Excerpt: "Many Vermonters have been told that S.5 will result in much higher fuel prices, that it’s a “carbon tax,” that it involves mandates for how they heat their homes or the fuel they use, and that the unprecedented “check-back” mechanism that the legislature added — at the request of Governor Scott — is somehow a sham.

None of this is true."

One of the most controversial bills to pass the House and Senate this year is S.5, the Affordable Heat Act. It’s controversial for a few reasons:

 The bill addresses how Vermonters heat their homes. Fuel bills are a big part of our household budgets, so this matters a lot … to all of us.  The bill is complicated. It’s not simple to explain. (Does this mean it’s bad policy? No.)  The goal of the bill and the solution it proposes — the facts — have been muddied by misinformation that seems specifically designed to scare people.

Many Vermonters have been told that S.5 will result in much higher fuel prices, that it’s a “carbon tax,” that it involves mandates for how they heat their homes or the fuel they use, and that the unprecedented “check-back” mechanism that the legislature added — at the request of Governor Scott — is somehow a sham.

None of this is true. And it’s keeping folks from understanding the clear, stated intent of the bill, and the language that it contains. And it’s frustrating for the many people who are working hard to help Vermont adapt to climate change in a thoughtful, forward-looking way.

I voted “yes” for S.5 and am encouraging all Vermonters to look past the hype and get the facts about this important bill.

Here is some background on S.5.

Over the past year, the price of fuel oil has risen by $2 a gallon. This has hit Vermonters hard. It’s not the first time, and certainly will not be the last time, that families have been hammered by rising, unpredictable, volatile fossil-fuel prices.

Here are some things I think we all agree on:

1. People can’t afford rising, out of control fuel prices.
2. Right now, there’s not that we can do to control these prices. Neither can our local fuel dealers.
3. It would help everyone to find a better way.

The fact is that clean heat is cheaper and more sustainable. It’s the heat of the future. Here are some resources to learn more about this:

U.S. Department of Energy: https://www.energy.gov/articles/how-saving-environment-can-save-you-money-big-time

Vermont Department of Energy: https://energysaver.vermont.gov/programs-incentives/rebates-financial-incentives

Efficiency Vermont: https://www.efficiencyvermont.com/

So how do we get to the approaching clean-heat future in a way that helps, rather than hurts, the Vermonters who can’t afford rising fuel bills, and are least able to make the switch to cheaper, cleaner heat?

Vermonters who can afford to do so are already lowering their fuel bills — and saving a lot of money — by taking “clean heat” steps like weatherizing their homes, installing heat pumps or advanced wood heating systems (to replace, supplement or back up their existing heat system), or making small changes by switching to solar-powered water heaters.

Vermonters who cannot afford to make these changes — the same folks who can least afford rising fuel prices — are the ones getting left behind as our economy shifts — faster and faster, and inevitably — to clean heat.

S.5 is designed, explicitly and clearly, to help Vermonters save money on fuel bills by switching to clean heat. It does this not through taxes or mandates, but by requiring fossil-fuel dealers to earn credits. They earn these credits by helping Vermonters to weatherize, to install clean heat systems, to switch to cleaner fuels, at a more affordable price.

For Vermonters, would translate to many more available choices — and more affordable choices — to switch to clean heat in any way that works for their home and for their family finances … but only if they want to. It creates a Vermont in which it’s easier and cheaper to take these steps. It’s based on incentives, not mandates, for customers.

A big percentage of the incentives would be aimed at low- and moderate-income Vermonters. The rest of the incentives are aimed at any residential home (regardless of income), plus businesses and manufacturing companies. They will benefit from the incentives, too.

For policy wonks, here’s the actual language in the bill: The Clean Heat Standard shall be designed and implemented to enhance social equity by prioritizing customers with low income, moderate income, those households with the highest energy burdens, residents of manufactured homes, and renter households with tenant-paid energy bills. The design shall ensure all customers have an equitable opportunity to participate in, and benefit from, clean heat measures regardless of heating fuel used, income level, geographic location, residential building type, or homeownership status.

And this: The Commission shall, to the extent reasonably possible, frontload the credit requirements for customers with low income and moderate income so that the greatest proportion of clean heat measures reach Vermonters with low income and moderate income in the earlier years.

