Program pushes companies to invest more in efficiency

Ethan Bellavance, energy consultant with Efficiency Vermont helps a customer optimize their HVAC system. Photo credit: JAM Creative

  The Vermont Legislature has created a three-year pilot program that allows Efficiency Vermont, the state's energy efficiency utility, more flexibility in working with Vermont businesses on custom efficiency and energy saving programs. The legislation also amends the existing SMEEP (Self Management Energy Efficiency Program) and allows companies in SMEEP and those in the newly created pilot to use state-regulated electric efficiency funds to make productivity investments at their facilities. “The increasing cost of the energy efficiency charge, about a 50 percent increase in the past five years, and decreasing returns on efficiency investments for some manufacturers, demanded a look at whether there was a better way to incentivize energy efficiency,” said Ted Brady, deputy secretary of the Agency of Commerce and Community Development. According to Rep. Laura Sibilia, of Dover, a member of the House Committee on Energy and Technology and a supporter of the legislation, one of the main reasons behind the legislation was an effort to help Vermont companies with energy costs. “What we heard consistently in the committee is that electric costs at plants in Vermont are noticeably higher then at other plants in other states," she said. "We have employers who have options available to them, and who consider many factors when making decisions about the location of their operations and expansions," Sibilia added "For a number of these employers, they had maxed out their use of allowable energy efficiency programs through Efficiency Vermont. So they were unable to leverage their sizable payments to the efficiency utility to further reduce their high energy costs.” Founded by the Legislature in 2000 and funded through a surcharge on all electric bills, Efficiency Vermont provides technical services and financial support to improve the efficiency of energy usage for homes, businesses, and communities. According to its most recent annual report, the 2017 budget was $61 million, including about $46 million in energy efficiency charge revenues. “We couldn’t be more excited about this opportunity to help Vermont companies unleash their innovative spirit,” said Abby White, director of communication for Efficiency Vermont. Companies that enroll in the pilot will continue to pay their energy fees, but 100 percent of the payment will be returned to pay for projects or consulting fees. Under the current program, 70 percent flows back to the customer to pay for its completed efficiency projects. Pilot participants will be able to access these funds before project completion. “It is worth noting that there are no more than two customers participating in this program due to its complexity and poor return. The new program helps a company retain a larger percentage and increases eligible uses of the funds,” Brady said. One company likely to apply is Sugarbush Resort in Warren, according to owner and President Win Smith. “We’re excited about the opportunity to apply,” he said. The biggest draw for Sugarbush is the expansion of what qualifies as tax credits. The legislation expands the list of projects eligible for energy efficiency credits to include thermal energy and process-fuel efficiency for unregulated fuels, productivity measures, demand management and energy storage that provides benefits to the customer. The current program only allows investments in energy efficiency. Other ski areas are also likely to apply, Smith said. The legislation allows SMEEP participants to count funds received from the government or other entities toward the required annual investment in efficiency. Currently, SMEEP allows one company, Global Foundries of Essex Junction, the option not to pay the energy efficiency tax but rather to spend at least $1.5 million or more annually on energy efficiency. The program was originally designed for IBM in 2008. Under the new legislation, one additional company, OMYA, a mining company based in Proctor, would be eligible to forego the tax as long as the company commits to spend $500,000 annually on energy efficiency. The legislation also requires companies in the pilot to work with Efficiency Vermont and state regulators to evaluate the energy savings of each project at the end of the pilot program. There will be a competitive solicitation process conducted jointly by Efficiency Vermont, Department of Public Service and the Agency of Commerce and Community Development. The request for proposals will be completed by July 1, 2019. Upon completion, the Public Utility Commission or a third party hired by the PUC will conduct an independent evaluation, and report to the General Assembly by Jan. 1, 2023, on whether to continue the program and if so under what conditions or revisions, if any. The Department of Public Service will evaluate and verify the savings of each project funded under the pilot program. Ben Edgerly Walsh, climate and energy director at the Vermont Public Research Group, said the legislation was written as a reaction to Gov. Phil Scott’s proposal to make significant cuts to efficiency programs. The initial proposal, he said, would have allowed several of the biggest electricity users, which now pay substantial fees, (some as much as $100,000 a year), to stop paying the fees if they spend at least $1 million a year on energy efficiency. That proposal, according to Walsh, would have cut several million dollars from the Efficiency Vermont revenues. “As proposed by the Scott administration, this bill would have undercut Efficiency Vermont’s great work," Walsh said. "Instead, the Legislature ultimately passed a pilot program that will help regulators and legislators figure out how Vermont’s efficiency work may need to change to better serve Vermonters as our electric system evolves. That’s a result we’re happy to see.” The main advantages of large energy users working with Efficiency Vermont rather than working independently, White said, is the technical expertise of Efficiency Vermont’s staff, which helps companies optimize savings which then accrue to the entire energy system and to all ratepayers. “Under the pilot program we will be able to test if there are better ways to deliver services to large energy users which will also benefit the entire system,” she said.



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