Vermont Legislature SmartTranscripts:

[Senator Anne Watson (Chair)]: Okay, good morning. This is Senate Natural Resources and Energy, and it is Thursday, January 15, and we are starting the morning with S202 about affordable solar. And so, we have a number of utilities to hear from this morning, And yes, we're going to start with Mr. Nolan.

[Legislative Counsel (unnamed)]: Welcome. Thank

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: you, Madam Chair and committee for hearing today. Thank you for letting me go first. I'm actually in house interview in fifteen minutes.

[Senator Anne Watson (Chair)]: Fair enough.

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: Appreciate the accommodation. For the record, I'm Ken Nolan, I'm the General Manager of Vermont Public Power Supply Authority. For those who don't know, GUSILD was actually created by the legislature back in 1979, specifically to help public power manage the small municipal utilities really don't have the staffing to operate on their own, we impacted their back office in doing a lot of the regulatory and legislative issues. My comments today are going to be fairly brief, reiterating some things you heard earlier this week. I want to start off by saying we are very intrigued by the new technology you're working on, or interested in any way possible to get renewable energy in the hands of consumers in an affordable way. So we're anxious to work with you on the bill. We do have a couple of concerns, a couple of specific areas we'd like to keep working on. First one is utility worker safety, but we acknowledge the bill has provisions for a disconnect device. We don't really see that as being enforceable. We don't think BUL certification or listing is going to be sufficient to make sure that devices actually do disconnect from the grid during outages. Without a specific enforcement mechanism, we're very concerned that worker safety will be an issue. Especially given that the bill really, the only notice provisions really happen after the device has already been connected to the system. So you've already got a potential problem that then you're trying to undo for a consumer that already spent the money. So we see that as the potential weakness. The second area is more around the definitions on grid exports. We're very appreciative that the bill explicitly says units don't qualify for net metering, but we believe it still leaves some ambiguity as to whether there's any compensation due. So we would prefer very explicit language as to what that compensation is, or the bill to say there is none if that is the intention. I also note on the unit size, the language in the bill now references maximum power output to the electric grid of not more than 1,200 watts. That implies that the device can be large enough to serve the whole building load, plus an additional 1,200 watts, which really raises some questions about exporting to the grid and how that's going work. We prefer that the build set the minimum or the maximum size without regard to whether power is exported, so that everyone is clear as to what can actually be put on. That's a little bit of my comments this morning. I think in general, the bill is a good starting place. There's a couple of thorny issues to work through, and we're looking forward to continuing conversation as you go to review and amending. Happy answer questions.

[Legislative Counsel (unnamed)]: I do have

[Senator Anne Watson (Chair)]: a few questions. Appreciating all of your suggestions, those are great, and trying to figure out how to materialize those. So one possibility is that we could, because in the definition is where it says you can't export more than 1,200 watts. So one thought that we could say that the device itself is no more than, we may end up with two levels, like a 1,200 watt threshold and a three ninety one watt threshold just because of the UL 700. We could just define there's these two thresholds and different things have to happen for the two thresholds. And then later we could also say in combination, we can't export more than 1,200 watts. Would that?

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: I think that would help.

[Senator Anne Watson (Chair)]: That would help. Okay. So that's good. And then the question about compensation is, I think it's a really interesting one. So all use smart meetings?

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: We're installing them through that.

[Senator Anne Watson (Chair)]: You are, okay. So right as of, like let's say this was last year, if somebody had one of these, if this was possible and they had just had an analog meter, their meter's just going to run backwards. And in that sense, if that were to happen, if that was the case, would you, I guess you would have potentially no way to see how much was generated. It would just, to you it would just look like the meter had run more slowly.

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: Right, you would end up seeing zero usage, and after a time the utility would ask the customer what's going on. Right. It's an after the fact.

[Senator Anne Watson (Chair)]: Right, okay. And so in that situation, no compensation would mean, what would no compensation look like for you in that situation?

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: I think our concern is Vermont already has a very complex debt metering program, and it's not something you can get a standard customer billing system to handle. We have to pay to customize all the calculations to determine compensation for net metering projects. Our concern is, does this create yet another tier in that metering that we're going have to then go and figure out how to accomplish? So our preference would be that the customer is free to reduce their load as much as they want, but if they're exporting to the grid, there's no compensation for that.

[Senator Anne Watson (Chair)]: And in that case, if someone's meter is just moving more slowly, they would be billed for what they did use and that's it? That's it. Then that's the unit.

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: Whoever they generated themselves, they would not proceed with the whole four, they would just be what the utility has provided.

[Senator Anne Watson (Chair)]: Okay. And in the case of, if you have smart meters that are giving you an hourly update, you can see, oh, in this hour, you did actually export the grid. It would be helpful if we said there is no compensation for that hour of excess generation. But all the other times, if their load is reduced, that is still to the customer's benefit for them.

[Lewis Porter (Washington Electric Cooperative)]: Okay.

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: I mean, during those hours when they're exporting, their utility usage, but essentially these are out, wouldn't be no bill for those hours. Those related to just the hours that they're using electric energy from the grid.

[Senator Anne Watson (Chair)]: And so that would incentivize customers to not have more generation than what they would expect their building to use. Okay. Yes. So I'm not, I'm Ruth Hardy from Addison District. Putting in explicitly that there's no compensation, how is that different than saying that they don't qualify for net metering? How are you worried that people might expect compensation back?

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: We've had conversations on net metering in the past about when you're exporting to the grid, which program you actually qualify for, and by just saying it's not in that metering, I can envision conversations about, well, I be compensated at the retail rate? Should I be compensated at something less than

[Speaker 4]: the retail rate? Should you pay me

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: wholesale prices because I'm actually reducing utility power costs? And I think it's better to just, if you want them to receive compensation, then to explicitly say that,

[Speaker 4]: and if you don't,

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: then say that as well, because when language is vague-

[Senator Anne Watson (Chair)]: Yeah, yeah, no, that's fair. Vague language is problematic in legislation. I guess I'm concerned about actually the word compensation, because to, maybe it's just compensation from whom for what, because people using these would be compensated with more energy. You know what I mean? So I hear you about clarity, and I also just want to make it sure that it's, because the whole point of these is that people would be able to get free energy, so I don't want them to think, Oh, well, actually the energy I'm going to get, I'm not going to get.

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: I don't disagree, and we are very much in favor of what the customer generates at their home themselves, they should receive the benefit of that. The challenge comes in is with what they're sending to the utility, what they're exporting, they should receive no compensation.

[Senator Anne Watson (Chair)]: So no compensation from the utility, is maybe the way that we And then on the safety thing, I just wondered if you could, the bill, there's the UL certification on page two. And then I think there's something else about building safety code, fire and safety codes on page three. What else are you looking for?

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: So there's, on the line five of page two, it includes a feature that prevents the system energizing the building's electrical system during a power outage.

[Senator Anne Watson (Chair)]: Okay.

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: That is good. Our concern is that there's no way to verify. And with net metering systems, any of these generators that are required to get state permit have to go through a process where they show they've got a disconnect. If there's a power outage that the degenerate cannot put power back on the grid. The concern here is there's no permitting, there's no notice provision until after the jargon is solved. Therefore, from our mind, is no way to really prove that the device cannot put power back into the electric grid. Which figuring out it becomes a safety issue.

[Senator Anne Watson (Chair)]: Yeah, yeah, totally hear that, and I'm wondering if it's sort of a requirement for manufacturers. If we're trying to do these things without going through that long permitting process, is there a way to I think that's what the UL certification is, and this could be.

[Speaker 4]: But the

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: UL certification, to my knowledge, and I'm not a UL expert, my understanding is it's just not explicitly that required.

[Senator Anne Watson (Chair)]: Right, no, I understand that, but I guess sort of making sure that these, if they're gonna be sold in Vermont, have a feature that does this. And I don't know who certifies that if it's new or if it's somebody else, but so that the customer doesn't have to do it, it's something that's already built into the product that they're buying.

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: That would be valid, I mean, our main concern is the safety issue, and making sure that we're not caught in a place where the customer thought they complied and we somebody get injured in repairing a line because it was a distance.

[Senator Anne Watson (Chair)]: Of course, obviously that is clear, so. Okay, thanks.

[Candace Morgan (Green Mountain Power)]: I know

[Senator Anne Watson (Chair)]: you gotta go. I have more questions, we have ready to hear from a lot of utilities. Yes, others can, Doctor.

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: Bieber, I'm sure they can cover the usual,

[Senator Anne Watson (Chair)]: but appreciate your time. Appreciate your time. Okay, all right, so next, Mr. Porter. Great. Welcome. Good morning. Good morning.

[Lewis Porter (Washington Electric Cooperative)]: For the record, Lewis Porter, District Co op, and I have with me Kevin Crawford who is our Department of Energy fellow, which means we get the benefit of his work and the DOE pays for it. So we're very grateful to hand it to them for that, but I thought it would be useful for him to see the legislative part of what we get. I'm gonna try to not go over a lot of things you've already heard, have a lot of witnesses. I'll just say I agree with everything that Caledonia and Betz have said, I also agree with everything the department said in their testimony, including that. But I think we need to be careful in overstating the amount that this is a solution either for low income Vermonters or for greenhouse gas reduction. Washington Electric does impose the bill, it's fine with us provided that we have the safety components that Ken mentioned, the consumer education and protection provisions are in place properly and that excess export is not compensating. So I'll talk to you very briefly about some these things, happy to answer any questions about them, you've heard from others and you will hear from more on most of them, one piece I do want to highlight. As Ken said, it's very important to us that to make sure that the inverters and these cut off if there's a loss of power to the grid. We also think it's very important that the entire system be studied by UL laboratories and it's called UL solutions now, and that the entire system be vetted by them, not just component parts. Then last you heard the issue about making it clear that any excess generation is not in that meter. That's kind of the trade off in my mind between not going through through the permitting process is that it's not a net metering system, it's not compensation. Through the net metering CTG process, we have the opportunity to know where these things are, to make sure they're not gonna have an impact on the grid, to make sure that they're installed and wired in correctly. And without those, we think it's reasonable to

[Senator Anne Watson (Chair)]: have

[Lewis Porter (Washington Electric Cooperative)]: them not be exporting. It also will make sure that the size is restricted to the usage of a house at any one time because people won't put in systems in order to throw over system. The one thing I did want to emphasize is that I would ask that you consider putting in a line that makes it clear that issues around these do not go through the consumer protection process at the Department of Public Safety Service. The reason I suggest that is we not infrequently have disputes with our members that net meter over whether we are metering properly or not, whether they're getting compensated at the correct amount or not, whether they are located and sized appropriately. And some of these disagreements end up being quite expensive. We just spent $20,000 in a year long process with a net meter, that's $20,000 that the rest of Washington Electric Co op members are paying to adjudicate dispute with a member who's not covering the cost of providing electric service to their house because they're in that neither. So not only are they relying on their neighbors to pay for their cost of providing electrical service, they're now also incurring costs on the rest of the members solving these disputes. The consumer protection statutes would still protect them, they still would have access to the consumer protection system through the attorney general's office, and should have that. And if you wanted to make that clear, we'd be fine with that. But I think it's important that they not go through the CAPI DPS consumer process, because that's really set up to deal with systems and generators that are through a CPG, and have rules on them and on us through that process that we can then adjudicate through DPS. This is kind of outside the DPS process, And I also think DPS is limited in their ability to deal with the manufacturers and retailers of these systems because they don't go through a CPG, they're not licensed, they're not utilities, they're not otherwise regulated by DME. So if you're gonna be outside of regulation, that should be outside of the regulatory system, we're fine with it if you are, but I think that the AG's Consumer Protection Office is the appropriate for us to deal with the suits after that not gap. So the last thing I just wanted to mention is,

[Senator Anne Watson (Chair)]: I think

[Lewis Porter (Washington Electric Cooperative)]: you're had a conversation about not co locating these with net metering, and I think that's important because if you had a net metering system, that had gone through a CPG, was you know producing power onto the grid that produced say was say a 10 kW system, and then somebody put one of these in in addition, we would have no way to separate those two things out from each other, That person would be in violation of their CPG because they'd be producing too much power under their CPG. So I think it's important that these being separate from net metering systems. I don't know why anybody would put up a net metering system and have one of these, like it would seem to me like you would go and upsize your net metering system and amend your CPG instead because then you'd get paid for the access generation, but I do think it's important that they not be co located with that view. With that, I'm happy to answer any questions about this as I can.