See examples of how this will work for families:

Scenario A: The Anderson family is a lower-income family that lives in an apartment. They pay the utilities for the apartment, but the property owner is responsible for the appliances. The propane water heater that heats their water dies. Instead of replacing it with another propane water heater, the property owner takes advantage of a clean heat credit supported incentive that lowers the upfront cost to install a new heat pump water heater to below the cost of installing a new propane water heater. This allows the Anderson family to save nearly $500 a year.

Scenario B: The Bertrand family is a middle-income family. They live in an average size home and heat with a fuel oil furnace. They make too much to qualify for free weatherization through the Weatherization Assistance Program that supports the lowest income Vermonters, but they don’t make enough to go ahead with weatherization without additional incentives. Due to the incentives made available by the Affordable Heat Act, the Bertrand family can finally afford to comprehensively weatherize their home. Any remaining upfront investment of the weatherization that is not covered by expanded incentives is financed by the Weatherization Repayment Assistance Program, paid back over time on their electric bill. The project results in a 25% reduction in fossil fuel use, which lowers their average annual fuel oil bill from $2,000 a winter to $1,500 a winter, saving them an average of $500 a year in fuel costs, or $5,000 over the next decade.

Scenario C: The Cassidy family is a lower income family who owns a small home that is well-insulated because they previously had it weatherized by the Weatherization Assistance Program. However, they still have trouble with the high cost of their propane bills. Because their home is small and well-weatherized, their heating contractor let them know that they could heat their whole home with heat pumps (while leaving their existing heating system in place as a backup). Thanks to the incentives created by the Affordable Heat Act, the Cassidy family installs the heat pumps and proceeds to save about $1,000 a year in heating costs.

Scenario D: The Diaz family is a middle-income family who had a new fuel oil boiler installed 5 years ago. Because they are invested in keeping their relatively new boiler, they decide to simply switch their heating fuel from fuel oil to B99 biodiesel, made from recycled restaurant oil. Because of the Affordable Heat Act and the value of a B99 biodiesel that is 5x lower emitting than fuel oil, the cost of the biodiesel becomes lower than fuel oil. The Diaz family keeps their boiler but pays less per year in fuel than before.

Scenario E: The Edmonds family lives in an old home that is twice the size of the average home in Vermont. They decide to replace their old propane boiler, which was costing them an average of $5,000 a year, or over $50,000 in total fuel costs over the past decade. Instead, thanks to the Affordable Heat Act, the upfront cost to install a new advanced wood heating pellet boiler is brought down to less than the cost of installing another propane boiler. After installing the pellet boiler, the Edmonds family saves an average of $2,000 a year in fuel costs as a result of using wood pellets rather than propane.

Source: Energy Action Network: https://www.eanvt.org/affordable-heat-faq/

The two most damaging claims being circulated about the Affordable Heat Act are that:

FALSE: It will raise the price of fuel by 70 cents or more FALSE: And that if it becomes law in 2023, it’s a done deal.

Both of these claims are untrue. Here’s why:

1. Under the Affordable Heat Act, fuel dealers will be required to earn credits. They’ll do this by delivering a wide range of “clean heat measures” to interested customers at a more affordable price. For customers, this equates to opportunities and incentives. For fuel dealers, this translates to an increased cost that they are, in fact, likely to pass along to customers in some way.
2. The question is: How much? There’s been a lot of speculation. A similar program in Oregon, based on transportation fuels, resulted in higher prices at the pump of about 7-10 cents per gallon. Others have claimed — based on admitted “back of the envelope” math — that in Vermont it could mean a price hike of 70 cents a gallon. (Click here for discussion of that number by an energy policy expert).

The good news is, we won’t have to guess.

TRUE: We won’t have to guess about any impact on fuel prices. We’ll know ahead of time — and we can adjust the program in response.

As passed by the House and Senate this spring, S.5 includes a series of mandatory reports back to the legislature. The detailed reports include:

 A “potential study” that takes a hard look at the actual logistics and implementation of the proposed program, including important things like the evolution of clean-heat technology, workforce capacity, supply chain constraints, and estimated uptake: How many Vermonters would be likely to install heat pumps, for example, at more affordable prices? How many would weatherize? And how should the program be designed in light of this information?

 Economic impact studies — before the program takes effect and then regularly after that — that analyze the cost of the program (including any impact on fuel prices) and the estimated savings for customers.

