By Shay Totten | Vermont Guardian
Posted February 9, 2007
Two years ago, Vermont Yankee acquiesced to handing over more than $25 million to the state to establish a fund that would help support the development of renewable energy in Vermont.
In exchange, it got the support of state officials to back its plan to produce more power than the plant was originally designed to produce, and the support of legislators to begin storing some of its spent nuclear fuel in cement dry casks on site.
To date, nearly $7 million has been deposited into the fund — first with two lump sums of $2 and $2.5 million aimed at protecting ratepayers if Vermont Yankee shuts down due to its uprate status, and then bolstered by quarterly payments of $625,000. Of that, about $1.3 million was spent on some renewable energy projects last year, by order of the Legislature, and another $2.5 million was given to utilities who had to buy power on the spot market when a fire at Vermont Yankee took the plant offline for a period of time. There is currently about $3 million in the fund, with Vermont Yankee expected to replenish the ratepayer money this spring.
Now, a group of public and private officials are trying to figure out how best to spend the rest of the money between this year and 2012, when money stops going into the fund, and what kind of projects it should support.
According to a draft report of this working group, obtained by the Vermont Guardian, little changes have been made since a thumbnail sketch was issued by the Department of Public Service (DPS) more than a year ago.
This has rankled, and exasperated, some proponents of expanding the amount of renewable energy that makes up the state’s mix of power sources before VY’s license expires in 2012, and a series of contracts begin to expire with Canadian power giant Hydro-Quebec. These sources represent the equivalent of two-thirds of the state’s power needs.
State officials, however, contend the report is being heavily revised and will be much more detailed within the month. In fact, the group meets this week — on Thursday — in what some hope will be a final working session before polishing up the draft.
Several members contacted by the Guardian, as well as one key lawmaker, believe that having a part of the fund targeted for revolving investments makes sense, especially since the $25 million investment stops in 2012.
“I know there are some who wanted us to take a little bigger leap,” said Rob Ide, director of energy efficiency at DPS. “But, we were going to be criticized either way — if we went too far or not far enough. In this case, we erred on the side of conservatism and the investment committee members providing more depth to the ideas in the draft. The bottom line is that this is a significant project and it’s important we get it right.”
Last year, the Legislature earmarked $1.3 million in the fund to be used for a variety of projects: $500,000 to support small-scale wind and solar; $485,000 to support CowPower projects; $100,000 went to the Agriculture Agency for renewable energy development; $100,000 went to an assisted living project in Windham County; $65,000 went to DPS to defray administrative expenses; $50,000 was set aside for the upcoming public participation process; and $50,000 was used to help the University of Vermont and Middlebury College examine the construction of combined heat and power projects.
A similar, diverse approach is developing in the use of the fund.
“There are many objectives to this fund,” said Richard Sedano, a former commissioner of the Public Service Department under Gov. Howard Dean and director of the Montpelier-based Regulatory Assistance Project, which consults with utilities throughout the country.
“We want to stimulate businesses in Vermont, and stimulate interest among consumers to look for clean energy opportunities,” said Sedano. That includes helping people think about ways to make new homes and buildings more energy efficient, and more self sufficient in terms of energy use.
“There a lot of reasons to encourage people to think differently about their buildings,” Sedano said. “The whole concept of net zero energy buildings is starting to get some currency and people shouldn’t be held to that kind of goal as a primary objective but there is a lot of potential for people and businesses to be energy producers, not just energy users.”
Mark Sinclair, the former director of the Conservation Law Foundation in Vermont and now with the Clean Energy Group in Montpelier and a member of the fund’s investment committee, said the biggest hurdle is figuring out how best to stretch a limited amount of money.
“There is an awful lot of activity by the states to drive markets, and it’s pretty exciting — there’s a lot more activity on the state level than there is at the federal level and the states are really experimenting with a lot of different approaches,” said Sinclair.
Even though Vermont is coming later to the game than other states, Sinclair believes that the approach outlined in the plan — one that promotes a more entrepreneurial approach to funding rather than straight incentives — can work.
“The challenge is going to be figuring our what are the best ways to get a big bang for the buck,” said Sinclair. “This is not a lot of money and I think it’s smart to try and leverage it with other investors. That may be a way of bringing a broad group of stakeholders together.”
Sinclair said the fund’s small size is not enough to meet the demand from the market, or some lawmakers who believe the clock is ticking.
“The committee is aware that time is ticking and we can’t sit on this fund, but it makes sense to be clever and to figure out how to use these funds,” said Sinclair.
Other members believe there needs to be someone in place to oversee the fund, rather than have it be tacked onto an existing job title.
Treasurer Jeb Spaulding said the committee wants to hire an executive director to oversee the fund, rather than leave it all on the shoulders of the Department of Public Service, and other state agencies.
“I think we need someone running this who knows what they are doing, and the fund isn’t just one of the myriad of responsibilities they have to do,” said Spaulding.
Spaulding said his office could possibly work on providing grants, but loans and investments may need to flow through the Vermont Economic Development Authority, which has the expertise on staff to vet potential projects.
More importantly, Spaulding noted, is that the committee is struggling with ways to make portions of the fund perpetually run through a revolving loan fund, or some form of venture investment component.
Sen. Ginny Lyons, D-Chittenden, chairwoman of the Senate Natural Resources and Energy Committee, said she is looking forward to seeing the committee’s work. It is likely that the House and Senate will hold a joint hearing on the fund in the coming weeks, or when a public draft of the report is available.
Lyons said keeping part of the fund as a revolving loan fund, combined with direct incentives and grants, were all part of the legislative discussion when the fund was established.
“All of those things are legitimate approaches, and the question is where is the demand coming from,” said Lyons. “I think a lot of folks are hoping that we’ll see something tangible coming out of this and not just more reports and planning, but funding some actual projects.”