Vermont Legislature SmartTranscripts:

[Speaker 0]: Mark. Good morning. Friday, It March 20. Spring is tomorrow. Yeah. Yeah.

[Rep. Charles (Charlie) Kimbell (Ranking Member)]: Birthday of spring today.

[Speaker 0]: So today? Yes. Just What is it like? Between the twentieth and the It's how

[Rep. Charles (Charlie) Kimbell (Ranking Member)]: the epochs

[Speaker 0]: works. Good. Status. Anyway, it's 09/2005. We are beginning our work for the day. The first thing we are hearing is some technical as a placement amendment from Representative Kimbell and myself. And then we're going to look at and ideally vote on H727. And then we are back here after lunch at one for H650 and frankly, else winds up there then. And with that.

[Rep. Charles (Charlie) Kimbell (Ranking Member)]: Thank you, Madam Chair. My name is Charlie Kimbell, representative from Woodstock, member of this committee. I'm here on h nine twenty eight, and this is the bill that you would remember seeing. We offered an amendment to the bill that came out of house environment. And what we discovered after we had passed the bill and as I was on my way to explain what we had done to the bill to the House Environment Committee is that the way that it was worded is it said, if not more than the lowest fee for a big game tag in terms of the fees charged for licenses that we gave the provision, the director or the commissioner, the authority to issue a provisional fee if they found themselves in between seasons and they need to issue a fee because of what was going on with the management of a particular herd of animals. But it turns out that the fee that is the lowest on the list is a $5 bear tag fee. So the committee and environment said that's really too low. They thought that what they intended with their original bill was the prevailing rate, which was really an obscure term, because prevailing, we have a moose fee on here for a license for $100 Is that the prevailing fee? So with some further discussion with them, they said, well, we're really trying to just determine that it's the same fee for the same type of animal. Like, oh, okay. So that's what this whole amendment is. Just very clearly states that the department can issue a new license, a provisional fee for a license as long as it's the same fee, equal to equal or similar to the same fee for the same type of animal. That's the whole thing. So if it's a deer, it's $23. If it's a moose, it's a $100. Bear tag is interesting. I've learned that it's the extension of the season, either early bear season or late bear season. So you can extend the use of your bear tag so that's not necessarily a new bear. So that's the whole amendment.

[Speaker 0]: Thanks, Charlie. Does anyone have any questions for representative Kimbell? Please catch.

[Rep. Charles (Charlie) Kimbell (Ranking Member)]: The art of compromise.

[Speaker 0]: Can I have a motion to

[Rep. Carol Ode (Member)]: I didn't I was fine? I was following you till you said the art of compromise. It was clarification, really.

[Rep. Charles (Charlie) Kimbell (Ranking Member)]: It's a compromise between committees when we were offering an amendment that would have changed it from what they understood it to be. So it's a comp going back to them and trying to figure out an elegant way to make it what they intended to was a compromise in that process. That's all. Nothing substance.

[Speaker 0]: It all is basically the same thing.

[Rep. Carol Ode (Member)]: It is. Except for yeah.

[Rep. Charles (Charlie) Kimbell (Ranking Member)]: But it makes it everybody makes it clear.

[Speaker 0]: And when will we find this amendment friendly?

[Maria Royle (Office of Legislative Counsel)]: Thank you so much.

[Speaker 0]: Representative Canfield moves that we find this amendment friendly. Representative Ode seconds. All those in favor?

[Rep. Carol Ode (Member)]: I don't think I saw

[Speaker 0]: that you're here today. We're missing. 8. 8.

[Rep. Carol Ode (Member)]: 8. 8.

[Speaker 0]: 00. Nope, that's not how it works. 803. Oh, right. 803. Sorry. Oh, I thought that was me, but in fact, think I said two, and it got stuck in your brain. We are going to move to H727, an act relating to sustainable data center deployment. Maria Royal, hello.

[Maria Royle (Office of Legislative Counsel)]: Hi. Good morning, everyone. Good morning.

[Rep. James Masland (Member)]: Good morning.

[Maria Royle (Office of Legislative Counsel)]: So I know you don't have a ton of time. What would be the best approach? Do you want me to walk through the bill, share my screen, give some background, do a broad overview?

[Speaker 0]: I'd like you to do all of those things.

[Maria Royle (Office of Legislative Counsel)]: Okay then. Start with

[Speaker 0]: a broad overview and then share your screen and walk us through section by section, not word by word.

