selling EVs are the lowest cost ones because of this price sensitivity.

[Representative Kathleen James (Chair)]: Thank you.