Committee considers S65 to refocus efficiency utilities on emissions reductions and equity

The Vermont Senate Natural Resources & Energy Committee took up S65 on Feb. 12, a draft bill that would revise 30 V.S.A. §209 to expand the statutory mission and funding rules for the state’s efficiency utilities to include greenhouse‑gas emissions reductions, electrification and energy storage, and to add explicit equity targets.

Legislative counsel Ellen explained that the draft inserts emissions‑reduction priorities into the 30 V.S.A. §209 framework and clarifies that the Public Utility Commission (PUC) may appoint independent efficiency utilities to develop, implement and monitor electric and thermal efficiency, electrification, active demand management, and energy‑storage programs. The draft would also consolidate supplemental revenues — including forward‑capacity market payments from ISO‑New England and Regional Greenhouse Gas Initiative (RGGI) proceeds — into a single “efficiency fund.”

Ellen told the committee the draft makes three notable structural changes: it adds electrification and energy storage explicitly to the utilities’ mission; it moves existing supplemental‑funding language earlier in the statute so those funds feed a single efficiency fund; and it requires the PUC to prioritize greenhouse‑gas reductions when setting the efficiency charge. Ellen flagged editorial errors in the draft and said some struck and inserted language may be undone during amendment.

Ben Angley Wolf of the Vermont Public Interest Research Group (VPIRG) supported the general approach, arguing the efficiency utilities’ mission should evolve to address emissions and energy burden across sectors. “Emissions efficiency allows you to look at the whole of the energy system,” Wolf said, urging the committee to measure outcomes beyond electricity alone and to set clear, unambiguous targets for benefits to low‑ and moderate‑income Vermonters.

Several provisions discussed in detail included a new minimum targeting requirement for benefits: the draft directs that not less than 25% of the annual budget be targeted to residential services for customers with low‑to‑moderate income and not less than 12.5% of the annual budget be targeted to small businesses and nonprofits. The draft also requires the appointed entity to propose, by Sept. 1, 2026, a statewide low‑income energy‑efficiency rate and allows distribution utilities that already have commission‑approved discounted low‑income rates to apply those criteria instead of a new statewide rate.

Burlington Electric Department (BED) witness Darren Sprayer said BED supports the draft’s approach because it builds on pilot authorities that enabled more flexible use of efficiency funds. Sprayer described Burlington’s experience using a pilot carve‑out to support geothermal test wells, stronger heat‑pump incentives and other programs that spurred rapid adoption of residential heat pumps and EV incentives for income‑qualified customers. “BED is very supportive of the approach that’s laid out in S65,” Sprayer said, describing the pilot work as a precedent for the legislation.

Committee members and witnesses discussed a range of implementation questions: how the PUC will set a societally cost‑effective charge prioritizing greenhouse‑gas reductions; how the appointed entities will verify greenhouse‑gas savings and be compensated on verified emissions outcomes; whether moving building‑code support and code attainment into the efficiency portfolio changes enforcement; and interactions with Act 250 permitting. Ellen and others said the PUC and the Department of Public Service will need to provide technical testimony on methodology, verification and budgeting.

No formal vote or motion on S65 was taken during the hearing. Committee members and witnesses agreed the bill requires editing for typos and clarification of several phrases the counsel described as “confusing” (for example, one long sentence on incentivizing high‑consumption vehicle users). The committee postponed final drafting and indicated plans to gather additional input from the PUC, the Department of Public Service and stakeholders.

Key elements in the draft highlighted in testimony: • Add emissions reductions as an explicit statutory objective for energy‑efficiency utilities and prioritize that objective when the PUC sets the efficiency charge. • Expand the appointed entities’ mission to include electrification, energy storage and active demand management. • Consolidate supplemental funding (ISO‑NE forward capacity payments and RGGI proceeds) into the efficiency fund and allow fuel‑neutral use of funds for thermal and transportation measures that reduce fossil‑fuel use. • Require equity targeting: at least 25% of annual funding to low‑to‑moderate‑income residential services and at least 12.5% to small businesses/nonprofits; require a low‑income rate proposal by Sept. 1, 2026.

The committee took public testimony from organized stakeholders and invited further technical review and redrafting. The bill remains in the committee’s drafting and review phase.