[Senator Anne Watson (Chair)]: Forgive my ignorance. This process you were talking about where this dispute regarding net metering, a process with APS, the word that you used for it, CAP E? Yeah. Was that an acronym?

[Lewis Porter (Washington Electric Cooperative)]: Yes, it's the Consumer Protection Division within the EPS. And those are the folks who resolve all of the issues we have with members, whether it's billing or timeliness of our work or speed in which we answer the telephone. We're very, very highly regulated in Vermont and they adjudicate all of those disputes that occur within the regulated utility system. This is outside of that system, and I think it's proper that any disputes and consumer protection issues happen separately as well.

[Senator Anne Watson (Chair)]: Suppose that So it is possible for one of these devices to self limit to not export to the grid. That technology exists. If it was going to export to the grid, it could just not? Is.

[Legislative Counsel (unnamed)]: Is- That exists.

[Senator Anne Watson (Chair)]: So I'm thinking about this last situation where you were talking about people co locating these devices with existing net metering systems. Suppose that you had one that just did not export, that just itself limited to.

[Lewis Porter (Washington Electric Cooperative)]: Yeah, so you could have a system that didn't export, but I think it's asking a lot of the consumer to know whether the version they're buying is exporting or not exporting. Think definitely not an electrical engineer, but I think it would be very difficult to I I don't know that they make those. The ones I've seen cut off if the bridge shuts down, which is which is great, but they don't necessarily cut off if there's another generator on the same on the same house.

[Legislative Counsel (unnamed)]: I did ask about that.

[Senator Scott Beck (Clerk)]: My understanding, correct me if I'm wrong, Lewis, but for most people that are in debt metering, they export a significant percentage of what they

[Senator Seth Bongartz (Member)]: produce to the grid already.

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: Right.

[Senator Terry Williams (Vice Chair)]: Yeah, okay.

[Lewis Porter (Washington Electric Cooperative)]: Yeah, when times when they're producing they're exporting a lot because you know we don't produce much in the winter, we don't produce at night obviously, we don't produce in the mornings or the evenings very well, so they export a lot.

[Senator Scott Beck (Clerk)]: I don't know if it's true, the number I've heard is they export typically 80% to the grid.

[Lewis Porter (Washington Electric Cooperative)]: I don't know, but I would not be surprised if that was correct. And I don't think you're going to have people who want to do this, who want to have these and that metering. I think they would either build that meter system big enough or they would expand their net metering system if they wanted to, this would be a drop in bucket compared to typical net metering system. So I don't think it'll be an issue, but I just don't want somebody to accidentally be in violation of CPG.

[Senator Terry Williams (Vice Chair)]: Yeah, it

[Senator Scott Beck (Clerk)]: wouldn't make any sense if you're exporting, why would you add? Right. Shut it down. Exactly.

[Senator Anne Watson (Chair)]: Further questions, something that you did not mention that hasn't been mentioned yet. Part of this bill is about You did mention that it's useful for you to know where these devices are, that that continues to be accurate. So there's a process by which if somebody gets one of these that they need to let their distribution utility know.

[Lewis Porter (Washington Electric Cooperative)]: Yeah, I would get rid of that section. I don't want them. We use Utility World, work hard and net metering has made this challenging, but we work hard to separate what's on our side of the meter from what's on the member's side of the meter. And when our folks go out, obviously if they see something dangerous on the member side of the meter, we're going address it with them, but generally we don't have visibility or control over what's on their side of the meter, and we don't really want it, because that's their house, it's their business, and in Vermont you can wire in your own house without a license. My electrician has asked me not to do that anymore, but you can do it, and so we kind of try to keep a line at the meter, and I think if these systems are going to be outside of the regulatory space and outside of our control and management, that I think they should be outside. But I can understand fully the reason for including that, because it makes sense on the face of it that the utility would want to know, but the reality is people are going to be buying these and plugging them in, they're not going to be telling us, and I would rather not know where any of them are than know where some of them are,

[Senator Seth Bongartz (Member)]: if that makes sense.

[Senator Anne Watson (Chair)]: Fair enough. I mean, that makes sense. It's not like we tell them they have to tell you if they get that generator or if they get a base stereo system or something that's going to eat a bunch of electricity. I

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: don't know.

[Lewis Porter (Washington Electric Cooperative)]: We do ask them to tell us if they get an EV, they're not enforceable provision, but that's really so they don't blow a transformer up and cost all of us much money. Most people do that, and we will soon have better tools even to know when that's happening so we can proactively reach out to a member.

[Senator Anne Watson (Chair)]: You're anticipating that if people plugged these in, there was reasonable uptake of these, it's not going to blow up the transformer?

[Lewis Porter (Washington Electric Cooperative)]: It would be, mean, you'd have to have, certainly not in my territory, we don't have a parking lot, we said my territory basically. So certainly not in my territory. I guess there's a potential if you had a dormitory or an apartment building where they were a lot of these, every single person had one, possibly, but even so, think that would be, it would be, it would be very, it's a pretty solid.

[Senator Anne Watson (Chair)]: Great, may have any further questions? Okay, thank you. Okay. And so moving on

[Candace Morgan (Green Mountain Power)]: to Ms. Morgan. Good morning. Good morning. I had told last week, it was all these symptoms. I don't have much of a noise, but I feel totally fine. I will say as little as possible. All right, I appreciate Candice Morgan from Green Mountain Park for the record. Appreciate the time this morning on this bill and also sharing the concept along the way in the summer and the fall is really helpful for our team to take a look at this technology, see what other states are doing and kind of have a good sense coming into the session and how we want to respond. Appreciate that. I want to echo what both Mr. Nolan and Mr. Porter said this morning and agree with them that Green Mountain Power is, we are supportive of the bill, appreciate what it's trying to do related to creating a streamlined process and making sure that we're not adding any kind of undue burden to customers that are interested in this technology. But really do want to emphasize the considerations as well as the consumer awareness piece. I think the safety concerns that both Mr. Nolan and Mr. Porter outlined are critical to keep in the bill around the UL certification, so the provision that prevents any feeding to the grid in the event of an outage, and that's really for our worker safety and things of work to continue to

[Legislative Counsel (unnamed)]: have in there. The consumer

[Candace Morgan (Green Mountain Power)]: education piece, I want to emphasize some of what you just heard from Washington Electric. We also work with our customers at the time who have net metering systems and might have some questions about the billing process and what they are billed for versus what compensated for, depending on the time of year and how those systems are degrading. I think if you were to add a portable solar device, I don't think it's going to be a widespread thing for all the reasons we just talked about, but it creates another level of distinction between what we would be seeing on the bill for usage versus what the customer might be seeing for generation. And

[Senator Terry Williams (Vice Chair)]: I

[Candace Morgan (Green Mountain Power)]: think it's important to emphasize that point because it could just get into more disputes about what is being compensated for what. So a potential point of clarity, just to say, if you have an existing home hearing system, you can't have a portable solar system as well. But I think it's worth exploring what the right resolution is there. On the billing side of things, and this is where I think getting into some of the consumer protection and understanding is really important too. If you were to install one of these systems at your house, essentially your bill would just look like you have less usage, right? And so from our perspective, it would look like you installed a more efficient refrigerator, or were doing something that was changing. And that's great, and support that for customers that choose to exercise assumption, but there's not going to be a great record, or any record, of production. And so when manufacturers claiming that you'll get payoff in some number of years, there's not really going to be a way to confirm that, just based on how the technology is working, and that's where I do think it comes into the consumer awareness, and the attorney general's office is definitely more equipped to handle how they are marketed and how they are communicated about to customers than the Department of Public Service. So I want to really emphasize the point that Mr. Porter just raised about the right place, because these are really more like appliances than anything else, and not in the sort of utility, regulatory structure, in the way that other technology for solar and renewables are. Let me think if there's anything else that you wanted to hit. Those are really the main points that I really wanted to emphasize that, and like I said, agree with the testimony that you have heard this far from folks this morning, as well as from the department and the Public Utility Commission. We're really wanting to keep an eye out into the future where a lot of customers have these. There could just be a lot of questions about performance and everything. Wanting to get out ahead and create the right system for that advocate to answer those questions versus relying on utility call center folks or the public service for those questions. And then have the answer to any questions.

[Senator Anne Watson (Chair)]: I'm going to ask you the same question. I just want to confirm that would, don't want, do you not want to know where these are?

[Candace Morgan (Green Mountain Power)]: Well, a great question, and if you asked multiple people on our team, I might get multiple answers. Understand the points that Mr. Porter raised around we don't know what you're plugging into your

[Legislative Counsel (unnamed)]: home, generally speaking, right, and there are

[Senator Anne Watson (Chair)]: some pretty

[Candace Morgan (Green Mountain Power)]: well tread rules and liability considerations based on that line of demarcation behind the meter or in front of the meter. So I don't want to blur that line. And I think it is an interesting question about if we know, do we have an obligation that the other ones would not. So it might be a good follow-up question for the PUC too, in terms of what they would want to understand is out there. And I'm happy to follow-up if we feel strongly one way or another. But I think the consensus you'll be able to hear this morning is maybe that we don't want to know. And I think that that's

[Legislative Counsel (unnamed)]: a reasonable outcome. I'll follow-up if we Okay. Feel

[Senator Anne Watson (Chair)]: But just to say, if there was agreement, and I want to know, because I value your input on this, but if there was agreement that it's not necessary to know, that would be amazing. Yeah. Because that would make it even that much easier for a consumer. So is that very interesting? But I hear you that we should check with the PUC. Yeah, I was going to say that same thing. You all, same thing. And you're sort of, these are more like appliances than utilities, think was an interesting, that was helpful comparison. It's like a more efficient refrigerator. Exactly. Exactly. And if that's the case, it would seem like you wouldn't want to know because you don't ask people to tell the fisherman they're getting a new fridge. That's really neat. But yeah, that would be a burden on everyone. It would. So that would be helpful if the answer's like, yeah, we'd want to know. Okay. Any other questions? And again, just to confirm, you would appreciate a line that was like, in the event of excess generation, there will be no compensation for that power.

[Legislative Counsel (unnamed)]: Yes. I agree with

[Candace Morgan (Green Mountain Power)]: the discussion on that. I also mentioned to a teammate, to make sure to say, was doing a little bit of reading on this, about the white paper from the Clean Energy States Alliance, she was saying it was super helpful. And my favorite part about that was that in Germany, in IKEA, they sell these systems and they're called Fin Craftwork and I just really like the name of that. I wanted

[Legislative Counsel (unnamed)]: to make sure I said that today. That's like, amazing. Thank you, St. Jude. Okay, all right. Ms. Geller, hello, good morning.

