In a status report to lawmakers, the independent Public Utility Commission has said that the proposed clean heat standard, sought by lawmakers and environmental advocates, “does not make sense for Vermont,” recommending instead pitching a “thermal energy benefit charge,” or a tax on heating fuels.
In 2023, lawmakers gave the commission a blueprint for the clean heat standard — a program that’s intended to reduce emissions that come from heating and cooling Vermont’s buildings — and required the commission to fully design it. Lawmakers plan to consider the commission’s plan in the coming 2025 legislative session and decide whether to put it in place.
Issued Oct. 1, the commission’s status report is the latest in a slew of documents released in recent months as the body reaches the final stages of its process.
Political rhetoric has clouded the clean heat standard’s development, and those closest to it have long debated its basic structure, its impacts and its benefits. Gov. Phil Scott vetoed the bill that set up the program in May 2023, fuel dealers in Vermont have organized against it, and Americans For Prosperity — a super PAC founded by billionaires Charles and David Koch — has sent out mailers containing misinformation decrying the proposal.
This time, the criticism comes from the Public Utility Commission, a quasi-judicial, three-member panel that is independent from the executive branch and the Legislature, but whose members are appointed by the governor.
Their concerns are focused on the credit market at the center of a clean heat standard program.
Fuel dealers that import heating-related fossil fuels into Vermont would need to offset the emissions associated with their products by earning credits. Fuel dealers could gain credits in several ways: by delivering cleaner-burning products like biofuels, by helping to weatherize homes or install heat pumps, or by paying a fee.
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The money raised from those fees would go toward switching Vermonters to efficiency measures and other heating systems that pollute less.
“Our work over the past year and a half on the clean heat standard demonstrates that it does not make sense for Vermont, as a lone small state, to develop a clean heat credit market and the associated clean heat credit trading system to register, sell, transfer, and trade credits,” commissioners wrote.
Instead, they proposed returning to an idea the Legislature pitched in 2021: a “thermal energy benefit charge” — in essence, a tax — on the sale of fuel oil, propane, and kerosene.
In setting the rate, the commission would consider “the need to provide sufficient funding to meet the Global Warming Solutions Act requirements,” a law that sets deadlines for Vermont’s greenhouse gas reductions, commissioners wrote.
Commissioners plan to develop the idea in more detail before presenting it to lawmakers.
Lawmakers who support the program have urged the public not to jump to conclusions about its potential cost or success based on the information available ahead of the new legislative biennium. Rather, supporters have pleaded for Vermonters and decision makers to wait until 2025 to consider the program, when more information is available for lawmakers to debate.
This latest update is no exception.
“Once again, I’m in the place of saying, before we call the clean heat standard a great or lousy idea, could we please finish gathering all the information that we requested?” Sen. Chris Bray, D-Addison, a lead sponsor of the clean heat standard, said in an interview. “I think it’s worth pausing to say, ‘Wait, we asked all these questions for a reason.’”
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In their status update, members of the commission note their work has included hiring full-time staff and appointing members of two technical advisory groups that have been meeting since December 2023, along with a range of other tasks required by Act 18, which established the process.
However, Bray noted, other than a brief synopsis in the status update, the commission didn’t fully explain why it reached its conclusion on the impracticality of the credit market, and that outside of the legislative session, he doesn’t have the same ability to ask for additional information through testimony.
Rep. Laura Sibilia, I-Dover, who has backed the clean heat standard on the House side, said the commission’s conclusion did not surprise her. She’s tracked the process and the commissioners’ work, she said, and was aware they planned to present alternatives to the program.
“What does it mean, coming from the PUC?” she said. “I think that that’s a thoughtful body. I think that we all need to keep working. This is very hard work.”
Read the story on VTDigger here: Vermont utility regulators recommends tax in place of clean heat standard.