 Great. Good morning. Today is April 6th. This is the House Committee on Environment and Energy, and we are back on S5. This morning we have with us a number of witnesses who can talk with us about housing and weatherization and start this morning with Sue Minter. We'll have about an hour here with Sue and Paul, Zabriskie, Kathy Beyer, and Mora Collins. So Sue, welcome. Thanks very much. Are you able to hear me? We are. Great. And I appreciate you're letting me go first. I apologize for having to hop off soon after my remarks, but Paul is available to answer any questions that may come up. So I am Sue Minter, Executive Director of Capstone Community Action, and joining me is Paul Zabriskie, the Director of Capstone's Weatherization and Climate Impact Program. And just quickly, Capstone is a anti-poverty, non-profit organization founded in 1965 working to really overcome poverty by serving people in crisis and offering opportunities to build ladders out of poverty. Our programs are very multifaceted. They include emergency food assistance, heating assistance, housing counseling, homelessness prevention, savings and credit coaching, businesses, workforce development, and home weatherization services, as well as Head Start. We serve the communities of LaMoyal, Orange, and Washington County, Central Vermont, primarily, although some of our weatherization services are statewide. And for all of these services, we provide help for over 10,000 Central Vermonters who are struggling with their low incomes. I want to start by explaining that my Board of Directors has not approved or even really contemplated the details of this complex bill, S5, so I don't speak for Capstone. I speak on behalf of myself, as well the Vermont Community Action Partnership, VCAP, the Network of Community Action Agencies, has not taken a position on this bill. So again, I just want to make it clear I'm not speaking on their behalf or on behalf of Capstone officially. I want to recognize that I have served also on the Vermont Climate Council as an appointee from the Senate. So I do really appreciate your inviting me to provide perspective. It's clear from our Climate Action Plan that transportation and thermal energy are the greatest contributors and therefore the most important for us to address. Capstone is working in both of those sectors. And I feel strongly we have to change, we have to innovate, and we have to facilitate a transition to reduce carbon emissions, but also being mindful of the potential impacts. And as I think you know, the Global Warming Solutions Act calls for what we call a just transition, which among other things really has to seek to support and not undermine vulnerable and frontline communities. So I support the groundbreaking approach to advancing this transition within the thermal sector that I think S5 really represents. I feel strongly we have to move forward toward burning cleaner forms of energy sources that can be more locally owned and generated. Doing nothing ignores the reality that in addition to the high costs of carbon, our current system is both costly and volatile. Now, from my vantage point at Community Action, I see this transition as most critical for the most vulnerable Vermonters who we serve. These are Vermonters who share the greatest energy burden and who are the most vulnerable to both the cost shocks and climate disruption. They're also the least able to recover from climate disasters. And as the former Irene Recovery Officer in 2011, serving in that position for two years, I personally saw how those most impacted by that historic flood were also the least able to respond and the longest to recover, which is I think why we have to have an eye on the impacts of the transition on frontline and vulnerable communities. So while I'm supportive of the approach with the view I have about the demand for energy, but also the challenges of helping our Vermonters stay warm, I also have serious concerns about anything that could exacerbate our current challenges. And I say this in a particular window into the world of those who struggle. And I just want to sort of share what it's like at the front lines of helping low income and very low income Vermonters. I want you to understand both our mission and some of the stories. Our winter services begin to ramp up in October when cold really arrives. And our fuel season becomes very, very stressful for folks both answering the phones to kind of assess the needs of folks, whether people may be eligible for our services, and especially for our six direct service staff in the total region I described. So even though this winter has been relatively warm, the extreme jump in fuel costs has meant that we are working through every source of funds. In fact, we've pretty much depleted those funds to help more people, especially more people who are above the eligibility threshold for crisis services. Just to give you the numbers, we have fielded since October through February 2097 calls. That's just in central Vermont for people who need emergency energy services. We've helped over 890 people and provided 670 actual crisis service supports. That's for fuel, electricity, pressure tests, tip charges, relights. We've obligated over $457,000 for those services. That's a combination of LIHEAP and crisis fuel, but also from a variety of donated funds that we work incredibly, incredibly hard to provide to raise. The people needing assistance from us are from all walks of life, but the majority of these people are elderly or on a fixed income. They may be living with a disability or living with others with a disability. So these are folks who, as our staff call, are living very close to the bone. They have no ability to adjust to increases in fuel prices. And even though this has been a relatively warm winter, it has been a super dramatic and stressful winter because of the escalation of prices, not only for heating fuel, but for food for basic needs. And it is that combination of challenge that brings folks us. Just one example. We had for the first time in many years an increase in the COLA, the cost of living adjustment for folks living on social security. But we had a couple come in, and I think it's the first of many, who since January have received a $200 monthly jump bump in their social security income. But that has meant they are no longer eligible for crisis services. So they receive, to be eligible for this couple, they receive just above what would be a $32,000 annual income for a couple, a family of two, to be eligible for our services. So they no longer can receive the public subsidy of $900 for their fuel assistance. Now thankfully, we work really hard to not have to say no to folks. And we raise money through our fuel your neighbors, our wheels for warmth, the warmth program through our utilities, and our town meeting requests. So we were able to help this couple. But for many more, we are not, we fear that we are not. I just could go on with just for a second, the many ways in which folks we serve are being hit by the reduction in the element ending of pandemic era funding, such as the extended emergency allotment of SNAP benefits. I'm not going to go on to that, but simply to say we are in really hard times and they're getting much harder. I want to just really call out and thank the committee for the part of the bill that does recognize those needs, specifically support the equitable distribution of the clean heat measures that are set forth in the bill. I greatly appreciate that you are working to prioritize the customers with low and moderate incomes because they are those with highest energy burdens and including renters. And I especially appreciate that you're looking for so-called installed measures. Those may be more costly at the outset, but we know and certainly Paul knows that this is long term and lasting benefits to the folks we serve statewide. I think you know that community action agencies are the providers of weatherization assistance, subsidized weatherization assistance to low income folks. And I want you to know that statewide is our understanding that we've produced investments weatherized over 1,000, 1,033 units, which is about 79 percent of the goal we had set statewide, about 279 short. Now what that is producing is an average of 28 percent of the costs of that unit that that individual has spent on fuel. So an ongoing reduction of that kind of cost is the most important investment we can make to serve the folks who then no longer have to come to us for those emergency allotments I was speaking of. We work incredibly hard and yet the progress is complex and slow. We have workforce challenges that we are working incredibly hard to overcome and we can speak further to those, but they are real. Nevertheless, the Global Warming Solutions Act has set forth very ambitious targets for us that we're doing everything we can to try to reach. Capstone has weatherized on its own over 171 units. We also have a program, the 3E Thermal, looking at multi-family units that completed work on 211 residential units. All of these are incredibly important and long-lasting savings and we appreciate how much this bill sets forth ambitious and important supports for this program. I want to say that I know the Global Warming Solutions Act sets an aggressive timetable for this transition and we are working very hard to try to reach that, but I do recognize that and worry that that sets a price challenge for this to meet especially the near-term targets. I want to request that you place some kind of a monitoring mechanism to help evaluate potential unintended impacts and especially the impacts on low-income vermoners. In addition to tracking and analyzing these impacts, I would recommend that you consider additional supports for programs like the LIHEAP crisis fuel assistance that have very limited eligibility but might be able to further ameliorate some of the impacts on those low-income folks. That's really what I wanted to share from my personal vantage point. Again, not formal support for this by my board or the network of CAPS, but really just to try to present what's happening on the ground with people struggling to afford our current system and to recognize that currently we are struggling because we depend on sources of fuel supports that are volatile and that are from being imported. Thank you. I will leave it there and see if you have questions now or if you hold them to the end. I know Paul will be available. Does anybody have questions for Sue knowing that we will have Paul with us all the way through? Representative Stevens. Good morning. Thanks for joining us. You just mentioned additional support to LIHEAP for the range. If I recall, LIHEAP goes up to 60 percent annual median income. I think you are right. What would be helpful in terms of the range to be able to provide more services to people if right now it goes to 60 percent? I think this is a very complex topic of how this program is supporting folks. I don't want to set a limit right now, but I think there are various types of support within this whole LIHEAP program that I would welcome the opportunity to have a deeper dive with folks from the state and from the CAP network to really think, I guess, more holistically about the program as a whole. And I guess just if I don't know if everyone in this committee knows what LIHEAP is, could you just explain LIHEAP for a moment because we have some new folks to the committee and the committee was merged from last year? I think it would be great for you to have folks from the state in what I can tell you low-income heating assistance program, LIHEAP, which is a federal funding that comes through the Department of Children and Families. I cannot testify to all of the different aspects of this program. What we rely on is emergency heating assistance where we are determining the eligibility of folks and sending the information and the fuel dealers are providing those services. So it isn't like we are giving funding from the feds directly to our clients unless they are not eligible and we have the ability to support them. I think there are different kinds of supports that I don't feel able to testify but would be welcome to