Vermont’s Public Utility Commission continues to shy away from the Clean Heat Standard mandated in a landmark 2023 law.
The PUC on Jan. 15 reported to the state Legislature that while the standard (with changes) would be “theoretically workable … the commission does not believe that this program is well suited to Vermont.”
The PUC recommended that legislators consider other ways to reduce greenhouse gas emissions — such as a fuel tax, thermal efficiency benefit charge or a biofuel blending requirement, or some combination of these or other alternatives.
A few months earlier, the PUC determined the credit-trading system envisioned in the legislation would be costly and complex and that it made no sense for a small state to create such a system on its own. (See Vermont PUC Rejects Heating Fuel Credit Trading Concept.)
In the Jan. 15 report, the PUC said its task — study the costs and benefits of the system while designing it — was complex and difficult and that its conclusions should be treated as a very rough estimate.
With that caveat, it said the Clean Heat Standard could carry program costs of $956 million in its first decade, with an impact on fuel oil prices gradually rising from 8 cents per gallon in the first year to 58 cents in the 10th year.
The estimated value of the greenhouse gas emissions reductions yielded by the standard over the same decade would be $477 million.
The PUC said its recommended alternative mechanisms would be less complex and have lower administrative costs than the Clean Heat Standard.
The fuel tax option would be simple and efficient, the PUC said, as it would be an expansion of the fuel tax mechanism that for many years has been sending money to the low-income Weatherization Trust Fund.
A thermal efficiency benefit charge could function similarly to the electric energy efficiency charge collected by the state’s electric distribution utilities and could run alongside the fuel tax that fuel dealers collect.
Neither of these alternatives would achieve the greenhouse gas emissions reductions required under the Global Warming Solutions Act of 2020, the PUC wrote, but increasing the amount of biofuel burned in Vermont would accomplish this, and a blending requirement could be complementary to the fees.
Legislators now must decide whether or how to implement the Clean Heat Standard. Democrats still control both chambers of the Legislature but have lost seats since 2023, when they overrode a veto by Gov. Phil Scott (R) to make the Clean Heat Standard a law.
Local media reports suggest legislators remain concerned about the financial impacts of such a system, particularly on lower-income Vermonters who spend a larger portion of their income heating their homes during the state’s long, cold winters.
Vermont has among the highest percentages of homes heated with fuel oil of any state.