[Maria Royle (Office of Legislative Counsel)]: Got it. Thanks. Okay. So in terms of a broad overview, this bill, concerns what are called AI data centers. These are basically warehouses that are filled with racks that contain servers, which are huge computers, that are filled with lots of IT hardware, but specifically, high performance computer chips. In other words, a lot of computing power, and that is necessary for AI training and inference. So, what's significant about these data centers is because of the computing that's involved, not only does it require a lot of power to operate, but it also generates a lot of heat. Data processing generates a lot of heat, so it requires some water for cooling. So, in terms of this bill is the threshold for when this bill would apply, in terms of the regulations is, 20 megawatts of power. So a data center that uses 20 megawatts of power, would meet the threshold that then would be subject to the requirements of this bill. So just generally in terms of what a 20 megawatt data center, requires in addition to the land, which is usually somewhere between ten and forty acres and the building itself, There is, as I mentioned, energy consumption, and that can be when you talk about 20 megawatts, that could be enough to provide service to 15,000 to 20,000 households. And in terms of the water consumption, I think it's about 500, thousand gallons of water a day, which is about enough to serve 1,500 households. So that's just kind of a broad view. And because of all of these factors, there are a number of concerns, the obvious being meeting the electricity demand, the large load, the electric load, ensuring that other rate payers are not on the hook for any costs necessary for meeting that load in terms of the infrastructure, building new infrastructure, finding new energy resources, similar concerns with respect to water, the water consumption, and then generally just the environmental impact of these facilities. So the bill, in terms of the components of the bill, and I'll pull up the document now, just in terms of a broad overview of a structure of the bill. The first two sections deal with the energy component, the contracts between a data center and an electric utility. The next sections three and four are the land use components. These data centers that meet the definition, 20 megawatts of power capacity, They trigger Act two fifty review. That's a requirement that's been put in here. And then there are specific requirements related to ANR water permits. In addition, there's some reporting requirements too, which I can talk about. So that's a broad overview of the bill. So we'll start first with the, as I mentioned, the contract between a data center and an electric utility. Those contracts are termed here large load service equity contracts. They're like other tariffs that a utility might have with a large load user, industrial users that require a lot of power, but this is tailored specifically to data centers. So in subsection b well, I'll read the subsection a quickly. So the purpose of all of this is to ensure just and reasonable rates for all ratepayer classes, not just the data centers, and mitigate the risk of financial exposure to the distribution utility and existing ratepayers, mostly in terms of cost and grid reliability, and to do this by ensuring that there are specific terms in every contract. And so that's what subsection B is about. So there's a cost allocation method to make sure that the data centers pay for any infrastructure upgrades, or any other, costs related to meeting the high demand. The duration of the contract is specified. In part, that's because you'll see further down or even actually, so I'm on page three, subdivision three, the duration of the contract. Subdivision four is basically saying, okay, so you're going to come in, you're going to agree to serve for this or you intend to serve for this length of time, but we want you to commit to buying, a certain percentage of power for the duration of that contract. Again, trying to protect existing ratepayers from any unwarranted costs.

[Speaker 0]: Yeah. We have a question here from representative Ode. Sure. Okay, I get that. But

[Rep. Carol Ode (Member)]: Is there a protection for what Is that data center is there for even longer than what's in the contract? I'm concerned about long term. There's a contract and it's ten year contract or something like that. Then what do you do if the data center's there another twenty years after that and it's hugely exploded in size and everything else? How do we protect our rate payers from that?

[Maria Royle (Office of Legislative Counsel)]: Yep, that's a great question. So all of these contracts must be approved by the PUC and they have to, the data center has to have a contract in place. So if the original ten year contract expires, they would have to renew a contract and go through the same process, make sure that any additional costs, etcetera, any new load, and all of that would have to comply with these requirements and also meet PUC approval before they can take effect.

[Rep. Carol Ode (Member)]: Thank you very much. Represent Masland.

[Rep. James Masland (Member)]: Yeah, Maria, good morning. A little while back you mentioned large users can't remember the terminology, in the bill. There are other examples existing of large users that would fall under a similar thing other with the same explicit definition.