bring the right staff or most importantly for you to get the right staff from the state to discuss it. But it is really the way that our state and federal government supports very low-income people who cannot afford to keep their homes heated through the winter and what I can tell you is we are not meeting that need even in spite of the generosity of this program and it's because the eligibility is so narrow. We work incredibly hard at Capstone. We've raised over $300,000 from our neighbors through our fuel your neighbors program because so many of the people in need don't meet the eligibility requirements which is why I'm saying if this program is putting in more acute pressure on those folks this would be the place to look at the determination of an eligibility and the possible flexibility. You know the example of someone relying on Social Security who is able to get a COLA increased but is no longer eligible for the fuel assistance is a perfect example of how these different programs are not integrated. Thanks. Thanks very much Sue. And next up we will hear from Paul. I want to be cognizant that we do need to get more Collins on her way by 10 o'clock. Representative Logan. Thank you. I do have a quick question for probably you know there are multiple people who could answer this today. One of the pieces of information I think that would be helpful for us is understanding at the state level how many households fall under the fall within the category of low to moderate income given that we're using HUD standards for calculation of low and moderate income status. The ANR provided some numbers that they were based on HMI household median income rather than AMI. So that's a very very different number. The other comment I just wanted to make regarding you know the increase in Social Security the COLA increase for Social Security as I understand it given that my father was in a similar situation this year. Part of the reason that these folks are ineligible for services is because of the use of AMI as standard and HUD will not adjust AMI until this month. So there was a three month period where COLA increased for Social Security you know lagged behind HUD increasing AMI calculations. So good information for us as we continue to work through. Madam chair or vice chair I want to just say it's such an important point that you know you're looking to certain eligibility and and different federal programs and different federal agencies really determine what poverty means in different ways and it is complicated and I think the more we understand the whole set of challenges the better off will be in thinking about these programs. I don't know if Paul I might have mistake miss spoke or that there's an additional point that he wanted to make relative to the question I just answered. Just like he been Vermont is currently 185 percent of federal poverty. 60 percent of median income which is a metric used in the bill as five is nominally relates to about 200 percent of federal poverty. So there is a little bit of a mismatch there and again my name is Paul Zabrisky for the record. Okay. Other brief questions. Yes. Just in terms of the question about explaining why he there are two components to why he one is for people who qualify they get a assistance in paying their monthly energy bill during the heating season and then there is the emergency systems that people facing a crisis who don't have. That's the one that Sue referred to who who don't you know can't can't pay their bill and are going to go hold or whatever. Thank you. Okay. Mr. Zabrisky. Well I'm available for questions. I have no prepared comments. Thank you very much. Yes. Yes. It might not be a quick question but I'll try. Thank you. Thank you for your testimony. With the existing state and federal programs right now how much more beneficial do you see S5 helping low to middle income people? Well I think as I tried to explain you know the reduction when we weatherized up a home which I think this is going to facilitate not just weatherization but new efficiency investments in multiple homes but the long term savings in terms of cost of reducing cost is incredible. In some cases we've heard of families who the cost to heat their home has been cut in half after we leave a weatherization so that is long term so I think the more that we can look at the home heating needs and of course transition to those that aren't reliant on imported sources of energy that are moving towards sustained and locally generated sources I think that transition has the long term benefit of reducing cost and volatility for the system as a whole. What I tried to point out is the degree to which right now so many Vermonters because of the costs and volatility of our existing energy sources are really challenged and we are working to meet that challenge but we're also trying to reduce their cost long term so I think in the long term there's no question that we will see benefit to the households we serve. Thank you. If I may add one more. With the current and I've asked this on a number of witnesses the current workforce and I know weatherization is flat out I mean they could work seven days a week but with the existing workforce where do you foresee bringing in another 4,000 people to meet our goals? I would love Paul to share his experience I think these are very real challenges. Yeah undoubtedly I just would point on your first question the inflation reduction act and the infrastructure bill the federal resources that are still the details of those those the rules associated with those are not entirely clear but they're primarily built on incentives on rebates and on tax credits and all of those assume that a consumer has the upfront resources to make an install in order to access those resources so I think that as five contemplates mechanisms that provide resources for low income remuners that are not necessarily addressed in the other resources that are likely to be forthcoming for the rest of the market segments. Thank you. Thank you. Okay thank you very much for joining us this morning Sue. Yes. Representative Sevens. Thanks Madam Chair. Paul I'm wondering and maybe it's Sue I'm guessing it's Paul could you just share a little bit you and I excited about the energy coach and could you share a little bit about that because one of the things we've talked about in this committee is that it can be a potentially confusing meandering path to understand how to do like what steps to do in upgrading your home and how to go about it so could we move this since Paul can stay with us and Mora's on our time schedule could we take Mora's testimony Mora's testimony okay and then come back to this question and Paul you are able to stay with us. Yes I am. Thank you very much thank you Sue. Thank you. Thank you. Mora if you're able to join us. I am thank you and I'm over here trying to answer your questions before you have to ask them again. Hi I'm Mora Collins I'm the executive director of the Vermont Housing Finance Agency I'm so grateful to be here with you today I have testified in this committee in prior sessions but not often and so I'm excited to be here I'm not often here because the HFA is a statewide affordable housing lender so I'm usually down the hall to the right and we're usually talking about banking issues and housing affordability and low and moderate income needs for Vermonters because we run a statewide affordable mortgage program usually for first-time home buyers and that's what we were started to do was to meet the market need to offer lower interest rates to buyers who are purchasing a home who are income eligible for our programs and then we have several programs to support the creation of affordable rental housing we administer federal tax credits which is the largest source of money to create affordable rental housing we have state tax credit program and we do loans to that we don't come here for state appropriations for completely self-sustaining and we do that by selling tax exempt bonds and that will really put you all to sleep so I'm going to move on but I'd be happy to talk about any of that if we haven't met already I why I'm here and and how I got into this work is because VHFA has long been very focused on getting people into housing and focused on the affordability of getting into housing and then through those loans that we offer making that housing affordable and on and off we have participated in various ways to support the ongoing affordability of housing through lowering utility costs and so we've had many programs over the years where we've looked at mortgage programs that can be adjusted for energy usage of a home but it was in 2020 that we got involved with an energy action network working group working to bring weatherization to scale we know we need to weatherize 120,000 homes in the state we know we've done about 30,000 so far and the program Sue was mentioning continues to chip away at that need but we also know that we aren't going to get to 120,000 homes through straight appropriations and with the course that we have right now and so you may remember a few years ago you all put some funding into a weatherization repayment assistance program RAP is the acronym so weatherization repayment assistance program and folks earning up to 120% of median can get there if they do an energy audit and they need work done on their home we can weatherize their home and pay for that up front and then the household owner or renter can pay that back over time through the utility bill this is a partnership we're doing with four distribution utilities electric companies and Vermont gas already and that is just starting to really get up and running and roll out now we're partnering with efficiency Vermont and Vermont gas and Burlington Electric is the three energy efficiency utilities in the state to administer that I mentioned that background because I want to put strong support behind this bill because I have been working for many years and VHFA has a long track record to look at how to make housing more affordable long term and I think that this bill is going to do it for all the reasons that you just heard of from Sue that we know that price volatility and what's happened just over the past year but we can look back many many years and know that inaction is not going to make electricity or heating costs thermal costs any more affordable it is only going to keep people on this volatile roller coaster and in VHFA's experience and I think many who work with lower income households we all know that the budget plan works you don't even have to be lower income to know that smoothing out that volatility makes everything more affordable for folks because it's more predictable and this s5 in large part I'm trying to you know keep it short is going to take folks off of that roller coaster and make it more stable I do also want to say that the transition from the current system that we have to this needed change is going to cost money and I think we have to be honest about that and we have to there's a real risk that without firm targets to serve certain people and without guardrails to protect those folks that the economic and environmental burden could continue to be put on lower income bermaners and so I want to talk about the ways I applaud this bill for building in those safeguards largely I know that our state has a goal of ensuring equitable access to the benefits of energy efficiency renewables and energy incentives but where we sometimes fall short is in the implementation of that goal and so I'm going to get very specific in a minute and get right down in the details to to speak to some ways that I think this bill already was changed to to protect lower income bermaners and how it could do so even more and so the few recommendations I'm going to make are in the your committee's website sorry I'm now pulling up zoom because I want to share what the memo I presented so that you can see the language that I'm talking about as I do it it's not a pretty powerpoint I apologize but you have this memo on your committee's website and you will see that right now the definition of low income is those below 60 percent very medium income am I my language and