Senate committee advances bill to refocus Efficiency Vermont on greenhouse‑gas reductions

The Senate Appropriations Committee voted 4‑3 on March 21 to report out S.65, a bill that would redirect how Efficiency Vermont may spend funds collected through the electric efficiency charge, placing greenhouse‑gas reductions as the primary priority while preserving other program objectives.

Senator Mike Watson, the bill sponsor in committee, said the bill’s main purpose is to change how the Public Utility Commission and Efficiency Vermont prioritize spending. "The primary issue that we're trying to address with this is that right now, the public utility commission evaluates efficiency Vermont in a way that, means that 90% of the work, the money that they, that they have from, electric efficiency charge is used for specifically, electric consumption reduction," Watson said. "The vision of this bill is to, shift the prioritization of, what, efficiency Vermont is allowed to do with that money, to make the the primary priority greenhouse gas, reductions."

Watson told the committee current rules effectively allocate a small share of the program to greenhouse‑gas goals: "So right now, only 5% of their mission is allocated to, a greenhouse gas reduction." He also described two required spending carve‑outs in the draft: 25 percent of Efficiency Vermont's budget for benefits directed to low‑ and moderate‑income households and 12.5 percent for small businesses and nonprofits.

The bill would also "fix" the portion of the Efficiency Vermont budget associated with the electric efficiency charge at the fiscal‑year‑2026 rates and then adjust that fixed amount for inflation in later years, Watson said. He added the draft removes unused language tied to the clean‑heat standard and consolidates previously separate electric and fuel efficiency funds so both can be spent on electrification and greenhouse‑gas reduction projects.

James from the Joint Fiscal Office (JFO) told the committee the bill has largely indirect fiscal effects on the state budget. "The direct impacts of the state budget from this are largely indirect and secondary," he said, noting any shift that raises electricity consumption could change retail electricity receipts and related revenues. "There is not a fiscal for the current draft of the bill, but just given those secondary and directed past the budget… I think the proposed assessment of this 1 actually will be unchanged."

Committee members asked technical questions about draft language, including the use of the word "budget" in different sections and references to the PACE reserve fund. Staff and counsel explained that some language is existing statutory wording being moved and that the PACE (property assessed clean energy) reserve remains in the draft for statutory completeness even though there are currently no funds in it. Counsel said the bill commingles funds that were previously sequestered for thermal and process fuel efficiency so they can be used for electrification.

Committee action and next steps

Without a named mover and second recorded in the transcript, the clerk called the roll on a motion to report S.65 favorably. The roll call recorded four yes votes and three no votes; the motion passed and the bill was reported out of committee for floor consideration. One committee member emphasized that a yes vote to advance the bill from Appropriations did not imply support for final passage on the Senate floor and said they planned to offer amendments there.

Votes at a glance (S.65) - Yes: Senator Mike Watson; Senator Andrew Baruth; Senator Christopher Lyons; Senator Emily Perchlet (4) - No: Senator Matthew Norris; Senator Robert Westman; Senator Alan Brennan (3) - Outcome: advanced (reported favorably out of committee)

Why it matters

The bill would change the stated priority for Efficiency Vermont away from primarily reducing electric consumption and toward greenhouse‑gas reductions, a shift that could broaden program activities to include beneficial electrification measures such as electric vehicles and heat pumps. Supporters said the change targets greenhouse‑gas goals and expands access for lower‑income households and small businesses; fiscal staff said revenue impacts on the state budget are likely to be indirect and secondary and that retail electricity prices could face offsetting upward and downward pressures.

The bill now goes to the full Senate. Committee testimony and the JFO fiscal analysis will be available to senators as they consider amendments and floor action.