Tag Archives: SPEED

Maybe now Kevin Jones can find himself a new hobby

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Yesterday, the Federal Trade Commission gave a light wrist-slap to Green Mountain Power, telling GMP to “be more clear” in how it advertises renewable electricity while closing the books on a complaint of deceptive marketing.

The allegation had come from the usually reliable folks at the Vermont Law School, and in particular the unreliable Kevin Jones, who’s had a bee in his bonnet for years about Vermont’s SPEED program, which allows utilities to sell renewable energy credits out of state. Jones’ complaint is that selling RECs is basically a shell game, allowing Vermont utilities AND the out-of-state REC buyers to both claim they’re producing “green energy.”

Technically true, but with a couple of giant caveats.

SPEED was designed to encourage development of renewables at a time when they were not financially competitive. Vermont utilities could build renewables and recoup some of their costs through the sale of RECs, thus cushioning the blow to ratepayers. And it was designed from the beginning to be a temporary program; it will expire in 2017, and the legislature is crafting its replacement this year. SPEED is going away on schedule, having achieved its mission.

Jones also ignores the fact that, whether or not RECs were sold, their sale allowed us to adopt renewables more quickly than we could have otherwise. Real power was generated, and it reduced the overall need for fossil fuels.

The complaint also seems to rely on a misperception of electricity generation and consumption. Power enters the grid from all kinds of sources, is distributed through the grid, and consumed — all in real time. Unless you live off the grid, there’s no telling where your electricity comes from at any given moment. GMP can promote its commitment to renewables, but it cannot promise you that your power comes from the solar farm down the road, a hydroelectric dam in northern Quebec, a fossil fuel-burning plant in Massachusetts, or the big nukes at Seabrook. That’s true with our without SPEED.

I wrote about this a couple months ago and you can read more there, so I won’t belabor the point here. Suffice it to say I’m glad to see the FTC close this case. And once the legislature passes the next iteration of power regulation, I wish Mr. Jones luck in finding a new binky.

 

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The Inaugural Address: A pretty good start

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The speech by Governor Shumlin — which he billed as the first of two parts — included some welcome elements. It left a lot unsaid; presumably he will confront property taxes, school governance, health care, and government spending in his budget address next week.

Today’s address focused on two areas: energy, and the environment. In the latter category, his primary focus was on Lake Champlain. It was, if I recall correctly, the first time he’s drawn attention to these issues in a major January speech. To me, it’s a welcome development.

It’s also an opening for him to regain some credibility among liberals. When Peter Shumlin was running for Governor in 2010, his two big issues were single payer health care and the environment (climate change, green energy and Vermont Yankee). But while his administration has made some good incremental gains on the latter issues, they’ve never seemed to get the spotlight. Now they have.

With single payer off the table, perhaps Shumlin is returning to his other signature issue and hoping to put his stamp on Vermont’s future on energy and the environment. If he can’t be the single-payer governor, perhaps he can be the environmental governor. It’s a good strategy.

The caveat, of course: Now he’s gotta deliver.

He also opened the door to raising taxes as part of the effort to close a $100 million budget gap. In a brief preview of next week’s budget address, he said this:

We cannot simply cut our way out of our fiscal challenge year after year – taking away services that are important to so many Vermonters. Nor can we tax our way out of the problem.

Which would seem to indicate that his plan will include a mix of cuts and “revenue enhancements.” I’d urge him to take a long look at the plan that nearly passed the House a couple years ago, which would have raised taxes on the wealthy (by closing loopholes and limiting deductions) and provided some tax relief to the middle and working classes. I say “nearly passed the House” because it was stopped in its tracks by Shumlin’s stubborn opposition.

As for the details on energy and the environment:

The centerpiece on energy is a new renewables strategy, as the current (and, in some circles, controversial) SPEED program is sunsetted in 2017. The Energy Innovation Program is aimed at further boosting our investment in renewables and energy efficiency. Shumlin called the EIP “our single biggest step so far toward reaching our climate and renewable energy goals.”

Sounds good. We await the legislative process with anticipation and a bit of trepidation.

On Lake Champlain, Shumlin came up with a decent-looking package. It doesn’t go far enough, but it’s better than anything he’s offered before. He realizes, as he told the legislature, that if the state fails to meet EPA muster, we’ll face some burdensome federal regulations.

His plan includes:

— New transportation funding to curtail runoff and erosion around our roads and streets.

— New funding and technical assistance for farmers and loggers, to help them meet water-quality standards.

— More thorough efforts to enforce current water quality regulations.

— Making a change in the Current Use program, which would take away that tax break from farmers who fail to reduce pollution.

As for funding, his plan includes two new fees: One on agricultural fertilizers, and one on commercial and industrial parcels in the Champlain watershed.

The revenue would go into a newly created Vermont Clean Water Fund, a repository for state, federal and private funds. The first private money, he announced today, is a $5 million donation (over the next five years) from Keurig Green Mountain, which Shumlin called “a company that depends upon clean water.” He expressed the hope that KGM’s generosity will “inspire others.”