then moderate income is between 60 and 120 percent of very medium income the effect of that means that if you earn below the 60 percent of medium you don't qualify for those moderate income benefits and I would recommend the language change so that moderate income is defined as earning below 120 percent of median income but not putting a floor to it so that we can maybe help serve even more low income households in that moderate income category so keep the low income definition as is change the moderate income definition to remove the floor so that if I'm earning 55 percent of median I could qualify as low or moderate income I'm trying to imagine the implementation of this program I'm trying to imagine the participants who would be setting up targets of no no now I got to serve some somewhat higher income folks in this moderate definition I'm trying to make sure that they don't leave behind very low income folks I also I applaud the Senate's work at defining low and moderate income that was testimony that Kathy and I made loudly in the Senate side and we were very grateful for these definitions and so that is wonderful at the very end as you know how this works there was a little discussion about is area median income the right term or should we go to statewide median income the greater of the area or the statewide and I'm asking for you to consider that conversation because you have a little more time with it than when we were talking about the very last minute of the Senate because if you have a statewide income limit it will make the implementation of the program easier when you think about these delivery agents and all these participants if there were some statewide income limits it would make it easier than talking about you know in this county it's this and that county it's that area median income limits are largely are mostly by county except for northwestern Vermont which is the three county area of Chittenden Franklin and Grand Isle all has one income limit so every time it's a head scratcher about why Richford has the same income limit as when you see your South Grillington but that's the way the numbers work and I want to make sure you all know that so that you know what you're passing when you look at this so a statewide number might over serve might have kind of higher numbers for some communities and too low in numbers for other communities if anything working with the data I think it's going to mean that the incomes of our northeast kingdom and our higher poverty areas that have more efficient housing might be a little higher than what is warranted based on their area calculation and the Chittenden County and areas where we actually have a little more recently built housing might be a little low if you can imagine how that smooths out statewide representative civilian has more can you who could help us really fine tune that I'd be happy to um there is oh I wanted to jump over I'm hoping that I have it all queued up someone was just asking about the oops you're not saying okay um about how many people and I just want to say that we do have um information about households by income group on this fancy housing data website and um you can see here and I can show you where this is this is housingdata.org I went to um uh income and employment and I was able to pull up how many households by different income group I know that this isn't at 60% but it starts to give you an idea you could pull up every county or actually every town in the state to um see what the income levels are for um by that and someone else asked about um how many people are eligible under this program um and there are some other numbers about we're talking about 21% of owners would fall in that low income category about half of our renters and then you'd add another 27% of owners would fall in the moderate income category or 30% of our renters so in total 81% of our renters would fall into these two targeted areas that's been identified in s5 whereas 48% of the owners would fall into that targeted area to be addressed and I'm happy to follow up um with more details on this as well so my final I'm moving very quickly um pieces that I wanted to um speak to next goes to um a little bit of a um disagreement among some of us uh about what something says under d5 um the language talks about that uh in determining whether um the clean heat measures must be delivered to folks with low and moderate income that it should take into account participation in other government sponsored low income and moderate income weatherization programs I'm told that the intent of that language is to make sure that people who are already participating in programs like lieheap like weatherization and all that are still eligible for clean heat credits someone who administers public funds I am so aware of the uh cardinal rule that you never allow double dipping and that you have to make sure that if you're eligible for one thing you're not getting the same kind of benefits covered by another governmental program and when I read this language and this is the disagreement I read this to actually make it sound like if you are participating in other low and moderate income efficiency programs that maybe you shouldn't be eligible for clean heat credits you may be you may not agree with me and you may think that this is clear as can be and that's fine to me when I see in determining whether to exceed what we're going to do for low income households the commission should take into account participation in other government programs is not clear enough to say that the taking into account means it's okay to do it and so at the very bottom of this paragraph I have on the screen I'm going to throw out a language change recommendation that participant participation in other government sponsored low and moderate income weatherization programs should not limit the availability of clean heat measures available to those households by nature of that participation for your consideration that's the goal of I'm just trying to make sure it's very clear if you're participating in some government programs already it does not by that nature make you ineligible for this participation which I know is everyone's goal I just think that years from now when we're doing other things I want to make sure that's clear representative Logan thank you more thank you so much I what I've heard about this particular topic is that the participation of low and moderate income folks in other government programs like weatherization programs for example and and counting those as as clean heat measures makes this more affordable to implement so are you suggesting that I'm not exactly sure what the upshot of this comment is here yep I agree with that and I'm hoping that s5 and these measures are going to mean that there may be more resources and support for wrap that I spoke about for the weatherization assistance program that sue spoke about which serves households at 80 percent or below and wrap I didn't say this before actually goes right above that for 80 to 120 and trying to serve that next year and other programs and so I agree that clean heat it should hopefully be trying to make all of this more affordable I want again there's something about it I'm just not understanding when I read this language as is I'm worried that someone could see it as a division of that there are clean heat measures that we're going to do and then there's weatherization that someone could participate in and that someone couldn't participate in both so again I this is I'm told that I'm in the minority here so I'm fine with moving on but I just want to make sure that the lawyers or everyone else is meeting the legislative intent which I think everyone agrees with which is that participating in weatherization and participating in these clean heat measures would be the same thank you thank you for testimony vhfa carries mortgages for low-income families low-income families see the need for replacement of a heating system or heat pumps or furnaces or anything will vhfa consider or do they refinance and remortgage to include these heating systems because I know there will be assistance for them but maybe not enough to really actually make it happen you would you will remortgage I know I was listening so I was nodding we do not offer refinances right now the the techs exempt bonds that I skipped over do not currently allow us to offer refinancing there is a bill in congress if you want to have that conversation to allow us to do that but right now we don't offer refinancing that same bill right now caps us that if we want to give a loan to a home renovation project we could but we're capped at fifteen thousand dollars I think we all know that that doesn't get us as far as it used to so that same bill is going to raise that to fifty thousand dollars and keep up with inflation I was in DC last week advocating for that bill so I I have interest in exploring that in partnership with regular banking partners like we always do but that is not something that we offer right now because of the limitations on our source of money well I know you've helped a lot of people in the north east kingdom and you're you're appreciated for that thank you the last recommendation that I wanted to make was that later in the bill there's a review of consequences study that's going to be looked at biannually and it talks about the consequences that may happen to deforestation conservation grasslands damage to watersheds and the like very focused on the environmental consequences and we would suggest that that review also be broadened to consider the unequal impact on low income or disadvantaged groups I will acknowledge that later um or actually earlier in the bill there is talk about looking and trying to get at equitable distribution of clean heat measures and I applaud that that's like are we distributing the the resources equally among these groups but I think that understanding the unintended negative consequences that may come also is an important step that is the foundation of energy justice is to look at not only who's benefiting from something but who may be unintentionally harmed by it and so including the look of the review of consequences to include people and what their experience was would be important and the last question I have for the committee and I don't know how to fix this one so I'm sorry I don't have language to tell you how to fix it is when looking at rental buildings we applaud the senate that they included under the default delivery agent to focus on rental housing and that rental housing is throughout this bill there is we all know the split incentive there about environmental housing and so as written when you're talking about low and moderate income targets if a property owner who manages or owns you know landlord who owns property if they do not personally qualify as lower moderate income but they want to invest in a property that is very clearly lived in by low and moderate income folks and I'm going to turn to you know then your next witness to be an example of this ever north may not qualify as lower moderate income as corporation but their tenants absolutely are all under 60% a very am i is it clear or does it need to be defined how that's going to work because again when you're a home owner it's clearer I do income certifications all the time it's clear to know what your income is and you're an owner but in a rental situation I want to make sure that it's not the property owner who's assessed but it is the renters representative Logan thank you yeah I appreciate that point and I imagine that Cassie your call to speak to Damian Leonard could speak to how this is done for weatherization programs and other programs like lead based paint remediation because that's certainly how it's done in those programs I am so grateful to be here there is so much good work that has been done already to this bill that we talked about defining the income areas the front loading of credits was something that we had really advocated for and we appreciate the way that the default delivery agent is focused on rental housing and adding how inefficient manufactured housing can be replaced by more high efficient