[Candace Morgan (Green Mountain Power)]: Hi. Hi.

[Legislative Counsel (unnamed)]: You for having us in today. For the record,

[Senator Anne Watson (Chair)]: my name is Andrea Caledonia. I'm from All Electric Cooperative. And I too wanted to start by saying that we really appreciate your early engagement on this. That early heads up, we're thinking about doing this, do you have any initial, really makes for a better process, better policy. So thank you, Chair, for reaching out early on this. I too am learning. Setting expectations, think you've heard that, I think it's important to set modest expectations. We're not expecting that every run through that we have, especially low income folks, gonna are run out and get these right away. That said, we do not have an objection for getting a foot in this and getting this moving and learning. We also have community solar, so we have other options for folks that want to support renewable energy that's over top an appropriate site or POP or renting. So this could be one of many options that folks can explore and see if it makes sense for them. But when I shopped it around to my team, they were a lot of like, you think people will really do this? And they said, I don't know, we'll see, right? Price points matter and things like that. A few comments, some things that are a little different than what you've heard, so put some new things on the table. Our comments are driven by the safety concerns and the cost concerns. We would never want a member who chooses to do this to incur, it causes costs to other members, right? So that's the spirit of which these comments are given. I'm not gonna really touch on the safety things too much. There's provisions in here that we support, especially about the outage and not having the back feed, that's critical. And kind of inform some of the other comments, the exemption threshold was driving a lot of our concerns about safety and transformers blowing up. And the worst case scenarios, I think get remedied by there being a clear threshold. The definition I do think needs some work because it's not clear to me on a simple reading, and I'm not a lawyer, that the device cannot exceed the 1,200 watts, but what about the system? Somebody puts 10 of these, they got it, it will happen, but if they did all of sudden, we would have some concerns about safety and back eating and impact. So we can gladly work with you on the definition. It gets complicated whether you, the terms like account or service locations, there's a lot of things there. So we gotta get it just right because an accountant can have multiple households. Like a landlord has an account, but there could be a lot of people under that account or a customer can have multiple accounts. So you're a customer, but you have different locations. So let's work on that with Allen or whoever to make sure we're very clear that we're getting it right. So that will be very important. The notice provisions, I will share, I think part of the reason it's in there is because I might've brought that up when spoke to you earlier. And now that we dug in and we understand there's the threshold limit and we understand the benefit, there's the cutoff, geraniologists, things like that, I think it's less important for us to get notified. So we would be comfortable with taking that section out because all those other provisions are now in there. When we first were looking at this, said, we need to know for safety and management and all that. But I think at this point, especially how it's drafted, it's not enforceable. I understood from the PUC testimony, don't really want to be doing this. It would be incomplete information. I don't know what the enforcement mechanism would be. Would we stop delivering power to people who don't report? I don't think it's really workable how it's written and I'm not sure the value it adds. So we would be comfortable with taking that provision out. Something to maybe add though, we're kind of all trying to figure out how this would play out in this emerging new interesting world and maybe a report back at some point would be indicated, maybe a year from now or two years from now, if we have transformers that blew up or something, that would be really important to know whether we got it right. So maybe if the PUC or DPS would be willing to survey us, survey the fire, the first responders, you know, have any issues emerge, is this something we're worried about? And do like a check back, I think might make sense. That's just, one of the provisions that concerned us that I might raise, the part about the DUs cannot charge people for any costs around this. I think generally that's fine. But if someone did blow up a transformer, we don't know what they're doing.

[Candace Morgan (Green Mountain Power)]: They put a whole bunch of

[Senator Anne Watson (Chair)]: these in, there's a problem. We would not want to see other members having to pay for that cost. We would want that entity to, what we do now, we put something on the system, you didn't let us know about it, there's a large cost because of that, we do go back to the member and we say you are responsible and it costs this much and you should pay this. And of course, it doesn't always go smoothly, but I would hate that this would not let us do that if somebody did something irresponsible and didn't, you know. So we can offer some language if you're interested with making an exception, you know, it will not cause costs unless there was an incident or something that was responsibility from their member to the system. So maybe that's something, unless damage to the systems or upgrades needed, stuff like that because of their their choices. Final, just closing comment to emphasize, the consumer protection piece is big. We get so many members call us with complaints, nothing to do with us. Somebody sized the system inappropriately. They got sold something that was not appropriate and we feel terrible because it's nothing we can do anything about. And I'm not saying all the folks are petty, they're sometimes bad actors, not selling people things they don't need or isn't appropriate. And I don't know what you might be able to do for that. I see internet ads pop up on my Facebook feeds. So if you see your electric rates,

[Legislative Counsel (unnamed)]: they're this and buy this instead of them.

[Senator Anne Watson (Chair)]: And I know it's not factually correct. And if I was a vulnerable, maybe low income person or older person, I may think this is just gonna save me so much money and it doesn't. There's nothing, we're always after the fact. We tell people to do their research, talk to, but, so if there's ways you can beat that up in terms of just supporting the market, because the ones that are good actors, they get a bad reputation. It's just important for making this work the way you're intending it. I think that was the end of my comments. I'll take your questions. Super. Yes. Just question, the check back report, if we're taking out the section because you all agree that you don't want to know, I don't know how we would do a check back report because there would be no data. It would just be a hearsay report. Like, oh, I heard about this thing that happened somewhere that might be related to these things. It could be DPS or PC surveying the DUs. Are you having any issues on your systems? Surveying the fire response are

[Candace Morgan (Green Mountain Power)]: you having any issues? But how

[Senator Anne Watson (Chair)]: would they know that they're related to these things? I don't think they would know that they're related to We might know. Just like you wouldn't know that things are related to a new refrigerator. I mean, these really are that kind of low level, like power generators, they're the equivalent of

[Legislative Counsel (unnamed)]: a, they

[Senator Anne Watson (Chair)]: the stay limits, I don't know that you would know unless we're asking people to report. And it sounds like you don't want us to have people to report. And so I'm really hesitant to ask for a report from a state agency that's either based on hearsay or requires them to do so much digging to be able to figure And it I'm not suggesting a very, I'm suggesting a survey of the DUs. Are you hearing, are you having any issues, are you getting complaints here? Just very simple, because you all want it to be good. You might want to adjust things if things aren't going well. Again, if you don't agree with that, I was just Yeah, say I'm just something trying to see how it works. And it does seem like the consumer protection division of the attorney general's office, I mean, we do get reports on what are they getting complaints about. That's great. And, you know, we could, if they get a lot of complaints about these things, then we might be like, oh, we've got to deal with that. Just like when we know that they're getting a lot of complaints about contractors or they're getting a lot of complaints about whatever, we are like, oh, we should maybe- And if they're having issues, we'll bring them forward. It's just sometimes it's nice to just, how's it going? Check back. Not meant to be a big workload for them or us. Was just, you get feedback, you remember to get feedback. Yeah. But if you, we'll let you know we're happy with this for sure. Well, Like, I mean, in the situation of we had this apartment building and everyone got one and again, I don't expect it to be a big thing. I think it's good practice, but it's okay if it goes different ways. Sure. Great, any other questions? No, thank you. Super, thank you. Okay, and

[Legislative Counsel (unnamed)]: do we have, oh, here's one, yes. Hello, hi. Welcome. I'm Amber Bingner, Brunswick's electric department. Thank you for the opportunity for us to come in today. We're excited to support the bill. Arlington District has a long history of being pro solar. We have over 10 megawatts of solar installed in Metro Detroit. We were recognized by Environment America as a shining city for a big leader in solar adoption. So we're excited for this technology to provide more access to renters and people who don't have the ability to install metering systems. We echo much of the testimony that you've heard from the other utilities and department and the commission. We are okay with deleting notification or something and safe it clean. In terms of the tweaking the definition for limiting the 1.2 kilowatt, I think it would be a clean solution to limit it to a total 1.2 export ability per, perhaps per dwelling unit might get to the, you know, the customer versus the landlord situation. In terms of, let me just repeat that. Sure, that's four foot. Rather than have it as a 1.2 kilowatt per system, they did a total of 1.2 kilowatt per dwell unit. Okay. So that if people do want to aggregate, they'd rather limit that so they can have 10 systems.

[Senator Anne Watson (Chair)]: Yeah.

[Legislative Counsel (unnamed)]: Agreed with the suggestions on the UL listing. And yeah, provided that the questions that have been raised are addressed, we are happy to support them. Super.

[Senator Anne Watson (Chair)]: All right, any questions? Just wanna

[Senator Seth Bongartz (Member)]: make sure we're getting clear about apartment buildings, because you bring them a couple of apartment buildings. Are we thinking about the limit per meter or would it matter if you had one? There's one, I guess they're all separate, probably seven meters, right?

[Senator Terry Williams (Vice Chair)]: Not all of them are. Okay.

[Legislative Counsel (unnamed)]: So yeah, that's why we figured out the dwelling unit If

[Senator Seth Bongartz (Member)]: they're not, and they're on one, have multiple apartments on one meter, is that they all do it with their 1,200 set, could it be a problem for a problem with that one meter or is it or is that not an issue?

[Legislative Counsel (unnamed)]: I think we're not concerned about the scale of adoption at this point, raising an issue. But that is a question that might be worth reading in future. Just got into the question of what

[Senator Anne Watson (Chair)]: is a dwelling unit? Yeah. Yeah.

[Legislative Counsel (unnamed)]: Talk about that all the time. In general, they're designed to not be exporting, so we're not especially concerned My

[Senator Anne Watson (Chair)]: question there, I think it's interesting to have it be per dwelling unit, which works if it were talking about residences, but I could certainly picture small businesses wanting to do this as well. So it seems like we have to Do both, you know, something like per meter or per dwelling unit. And I'm not sure how to frame that exactly, but, you know, to acknowledge that it's You may not just be homeowners or renters. Any other questions? Okay, thank you so much. Before we, oh, we are going to take a break because we're running ahead. But just to check-in with the committee about things that you've heard so far today, how has either your thinking changed or things that you want to see amended, Eva? What's jumping out to you?

[Senator Scott Beck (Clerk)]: Well, I'm so supportive of the data. I'd have to go back and reread the bills for some of the details relative to some of what we heard this morning. I'm tending to think though that I don't think it's a good idea for these people to have to conserve the utilities that they're offering unless somebody comes back after they've had some more time to think about it and says, yeah, well there is something.

[Senator Anne Watson (Chair)]: Yeah. Ahead.

[Senator Terry Williams (Vice Chair)]: Lauren, you know, I'm generally supportive of the, taking everything in in the consideration I heard. Concern of guys that, you know, the launch should be able to we're gonna save energy. We should be able to talk claim that somehow. If it doesn't go back through net metering, you have no way of blocking that matter. Number two is that I am I would be concerned about some guy like me learning himself and going feeding back on the system. Be kind of like our committee assistant having somebody with a program open feeding back on screwing up everything. If you don't know if you don't know where the problem is how you're

[Senator Scott Beck (Clerk)]: know how to identify those they could it could affect the whole grid in that area. I understand we've people have been using the term wiring but this is really just a grounded plug that goes into an outlet okay it's not.

[Senator Anne Watson (Chair)]: No. I think they might need a dryer in. Like, if you were buying all the pieces separately and putting it together, that would not have the UL as standard. And so it wouldn't it would not, according to this bill, be it weren't solely device.