If he can leverage substantial donations from the private sector, his plan could accomplish quite a bit without too much stress on the state’s bottom line. Maybe enough to get the EPA off his back, at least for a while.

From this liberal’s point of view, it’s a good start. But as VPR’s Bob Kinzel said today, the Governor effectively served us dessert before dinner. Next week’s budget address will be a much less appealing dish. Plenty of mushy steamed vegetables scattered around a hunk of gray meat.

Beyond that, well, actions speak louder than words, and we’ve heard plenty of words from this Governor in the past. The political question is: Can he deliver on this agenda in a way that will repair his reputation for effective governance and bring liberals back into the fold? He can; but will he?

The need for SPEED

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Vermont’s SPEED program is in the news again. And, as is usually the case, much of the coverage misses the point. As does all of the criticism.

SPEED, for those just joining us, is short for Sustainably Priced Energy Enterprise Development. It was enacted by the legislature in 2005; its aim was to encourage development of renewable energy, which at the time was in an embryonic stage and suffered from competitive disadvantages.

(It was more expensive than fossil fuels. Which, of course, benefit from tax credits and other forms of government largesse, and the harm they do to the environment is not factored into their pricing, so they are much cheaper than they ought to be.)

As I explained in a nice long 2013 thumbsucker on Green Mountain Daily:

SPEED was designed to surmount the chicken-or-egg problem with renewables: the upfront investment is relatively large, making renewables uncompetitive at the beginning. Over time, their costs drop dramatically because, well, they’re renewable: no need to keep on buying fuel. SPEED provided a market-based solution to the initial-investment problem by allowing utilities to sell long-term contracts for renewable power. Without SPEED, adoption of renewables in Vermont would have been much, much slower.

The program’s critics say the trading scheme means that our renewables are, in effect, enabling the use of dirty energy elsewhere. In particular, SPEED’s been used as a punching bag by opponents of wind and solar power.

Today, there are stories on VTDigger (pretty good) and VPR (not so good) about the Shumlin administration definitely (VTDigger) or possibly (VPR) planning to phase out SPEED in 2017.

Well, hell. That was the plan from the very beginning. SPEED was meant to goose the renewables market. And it’s worked: according to VTDigger, “The state has built wind, solar and other renewable power generation that could supply about 15 percent of the state’s electric retail sales.” That’s substantial progress.

Rep. Tony Klein, D-East Montpelier, displays some of his vast knowledge.

Rep. Tony Klein, D-East Montpelier, displays some of his vast knowledge.

SPEED was designed to be temporary, and was set to expire in 2017. It could have been extended, to be sure; but one of the House’s top energy people, my own state representative Tony Klein, has been saying for a long time that SPEED would sunset on time.

And on Saturday, Governor Shumlin told the House Democratic caucus that SPEED would be scuttled on schedule. VPR’s John Dillon somehow missed this; he has the administration merely considering a change to SPEED. (The VTDigger story has the administration “calling for an end” to SPEED, which is closer to the mark but not quite there.) In his story, Dillon gives extensive time to the Vermont Law School’s Kevin Jones, who’s had a bug up his butt about SPEED for a long time.

“For me, it’s at least a step in the right direction for the Public Service Department and the Shumlin administration for finally acknowledging that the SPEED program does not work in terms of providing any climate mitigation,” he said. “As a matter of fact, it has increased Vermont’s carbon footprint, by something, according to their analysis, like 70,000 tons in greenhouse gas emissions in 2013 alone.”

Jones’ interpretation is ignorant at best, disingenuous at worst. The DPS and administration are not “finally acknowledging” anything; they are letting SPEED expire on schedule.

And the purpose of SPEED was not to immediately mitigate Vermont’s carbon footprint; it was to hasten development of renewables so our longer-term footprint would decrease.

Also, SPEED may have “increased Vermont’s carbon footprint,” but only technically: the renewable credits were sold out of state, but the energy was still being produced, thus reducing the region’s carbon footprint while  — again, technically, and only in the short term — increasing our own.

Finally, a misperception from VTDigger’s article:

The state’s goal is to generate 20 percent [of electricity via renewables] by 2017, but there is no requirement in state law that this power is to be sold to Vermont customers.

This reflects a fundamental misunderstanding of electric markets. In the absence of large-scale storage technology, electricity is produced, transmitted, and consumed all at the same time. The power grid is a regional creature, networked to the national grid. There is no way to tease out which energy came from where and ensure its consumption within the state of origin. Such a “requirement in state law” would be technologically laughable.

Vermont’s power — renewable, dirty, Vermont Yankee, whatever the source — goes into the grid at the same time as power from out-of-state sources; it’s shunted around the grid to where it’s needed at that moment, and consumed. It’s like taking a cup of your tap water, pouring it into a bucket of water, and then wanting to take back your own water. Can’t be done.

Which is at the heart of the anti-SPEED absurdity. The renewable energy whose development was fostered by SPEED went into that big bucket. Whether or not it was immediately credited to Vermont’s account, it exists, and it helps reduce the region’s dependence on dirty energy.