manufactured housing as an eligible measure VHFA was added to the equity advisory group which I think is very beneficial to have a lower income housing organization at that table I may have already seen a copy of what Kathy's about to say and I just want to say I also endorse what I heard from Sue and what I think you're going to hear from Kathy and so when I walk out the door to my next meeting it's not because I'm in a fit it's because I just have some rest so I think you should probably know that we did take out the equity advisory group okay as the office of racial equity asked us to reconfigure how that was addressed and we found that with the latest draft representative Logan thank you um does VHFA serve on the environmental justice advisory okay I think I can tell you about a little group she's pulled together that's looking at environmental justice and housing uh but that's probably another topic for another day thank you for your testimony thank you very much next up I think we have Kathy fire welcome so much let's see if I can get this working at a screen share hold on you need a technical assistance green okay there we go yeah morning I'm um happy fire I'm senior vice president for real estate development of ever north and uh ever north has only been around a couple of years we um in 2020 merged with a sister nonprofit based out of Portland Maine and we now cover the three northern england states of Maine New Hampshire and Vermont but our real estate development activities are completely focused in Vermont and my work as a nonprofit real estate developer is completely focused in Vermont um in our history over 35 years um we have been leaders in energy efficiency and the renewable fields we have in our statewide portfolio portfolio we have hundreds of units benefiting from uh solar hot water solar pv advanced wood heating systems um and uh we have one geothermal a beautiful building on geothermal and most recently heat pumps um we work across the state with our regional nonprofit partners and many of you may know some like champion housing trust based in chitinin county or um windham and linser housing trust based down in the southern part of the state but when wherever we work we work in partnership with our regional nonprofits as a rural edge in the northeast kingdom so you know that low-income verminers um just have a disproportionate energy burden right this is from energy action network the um lower-income verminers have an energy burden that is three times higher than median income verminers interestingly it's the higher income verminers who actually use twice as much energy so you know their the energy burden is lower right because they have more income but they are also using consider of their their impact of greenhouse gas emissions is is twice that of our lower income households um as noted in the state's comprehensive energy plan that was updated in 2022 the burdens and benefits of energy policy in vermont have not been equally distributed across the state or its citizens and there's a fantastic section in the um the energy plan on energy equity and i know you don't have time to read more than um you have in front of you but it is um it was i was very pleased to see that the state's comprehensive energy plan for the first time i think really called out energy equity as a need and i think the affordable housing uh the affordable heat act does address equity and and that is is um the the the s5 as written is trying to get at that need for the balance right like we know that we need to find the balance before between our greenhouse gas reduction goals and the impact on low and moderate income verminers that mora talked about that sue mentor talked about and that's really the question for you and s5 is like have we achieved that is this the balance um and i think s5 originally was written that balance question was going to be determined by the puc which i do not think was the right place for it and i'm very um applaud the the amended version where we have now defined low income as below 60 percent of median and um moderate as full 120 percent of median and and i agree with mora's points on perhaps how we look at those two buckets um i want to be clear that the affordable housing network recognizes the importance to decarbonize our housing stock but i do want to talk a little bit about some of our low income households who may be left at the back of the line that's you know what the balance is about is the people who may be the last to participate in this transition in this transition so when we to think about housing we think about the two types ownership and rental and um what we find is that um heat pump adoption has been much more prevalent in single family homes that's just the really due to the nature of the building right it is just easier to put a heat pump on a single family home um as opposed to um some of you may be familiar with this building in downtown Montpelier ever north and downstreet housing and community development partnered with the city of Montpelier to build taylor street and sturdy apartments we planned from the beginning to use heat pumps so the new construction we could plan for how we're going to run those refrigerant lines up through the building there was absolutely no additional no additional land space to put the condensers and um and then we were able to plan for putting the condensers on the roof we were able to get solar panels on the roof but this is all in a new construction um scenario so i got a little off track with single this circle back to the single family homes as as a cementer pointed out and more pointed out in the single family home category and i think representative stephens was getting there there is a category of that housing stock that um we all know right it was it's old um it needs more than just a heat pump right the thermal shell is so bad that a heat pump wouldn't be able to keep up with it and that is um uh witnessed by you know this this slide always amazes me is the percent of our housing stock that's older that was built after uh or before 1970 so more is point about making sure that you can use um you can access the other uh programs like weatherization with with the um clean heat measures is very important because these homes are going to need um significant investment to get there um we also more also brought up that um i think it's i really applaud the the addition to include replacement of manufactured housing with high efficiency um homes i you know i drive i live in heinsberg i drive past this mobile home park i won't name names and it has some of the oldest mobile homes and they just are an energy disaster and i know for the people who are living there um there's not much we can do to to make those homes better so i want to switch back to um the renter category and more brought up the term split incentive does everybody know what that means so the the landlord does not pay the utilities the renter pays the utilities so there's a there's a split incentive there's no the landlord has little incentive to improve the energy efficiency of the building because the tenant just pays higher um higher utility bills and um s5 does nothing to address the split incentive the renters who are paying their own heat i in my viewpoint are largely left behind and it's not really a fault of s5 there's not a a mechanism to address this um or maybe perhaps we could look at is there a way to incentivize more landlords who who are not paying for heat um to make that switch but that is a category right now that is at risk because we know that the price of uh fossil fuels is going to go up as a result of implementation of this bill one help is is you know more money for lieheap to help these renters but that that is a category that i of all the categories i could this probably um most at risk however there are landlords who do um pay for the heat and in in the affordable housing industry across the state most are 95 percent of our buildings see as the owner of the buildings pay for the heat and we do that for a couple of reasons one is obviously the economic security of our residents um and that they are not going through those fluctuations the other is we that then that then puts us the owner of the building um very um focused on the energy efficiency of the building right because we're paying the heating bill and the electric bill is so we um look for every way that we can to keep those utility costs down which is good for um also good for greenhouse gas reduction i do want to talk about buildings where um converting off fossil fuels will just be a physical challenge so this is um in Windsor um called that's have army square union square in Windsor 42 apartments this building um is obviously a historic building and um it uh is currently on fuel uh um you know hydronic base for heat so to convert this to heat pumps will be challenging right because we got to get those refrigerant lines through the buildings we got to make sure that the thermal shell is out that the heat pumps are going to be able to keep up with the thermal shell we got to find a place to put the condensers um i i think this is one building where i'm not sure that adding heat pumps is actually going to be possible but um we have already done it's a little blurry um we've already done a feasibility study on installing advanced wood heat so i think it's very important to keep advanced wood heat as a um measure an eligible um measure in the bill and i just wanted to point out that that's one of the reasons um that i would say that so my um intention is not to spell all doom and gloom about the h.a. i just i just wanted to talk about this um this balance to address climate change decarbonize our housing stock and really talk about um also the equity impact on our low and moderate income for moners and i i also would um uh i didn't have specific language but i would say while the bill talks about equity there is more than more than just the example mora gave where then the bill um it it for example sets up the tag the technical assistance advisory group but that group has no link to the um equity uh working group so that those that when the the tag is making an assessment that that assessment includes or coordinates with the work of the equity advisory group so that is really the core of what we're trying to get at is that every time we talk about greenhouse gas reduction the climate impact at the same time we're talking about impact on low and moderate income for moners i will end there if you have any questions thank you for your testimony the members have questions representative longard can you start a little bit but do you have i know you don't have language but you have suggestions about how we could deal with the issue of um landlords who don't pay split incentive that's what incentive oh people would have been trying to i wouldn't try to fix that for years i i i i don't other than um i'll try to think about more is there a way you can't mandate it you know you can't tell every landlord switch over and you gotta start paying for the heat heat for the building but are the things we could do that would make it more likely they would choose that um so i'll think about that a bit more shoes weatherization and systems yeah yeah some will i mean some will out of the you know good idea or you know babe but some will we know that uh representative pat uh i'm just a little confusion in my head maybe i'm misunderstanding something but both uh you and mora had mentioned uh the desire to have measures that are that are paid that are currently available to be paid for by existing public funds included in this but the structure of this in terms of the credits are the obligated parties are the companies that are uh bringing fossil fuels into the state and and it's the the the bill is attempting to put responsibility on on them so i i i definitely understand the desire to have programs working together if they're doing similar things but um uh if if if if there's a an obligation on the part of an obligated party uh that's an obligation on them not on the low income weatherization program so that that's my what i started wondering about yeah it's complex yeah um uh but i i