[Senator Terry Williams (Vice Chair)]: So the components are available on the market through that right now. Yes. So you've got the other thing is if you have an apartment, obviously, it's only certain places that your apartment would be able to take advantage of some. And a lot of apartments have multiple units that carry on one one meter

[Senator Seth Bongartz (Member)]: I'm certain.

[Senator Terry Williams (Vice Chair)]: Circuit. So I'm just concerned about landlord, you know, the landlords, whether they want something like this on their system. That's all.

[Senator Scott Beck (Clerk)]: Some apartments, every apartment's on one meter. Yeah.

[Senator Terry Williams (Vice Chair)]: There's there. Right. And they just got them so much of work. Yeah. Yeah. Good.

[Senator Anne Watson (Chair)]: I think everything we heard today is quote unquote fixable in the bill. I mean, I agree. I I took lots of notes on that bill itself. So I think we can address all the concerns in some way or another. And what I heard is that these units are so small that you're not going to notice really. Like one guy wired in some weird way and brought it's not going to take the brick down. If that's, then I would think we've got bigger problems if that's the case. So I think that there are enough safety sort of mechanisms that would be

[Senator Terry Williams (Vice Chair)]: Well if they could blow

[Senator Anne Watson (Chair)]: up a transformer I don't think these are not that big these are tiny little things

[Senator Terry Williams (Vice Chair)]: and I heard being on the transformer my bigger concern and transformers can

[Senator Scott Beck (Clerk)]: be replaced my bigger concern is that

[Senator Seth Bongartz (Member)]: you get too much on one wire in one unit and you get a fire. That's my bigger concern for the transformer.

[Senator Anne Watson (Chair)]: Well and that is, you get to read that the Clean Energy States Alliance paper? Because it has some great- It that. Well, called it out, but

[Candace Morgan (Green Mountain Power)]: it's not. And I just thought they'd

[Senator Anne Watson (Chair)]: go really well. They've been using this website in Europe for a while and there are way more renters in Europe there. Like, that's the, they're, they're a renter. So I think that

[Lewis Porter (Washington Electric Cooperative)]: transform your place. Yeah, well, and I said

[Senator Anne Watson (Chair)]: it only to also just say, to like affirm that as a concern, that that is very much on the radar of the UL folks. It's like actually from a physics perspective, it's really like, oh gosh, Kirchhoff's loss. This is my family. Start with my physics teaching friends, but anyway, sorry. I'd say most

[Senator Seth Bongartz (Member)]: of the time, it's a big computer, but it goes slowly. Yeah. So.

[Senator Anne Watson (Chair)]: Yep. That's a good point. Like if you had an apartment building and you're out putting like a little bit because you're not your refrigerator isn't Doesn't have to be running at that moment, like somebody else probably is. Yeah. And I would

[Senator Scott Beck (Clerk)]: You're helping out the greater good.

[Senator Anne Watson (Chair)]: Yes. Since

[Candace Morgan (Green Mountain Power)]: you're here. Yes. I'm sorry. There was one other thing I meant to mention in your discussion on mute, remind me. Candace Morgan, your non power. The questions that you were asking about Mr. Nolan at

[Legislative Counsel (unnamed)]: the beginning about how it

[Candace Morgan (Green Mountain Power)]: would work for non smart readers is true, except for there are some non smart heaters that we still have out there, that if you were to plug one of these devices in, and it would be generating a little bit more than what you are using at any point in time. And I understand there might be some guardrails around anything being pushed back to the grid, but if there were a situation where that was happening, it would actually show up as more load, just because they're very outdated devices, and folks have opted out to continue to use those versus a smart meter, and to make sure that customers are getting billed accurately and to allow them to see a little bit more on when they're using. A discussion on the type of metering might be worth it, just to confirm that folks have a smart meter so that they are being pulled as accurately as possible if they have one of these devices. And I don't want to open up a whole other conversation before you go on break, but I just wanted to put that out there for consideration. And I know utilities are at various stages of deployment, so it could be a non smart meter as long as it's the right one or a smart meter requirement as well. So just wanted to flag that. Yeah.

[Senator Anne Watson (Chair)]: Okay. Let's have some further conversation. For sure.

[Candace Morgan (Green Mountain Power)]: We can talk more about it. Can get you a little bit more information. I was just checking in with our meter into about it yesterday. It's not a huge issue, but it's just a consideration that I just want to make sure.

[Senator Seth Bongartz (Member)]: Just make sure I understand. The issue would the potential issue is that the customer wouldn't get the reduction. Correct. Okay. Might actually look like more. Issue.

[Senator Anne Watson (Chair)]: Okay. And it could be a detriment. Correct. Okay. All right. No worries. Thank you. I appreciate that on the radar. So what II think we should do is go right into because we have Senator with us and so we have the new bill to talk about and I here's what I'm thinking to tell me if you think it's

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: I can be really quick

[Speaker 4]: if need like five hours.

[Legislative Counsel (unnamed)]: Yeah, movies. Super. Okay, so a new bill,

[Senator Anne Watson (Chair)]: that's 138. And oh, go ahead, take it away.

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: Great, so I thought I would

[Speaker 4]: just say my history, experiences with CPAs that I've been familiar with or property assessed clean energy financing. The last ten years I've actually a teaching course at the University of Monterey in 19 virtualization and this was always a discussion and a smaller case study that we discussed. But I also served on the side of Burlington City Council where we were familiar with what the Vermont does allow, which is residential property assessed green energy financing. So I had familiarity with this. The reason why I introduced this bill in the meeting session last year was in our discussions on economic development. We were talking about both how to incentivize addressing atrophied housing, as well as businesses in your strip malls for small farms. PACE is a tool that could be in the toolkit to help incentivize and align long term benefits with short term interests. So let me just give you my spiel on why I think this is something worth enabling. I also understand there's amendment, I fully support it on whatever it makes to make sense. A couple of lobbyists have reached out saying other states have done this before and they offered some advice. I just want to get the conversation going and since it's clean energy, it really felt for this committee. So I introduced the bill to literally toss it over the fence and have all you nice people consider it. So thank you for doing so.

[Senator Thomas Chittenden (Bill Sponsor)]: This is where I think it

[Speaker 4]: could be beneficial. Imagine you're a strip mall, so you own a strip mall like the Blue Mall or a small farm or Stone Mountain Resort, and you're not necessarily certain that you're going to keep that property as a commercial developer or manager in your portfolio. So you own this asset and you're managing it and there's economic activity happening there. And you're thinking about investing in a clean energy improvement like solar panel or solar panel carports. So this article I just sent you is about a Pittsburgh facility, this is happening in Pennsylvania, is using C PACE in order to align to long term benefits with short term interests that make financing things like Parkourt solar panels make sense for whoever owns that parcel. What PACE would effectively do, what I'm thinking a lot of you already know this is it would just allow the debt instruments to not be carried by individuals, but instead be assessed to those property, property assessed clean energy. So if you are a strip mall owner or the Snow Mountain Resort or a small farm and you're thinking about how do I properly, do I really want to spend $50,000 or $300,000 on extra cantilever infrastructure to have solar panels high enough that I can park and plow underneath them to shield my cars from both the rain and snow as well as the sun in the summer, that's really expensive and I'm not sure I could recoup that cost both resell, if I were to sell this two or three years from now, I'm not sure the selling price is going to be able to recapture that investment, but there is actual economic benefit from the solar panels that can subsidize your electricity and also generate revenues going forward. You can assign the debt to the property rather than to you individually so that when you sell the parcel, whoever else owns or maintains it, to pay through their property taxes. Now who owns that debt can be the municipality and I know VLCT might have concerns with that, but there is a role for them, also other States allow for third parties. And that does a big consideration that you'd want to think about is two things I'd highlight is you want to think about the subordination of the debt, whether or not it would have primacy over the mortgage holders or if it would be junior to that. I'm sure that the bankers association will have an opinion on that, I don't have a strong opinion, I just see this as a tool that could be useful in the toolkit to get cleaner energy infrastructure while also spurring economic redevelopment in a variety of different cases. The other thing that I saw that I did see in your amendment that might be worthwhile, other states have feasibility assessments. So I think this would be a natural fit for an organization like VITA, they already do a fair amount of this, but they want to look at what the clean energy investment would actually generate over the lifespan to ensure that the repayment of payoff would actually pay for the infrastructure so that the future owners would either be held harmless through any price modeling or there would be a net benefit to finance lower project costs as well as otherwise. So the feasibility assessment might be worth considering. Regardless, I just say you've been taking time on this and it just came up with a committee last year and said let's introduce a bill and see if you all want to talk about it.

[Senator Anne Watson (Chair)]: Excuse me.

[Senator Seth Bongartz (Member)]: I'm sorry, it's a little bit, I guess a part about the signing for the dead run, I mean to the property level, the person. You were then talking about the municipality, he's not at, and how the municipality end up with somebody's dad.

[Speaker 4]: So the bill is paid through your property taxes generally, so the local municipality in some states, okay, when they send a property bill they would also collect over twenty years or whatever the financing of this is, is the repayment for that amount. So the municipality could hold the debt or you can also have third parties that would just be junior subordination or primary subordination, meaning they get in front of the mortgage holder. So whether or not our local town would want to have that as part of their property tax management, or if they would want this to be entirely managed by a third party, that would be open discussion. But it would be owned by whoever owns the parcel, if that makes sense, which is the key benefit. So I hope I've clearly communicated that. If you're still not resorting, you're thinking about putting carports in, but the owners and the board members aren't sure that they're willing to keep it in a portfolio in the past five years for whatever reasons, it might be a harder motivation for them to invest in it. But if they can finance that long term benefit of twenty plus years of generating clean energy and carry or hand that off to whoever owns it in the future, that's where it plays a role in possibly aligning incentives for term interest for long term benefits.

[Senator Anne Watson (Chair)]: Go ahead, thanks. Do you know how, does this impact property taxes or property valuation at all?

[Speaker 4]: So property valuation, I wouldn't expect so. This is an improvement on the property, so if the assessor deems that as additionally valuable, certainly, but

[Lewis Porter (Washington Electric Cooperative)]: it would just be

[Speaker 4]: a way to finance an improvement on a property. Whether or not you want to scope it to also include other improvements like weatherization, it's because there's a payback for that as well. All of those things would affect property value, what you do best to develop a property that your overall value should go up and so should the grand list. And then property taxes, the other part of that question will also

[Senator Anne Watson (Chair)]: This is not like a tip that borrows from No.

[Speaker 4]: Okay. No. So this debt would be paid off and stolen by somebody who would be obligated to whoever owns the parcel and not necessarily to get all the debt properly assessed.

[Senator Anne Watson (Chair)]: So my understanding is that there are some other states that include the possibility of resiliency as one of the uses for this. How do you feel about that possibility?

[Speaker 4]: Sure. I think the key thing is payoff, whether or not there's a real payoff for this, but in resiliency can be proved out through lower insurance and also just greater confidence in resistance against weather elements, I could see the

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: argument for that as well.

[Legislative Counsel (unnamed)]: Okay,

[Senator Anne Watson (Chair)]: thank you. I might talk

[Speaker 4]: too fast, but I figured

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: you'd normally break.

[Senator Anne Watson (Chair)]: Fair enough. I do think, I mean we have one senator out, so I think we are going to take just a quick five minute break. Okay, sounds off. Okay, this is Center of Natural Resources and Energy and we're coming back from a break. And so just a little context for this. So as I said, we're

[Legislative Counsel (unnamed)]: going to walk through the bill as introduced.