[Maria Royle (Office of Legislative Counsel)]: Yeah, so there are yeah, yep, it does. So there are other industrial users that have their own kind of tariffs. I was gonna say GlobalFoundries, but GlobalFoundries is actually a little bit different because they used to be subject to a tariff power, but then they have actually petitioned I'm sorry, was there a question?

[Speaker 0]: No, the screen flickered, but it came back. You're good.

[Maria Royle (Office of Legislative Counsel)]: Sorry. But they now are what's considered a self managed utility. They created basically their own wholly owned subsidiary, which is their electric company, that sells to global foundries. Anyway, that's a sidetrack, but other, like, ski resorts or there are industrial users and they tend to have their own tariffs or contracts. Their provisions are not that familiar with it, but with respect to EV charging stations, I believe, the PC is developing a rate structure or the utilities are developing a rate structure specific to those purposes. So those kinds of special contracts are not at all unusual in the state.

[Speaker 0]: Thanks, Maria. Back to you and the walkthrough.

[Maria Royle (Office of Legislative Counsel)]: Okay. So again, in terms of protecting, I'm just looking on Line 11 Subdivision 6, protecting ratepayers. So the contract would include a collateral requirement sufficient to mitigate the risk of stranded costs. So if for some reason the data center is not operational as intended, the utility and the ratepayers aren't on the hook. So then that's some provisions related to demand sign demand side management. So this is all about trying to maintain grid reliability and stability. For example, if a data center can have storage on-site or even their own generation, you know, there may be ways to, balance supply and demand, just to protect the grid, from any, over demand on the system. So, in terms of subsection C, basically says that the commission shall not approve a contract unless it finds that it will promote the general good of the state. And then in subsection D, those specific findings are will not adversely affect the power system, will result in an economic benefit to the state, and so on. And then consistent with all of the electrical planning that goes on currently. Oh, significantly, I just wanted to go back. Sorry, I should not have skipped over this because this is one of the things this committee wants to probably look at. So on the actually the bottom of page three, that's subdivision eight. The contract shall include provisions for the collection of gross receipts, taxes, energy efficiency charges, and any other fees or charges that are applicable to electric revenue. So the gross receipts tax, this is what utilities end up paying, to the department and to the PUC. They're basically regulatory fees or percentage of their revenue. The utility collects that percentage directly from the rate payer and then, in turn, gives it to the regulator. So there's no increase, here, but because of the new revenue, there'll be more, fees going to the department and to the PC. The energy efficiency charge is what most freight payers pay on their, electric bill to fund Efficiency Vermont and other weatherization efficiency programs. So I just wanted to flag that. There are no additional fees, but just wanted you to be aware of that. And then probably, and so this would apply to, all new data centers, and any existing data centers. There are traditional data centers, small data centers in Vermont. I think there are three of them combined. They use less than one megawatt of power. I think like half a megawatt of power. So these would be data centers that don't use tremendous amount of computing power, but and they perform services like web hosting, another cloud services. So, section three is the hook for act two fifty review. It's just including these data centers under the definition of development that triggers the whole act two fifty review. Section four concern the ANR water permits. A number of provisions in here about the type of cooling systems that are needed. Not going to go through all of the details in there, but the Clean Water Act, monitoring for PFAS, having a plan that's approved by the agency of natural resource regarding PFAS. There's a reporting requirement. This just has to do with, looking at the availability or the changes in the renewable energy market, to the extent new generation is needed and what's going to be available to meet the demand in the future. And then finally, a recommendation from the Department of Public Service on data center decommissioning. So the extent a site is no longer operational or is abandoned, that there is a plan in place, to provide for basically the any site remediation that needs to occur. So that is an overview of the bill. Did you have other questions for me?

[Rep. Carol Ode (Member)]: I don't think so. Thank you. Hi.

[Speaker 0]: James, do you want to jump on up there? Or walks at whatever speed you prefer? Sure.

[Rep. Carol Ode (Member)]: Thanks for coming up here.