think what we we want to make sure that if we can figure out the complexity that the language doesn't say oh well you can't double dip you know you got weatherization money so that you can also get the heat measures yeah i would think that the let's say there was a project in which both the low income weatherization program and other measures uh were additional measures being uh that are being put in one way or another through the obligated party that they would get credit for their part of it but yeah not the publicly funded yeah i do you want to um i want to resonate that i i hope that the language is clear around um this is very self-serving but um in our portfolio our renters 70 70 percent of our renters are in below uh 50 percent of median so i would hope that owners of buildings who house low and moderate income households would be eligible as as i think that's the intent but i'm sure the language quite gets it 70 percent what did what was the number you just said what was the number you just said uh 70 percent would be under 50 no but recommendation in the bill i you know i i'm sorry i need to go back and look at the at the language to see how um how to clarify that oh okay i apologize i can i can send something to the committee yeah uh representative logan thank you um i continue i'm you and morah have said similar thing um you know regarding um you know making sure that low and moderate income households are eligible for additional clean heat measures um i just want to be clear that i'm understanding the policy as as it's written currently um one of the the reasons that um prioritization of low and moderate income households right now is particularly possible is because of all of the federal money that we have available to us to perform this kind of work in low and moderate income households and that performance of that work um by say like the default delivery agent for example would um would retire clean heat credits so it's money that's already being allocated for those purposes and will help reduce emissions and therefore counts as a clean heat measure um and the fact that that money is so to speak already in the bank and being spent means overall compliance with the clean heat standard will be more affordable um so i just want to be clear that that's really the case that money spent on weatherization programs that are already existent and will increase in their funding level because of new federal dollars will count as clean heat measures yes starting this year starting this year yeah okay yes thank you thank you for your testimony thanks so much members i'll take a five minute break we're going to continue our testimony on s5 and welcome uh kreg bolio the commissioner of the department of taxes welcome commissioner thank you madam chair i appreciate it uh yeah for the record kreg bolio tax commissioner uh thank you for the opportunity to weigh in on this as the tax guy i don't get over to this committee very often and my discussion today is going to be fairly limited in the scope of the bill and really focused on the provisions related to the fuel tax and confidentiality of tax records i'm working from the draft that i believe was posted yesterday dropped 1.1 um from yesterday at 11 14 a.m so my to get to my my headline my overall ask of the committee is a simple one um i would ask the committee to remove the provisions from this bill that compel the department to change the fuel tax form to include wholesale data and remove the provisions that change the confidentiality of those tax records i do not believe that it adds value to what the committee is trying to achieve so under current law the fuel tax is paid by retail sellers of uh heating oil propane kerosene natural gas coal other diet diesel right and there's a per gallon tax on the heating oil propane kerosene another diet diesel and the natural gas coal and electricity has a percentage based tax on it uh the key fact here is that our relationship is with the retailers right not the wholesalers um and information about the wholesalers does not impact the tax calculation or tax administration right and additionally by excuse me by statute all tax information by default without an exception in law is confidential right and so this bill has a few big changes that impact my little corner of the world the first is that on page nine line seven my department is is required to begin sharing all of the fuel tax data forms with the public utility commission and they will publish those documents publicly so that's a big change in tax administration right we don't have much tax data that becomes public it also has later on that page and starting on page 10 the requirement to change the fuel tax data that again among other things starts to capture information about the wholesalers or where the retailer who the retailer purchased from anytime that we're going to make changes to tax confidentiality I ask that we be very thoughtful about it and think about the balance of the cost of benefit for that and in this case it's hard for me to find the value and and what that change will do firstly my read of the bill is that the PUC is going to have all of the regulatory authority that it would need to get this data directly from the companies um on line eight or sorry page eight line 10 it talks about the annual registration uh with the PUC and it talks about the authority that they can set what is required and that that required information shall include the types of heating fuel sold and the volume of the sales of those fuels so that data is already going to be going to the PUC additionally the bill lays out on page 13 I believe the enforcement provisions that the PUC gets the authority to enforce the requirements of the chapter they can order penalties and injunctive relief and I think on page 14 it says that failure to file is a violation of the consumer protection act so it's unclear to me what additional teeth folks believe my department has like we don't license these companies I believe more regulatory authority is going to be provided to PUC than to us so the idea that we would have uh more honest data is is uh interesting to me on that front um and again we don't get the wholesale data today nor will it impact the tax calculation or tax administration so it is likely that the quality of the data that we would be sending over to the PUC would be no better than what they would get themselves unless I were to redirect resources from tax administration and from compliance activities that would have an impact on tax liabilities owed from from our taxpayers to validating that data which again I would say instead of having the communication channel be business to tax to PUC and PUC to tax to business just keep it at business to PUC we we are not adding any value because the quality of our data will be no better um so again my my headline is that I ask the committee to remove those provisions I think that this would set a bad precedent for uh making tax records less confidential and I think it would do so with uh little to no value added to what you folks are trying to achieve thanks for having me happy to take you can you um provide those in writing for us so we make sure capture them thank you sure representative Sebelia thank you commissioner for your testimony the um the so the data uh your concern is about the tax department sharing it not about it being shared uh it's either way it's being shared at the PUC is that correct sorry uh can you can you just clarify the question a little bit uh my concern is more of tax data becoming public so it will become public at the PUC so but your request is for you not to collect it for the PUC to collect correct and so it's going to become public either way right but not through the method of it being tax data that then gets published thank you and again I'm not sure that the data that the PUC needs is going to align exactly with what is on our tax form either right so there might be some uh irrelevant data that ends up published publicly there I haven't thought every element of that through but um I do worry about that is there tax data today that is public it's very limited um the there's a limited amount of landlord certificate data that gets uh it's not published but it's available publicly upon request you we also have uh we publicly disclose uh again on request not published but um who is licensed for sales tax meals and rooms tax or withholding and if they're in good standing um a lot of property tax data is public but that's not really my department that's overseeing that what is landlord certificate data yeah so that is part of our renter credit program so a program for low and moderate remoders who could qualify for some help with their rent there's a landlord certificate that goes with that that validates the tenant landlord relationship so the rent that's being paid uh it it actually doesn't it used to say the actual amount of rent being paid it no longer does unless that tenant is receiving a subsidy on their rent and most are not so most of those landlord certificates today just say the name of the tenant and actually that that's not part of the public data i believe what's public is name of the landlord address of the unit number of units i have to look it up in statute but it's mostly the landlord data that is public from that i frankly i was not thrilled when that happened either um but it happened uh and so that somewhere includes their income too no there's no there's no income data on that it's just if you gave me a moment i'd be happy to look it up and read exactly what it is but it's mostly demographic data it's that there's no income data that's published number uh representative pat thank you um did you had the opportunity to discuss your concerns when this was when the senate committee was dealing with it or did you just did it have sort of happened did you become aware of it after afterwards or just curious whether there was discussion about this specifically so this this language specifically was not in the bill when i testified in the senate i did testify generally about concerns about use of tax data but at the time it was not clear to me that it would be wholesaler data that we don't even collect today right so like this is now compelling us to collect new data that adds no value for us um and then disclose all of it publicly representative cedulia yeah so uh we'll look at this language again but it's obligated parties can be retailers or wholesalers so it's not just collecting wholesaler data it's obligated parties data i believe sure i'm again i i think that the pc is giving all the regulatory authority that they need to collect that data and enforce those provisions yeah so you're you collect data from anyone that sells fuel oil and yeah deliveries into vermont the retailers yes so any obligated party is going to be having to report fuels too uh not if they're strictly a wholesaler but um um yeah if only if they have retail deliveries into vermont for the questions thank you for your testimony thanks for having me and i'll i'll submit the comments written as well that would be very helpful thank you next step we have kyle landis from the pc together welcome yeah good morning the record kyle landis marinella general counsel at the public utility commission and my name is tom nower i'm the policy director with the commission and we didn't prepare additional remarks but we're happy to respond to any questions that the committee has we can also speak to always just address now about the tax provisions so we do have a different view on that issue yeah i think that would be a great place to start thank you sure um so uh commissioner bolio is correct that we do not need that data from the tax department if all of the obligated parties do what they're required to do under the statute and the rules that would follow um however i've learned from uh spending a number of years in enforcement at the attorney general's office that good policy doesn't plan on the best case scenario it plans on uh worst case scenarios and here as we mentioned last week there is one entity one obligated party that we currently regulate vermont gas systems all of the other entities we currently