[Senator Anne Watson (Chair)]: And then, so in preparation for today, I had some conversations with people who are in the industry, in DFR, etcetera. Anyway, so immediately after we go through the bill as introduced, we're going to go through a new draft, and what I acknowledge is that the new draft is not the end, and we'll continue to evolve it. There are questions that I have about it as well. So as far as a polished product, think

[Lewis Porter (Washington Electric Cooperative)]: we're

[Senator Anne Watson (Chair)]: still in progress. And also,

[Legislative Counsel (unnamed)]: I mean, that's true for all bills, to be fair.

[Senator Anne Watson (Chair)]: There's one other thing I wanted to say about this. Oh, right. So I also want to acknowledge that our role in this is to think about the clean energy and the potential resiliency aspects of this bill. I want to acknowledge that we are, at least in this room, not steeped in financial regulation understanding and anticipating that this bill would go to finance. And so the details of how the financing aspects of it work, I'm anticipating would be vetted more thoroughly by the finance committee, kind of like with the SALT bill on the liability protections we had when judiciary committee reviewed that because that was their expertise. We want to make sure that we are getting the renewable energy and potential resiliency aspects of this correct. So having said that, welcome. Thank you for being here. I'll take you out to the Office

[Legislative Counsel (unnamed)]: of Legislative Council. I'm here on S-one Hundred 38 as introduced. I will walk you through the language of the bill. The changes in the bill introduced are very minimal. And I can give you a basic explanation of how the financing works. Cannot answer questions specific to how the financing works. This law was levied and has not really been tweaked since then, so I never worked on it before. But we're talking about property assessed clean energy projects. This is a type of system that has been adopted by most other states in the country, so it does exist for both residential projects and commercial projects. This bill, as introduced, would be extending the property assessed clean energy districts from just residential projects, which is what Vermont currently has now, will also include commercial and industrial projects as well. Section one is amending 24 P. S. A. Chapter 87, Subchapter two: Property Assessed Clean Energy, also called PACE. So, in this subchapter, district means a Property Assessed Clean Energy District. The legislative body of the town, city, or incorporated village may submit to the voters of the municipality the question of whether to designate the municipality as a property assessed clean energy district. In the district, only those properties, onto page two, property owners who have entered into written agreements with the municipality would be subject to special assessment as set forth in thirty two point five five. So the town has to hold a vote to decide to become a property assessed clean energy district for the whole town. And once that happens, property owners can then enter into an agreement with the municipality itself to fund the financing for energy projects. Upon a vote of a majority of the qualified voters in the municipality voting at an annual or special meeting duly born for the purpose, the municipality may incur indebtedness for, or otherwise finance, projects related to renewable energy as defined in 30 BSA 8,000 two-seventeen, which is the definition section of the renewable energy programs in Title 30, or to eligible projects relating to energy efficiency as defined in 3276 of this title. Projects, the 3276 directs efficiency for modern efficiency utilities to produce a list of qualified energy efficiency projects to be published so that people know what they are. So it does task the efficiency utilities to make that list. Undertaken by owners of dwellings as defined in section 103 of the Federal Truth of Lending Act, or by owners of commercial or industrial buildings within the boundaries of the city, town, or incorporated village. Under the law that has existed, this has only been open to owners of residential dwellings. This would be added in commercial and industrial buildings as well. And the definition I've added here is any building other than a residential dwelling, you can provide you It was unclear to me what exactly the sponsor wanted for that definition,

[Senator Anne Watson (Chair)]: so you

[Legislative Counsel (unnamed)]: can tailor that if you would like to. The next section is 03/1962, and so this is the section on the agreements and is adding once again commercial and industrial. So upon an affirmative vote made pursuant to the section I just read you, and the performance of an energy savings analysis pursuant to subsection B of this section, an owner of a dwelling as defined in the Truth in Lending Act, or an owner of a commercial or industrial building within the boundaries of the district may enter into a written agreement with the municipality that shall constitute the owner's consent to be subject to a structural assessment set forth in 03/1955.

[Senator Anne Watson (Chair)]: Now on

[Legislative Counsel (unnamed)]: to page three. Entry into an agreement may occur only after 01/01/2012. A participating use value shall follow underwriting criteria established by the Department of Financial Regulation and shall establish other qualifying criteria to provide an adequate level of assurance that property owners will have the ability to meet assessment of payment obligations. A participating municipality shall refuse to enter into an agreement with the property owner who fails to meet the underwriting or other qualifying criteria. These are only two sections of this subchapter. There are a number of other provisions in this subchapter related to how this financing option works. And then this bill was introduced last year, the effective date is July '25, so if they'd be more ready, they wouldn't need to update that.

[Senator Anne Watson (Chair)]: Great. So we're going to roll right into a new draft, but yes, questions.

[Legislative Counsel (unnamed)]: When the statute was originally enacted, the program was allowed

[Senator Anne Watson (Chair)]: to start until after January 1. Oh, okay. Thank you. And

[Legislative Counsel (unnamed)]: so that was exclusively for residential property owners at the time. This bill would be extending it to commercial property owners as well. Yeah,

[Senator Anne Watson (Chair)]: so I requested this as an update based on some feedback that I got, we'll hear more about. So, go ahead.

[Legislative Counsel (unnamed)]: Sure, so with

[Candace Morgan (Green Mountain Power)]: this draft, there was a

[Legislative Counsel (unnamed)]: request So when I initially drafted this section, I just incorporated commercial and industrial properties into the existing statute. The request was to create statutes specific to commercial projects because there will be some proposed differences that could apply to commercial projects that are going to be different from residential. And so, I don't know if I have accomplished the goal quite, but this is a proposal. So what I have done just before I walk through it is I have added two new sections specific to commercial and then referenced some of the other existing statutes to residential because the subchapter two has a number of other sections. I wasn't sure if I should duplicate all of them. So this is a sort of hybrid. Yes, there's So anyways, I'm happy to take questions on that. This means your intent. So section one is adding a new subchapter, subchapter three, specific to commercial properties, gasoline energy. And so this first section, three thousand two and seventy five, is very close to the same process I've just read through for the bill that's introduced, but it's specific to commercial. So in this sub chapter, district means a property assessed in an energy district. The legislative body of town, city, or incorporated village may submit to the voters of the municipality the question of whether to designate the municipality as a property assessed

[Candace Morgan (Green Mountain Power)]: in an

[Legislative Counsel (unnamed)]: energy district. In a district, only those property owners who have entered into a written agreement with the municipality under 3,276 would be subject to special assessment as set

[Senator Anne Watson (Chair)]: forth in 3255.

[Legislative Counsel (unnamed)]: Upon a vote of approval by the majority of the qualified voters of the municipality voting at an annual or special meeting who will be born for that purpose, the municipality may incur indebtedness or otherwise financed onto page two. Projects related to renewable energy as defined in 30 GSA 8017, or to eligible projects related to energy efficiency as defined in 3276, undertaken by owners of a commercial or industrial industrial building within the boundary of the town, city of our corporate and village. So that is all the same language. That is in the underlying statute for residential, the exception of the construction of industrial. And then again, my proposed definition for commercial and industrial at any building other than a residential building. So on page two, line seven, three thousand two hundred seventy six, written agreements consent on property owners energy savings analysis. Upon an affirmative vote made pursuant to three thousand two and seventy five and the performance of an energy savings analysis pursuant to subsection B of the section, an owner of a commercial or industrial building within the boundaries of a district may enter into a written agreement with the municipality that shall constitute the owner's consent to be subject to special assessment (as set forth from March. Enter into such an agreement may occur only after 01/01/2027. A participating in tally shall follow underwriting criteria established by the Department of Financial Regulation, and shall establish other qualifying criteria to provide an adequate level of assurance that property owners will have the ability to meet assessed payment obligations. Ever participating in these tally shall refuse to enter into a written agreement with the property owner who fails to meet the underwriting and qualifying agreements. So this is identical to the other statute, it would be the exception of the date of 2027, which would be when this program would start. So on page three, this is where the first real deviation from the underlying statute is. Subsection B is largely what is in the existing chapter for residential case, but the sub criteria underneath it are what has been proposed. So prior to entering into a written agreement, a property owner shall have analyses performed to quantify the project costs and energy savings, and estimated carbon impacts of the proposed energy improvements, including an annual cash flow analysis, as well as the following analyses: Where energy or water usage improvements are proposed, an energy analysis by a licensed engineering firm or engineer, or other qualified professional listed in the program guidebook, seeing that the proposed qualified improvements will result in more efficient use or conservation of water or energy or water, the reduction of greenhouse gases, or the addition of renewable sources of energy or water. Where renewable energy is proposed, an engineering study showing that the improvements are feasible. Where resilience improvements are proposed, certification by a licensed professional engineer stating other qualified improvements will result in improved resilience. Or, for new construction, certification by a licensed professional engineer or engineering firm stating that the proposed qualified improvements will enable the project to exceed the energy efficiency or water efficiency or renewable energy or water usage or resilience requirements of the current building code. So these are not currently required under the residential statute. They're more specific and detailed than what is required already. At the bottom of page three on to page four, a written agreement shall provide that the length of time allowed for the property owner to repay the assessment shall not exceed the life expectancy of the project. In instances where multiple projects have been installed, the lifetime shall not exceed the average lifetime of

[Senator Anne Watson (Chair)]: all projects weighted by cost.

[Legislative Counsel (unnamed)]: Lifetimes of the project shall be determined by the entities appointed as energy efficiency utilities or another qualified technical entity designated by the participating municipality. Notwithstanding any other provision of law, at the time of a transfer of property ownership, including floor closure, the past due balances of any special assessment under this chapter shall be due for payment, but future payments shall continue as a lien on the property. In the event of a foreclosure action, past due balances described in Subdivision A of this subdivision shall include all payments on an assessment under this subchapter that are due and unpaid as of the date of the actions filed, and all payments on the assessment that may come due after the date and that accrue up to and including the date titled to the property is transferred with the mortgage holder, for being holder, or a third party in the foreclosure action. A person or entity acquiring title to the property in the foreclosure action shall be responsible for payments on the assessment that become due after the date of sub requisition.