 The bill also includes a “circuit breaker” mechanism that would allow the program to be slowed down or paused, for as long as 36 months, in response to market conditions (like a workforce shortage or financial impacts on customers).

FACT: According to one independent analysis, by 2030, the clean heat services that could result from the Affordable Heat Act are estimated to reduce the overall heating costs of Vermonters by $2 billion, or an average of $7,500 per household.

FALSE: If the bill becomes law this year, it’s a done deal.

TRUE: The unprecedented check-back provision guarantees that the entire proposal will come back to the legislature in 2025, and that it can’t go into effect unless we vote to move it forward.

At the Governor’s request, the legislature inserted a “check-back” provision — and I co-sponsored an amendment with several other legislators, successfully adopted during our floor debate, to make crystal clear our intent.

Under the check-back, the Public Utility Commission will spend the next two years “writing the rules” that would regulate the program. This is a familiar and common process: The legislature often enacts broad statutes that set clear intentions and establish parameters, which are then turned over to technical experts at state entities — like the PUC or the Agency of Natural Resources — to “write the rules.” This is an extensive process that brings stakeholders together (in this case, including fuel dealers) to hammer out the regulations, take public comments, publish a draft for more public comments, and then finalize.

Usually, these proposed rules come back to a committee called LCAR (the Legislative Committee on Rules). These legislators review and approve the rules to make sure they’re what the legislature intended. If LCAR approves, the rules are filed with the Secretary of State and the program gets underway.

In this case, we’ve adopted an unprecedented extra step, in addition to LCAR review: A full legislative check-back. In January 2025, all of the studies and the full proposed rules will come back to the legislature. S.5 clearly states that the real “guts” of S.5 — the requirements for fuel dealers to earn credits — cannot move forward unless the legislature enacts them. That means we’ll introduce a bill, take testimony, and change or revise the rules in any way that makes sense — to respond, for example, to what we learn about impact on fuel prices or capacity of Vermont’s workforce to handle an uptick in weatherization.

The program cannot become reality unless both the House and Senate vote “yes” on this new bill, and the Governor signs it, in 2025. If all of that happens, the program will start its gradual rollout in 2026. Though this has been questioned by opponents of S.5, the nonpartisan attorneys who drafted this bill for the legislature confirmed it when we worked on our amendment.

If the Affordable Heat Act gets underway in 2026 — in a way that works for Vermont and Vermonters — it will:

1. Help more people make the switch to clean heat, saving money on their fuel bills over time
2. Support fuel dealers during a time when their industry is changing rapidly. The fuel dealers of today can and should be the clean heat companies of the future.
3. And help Vermont meet the carbon pollution requirements that we’re required to meet by 2030 and 2050 … by law.

As I said in explaining my “yes” vote on the floor:

Climate action is a complex problem. And complex problems sometimes require complex solutions. I believe the Affordable Heat Act holds great promise — that it will help those Vermonters who are least able to afford rising fossil fuel prices — and for whom the investment required to switch clean heat is currently out of reach. I voted YES to give this potential solution the support, study and deliberation it requires.

There are a lot of great resources to learn more about S.5, and I hope everyone will take time to understand it. This bill matters to all of us, and it’s important we all understand what the Affordable Heat Act can accomplish.

Click here to read Rep. Laura Sibilia’s excellent floor report, explaining and presenting the bill to her colleagues during our April 2023 debate. https://laurasibiliavt.com/2023/04/21/10365/

Click here to watch our floor debate on April 20. The four-hour debate starts at 16 minutes. Pro tip: Did you know you can adjust the playback speed on YouTube? https://www.youtube.com/watch?v=I3NtVWfgLOE&t=978s

Click here to read the bill: https://legislature.vermont.gov/Documents/2024/Docs/BILLS/S-0005/S-0005%20As%20Passed%20by%20Both%20House%20and%20Senate%20Unofficial.pdf

Click here to see how legislators voted: https://legislature.vermont.gov/bill/status/2024/S.5

Click here to see a flow chart: How the AHA will work. https://docs.google.com/viewerng/viewer?url=https://www.eanvt.org/wp-content/uploads/2023/04/EANCHSflow-spring2023draftApr18b.pdf&hl=en

Click here to see an extensive FAQ published by the policy experts at the nonprofit Energy Action Network. https://www.eanvt.org/affordable-heat-faq/

Written by Rep. Kathleen James