have no relationship with the tax department does they get i believe the testimony in the senate was around 200 of these forms a year and so all of those retailers unless they're purchasing only insate only from insate wholesalers all of those retailers will need to register with us and then the wholesale entities in vermont are going to need to register with us but how many of them actually do is an unknown and um uh it's a big concern of ours at the commission for getting this program off the ground we need as much compliance as possible we're not going to get a hundred percent but for every single entity that doesn't do what it's supposed to do the costs go up for all the ones who are playing roles and so this is where the information the tax department is already collecting can be tweaked to add some useful data points breaking it down by fuels um my understanding is the fuel dealers association has supported that change for a while um also adding information like where the where they bought it from at wholesale and i i agree with commissioner bullio that doesn't provide information the tax department needs but it does provide very helpful information to the public utility commission for getting this program going and really maximizing compliance and so we do think those tax provisions are important for that standpoint in terms of it being public where that comes from a lot of it is how we do our business at the public utility commission we try to make everything public unless there is a really good reason it can't be shared publicly for instance um we do get some information uh critical energy infrastructure information we've um the acronym c i i we will protect that and keep it confidentially but it's actually very difficult just within our system our electronic filing system doesn't allow us to have confidential documents in them so we have to get them through a different method and um it causes constraints when we get uh request from members of the public and we expect a lot of public interest in this program and they're looking for data and if we have data that we can't share publicly um that puts us in a difficult position and so i agree with commissioner bullio generally you don't want tax information to be made public uh but this is a very small set of entities this is business data it's not personal income data um and this is information about fuels that the state of ramon has said as a policy matter you see how much of each of these fuels are coming in and we need to know how much that's changing year to year uh to address the global warming solutions act and then this law should have become uh should be this bill should have been passed into law and so just like non-profit entities their information may be made public i believe the senate heard testimony that transportation fuels um that information can be made publicly available and so we think this would be helpful information um for the commission to have for getting this program going and having high levels of compliance representative sabilia thank you for your testimony so i want to make sure i understand what where this data would be available so as we have it written now and i've gone back and read this it seems to me that we would have the entities like the names of the entities publicly available on the website we've said that but it says it it's less clear about the income data it says it will be publicly available uh which i heard commissioner bolio say uh there are other data sets that are available upon public request so will this will the income data be um on the public or available on the website or available by request it's a good question and this uh this again goes to how we do business that um be uh and we may be unique among state agencies in this way um in 2017 we moved from paper filing to electronic filing using the epuc electronic filing system and we make every single document that's filed with us in that system every single order our memorandum anything that comes out from the commission publicly available 24 seven through epuc um and the exceptions are these rare instances where we do have some confidential information there it's occasionally orders where part of the order has to be redacted and there the unredacted version is not available to the public but the public is still unnoticed this information is is available um at the puc if people have the right to access that confidential information so our policy um yeah i direction at the puc and this some of this comes from the legislature and uh a big push by the legislature for more transparency openness at the public utility commission we make all those documents publicly available 24 seven and that's what we would want to do for this information as well okay and our legislation does uh require that social security information would not be available but you know and and so i will just say that um i you know over the years of work that we've been doing this and engaging with the fuel dealers to make sure we have a good policy that is fair um one of the thing one of the concerns that they have brought forward is just um making sure we know who's who's who is in and so this information feels really important to me for the fuel dealers themselves to be able to reassure themselves who's in who's out so i think i'm satisfied with what we've got representative sevens thanks much sir um yeah i also uh there's a broader concern about just tracking um our our performance and whether or not we're reaching our global warming solutions act requirements um uh just in terms of are we actually collecting all the data we need um and so i i mean i actually have a bill in the wall to try and address this issue because if we're not tracking the data we need how do we know if we're even in the ballpark so this language for me is is pretty critical that we keep it in um i i don't know what the point is is of setting goals if we can't track it um i will say though if there is a concern specifically about confidentiality um perhaps the commissioner of the department of tax could provide us with additional like guardrails if if there was a desire for that um but i also know there i mean there are ways in pdf land to black out um social security numbers what not so i i guess um i guess i am very concerned if we uh end up removing the data collection piece because it's it's a key metric by which we measure our performance further thoughts or questions thank you oh representative i just again trying to get clear in my head the different entities some of which may actually have the same information and another so you have um wholesalers who have a facility in vermont and are selling to certain retailers um uh and both the retailer the the data of of how many you know gallons of which fuel would exist both at the wholesaler that is in vermont um uh and making making wholesale sales in vermont as well as in the retailers they're selling to but then you have the retailers who travel to into new hampshire uh and and and they're the importers and we have no we have no data from who they're buying from in new hampshire because they're in new hampshire so the only data in that case would be um uh the uh the the retailer who is it was importing i'm just trying to get uh the uh straight in my head where the where in which business is the data we're looking for exists you know so thank you for listening to me unless i got it something wrong there representative smith yes i'm not fully up to this information but i'm apologize to anybody nosing into somebody else's finances uh other than the tax department it's nobody's business what i make for for a living but anybody else makes for a living my social security card used to say not for identification purposes but that's changed that's just my opinion representative logan thank you that may be true but you'll if you were to participate in any one of these programs um you know web civilization etc etc etc food stamps uh you name it um people are digging into your finances and so having accurate data on the households that we're serving seems appropriate and the most direct way to get the tech the information would be from i would agree with that uh in instances where it's necessary for that information but i don't think it's necessary in this instance yeah representative simons so that's not what this data is it's not the individual home on earth data um just to be clear it's uh how much fuel is being sold um and and the quantity and the type it's not the individual home on the data so that's why it's important to actually track that because that's how you figure out we're going up or down or where is that of sabilia uh for clarity's sake i think just bring us back to the data that we're asking to be reported is about the obligated parties uh and uh as representative logan has pointed out in other programs uh vermonters have to provide qualifying income data as well representatives stevens when we're writing in the bond we did two two items yesterday and everyone yes yeah thank you for reminding me right all right further questions on this i'm not seeing any do you have further questions i do not thank you for the pc yes i do yes let's uh so we add um two questions well i have two questions i've noted one is um when we talk about appointing the gda i have to get to this place here um how long do you envision that process taken or how much time do you envision meeting for that process uh so we would need to develop kind of the the rfp issue it uh you've potentially interested parties an opportunity to review scope of work and develop their proposals uh submit them to the commission and we would need to vet them and go through a contracting process so at a minimum i think half a year um that you know seems like the minimum amount of time we would want to do that more time as always you say a year at least half a year so uh in uh the bill as we currently have a draft and uh and i believe this was a request from um that the commission the commission with designate first default delivery agent on or before june 1st 2024 i think we heard testimony from i think our ledge council wondering if that was maybe a little late who you should have that earlier so i can see you're thinking about that uh in real time i am thinking about that um one thing that i continue to wonder about is have we established a first compliance year yet i think uh day westman from efficient supermod was here last week talking about let's let's decide what's the first compliance year and work backwards from that and i agree with uh Dave's point there um great rather than working from today forward let's look at when we need to begin complying and having that uh delivery agent do that work so uh is it helpful for us to put a date in about um when the bda would um be when that process would start to is there more well i'm going to take that question back question back um the other question i have is actually for the department i think yeah that's for the facilitator one in this section okay um i'm just curious where the 12 years came from in the bda section right so we uh when we were working on this language we were trying to make it as analogous as possible uh to uh the existing law in section 209d title 30 that uh it speaks about appointing an energy efficiency utility uh so this is the statute that governs the appointment of efficiency vermont um that's just well known tried and true language and uh because the commission is comfortable with how that process works we are trying to borrow existing language rather than reinventing the wheel and then a follow-up thank you i thought you might say that i just wanted to be sure that and um otherwise for obligated parties who want to do their own work that so if you have a you maybe we establish a timeline for the default delivery agent but i'm someone who i have my business and i want to be a delivery agent does that process work are you envisioning that working like the timing of it i guess i'm just curious how long that takes enough of business to get become a designated agent so i'm going to ask uh to clarify that are you saying an obligated entity wants to become one of the default delivery agents or the