The SPEED program has had a purpose. It has served that purpose well. Now it’s time to move on. And we will.

Shumlin: “We have a structural deficit” and other happy tidings

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The Governor addresses the multitudes. (The bearded man begging for change is Dave Gram of the Associated Press.)

The Governor addresses the multitudes. (The bearded man begging for change is Dave Gram of the Associated Press.)

An uncharacteristically subdued Governor Shumlin held an agenda-free news conference this morning. I emphasize “agenda-free” because his past practice has been to piggy-back news conferences onto photo opportunities or policy announcements, leaving much less time for general questions.

Today there were a lot of questions and a lot of substance. In no particular order…

— The Vermont Health Connect website will go back online this Saturday, which happens to be the first day of open enrollment. So the relaunch will come on the last possible day. Gee, hope things go right; there’s no margin for error.

Shumlin pronounced himself “optimistic,” saying “I’m encouraged by what I’m hearing.” But given how often he, and we, have been burned in the past, he was reluctant to make any predictions. “I’m always hoping it will work.”

— He dismissed Republican calls to shut down VHC and go with the federal exchange, and he had several good arguments. First of all, it’s far too late to make the change this year, so we’d be limping along with VHC for another year in any case. And there are signs it’s finally getting on track. “We’re turning a corner,” he said. “Why not give it a chance?”

There’s also the fact that the federal exchange’s premium subsidies aren’t as generous as Vermont’s. Switching to the federal system would mean higher premiums for thousands of Vermonters who earn between 100-300% of the poverty line.

And, as he pointed out, the US Supreme Court may well strike down federal subsidies, in which case only states with their own exchanges will be able to offer subsidies.

— Get ready for a slam-bang legislative session. Shumlin is still talking about the next step in health care reform (see below), the legislature is hell-bent on property tax and/or school funding reform, Shumlin is talking about significant changes to energy policy, and perhaps worst of all, the quote atop this post: “We have a structural deficit at this point.” Meaning huge challenges in fashioning a budget. That’s a hell of a lot of big, contentious issues to tackle.

Temba, his arms wide.

Temba, his arms wide.

— Speaking of the budget, Shumlin acknowledged that Vermont and many other states “thought the recovery would be more robust,” and its weakness has caused revenue shortfalls. He’s talking about a second round of rescissions in this year’s budget, although he said nothing is final just yet. And he’s talking about major changes in next year’s budget in order to put an end to annual budget crises.

He wants to put the state on a more sustainable path. Which must be making a few Republicans chuckle, since they’ve been preaching this for years. On the other hand, Shumlin has a valid point: the recovery has been weak. If we’d had a normal recovery with decent wage gains, our tax revenue would be stronger and we wouldn’t be facing this dilemma. The big news on this front is that the Governor now believes we’re facing years of sluggishness, and we need to ratchet down the budget to make it sustainable.

When asked whether this might mean tax increases, he didn’t rule them out, but he made it clear that his first choice is to rein in spending.

— On the push for single-payer health care, he repeated his longstanding support for the idea, but acknowledged that in the wake of the election, everything is on the table. He is aiming for a system that combines affordability with universal access to health care. His preference remains single-payer, but it’s looking like we might settle for less than that.

— He made it clear that yes, he won the election, and he has no doubt that he will serve a third term. He pointed to Vermont’s long tradition of electing the top vote-getter when no one wins a majority: ‘The person who gets the most votes, wins.” He cited the 2002 election for Lieutenant Governor, in which he and Progressive Anthony Pollina combined for a liberal majority but Republican Brian Dubie won the most votes; he and Pollina urged lawmakers to elect Dubie, which they did.

— On school funding and organization, he declared “We have a spending problem,” with high per-pupil costs and administrative structures. In some cases, he said, small class sizes can be harmful to achievement rather than helpful. He’s not in favor of mandatory school consolidation, but it’s clear he will push for consolidation by trying to convince local districts that it’s in their best interest.

He did mention the idea of “prioritizing funding to schools that voluntarily consolidate.” That kind of legislative payola may be effective, but it kinda stretches the definition of “voluntary.”

— In a less wide-ranging news conference, his comments on energy policy might have made headlines. They’re likely to get lost in today’s news. He noted the pending sunset of the SPEED program, which has helped spur the renewables industry in Vermont but has also created controversy because it allows the sale of “green” energy credits in other markets. He and the legislature are working on “ideas to replace SPEED.”

He was asked about the prospects for a carbon tax with offsetting cuts in other taxes — a plan likely to be announced tomorrow by a coalition of environmental groups. He was cool to the idea, saying “It’s tough for a small rural state to do it alone,” and pointing particularly to its impact on gas stations near our state borders. He prefers a regional carbon tax instead; but he said he’s had no conversations with other northeastern governors about the idea. Methinks the enviros will have a hard time gaining traction, when you combine Shumlin’s reluctance with an extremely busy legislative session.

— Finally, he was asked about marijuana legalization. He said he wants to wait until the release of a report on the idea in January before proceeding, but noted that “I support legalization. The question is “when.”