[Senator Anne Watson (Chair)]: On to page five,

[Legislative Counsel (unnamed)]: a participating municipality shall disclose with participating property owners each of the following: The risks associated with participating in the program, including risks related to failure of a participating property owner to make payments and the risk of foreclosure, and provisions of subsection H of the section that pertain to prepayment of the assessment. A written agreement or notice of agreement and the analysis performed under subsection B of this section shall be filed with the clerk of the applicable municipality for reporting the land records of the municipality and shall be disclosed to potential buyers prior to transfer to property ownership. Personal financial information provided to the municipality by a participating property owner or potential participating property owner shall not be subject to disclosure as set within one BSA three three and seventeen C. Seven, which is the Public Records Act. If a notice of agreement is filed instead of a full written agreement, then notice shall attach the analysis performed pursuant to subsection B and shall include at least each of the following: the name of the property owner as Brandhorf, the name of the municipality as Grantee, the date of the agreement onto page six, a legal description of the property against which the assessment is made pursuant to this agreement, the amount of the assessment and period during which the assessment will be made on the property, a statement that the assessment will remain a lien on the property until paid in full or released, and the location at which the original or true legible copy of the agreement may be examined. The property owner shall provide to the holders of any existing mortgages on the property notice of intent to enter into the written agreement. The combined amount of the assessment plus any outstanding mortgage obligations for the property shall not exceed 90% of the assessed value of the property. With respect to an agreement under this section, the assessment to be repaid under the agreement, when calculated, as if they were the repayment of a loan, shall not violate 9BSA, 41A, 43, 44, and 46 through 50. Those are statutes related to interest and loans. And the maximum length of time for the owner to repay the assessment shall not exceed thirty years. Subsection H, shown at the bottom of page six, there should be no penalty or premiums for prepayment of the outstanding balance of an assessment under this chapter if the balance is prepaid in full. On to page seven, Property may be eligible for financing if otherwise qualified improvements were completed and operational not more than thirty six months prior to submission of the application to the program. Waivers

[Senator Anne Watson (Chair)]: to

[Legislative Counsel (unnamed)]: the thirty six month requirement may be granted in the sole discretion of the program administrator. Section 3,277, Rule Making. The Commissioner of Financial Regulation in consultation with the Secretary of National Resources may adopt rules to implement this subchapter related to commercial property assessed clean energy projects. I think you should hear more about this. I do think that DFR has issued underwriting criteria. I don't know if they have done that via rulemaking, and I'm not sure that ANR would have much to add. So perhaps maybe DPS, don't know. Then section two amends one of the existing PACE statutes, cost of operation of the district. The owners of real properties have entered into it written agreements with the municipality under section three thousand two and sixty two, which is the residential case, or 3,276, which is the new commercial case, shall be obligated to cover the costs of operating the district. A municipality may use other available funds to operate the district. Section three, rights of property owners. A property owner who has entered into a written agreement with the municipality under three thousand two and sixty two, Kingfish Residential, or 3,276, Commercial, may enter into a private agreement for the installation or construction of a project relating to, on page eight, renewable energy as defined, or relating to energy efficiency as defined. On page eight, section four, liability of municipality. A municipality that has incurred indebtedness for or otherwise financed this project under this subchapter or subchapter three, the commercial subchapter, shall not be liable for the failure of performance of the project. A municipality that incurs indebtedness for bonding under this subchapter or Subchapter three shall pledge the full faith and credit of the municipality. Section 5.3266, Intermediate inter municipal agreements to or more municipalities by resolution of their respective legislative bodies or boards may establish and enter into agreements for incurring indebtedness or otherwise financing projects under this subchapter or Subchapter three. Section 6.3267, Eligible Energy Efficiency Projects. Those entities appointed as efficiency utilities under 30 BSA two zero nine, which would include Efficiency Vermont, PED, and Vermont Gas. On to page nine, shall develop a list of eligible energy efficiency projects, and shall make the list available to the public on or before July 1 of each year, and shall provide information concerning implementation of this subchapter and subchapter three to each municipality within the area in which the entity delivers efficiency services that requests such information and shall contact each such municipality that votes to establish a district to offer this information. Section seven, release of lien. A municipality shall release the participating property owner of the lien on the property against which the assessment under this subchapter, the subchapter three, is made upon full payment of the value of the assessment. Notice of a release of a lien for an assessment under this chapter or subject under green shall file with the clerk of the applicable municipality for reporting in the land records of that municipality. Section eight, collection of assessments, liens. Special assessments under this chapter shall constitute a lien on the property against which the assessment is made in the same manner and to the same extent as taxes assessed on the land list of a municipality, and shall, on page 10, and all procedures and remedies for the collection of taxes shall apply to special assessments. Notwithstanding subsection A of this section, a lien for an assessment under subchapter two of this section, shall be subordinate to all other means on the property and existence at the time the lien for the assessment is filed on the land records shall be subordinate to a first mortgage on the property reported after such filing and shall be superior to any other lien on the property reported after such filing. In no way shall this subsection affect the status or priority of any municipal lien other than a lien for an assessment under Subchapter two of this chapter. A lien for an assessment under Subchapter three of this chapter shall not be subordinate to all other needs on the property. Any assistance at the time the lien for the assessment is filed for the land record. So, this is creating a distinction between the residential projects and the commercial projects. For residential projects, aside from the first mortgage on the property, it takes priority other any other means on the property for when there's payment to be made. This is creating though that for commercial projects, it is not subordinate to all other liens on the property. So this is this distinction about who gets paid first in this. You should hear more about that from someone other than me. I was going say

[Senator Anne Watson (Chair)]: this is a topic of discussion.

[Legislative Counsel (unnamed)]: Section nine is the fifth sections to, and this is in nine PSA, section 46. I cannot fully explain this language, but I will read it through for you. Section 43 of this title. So this is title nine, we're talking about liens, loans and interest relating to deposit requirements, and Section 45 relating to prepayment penalties shall not apply to the parties shall not apply, and the parties may contract for a rate of interest in excess of the rate provided in Section 41A of this title.

[Senator Anne Watson (Chair)]: In

[Legislative Counsel (unnamed)]: the case of, and it's adding on page 11, it's adding obligations incurred for commercial property assessed clean energy projects under 24 BSI 87, subject to treatment. Shall take effect on 07/01/1926. So this is a program where funding for energy projects can be made through voluntary agreements between the property owner and the municipality where they are located. The town access payment method and remitor. And financial instruments are not my specialty. So this is at Uber's time. It's got clean energy on the title.

[Senator Anne Watson (Chair)]: But it's really, it's a high end of the film. Yeah. One question. This, as I understand it, it does not necessarily allow third parties to hold the indebtedness. Was that fair?

[Legislative Counsel (unnamed)]: I believe so, but there's what I There are people in the state who have a lot of familiarity with the existing program that I can speak to about Well,

[Senator Anne Watson (Chair)]: putting it out there is like, this is something that Senator Chitin raised that is possible in other states. So maybe something that we want to allow for as well. So it's not just in this

[Senator Seth Bongartz (Member)]: Hardy, won't be embedded, especially in middle of the municipality.

[Senator Anne Watson (Chair)]: Effectively, would pass through. That's how I understand it, but we should take more testimony. Okay. I would just add,

[Legislative Counsel (unnamed)]: there were, in the two brand new sections, there are a couple of distinctions between maybe the same language. Perhaps the next witness is gonna

[Senator Anne Watson (Chair)]: speak about. Sure. Think it's different between the first draft

[Legislative Counsel (unnamed)]: and Well, existing program versus what you're proposing in this new program. So there are entirely new statutes in 3275 and 03/1976 because there were, the interest is to have it be distinct from the residential program and

[Senator Anne Watson (Chair)]: you should hear more about those things. And why this needs some additional provisions. Yeah. And why it's distinct. Yeah, I think that's fair. And this is something that our next witness and I have talked, so. Okay, Thank you. Yes. Okay. Okay. So with that, Ms. Samai, welcome. Thank you.

[Amanda Samai (CastleGreen Finance)]: You.

[Senator Anne Watson (Chair)]: Great, and also have I sent your name right?

[Amanda Samai (CastleGreen Finance)]: Samai, correct. Very close. Very good. You. I appreciate the opportunity to listen in and be part of this discussion.

[Senator Anne Watson (Chair)]: Great, if you could hold on one second, yep, great. Thank you, you read my mind, Jude, thank you. Okay, maybe before we get started, we could do it, just a quick round of introductions so that you know who you're speaking to. Great thought, thank you.

[Senator Seth Bongartz (Member)]: Sure.

[Senator Anne Watson (Chair)]: Hi, I'm Senator Ruth Hardy from the Addison District.

[Senator Terry Williams (Vice Chair)]: Good morning, I'm Senator Terry Williams from Rutland District.

[Senator Anne Watson (Chair)]: Anne Watson from the Washington District.

[Senator Seth Bongartz (Member)]: Senator Bongartz from the Bennington District.

[Senator Scott Beck (Clerk)]: I'm Senator Scott Beck from Caledonia District.

[Senator Anne Watson (Chair)]: Great, and if you could go ahead and introduce yourself and then take it away with what, yeah, talking about commercial pace and the draft.

[Amanda Samai (CastleGreen Finance)]: Great, thank you all. I welcome the opportunity and appreciate that you're taking up this very important topic. My name is Amanda Sami. I work for a company called CastleGrain Finance. We provide C PACE financing as a third party lender into states across The US that have approved C PACE at the state level and then at the local municipality level like you're considering today. So, I have a long history in C PACE. I've been involved on the origination side, but also previously as an investor in the asset class for pensions and insurance companies. So I have a history in C PACE that dates back to when the Vermont statute sort of was enacted in 2011 and contemplated at that time, I think a heavy, heavy consideration as it's written for residential, which has shifted over the years to now be a focus in the market primarily for commercial properties, which is what this amendment is specifically addressing. And I'm happy to answer any questions I've spoken in a number of States testifying in support of C PACE. So I understand the questions as they come up and I'm happy to assist in anyone's understanding. But the way we view PACE, which is now sort of active in about 37 states across The US and over 10,000,000,000, I believe in commercial originations has been performed. And it's more recently in the last, you know, sort of seven years and primarily earlier years focused on residential, but the focus, as I said, you know, from a legislative perspective and from a financing perspective has moved away from the consumer more into the commercial space. So the key points that are raised, and I appreciate all the attention that's been given in the work that has sort of been put into date to what we call modernize the statute, but it really is meant to offer a voluntary financing program and that I think the keywords are sort of voluntary and consenting. The statute allows local municipalities that wish to offer this financing the opportunity to do so, and it offers property owners who would like to take advantage of the financing a similar opportunity to do so. It's all voluntary. There is some language in the statute currently that allows for the municipality to offer the financing and certain municipalities retain that and others only do third party financing where no money of the local municipality pledge or faith of the balance sheet or the credit of that municipality is pledged towards the repayment of the assessment. What it does really is allows property owners to access capital through private lenders that is secured in the property records of the building in which they're building or otherwise improving with the sort of improvements that are noted here in energy efficiency, renewable resiliency is important. We can talk separately about that. And certainly in various States, we're seeing more States that have earlier statutes now adding resiliency because of the many instances that they can be beneficial there. So the property owner would like to borrow some percentage of the capital that they need, or potentially all capital they need if they're replacing their air conditioning systems or putting in LED lighting or other energy efficiency improvements. And they do that through this program. The municipalities participation is through allowing that to be levied as a special assessment in the land records. You've heard things here like consent and subordination, and really because of the voluntary nature of the program, what other states have done and what this amendment sort of seeks to clarify is that because this is a voluntary program, what your statute amendment does not contemplate, but we would recommend is that there's written consent of the lenders, of the mortgage lenders, of the lien holders on the property that understands that the property owner would like to use this and they understand what the PACE program is. That written consent is basically that lender saying, we understand that this property owner wants to borrow, you know, a certain amount of money for their project. The bank, if it is willing and able, may lend that entire necessary sum on their own completely, you know, that that is sort of the property owners first and foremost, you know, goal is to finance their project. If the bank is unwilling or otherwise unable to give that borrower all the debt that they need to complete that project, that borrower will probably go to the market and look for another sorts of financing and C PACE is meant to be an option for that property owner. And what that option does by levying the assessment that secures the amount of financing that companies offer, living in the land records allows those lenders to offer it at a lower rate of capital that you might otherwise see in what is deemed to be a mezzanine debt or a second lien debt, which tends to be a little bit more expensive. Now, the lender would have know and understand and consent in a written form, which is how it's handled by and large across the most of The US. They would consent that because this is meant to act like a special assessment and be collected annually, if taxes are collected there annually or twice a year, alongside the regular property taxes, that if a property owner is unable to make that payment, which is meant to repay the financing, all that's ever due and payable is the annual amount, just like your property taxes, plus any fees or expenses that could accrue in the same manner as property taxes. And this allows property owners who know and understand the implications of not paying their taxes and assessments, a clear understanding. And it allows the banks to understand that the entire amount of the PACE financing is not due and payable if a property owner misses a default. What is only ever due and payable is that annual payment. This is very unlike traditional financing whereby if you miss a mortgage payment or you miss a payment on your debt, the entire amount of the financing could be called and be doing payable. So that gives banks a little comfort. It allows them the opportunity to better understand what PACE is meant to do, And we get a lot of consent just through education of that and their willing consent to the property owner. We heard that there's sometimes objections from the Mortgage Bankers Association, we understand that. And allowing this sort of consent makes it very clear that this is voluntary from all perspectives.