obligated party wants to do their own work their own work okay right um i think it's a multi-month process um i'm using as an example uh the the electric distribution utilities as well as efficiency vermont we have a process where every year they develop their plan uh in the efficiency world it's you know what efficiency services are we going to offer in the next year in the distribution utility world it's what tier three services are we going to offer our customers in the next year they develop that you know over the summer and they file then with the commission in november so that we understand um what what they intend to do to meet their compliance obligations in the following year i think uh in this scenario because we don't have existing relationships with uh the obligated entities and uh because uh i think this most recent draft has the puc actually approving that plan in advance we want to receive something you know in late summer early fall period for us to review it um and they're provide the obligated entity with some feedback or you know issue an order approving their plans so that they can partner and do their business as they wish okay thanks um yeah i got it i have another question i'm sorry uh i guess is your on this section just keep going okay um i guess i'm curious if you have thoughts on or how you're seeing the um potential study being linked with the rulemaking process and making sure that there is a link i think right now i'm not certain that there is a good um i don't think those are well coordinated right now you know the potential study has not been done uh my understanding is that that that takes a while to perform and we'll be you know everyone who's who's engaged in this will be doing their best but we might not be working with final potential study until late now rulemaking process if that's on helping us line that up i can't i believe the department public service has been tasked with doing that potential study so i will not speak for them in terms of how long it takes for them to contact the senate get the work done they would be in a better position to answer that question uh but if if we do want the potential study to uh be you know fully utilized by the commission in the rulemaking process then we would need to uh question the commission's deliverables out in time represents sevens is the next question okay represents sevens it's i'm sure um two questions one is uh there is um some language in the bill currently that says if an obligated party does not comply they end up receiving four times you know they have to pay four times the compliance credit payment fee we had some discussion about this yesterday uh and we heard from the fuel dealers that this seemed you know very uh heavy-handed i don't think that was the exact word uh and we also heard that originally in the senate it was three times um we asked our ledger council about how this is done like in the renewable energy standard and i just wonder what your thoughts are in terms of the four times and whether or not there is precedent elsewhere that you've seen for that whether or not you feel like that level four times is necessary is there something that would be more representative of how we go about this work in other programs sure in the renewable energy standard there is what's called an alternative compliance payment and so that that's kind of the ceiling on what an obligated entity in the res it is a distribution utility it's a ceiling on what they would pay to comply in practice um let's i believe it started out at about 60 per megawatt hour in practice the utilities have been able to deliver and comply for much less than 60 per megawatt on average um and we've had very very good compliance by the utilities there was one instance where one utility i won't name them right now but they you know i think had a maybe a math error a rounding error and so they their compliance in one year was one megawatt hour short of of their obligation and so they they had to pay that alternative compliance payment um but it's it's a it's a value that's known in advance um by the obligated entities um in terms of whether the four times is appropriate you know that's that's something that we have not weighed in on um it's you know maybe helpful to think about what is cost of not complying and in practice if the entity doesn't comply in year one we won't know about that until three quarters of the way through or maybe two thirds of the way through year two and then the actual greenhouse gas emission savings would not occur until year three so you know i think having some um non-compliance is important to send a signal to the obligated entity is that it's important to comply now rather than have us comply later at a greater cost and i'll just add in the legal world um i think the concept of i don't know why they call it triple damages i think it was triple damages but that is a very um common penalty to put in when the government wants to really incentivize someone to comply and part of where that comes from is that you look at a business entity isn't just looking at which avenue is cheaper complying or not complying there they might also be taking into account what are the chances of being caught if i don't comply and so some economic economists will say if you have four times the damages then someone's looking at is there a 25 chance i'm going to get caught and if there is then they're likely to comply if they see it as 20 chance i'll get caught then they might not and so the bigger the x is the four times means you're more likely to have compliance but the legal concept that's used a lot more is triple damages and so i think that's why it was originally in there as that thank you and um anything we were talking about yesterday was uh so last time you were in you had requested um some language uh to clarify that um although there is a legislative approval required at the end of the rulemaking process that in order to do the work that you need to do uh you might need to issue some orders so yesterday we were talking about what is the line um you know how do we make it clear that you should be able to issue the orders you need to and do the work you need to while still being clear that it comes back for legislative approval so there was some discussion with our legislative council about what type of orders um because it seemed like this committee was discussing a little bit about um where that line is um how much you do understanding that it's to create the structure but then it still needs to come back to us so wondering if you could i don't know if you saw the language that our legislative council presented yesterday but actually uh yeah i mean the page that i saw from yesterday it was page 33 but you have page 20 but from yesterday i think the changes in draft 1.1 are very helpful in terms of um making clear that we would still be able to issue orders we'd still have authority over these new entities so that's um and as the bill passed out of the senate the way it's drafted now um we well before 1.1 the version that came out of the senate we did have a concern that um saying aside Vermont gas which we currently have jurisdiction over all these other entities we have zero authority over right now um they're not entities that we regulate and so the authority for regulating those entities we're asking them to register with us for following up if they fail to register with us um any uh proceedings we want to do if we want some of these entities talk to us about what they do where do they bring the fuel where did they send it um we currently have zero authority to do that and under the bill as it passed out of the senate that could be interpreted as maintaining zero authority over these entities uh until there is a specific legislative authorization two years from now that would make clear that this program's going forward um so yeah i think that with the edits in there now in 1.1 um that does go a long ways to addressing that i think it would make clear that we do have the authority now to issue orders to um follow up on parties that don't register with us even to shoot penalties in the meanwhile if they fail to register or the attorney general's office can go to court and get those penalties but it's important to have these changes in there so those entities can't not comply decide not to comply and then just present the defense that there's no authority to for anyone to make me comply i think that um maybe one of the maybe another rep wants to chime in but i think the concern was whether or not the language that was put into 1.1 was too broad and gave you too much um authority given the fact that this has to come back to the legislature for approval i we definitely don't i think it's too broad we think yeah i and we'd be very concerned about trying to restrict that in any way again i come back to these are 100 plus new entities we don't currently regulate this the first in the nation program there are a lot of things we're going to need to figure out to create the best program possible if we're given this task and if there are restraints on what we can do to get that information um it's going to be a progress these and i'll just add to it we're not trying to scribe any bad motives or anything but there's a big financial incentive that the obligated parties will have to not provide all the information that we're going to be looking for to get this program going and um if you put restrictions on what we can do in this interim period then i wouldn't be surprised if we start asking for stuff and the response is not to give it to us but to say you don't have authority to do that thank you representative sabilia and just coming back again to the testimony that we have heard uh over the last 18 20 months and work conversations have been happening with the fuel dealers i know this issue of fairness has been uh really really important to them and so uh you know ensuring that everyone has to comply this part of looking at this feels uh pretty important in terms of the fairness factor for these folks who we are trying to encourage and support and transitioning so i support this center um in a different section um page 35 i don't know if you had a chance to look at the changes to the facilitator requirements and um particular so we took testimony from the subracial equity that they are not looking for and they asked that we couldn't address those concerns more directly through the public outreach process can you curious what your thoughts are on that and then also in particular on the very first line of page 35 it was a may that was changed to a shell sir um i think it's it's a policy choice that we do tend to prefer they overshell because i i do like i said i often go to what's the worst-case scenario and you know third-party consultants to do this type of public engagement are in very high demand now the last couple requests were proposals that we've put out for other things where people are in high demand for instance for court reporters um we had to issue it again a few months later because we got no bids when we did that there's and that's a worry i have with doing this type of work is just i play out that worst-case scenario what if we don't get any bids or we don't get qualified bids to be the consultant i wouldn't want that to halt the whole thing in its tracks and i wouldn't want to give someone who opposes this work a avenue into court to say the whole thing's invalid because they were told they shall hire a consultant and they never did it and so um i know there's another part of the bill i'm not going to have it in my fingertips where there is a very important sentence that makes clear that a procedural failure to follow some of these guidelines doesn't impact the validity of the rest of what the commission does um but i i would lean towards more flexibility wherever it's possible and i and i'll also just add on that that um when something changes from a shell to a may it's not like anyone at the public utility commission says oh i guess we don't have to do that um when there is legislative direction that this is what we're looking for we take that incredibly seriously and we will do our best to meet all of