[Maria Royle (Office of Legislative Counsel)]: It feels exciting that you got out of the Jamie spring

[James Duffy (Joint Fiscal Office)]: Duffy joined fiscal office. Overall, this bill is expected to have a minimal impact on state revenue. It would not appropriate funds or raise new state revenue. There are new established regulatory requirements at several state entities, those being the Public Service Department, Public Utility Commission, Agency of Natural Resources, and the Land Use Review Board, which would have a role in reviewing data center development. But GFO has communicated with these agencies. They expect those fiscal impacts to be minimal and to absorb those additional responsibilities contemplated in this bill with existing staffing. I'll just walk through each section briefly if that sounds good to you, madam chair. Section one, this would establish the PUC's responsibility to review and approve large load service equity contracts to which data centers are required to enter with electricity retail electricity providers. PUC has indicated that this could be accomplished with existing staff resources. Additionally, if there is at least one large load of service equity contract established as of 01/15/2028. Public Service Department would also be required to collaborate with the PUC and include energy, environmental, and economic impacts of the center construction and operation and the annual C Comprehensive Energy Plan. That would also be expected to be absorbed by current staffing levels of public service department. Act III establishes Act two fifty jurisdiction over data center development. So it adds data center construction to the definition of development within Act two fifty. This could increase staffing demands on the Land Use Review Board permit review staff, including activity application volume and associate fee revenue. The Land Use Review Board anticipates that current staffing levels are sufficient to meet any additional demand for permit review. And also note that the magnitude of any impacts to fee revenue, as is the case with many of agencies, really depend on how many data centers come to the state in the future and how many are captured under this bill that wouldn't otherwise be captured. Legislative council pointed out that the minimum acreage size for many of these data centers is 10 acres, And that would already be captured under Act two fifty jurisdiction on acreage alone, to say nothing of water demands or other Act two fifty triggers. But as a maximum cap, these Act two fifty permits are capped at $165,000 per application. If a data center paid the maximum permissible construction fee, that could represent an increase in Act two fifty permit fund revenue by about 11% based on anticipated revenue in FY '26.

[Rep. Charles (Charlie) Kimbell (Ranking Member)]: But you said 165,000 for each application?

[James Duffy (Joint Fiscal Office)]: That is the statutory maximum for a construction permit under Act two fifty. So it could be much less, but 165 is the maximum. It's based on square footage of the construction, I believe, if on your basis.

[Speaker 0]: President Russell?

[Rep. Carol Ode (Member)]: Yeah. Thank

[Rep. James Masland (Member)]: you. Is there any anticipated build back in these applications? You please separate out Billback is when the applicant has to pay the state for some, you know, for various kind of studies and things that need to be done. I mean, if it comes up, I'm sure we don't care about it, but there are billbacks in other applications that go for act two fifty when there are studies that are not anticipated, you know, out there in the world, kind of stuff like that, that need to be completed before the decision making body can issue a permit. Maria?

[Speaker 0]: Are there bill back provisions specific to this bill?

[Maria Royle (Office of Legislative Counsel)]: There are not any included in here. And I will say I'm not familiar with Act two fifty and those bill back provisions. I know with respect to the PUC and the department, they do have bill back authority for particular proceedings. I'm not 100 this didn't get discussed at all, and I'm not 100% certain that a PUC investigation into the tariff would trigger the build back authority. It it might, but I can't say that for certain. I would have to talk to PC and see how they do apply that now.

[Rep. James Masland (Member)]: Thank you. That's a good start.

[James Duffy (Joint Fiscal Office)]: Section four pertains to various water quality and water resource protection permits within the agency of natural resources. This section specify the applicability of various existing water quality and water resource permit programs. It would also require certain data centers to submit wastewater monitoring plans to the agency of natural resources. These would include monitoring for PFAS substances. You may know these as forever chemicals globally. We have communicated with GFO, have communicated with ANR. They don't anticipate these changes to dramatically or to meaningfully increase the universe of regulated entities or permit applicants. These would be very similar to other large commercial or utility scale development water quality permits that they receive. The agency did note that reviewing and evaluating data center PFAS monitoring data would represent a meaningful increase in staffing demands from their point of view.

[Speaker 0]: The water resources protection permits, was there any discussion about the temperature of the water that's returned to the river?

[James Duffy (Joint Fiscal Office)]: I believe so. There there are provisions which legislative council can speak to regarding the the water cooling mechanisms used by these data centers and which kinds of cooling mechanisms trigger which kinds of permits affirmative review with the agency. But I would defer to legislative council for details.

[Rep. Carol Ode (Member)]: Yeah,

[Maria Royle (Office of Legislative Counsel)]: so I think that's right. They do need a discharge permit. I'm not Michael Grady is our water expert, so he can tell you many details. But I think the collection of water and the discharge of water, all of that is covered and you need different permits for each. The temperature obviously is going to be a factor.