[Lewis Porter (Washington Electric Cooperative)]: And

[Amanda Samai (CastleGreen Finance)]: because it is only that annual amount, the mortgage is only subordinate to that lien to the extent of the annual payment due. And again, that's just a clarification that allows the bankers to sort of understand and see that, you know, this is going to be something that they can underwrite. This is going to be something they understand how property taxes work. They understand the implications of that. And if the mortgage lender, if the property owner misses this payment, misses their property tax payment, misses their special assessment payment, the bank could step up to make that payment on the borrower's behalf to keep their interest in their loan secure. So it is sort of just an education process between the lenders and the banks as the property owners bring these parties to the table to talk about the potential to obtain this type of financing. So those are some of the changes that I think that modernize. There's a number of other things that are around resiliency. Heard about that, and we heard about the cost of the project and the energy reports. These are all very standard and required across The US and other programs as well.

[Senator Anne Watson (Chair)]: I have a question, go ahead. Yeah, hi, thank you. I'm just trying to understand what the role of the municipality is and why they are a third party to this agreement between lenders and banks or a fourth party. I don't know how many parties there are, but what's the role of the municipality? Why are they involved?

[Amanda Samai (CastleGreen Finance)]: The municipalities, participation is necessary because by statute in Vermont and other states, only those municipalities have the ability to levy in the property taxes this type of special assessment. So the power of the municipality to do that is what it lends into this process. So there's what we call an assessment contract, whereby the property owner and the municipality typically sign, where the property owner says, I voluntarily would like to obtain this type of financing from this financing company. I would like you, the municipality, to record that financing in the property record at records as a lien at the property level. And here in Vermont, I think your statute contemplates that the tax collector would collect that annual payment. Let's say it's a twenty five year financing repayable over twenty five years, lien would stay in the tax world, the lien would stay in the property records and the annual amount would be collected by the tax collector and then remit to the private capital that had provided the funds.

[Senator Anne Watson (Chair)]: Okay. So they're just they're the they're doing all the work, but what's the benefit to the municipality? Why would they wanna do this?

[Amanda Samai (CastleGreen Finance)]: So PACE financing drives development of projects and allows property owners another type of financing that potentially helps projects come to completion at a lower rate than, as I said, if a bank, a local bank can provide all the financing that a property owner needs to get their property completed, build a new building, add to the property tax or redo all of that, the banks will do that and you won't hear from PACE. But if the bank for some reason says, I can give you only 40% of the amount that you need and you need to go out and find another sort of 20% of your capital from somewhere else, that property owner could turn to a host of lending sources. But because of the security provisions of that assessment that's levied in the land records and the seniority that it has on that annual basis akin to a property tax or to a special assessment like a water assessment or a sewer assessment, the financing that companies like mine can provide is typically at a lower rate than that next piece of debt. So it gives property owners the benefit of lower interest rate costs. And for the municipality, because it's collected like a property tax, like something they do every year, that's how they drive their revenue base at the local level, they know how to collect property taxes. It's not meant to be a burden, you can outsource as was indicated or some economic development agency or some agency at the local level might take on the administration of the project in terms of getting the documentation signed. But annually, it's meant to act in a similar fashion to property taxes or special assessments, get sort of collected in sort of ministerial manner administratively throughout the county.

[Senator Anne Watson (Chair)]: And what is the, by doing this, what risks are the municipalities taking on? What happened? I'm still not clear why a municipality would do this. I mean, I'm not sure how familiar you are with Vermont. Our are tiny.

[Amanda Samai (CastleGreen Finance)]: Yes. Yes. So, and, you know, I have the benefit of I've gotten a lot of inbound inquiry into Vermont. I'm the person who sort of like runs the state programs and coordinates with state programs. We've had a lot of inbound inquiry into how is the pay statute in Vermont. We have a affiliate who's a USDA lender who does a lot of rural agricultural lending, rural lending in these areas. The opportunity for projects to get financing sometimes in more rural areas and smaller towns is, it's less than they can otherwise get in large cities. So the benefit is that these projects, which otherwise sort of have difficulty finding lenders with this type of program, lenders are more willing to sponsor and step in and finance these projects. And from the municipality's perspective, the legislation can be written all the documentation such that there's no liability assumed by the municipality. Again, it's really just meant to sort of be an add on to the process that they already administer through the tax collection. And if they wanted to, they could actually outsource that too and say, Okay, well, we don't want to do the billing. Someone else can do the billing. But these all have to be handled appropriately within the statute at the statutory level so that the lenders feel comfortable that the money that they are lending into these projects have a means of sort of being monitored and enforced in a way that's going to get their investors their money back Sorry,

[Senator Anne Watson (Chair)]: can municipalities charge a fee to cover their costs?

[Amanda Samai (CastleGreen Finance)]: Sure, that's very standard. If there's incremental fees, that's part of what the projects will cover. We understand that these are setups, there's going to be fees and expenses. These are common across The US so that it's not meant to be a burden in any way or to cause certain municipalities to put front a lot of money to get this up and running. Really, as you indicated, the localities are small. You see five projects in a three year period, but those five projects might come to the table, build economic development, build growth, allow the property owner to fund improvements that might not otherwise be feasible for them because of the benefits of the financing rates that in order because of the way it's administered through this property tax lien. So, and again, it's completely voluntary. It's sort of at the state level. It just allows the local municipalities to make these decisions on their own, whether they want to enact these programs. And typically what we see, especially for the smaller and more rural locations is that it's driven through the interest of the local constituents. So, you'll have property owners who really would like to use this financing. We have a few that would be happy to testify as this moves through as to the benefits to them as property owners within these jurisdictions and how they feel that this type of financing is better than some of the alternatives that they might otherwise have in the market.

[Senator Anne Watson (Chair)]: I've got a question. It stands right now, I think our draft is not envisioned by third parties holding the debt. So I'm imagining that one of the recommendations you would have is to allow that through statute.

[Amanda Samai (CastleGreen Finance)]: That's right. I guess because the statute exists currently in Vermont and has not been utilized to my knowledge, I feel that there's things that can be done like I said, modernize it and to create the interest in the program. You've addressed a couple of them. Certain, and again, this sort of enters back to the legacy and when these early statutes were enacted, it was a much different market. And now we're contemplating commercial projects, which might exceed $50,000,000 not a $5,000 sort of residential project or a $10,000 residential project. So the size and scale of the projects that we're talking about on the commercial side are potentially much different. And municipalities certainly have the ability to use their own funds. We've seen this through what sometimes municipalities will do is lend their bonding authority through a joint power authority or some other type of conduit financing. But typically, the funding behind that comes from the private markets.

[Senator Anne Watson (Chair)]: Great. I don't know if you had more that you wanted to share with us, we interrupted you or we could just go to questions.

[Amanda Samai (CastleGreen Finance)]: I'm happy to answer any, like I said, you know, having worked through this with a few states, and I'm happy to answer any questions. I understand that it's new and different, but I think the keys are really just this very voluntary nature, not meant to be sort of an administrative or economic burden, but to grow sort of the economic base and provide local constituents an option.

[Legislative Counsel (unnamed)]: So can you walk us

[Senator Anne Watson (Chair)]: through the situation of what happens when a property owner is not making a payment, right? Like they, maybe they're not paying their taxes, maybe they are not paying the special assessments, like maybe they're not paying book, or maybe they're just not paying the special assessment, what happens then?

[Amanda Samai (CastleGreen Finance)]: Sure, and I'll make this, and I apologize, I'm not an expert serving Vermont statutory foreclosure or any of the things the municipality does, but generally it again, because it is not meant to be something new or different for the municipality, if the property owner misses a property tax payment, a special assessment payment, a PACE payment deemed to be a special assessment payment, The typically we see reference back to the real property tax laws in the statute that sort of follow what that process is. So you'll have notice and cure periods to the property owner, the same as you do as the bank would follow if the, if you know, the bank would get note, the lender would get noticed, the municipality would get notice that the property, they would know that the property owner did not make that payment. And then whatever that sort of enforcement provision under the local statutes are for missed real estate taxes or property assessor other property assessments, that's the way the pace follows. So it's not meant to sort of, you have to learn anything new, already exists by statute and is currently happening at the local level already.

[Senator Anne Watson (Chair)]: Okay, and how are the interest rates for commercial PACE relative to market rates?

[Amanda Samai (CastleGreen Finance)]: So it is very highly dependent, as you can imagine. Lenders, mortgage lenders, all lenders sort of risk based pricing price, right? So the and we all know this when we go to buy our own homes sort of location, the fixed price. You know, but the pace is, again, the way we see this working is because PACE is limited as you see through the statute that it can only be used for things that impact energy efficiency, renewable energy or resiliency. It can't be used to fund the entire cost of building a building. It's going to be naturally constrained by those metrics. So you'll typically have, in the case of a new construction or new development of a building, you'll have a senior lender who is willing to come to the table and sort of say, well, they'll finance some proportion of that. The PACE rates are meant to be reflective of that secured provision within the land record. So it may be lower than what the property owner is paying for their construction financing, which is kind of a five year construction, and then a refinance, it might be a little higher than what they're getting from their bank, if their bank is giving them sort of a construction to permanent financing, you know, a twenty year, It really just sort of depends on the type of financing. But in all instances, it's going to be less than the second piece of debt that we call this second debt mezzanine type level debt, you know, that property owners use because in terms of what a property owner is putting forth, equity is the most expensive. Their own equity is going to cost them the most. And then you go down from there and typically your local regional bank will have the best rates for that borrower, and the borrower will look at the options in the market. And PACE kind of sits in between what they might get from their regional bank and what certainly what they would get from a mezzanine lender or what's called a second lien or junior participant. So the rates right now are between, you know, seven and a half to eight and a half percent typically, whereas mezzanine debt might be in the range of, you know, 10 to 12% to put it in perspective.

[Senator Anne Watson (Chair)]: Can you can you say that one more time?

[Amanda Samai (CastleGreen Finance)]: The rates currently are sort of in the market depending on the type of property, as I said, could range between and they're they're generally based off, like, a ten year treasury rate, but call it like 7.5% to 8.5% to 9% versus what you could see from a mezzanine lender, which is typically sort of that 10 to 12 to 13% type debt.

[Senator Anne Watson (Chair)]: Okay. Other questions that folks may have? Yes, go ahead.

[Senator Seth Bongartz (Member)]: In some way it would be helpful for us to have a handful of like real world examples.

[Amanda Samai (CastleGreen Finance)]: Of course, yes. And again, think that's one of the big drivers is because of the voluntary nature, the inbound requests that we're getting come from property owners who wanna develop projects in Vermont. You know, it does work really well in a lot of states and we're super excited to see if it could work here. And like I said, it's not for every borrower, instances where it works, the borrowers have really liked it and tend to be, you know, kind of repeat borrowers to our business.

[Senator Anne Watson (Chair)]: Yes, ma'am.

[Senator Terry Williams (Vice Chair)]: So just wondering about VOCT,

[Senator Anne Watson (Chair)]: I think that's a good question. We should have it in on. Okay, other questions for now? I do have more questions. I have a lot of questions. But I'm going to hold off for now. And I think we should move on.

