Senate Finance hears testimony on S.65 to refocus efficiency funds toward greenhouse‑gas reductions

The Senate Finance Committee on Thursday heard testimony on S.65, a 22‑page bill that would change the state's energy efficiency statutes to prioritize greenhouse‑gas reductions and allow a portion of electric efficiency funds to be used for electrification, thermal and transportation measures.

Supporters said the bill would align existing funds with Vermont's climate goals and target benefits to low‑ and moderate‑income households. Opponents — including the chair of the Public Utility Commission and multiple distribution utilities and co‑ops — warned the shift could raise electric bills, duplicate regulated utility programs, and create implementation confusion without further study.

Ed McNamara, chair of the Public Utility Commission, told the committee, “S.65 would increase electric bills.” He said the bill would divert money from energy efficiency, the lowest‑cost resource for meeting demand, to electrification programs that are more likely to require higher‑cost generation, and that would therefore increase electricity costs for customers.

Proponents described the bill as a reallocation, not a net increase in spending. A legislative counsel and other supporters said S.65 would fix the efficiency fund's baseline at the commission's inflation‑adjusted 2026 budget and prioritize greenhouse‑gas reduction while keeping other objectives intact. The bill includes carve‑outs that would direct not less than 25% of an appointed entity's annual budget to residential services for low‑ and moderate‑income households and 12.5% to small businesses and nonprofits, language intended to improve equity and access.

Distribution utilities raised practical concerns. Andrea Cohen of Vermont Electric Cooperative said the proposal represents a significant policy change and urged more stakeholder discussion, noting VEC remits about $5,000,000 a year as its share of the electric efficiency charge and that those dollars are material to member rates and operations. Lewis Porter, general manager at Washington Electric Co‑op, said raising fees on electricity to subsidize electrification would make it harder for customers to adopt technologies whose economics depend on lower operating costs.

Ken Nolan, general manager of VVPSA (a joint action agency for municipal utilities), and other municipal and cooperative witnesses said the bill would create overlap with the Renewable Energy Standard's Tier 3 work that distribution utilities already perform to reduce customer fossil fuel use, possibly causing competition between entities and raising the total cost of compliance.

Burlington Electric Department, which acts as both a distribution utility and an energy efficiency utility, described pilot authority the city has used to deploy efficiency funds for emissions mitigation projects. Burlington's general manager, Darren Springer, said pilot programs helped spur adoption — “we've seen about a 30x increase in adoption” for certain heat‑pump incentives since 2020 — and argued for continued flexibility for utilities that are also appointed efficiency entities.

Peter Wagram, representing the nonprofit that operates Efficiency Vermont, noted that greenhouse‑gas reduction has been among the program priorities since 2008 and framed S.65 as elevating that priority. He said the residential electric efficiency charge has declined 21% since 2018 and argued the bill does not itself raise the efficiency charge; rather, he said, increased electrification drives higher overall electric bills.

Committee members asked multiple witnesses about timing and fiscal effects. Several witnesses urged delaying legislation until the Public Utility Commission and other stakeholder processes (including a statutory report due under Act 142 later this year) produce more detailed analysis of costs, equity impacts and agency roles. Witnesses repeatedly recommended further regulatory review to avoid unintended duplication between Efficiency Vermont and distribution utilities, and to preserve existing low‑income weatherization networks.

The hearing produced no formal votes. Committee members indicated they would take the testimony under advisement and discuss next steps, including possible language changes to clarify budgeting mechanics and implementation timelines.

The bill remains active; provisions that drew particular attention included the 25% low‑ and moderate‑income targeting, 12.5% small business/nonprofit carve‑out, the proposed 2026 inflation‑adjusted budget baseline for the efficiency fund, and the statutory authorization for efficiency entities to count building‑code attainment and other electrification measures toward their savings targets.

A follow‑up report required under Act 142 is due to the legislature in December; several witnesses said waiting for that report and for a standard PUC review cycle before adopting broad statutory changes would reduce the risk of unintended rate or program impacts.