[James Duffy (Joint Fiscal Office)]: Finally, sections five and six would require the Public Utility Commission to report on projected regional renewable electricity generation market conditions to various committees and jurisdiction by 01/15/2027. Section six would require the Commissioner of Public Service to consult ANR and the Land Use Review Board to recommend a model for data center decommissioning to the committee's jurisdiction by 12/15/2026. Both of these reports and recommendations as the bills before you would be accomplished with existing agency staff resources. There are no additional appropriations. I will note that Public Service Department had testified needing additional contracting resources for their involvement in developing recommendations for data center decommissioning. But as the bill comes up for you, there's no appropriations for that function.

[Rep. Carol Ode (Member)]: Can you slide down to the beginning? This is probably a question for Maria Royal. The data center uses or is able to use 20 megawatts or more of power. With therapy protection, if there were multiple that used 18 megawatts, or do you need to talk about that?

[Maria Royle (Office of Legislative Counsel)]: Yeah, it's a good question that did come up somewhat. It was actually one of the issues that house environment that did not possession of the bill, but they did look at it, raised that very issue. Should the threshold be lower than 20 megawatts? I don't think there was a strong opposition to doing that, and representative Seville could speak to that directly. I think what they were looking at, though, is specifically regarding data centers, that 20 megawatt threshold seems to be the, at least as far as I've seen, kind of the lowest threshold with respect to state or federal regulation of AI data centers specifically. You know, whether there might be others that are lower or other large load users, some of these protections might automatically apply, but I can't say a lot more than that.

[Speaker 0]: These are I'm just

[Rep. Carol Ode (Member)]: trying to get to the idea of if I'm a company and I say, oh, well, I have to follow the rules if I'm 20 megawatts or more, I'm gonna put in 10 smaller, 10 megawatts and get around this. I just hope that the PUC would be able to Do we need say anything about this now?

[Speaker 0]: I would offer, and the reporter of the bill is here on the bench, but these are good policy questions. They're very outside of our jurisdiction on this bill, which is related to perhaps, possibly, maybe an increase in fee revenue, maybe. Any questions for James? Thank you, James.

[Rep. Carol Ode (Member)]: Here.

[Speaker 0]: Representative Kimbell. So just on one

[Rep. Charles (Charlie) Kimbell (Ranking Member)]: aspect of the decommissioning. So originally, I believe we changed that actually. But it was a study that we had put in there from the department. They were worried about that and having the contracts, but we changed it to just coming back with recommendations.

[Speaker 0]: Rather than a study. Okay, thank you.

[Rep. Charles (Charlie) Kimbell (Ranking Member)]: I have one question for Maria. Maria, I'm just looking at page 11 of the bill and about the report coming to the various committees, House Committee on Energy Digital Infrastructure, Senate Committees of Natural Resources and Energy, and also Finance. I was wondering Finance has jurisdiction over energy issues. That's why I was asking. Yeah. Finance has jurisdiction over energy issues.

[Speaker 0]: So finance Yes,

[Maria Royle (Office of Legislative Counsel)]: utilities generally. That's some of the energy stuff they share with natural resources, but they do a lot of the utility regulation.

[Speaker 0]: And so we weren't missing out. Thank you for looking out for us. Anyone have any further questions?

[Rep. Charles (Charlie) Kimbell (Ranking Member)]: Madam chair, I would move that we find favorable age seven twenty seven.

[Speaker 0]: Representative Kimbell moves that we find age seven twenty seven favorable. Representative Burkhardt Seconds. Represent Masland, can you just wait a minute to do that?

[Rep. James Masland (Member)]: Yes, I. Okay. You move faster.

[Speaker 0]: Any discussion? Seeing none, a quick and please call the roll. Representative Branagan? Yes. I'll vote yes as representative Burkhardt. Representative Higley? No. Representative Polka? Yes. Representative Kimbell? Yep. Representative Masland? Yep. Representative Cody? Yes. Representative Page is absent. Representative Wazak? Yes. Representative Canfield? Yes. And representative Kornheiser?

[Rep. Carol Ode (Member)]: Yes. We have voted the

[Speaker 0]: bill favorable ten zero. Thank you. Representative Ode, do you wanna report this?

[Rep. Carol Ode (Member)]: Sure.

[Speaker 0]: Thanks. Thank you, everyone. See you at