[Legislative Counsel (unnamed)]: Okay. All

[Senator Anne Watson (Chair)]: right. Thank you so much. Of course.

[Legislative Counsel (unnamed)]: And we'll continue to be

[Candace Morgan (Green Mountain Power)]: in touch.

[Amanda Samai (CastleGreen Finance)]: Thank you. Ms.

[Senator Anne Watson (Chair)]: Sullivan, welcome.

[Legislative Counsel (unnamed)]: Thank you.

[Anne Sullivan (Vermont Chamber of Commerce)]: The record, Anne Sullivan, Vice President of Government Affairs for the Vermont Chamber of Commerce. Thank you for having me. I may have already been enrolled in meeting and received my three copies of this from me at this point, but I'm going to reference the economic action plan. So I thought I would bring copies for folks who would like, I don't know. So I appreciate the opportunity to come in here and talk about commercial PACE. Start off, we are supportive of the intent of this legislation and appreciate your attention to looking at new tools to strengthen Vermont's economic competitiveness, modernize our building stock, and leverage capital to support business investment. Broader context, no surprise to anyone in this committee. Over the last several years, the federal efficiency programs, clean energy funding has played a significant role in helping businesses and property owners invest in, in foreign not phrase, that landscape has shifted, federal dollars are more limited, more competitive, and less predictable. Many programs that businesses rely on are winding down, oversubscribed, and less and less certain. At the same time, our businesses are facing a rise in their operating costs, aging infrastructure, and increasing pressure to modernize buildings to remain competitive, whether that's to control energy costs, meet tenant expectations, or make properties resilient in the face of climate impacts. And C PACE, you guys have been talking about this, so I'm just going to use that short term. C PACE offers a way to respond to that reality and help property owners make long term investments that strengthen both the individual business and the broader economy. At its core, this is, as you've heard, a voluntary financing tool available to commercial, industrial, agricultural, nonprofit, and I think importantly, multifamily property owners. My understanding is the residential pace in Vermont is between one and four units.

[Lewis Porter (Washington Electric Cooperative)]: So when we're talking

[Anne Sullivan (Vermont Chamber of Commerce)]: larger, especially our affordable housing projects, I don't believe they're up to growth for residential space as it's currently structured. It allows building owners to finance energy efficiency, renewable energy, and resiliency improvements that repay that financing over time through the property assessment. Importantly, that repayment term can align with the useful life of the improvement, which may not always be possible with traditional lending. It is not a state loan program, it's not a subsidy, and it's not a mandate on property owners or lenders. It's a framework that allows capital to flow into projects that may otherwise struggle to move forward because of the upfront costs or financing mismatches. From the Chamber's perspective, Esplan Berge is fundamentally about helping projects as well. Across Vermont, we hear from Vermont and business owners who want to invest in their properties, but face real barriers to doing the important things like energy upgrades, building envelope improvements, and resiliency investments that make sense over the long term, but upfront capital requirement can delay the project. CPASE helps address that gap. It reduces upfront costs, improves cash flow, and allows businesses to modernize without diverting working capital away from operation, payroll, or growth. This is particularly important in Vermont, where much of our commercial building stock is older, and where reinvesting in existing buildings is critical to keeping our downtowns, village centers, and employment hubs viable. CPAs should also be viewed as a broader economic development tool. When projects move forward, contractors are hired, engineers, energy professionals, and skilled trades go to work. Local suppliers benefit. These investments support Vermont jobs and keep dollars circulating in our local economies. In addition, modern, efficient, and resilient buildings are more attractive to tenants, employees, and customers. That matters to the workforce recruitment and retention, especially as businesses compete for talent and seek to offer safe, comfortable, and forward looking workplaces. S-one 138 is well aligned with the priorities already identified in the Vermont Economic Action Plan. The action plan emphasizes the need to modernize infrastructure, improve energy efficiency, reduce operating costs for employers, and attract private investment without increasing public spending. CPACE directly advances each of those goals. It supports reinvestment in existing buildings, local and long term costs for businesses, and encourages private capital deployment, and strengthens the physical foundation of Vermont's economy. Rather than creating new policy directions, CPASE provides a practical tool to help implement priorities that the state has already embraced. Vermont would not be breaking new ground by adopting C PACE. Dozens of states already operate successful programs that range from projects supported in this infrastructure. The written testimony I have submitted, which I think is posted, right? Yes. Has lengthy examples of how it's been used. I wasn't planning to go into that, but if you'd like me to, I can go into more. But in Connecticut, CPA's financing helped transform a former office building into Hotel Marcel, which is now recognized as one of the nation's first net zero hotels. So if you think about why a municipality would do that and fake an office building versus having a thriving hotel, the revenue that runs in no town, so the state. In Tennessee, historic theaters and downtown landmarks have been renovating using C PACE alongside tax credits. Across the country, everyday office buildings, manufacturing facilities, and mixed use properties have used C PACE to fund HVAC upgrades, energy efficiency improvements, and resilience measures. These examples demonstrate that CPASE works not only for high profile projects, but also the types of buildings that make up the backbone of our local economy. So they can be scaled from small business, the small project, to very large projects. We recognize the importance of getting the details right. And understand that lenders will have questions and may propose refinements to ensure clarity and confidence around their position, and we support thoughtful technical adjustments that strengthen lending participation while preserving the core functionality of the program. Other states have navigated these issues successfully in Vermont and learned from those models, and we'll stay committed to working constructively with lenders, program administrators, and policy makers to ensure this is implemented in a way that works for all parties. There isn't a silver bullet to deal with all of the infrastructure needs and climate needs that Vermont has had with. The more holes that we have in the toolbox, the better off we are in trying to address them as quickly as we can. Please let me know if you have questions for me. Full disclosure, I am not a C PACE expert. I am not an energy efficiency expert or a municipality expert, but I will answer any questions that I have and maybe raise some questions too instead of new draft. I'm just trying to complete it if there's anything else there. Can

[Senator Terry Williams (Vice Chair)]: you give us some kind of an idea of the magnitude of how many how many of these systems are already could be taken advantage of this? Mean we're still going to build solar for example, we're still going to have to meet the regulatory requirements, the power company is going to have to say that they can accept the power.

[Anne Sullivan (Vermont Chamber of Commerce)]: Yeah, I mean it'll take, you know, I think with any project that you have in the commercial industrial space, it takes people working together to understand how do we bring in the power that we need. You already have these players at the table. This is really about how do we finance that picture that we've created of a modern, resilient, efficient building. So I think one new player that we might be bringing in is the administrator of C PACE, but otherwise, these are the projects that people are already envisioning. And if right now they can't get them to pencil out, if this tool allows that to happen, that's important. I think the question for the municipality, why would I do this? That's a great question that we need to answer to make sure that they are feeling good about it. And we have residential PACE already in place, so maybe finding out what Vermont's, how these are districts for residential PACE and how has it gone?

[Senator Terry Williams (Vice Chair)]: Where is the demonstrated of C PACE?

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: What's that?

[Senator Terry Williams (Vice Chair)]: We have one in Vermont.

[Anne Sullivan (Vermont Chamber of Commerce)]: We have resid we don't have C PACE in Vermont, but we have residential PACE in Vermont. So our PACE, our pace, our pace has been, I think, since 2011 or 2000. Well, and I can say that the uptake on residential pace was nearly nothing. And there were some reasons for that that made it unattractive. But it has been successful in these other states. So one of the attempts here, Ms. Sami mentioned, was to update the statutes. Like they were done on that, yes. Yeah, I mean, appreciate this attempt at an economic development tool. I'm really, I'm putting my GovOPS hat on, and I'm really concerned about any liability that municipalities might take on with this, and so I want to understand that better, and any risk that they're taking on, and any work they're taking on, because our municipalities, especially our smaller municipalities, even our medium sized municipalities are really stressed right now. And I don't want to put them at risk. I mean, the other draft, maybe it's in the residential program, the mention of the full faith and credit of the municipality. That freaks me out. Like I don't want, our municipalities are already stretched some of them are not super sophisticated, and I don't mean that as a negative, an insult to them. They just don't have the people and the staff. And if there are landowners or people who want to finance a project and get their town to vote for it, because our small towns, that can happen. And then the town takes on the risk. I will be really worried about that. So I just want to make sure that protections of our municipalities and therefore our taxpayers, because we would all pay if something goes wrong. Our perspective. So I fully agree. And I think we need to ensure, I mean, if they wanted to, maybe that's an option, but I think in order for this to work, there has to be an option where it is not a municipality that is taking on that risk. And one of the things that I feel like could be, that could make it attractive as, was mentioned is if there is a way for them to charge for effectively providing service, that could be beneficial. That could be a mechanism for them to earn a little bit of money. Mean, one word more. Yeah. And I think, you know, when we look at municipalities taking that risk with tax and foreign financing, I think it's also in check.

[Legislative Counsel (unnamed)]: Ruth, that the sole

[Anne Sullivan (Vermont Chamber of Commerce)]: faith in credit has to be, if you're going for indebtedness, it's sort of ensuring that your taxpayers know we're taking this on. Now, I think something that's important in CPAs is that because it's with the property tax, not with the owner, if that owner goes bankrupt, the next owner of that property, the lien is still with the property, not with the person. So payment will still be due on the property. Now if the property is,

[Legislative Counsel (unnamed)]: there's still risk, but I

[Anne Sullivan (Vermont Chamber of Commerce)]: think that takes a little bit of a way to say that it's, this is living with the property, these are upgrades to the property, less about the person. Yeah, I understand that. People think they're- Yeah, I just kind of want to, well, yeah, we don't, I mean, creating a new tool, I love that, but I want it to work in a way that people are going use it. So if municipalities are making- Yeah, I mean, I'm just seeing some of our municipalities that have been the victims of all the floods, and they may want this kind of investment in their town, but they just can't take out this risk and this work, and it's unfair to ask them to do it. And I know it's voluntary, I understand that, but there still could be pressure from groups to do it. I just want to- You know what amazes me is that I think the fish can see the hunt in the RBACE program, if he supports the municipalities, but we're gonna do that easier Yeah, from so that's different. And again, my great testimony for some of

[Legislative Counsel (unnamed)]: those examples of what are

[Anne Sullivan (Vermont Chamber of Commerce)]: the projects that have been done with this? I've got a longer list of small business, larger commercial mixed use, redevelopment and sustainability, and institutional buildings that have different mixed projects. You know, I was just thinking out loud here. Something that may be helpful is, I'm just flagging for myself, suppose, is that it might be helpful to hear from a small town that had ducked us. So anyway, we'll move out. If we can add it to

[Legislative Counsel (unnamed)]: that state, you're from Minnesota. Kid's Thunder Minnesota. Could be the place you need to be. Kid's Thunder had a thrift store, lighting

[Anne Sullivan (Vermont Chamber of Commerce)]: changes generating, meaning polarity savings. They're out there. We'll try some band. Yeah. Okay. Super. Thank you. All right. Thank you. Okay, so that is the end of our testimony today.

[Senator Anne Watson (Chair)]: We are done a fair bit early, which is great. And so unless there's anything folks want to share at this point, any conversation?

[Ken Nolan (General Manager, Vermont Public Power Supply Authority)]: I'm be half

[Senator Anne Watson (Chair)]: hour. Okay, fair enough.

[Senator Scott Beck (Clerk)]: Take it down the line.

[Senator Anne Watson (Chair)]: We started calling it time effective.