By John McClaughry

Up to now criticism of the clean heat standard bill (S.5) has focused on its intended result of driving up prices of heating oil, propane, kerosene and natural gas somewhere from 70 cents to $4 a gallon, in order to finance $2 billion worth of subsidies to people to quit using those fuels and install “cold climate heat pumps,” “advanced wood heat” and home weatherization.

John McClaughry is vice president of the Ethan Allen Institute.

The bill is built upon a complex “credit” system managed by the unaccountable Public Utility Commission, designed to shield the law from the charge of being a carbon tax — although it will have precisely the same effect on consumers.

The two largest corporate cheerleaders for the CHS are Vermont Gas Systems (VGS), the regulated monopoly that controls natural gas delivery, and Green Mountain Power (GMP), the state’s largest electricity supplier. Both are owned by the Quebec energy giant Energir.

For three years the lawyers for these two corporations have been working behind the scenes designing the clean heat standard legislation, along with the Regulatory Assistance Project. That is the company of chief CHS designer Richard Cowart, the guiding hand of the Vermont Climate Council. For 12 years Cowart was the chair of the Public Utility Commission.

Here’s how the CHS will work for VGS. First, it will force Vermont’s 120 independent fuel oil distributors (as well as VGS) to deliver PUC-created credits to the PUC or its agent. Most distributors will have to purchase those credits from companies (like VGS and GMP) that install heat pumps to families, businesses, schools, hospitals, local governments, and so forth.

The fuel distributors will necessarily raise heating fuel prices to customers to produce the money to buy those credits. If the distributors don’t deliver their quota of credits, they’ll have to make “non-compliance payments” equal to twice the amount of the shortfall. Some of them will go out of business, which is what the backers of the CHS earnestly desire.

VGS also has a special angle built into the CHS. It will earn marketable PUC credits by claiming to deliver “Renewable Natural Gas,” almost all from upstate New York landfills and manure treatment plants. The higher cost of this more costly “renewable” gas will raise the price to VGS’s Vermont customers, who will actually get practically none of that gas.

The Public Utility Commission (PUC) will supposedly protect gas consumers from the higher prices. But its chair Anthony Z. Roisman is an outspoken climate activist who in 2019 urged a “Thermal Efficiency Benefit Charge” (carbon tax) to make natural gas more costly, and bring in millions of dollars to subsidize PUC-favored projects. Roisman said that we faced a “Pearl Harbor moment” that requires a “wartime effort” to stamp out fossil fuels. Don’t look to his PUC to hold down gas prices for consumers.

While VGS profits by selling PUC credits, its corporate sister Green Mountain Power will have to furnish lots more electricity to operate tens of thousands of heat pumps. It will seek PUC approval of rate increases on all its customers to meet that demand.

Annette Smith of Vermonters for a Clean Environment writes: “The legislation … disproportionally benefits VGS while overly burdening our rural fuel dealers. … It is surprising that Vermont’s mainstream environmental groups are supporting legislation that was crafted by and benefits VGS.”

She continues: “Our rural fuel dealers will see increased costs and threats to their business’s continuing operations, all passed along to customers who may have no options as heat pumps are only appropriate in 30% of Vermont homes, many of us rely on propane for which there is no renewable alternative, and upgrades from old polluting to newer efficient furnaces are not allowed to earn credits in S.5.”

Bottom line: Two large Quebec-owned utility corporations, regulated by a Public Utility Commission chaired by an outspoken climate activist, have quietly engineered a complex scheme that will make them and their owners more profitable, and over four years you, your business, and your local public institutions $500 million a year poorer.

Only a few legislators can even explain this, but most of them are voting for it because they have been told that it will produce a “cooler planet” (Richard’s Cowart’s sales-pitch language), or more likely, because they were told to vote for it by the leadership of the Democratic supermajority. (Every Republican in the Legislature voted against it.)

The Democratic leadership and the two big corporations that are eager to exhibit their climateer credentials while making money out of the CHS do not however control Gov. Phil Scott. He has called this bill regressive and harmful to low-income Vermonters. It’s up to him to veto S.5, and go forth and make his case with the 78% approval rating that has made him the nation’s most popular governor.

John McClaughry is vice president of the Ethan Allen Institute.