those um i directions that are put in the statute and i have particularly looking at equity issues uh diversity equity inclusion is front and center at the commission and um a lot of the work that we do and we're going to prioritize that if we're given this new work with the clean heat standard thank you for that representative tory um i have a question about uh edit in 1.1 to the bottom of page 21 on credit ownership um i think i think it was there in terms of a question that he got in an ebt about rights to be divided is that something that you're that needs to be specific in here or is that something that will be developed as you're further along but there's just some logistical things that are hard to kind of like tier three for example let's yeah i think this was an edit this was not one of ours this was right leave efficiency remand but put that in there and um i think it's a policy choice i don't know time you may have some experience you can add to a similar type of provision the energy efficiency utilities are they able to recover or something like that those types of costs uh so i agree this is a policy choice uh for this committee and other committees to to make um there are instances where distribution utilities and efficiency vermont will work together on joint projects and they work out the sharing you know the credit ownership slash sharing arrangement uh without our intervention um i trust that that could work um without any statutory guidance um but if folks feel it's important to have have it in this field and that's all right as well and i'm sure you know i think this is provides sufficient latitude for the technical advisory group to you know weigh in um representative seven so do you have one more one continuing along that theme such page 21 of 1.1 um we had some discussion about the concept of workforce development as part of the credit ownership and there was some thought that perhaps that's in the wrong place um or at least basically the concept is it's recognized there will need to be some effort to uh train the workforce and is there any acknowledgement to how that may or may not um be valued within a credit i wonder if you have any thoughts on that or thoughts on this in this placement or if and when this comes across the street and you're looking at it will you just scratch your head and go what i have no comment on the placement uh within the bill i i think it is clear enough you know if it were to go across the street that we would be able to interpret it within the context of you know the technical advisory group will be sending a package over to the commission to review and approve um and so i i'm confident that there be enough documentation of you know they gave up you know one percent of the credit to whoever provided that workforce development you know whatever the value is um there would be sufficient documentation for that decision that we could interpret it thank you um and then also uh page 35 um we had some discussion there was a request by the office of racial equity uh it's not page 35 it is the list of types of measures one of which there are 11 and originally it was fell from the senate and it became may um i wonder if you have any thoughts on that i would assume you would prefer may because it's more flexible based off of what you just said yes and we had we did testify in the senate that we prefer a may there rather than a shallon and part of the reason for that is if this program is given to us it's not just for the next two three four five years this is expanding decades into the future and if the the warming solutions act has a 2050 goal that um requirement that would need to be met and so whenever you're looking out that far into the future it does give us a little concern that having the shell in there and with some measures that aren't fully tested could create issues and and i also just look at it again if someone were challenging this um we could be in a difficult spot if the statute says it shall include the following and um one of those items that listed the tag does its analysis and says that's not actually going to reduce emissions so we're giving zero credit to that um and then the that uses that technology might bring a lawsuit and say well no you were ordered to give credit to it and um we'd be in a difficult spot there so i do always that's another reason i look for that flexibility so that it prevents that type of litigation yeah great and my last question on this oh okay i should go because my question is different so uh on this um we noted yesterday that this list of eligible measures uh has been compiled from a very broad uh cross section of stakeholders and my question for you is uh if we make this a shall how do we take something off the list i mean we could pass a law right is there um anything any other way we could take something off the list if it's in the statutes then it needs a a lot of change that and so that's yeah a reason for the flexibility some of this i think is um i think there are some concerns that some stakeholders have that we might ignore technology that should be qualified i i don't know where that skepticism or concern comes from because it certainly if we're being told they may include this this is what we would start with and there would have to be a really good reason for one of these things not to make it into a final rule as an approved measure um and however it's drafted because it's include we can always add on to it it's just how resurgent we are and um uh i have mandated that these ones be counted so in your initial recommendations when we take this unprecedented step of coming back to the legislature for a check back which we're doing um if we if there's a problem will that be uh information that we'll be able to avail ourselves of before we vote i don't know and and the reason is because something like green hydrogen i don't think we're gonna have much more information on that a year or two years from now than what we currently have um so that's why i'm thinking more 10 years down the road then we might know if that's something that worked out or there might be other impacts that no one's even thinking of now that uh are reason that policy wise no one wants to go forward with that thank you um you set up a moment ago of that the potential study isn't um linked all that clearly with rulemaking um we've also had testimony that um the public service department is doing some public outreach regarding their next comprehensive energy plan um we also just heard that vhfa would like to be part of the equity advisory group but we got rid of the equity advisory group because another entity said please don't keep asking everybody you know the same 50 people to show up to every meeting my question is would you please as a lawyer um think about uh some language that perhaps we could look at that would connect these dots and make it very clear to the puc that we would like there to be small state um coordination and recognition and tying in of the lessons that we're hearing and learning from other stakeholders yeah yeah and i i also i'm the puc's appointee to the interagency committee on environmental justice and so i was at the first meeting that they had i'll continue to be at those meetings going forward and and like i said that work is going to be front and center and everything we do including this new legislation if it's given to us so it sounds like you're looking for some specific language that would tie that and we can look to put something like that in there's just so many efforts and i see them as complimentary and i think other people are seeing them as we should do one thing at a time and i'm hoping to make it complimentary thank you on this follow up to represent blogan that's good thank you i'm just following up on that um um what we heard from anna was that the environmental justice council and the inter agency panel um already have too much work to do to take on um you know oversight and advisement on the development of regulations for s5 which is why the equity advisory group was included in the bill and then the office of racial equity said then that's that's too much work um as well um as someone who sits on the interagency um group would you support the environmental justice um council and your group having some input into the way that the public engagement process is conducted for s5 um so it's hard to speak to that because it's still that group both those groups are still figuring out what are they going to be doing what's the next task and so i don't know to what extent those groups will have the capacity to look at um what's happening with specific bills i think probably what they're going to be doing is focusing on where they can have the biggest impact and um i do think one challenge with that here is that the policy is being set in this uh this bill and so um there's not going to be a lot of flexibility in terms of what the commission is able to do um on some of these measures when the the policy has been set already and so i don't know how much energy those committees would spend on providing that advice um at the commission we would certainly welcome it and we would look for as much input as possible um and and if the legislature were to order that to be a priority then those committees would do that as well uh but on all these issues we would definitely defer to the testimony you heard from jay green on uh at the office of equity so i just would note in terms of that timeline and bringing all of these things together of course we're also working with legislative council on knitting those things together and we'll be hearing from them this afternoon on the timeline i expect that they're probably reaching out to you and making sure that all of these things are cohesive as well but we are also working just to represent our staff and start here thank you for coming in for your testimony thank you thank you thank you all right members we have a witness who's been very patient uh and she's in oregon and i think maybe we could take a three minute break and come back we'll probably go past the noon hour at this point just what's up you can take all right we are going to reconvene our meetings and um welcome korean wind reporting clean fields program welcome korean uh good morning uh madam chair and members of the committee can you hear me okay yes yep okay so for the record um i want to introduce myself my name is korean wind i work for the state of oregon with the oregon department of environmental quality and my role here is as the program manager for the oregon clean fuels program so uh first off thank you for inviting me to present today um i my goal here is to basically explain how the clean fuels program works and trying to get into kind of that some of the interactions between what is being proposed in vermont for a clean heat standard um i understand that that is different than uh the scope of what the clean fuels program is because it is uh heat heating oil versus transportation fuels but i think the way that the bill is designed and envisioned is that it it has the same uh similar framework and so then if you do have questions about how you know i think a lot of the testimony preceding this was had a lot to do with um implementation issues or enforcement or monitoring or those kinds of you know following up on performance metrics for program those kinds of things hopefully um what i'll be presenting today about how we run our clean fuels program kind of can create those parallel kind of like situations for you so you can understand how it might uh work in the future for a clean heat standard in vermont so um i need to share my screen right do you have a share screen can you share uh can you see my screen now we can um it's not a slideshow if you want to make it a little bigger if you could make it a slideshow no that's actually probably a little worse because now we have two slides up at the same time because i've got the wrong window going uh let's see because it's got that how do we get out of here yeah i think because i've grabbed the wrong screen let's try this again it's fine we can read these they're bigger there you go better that did it okay so let me start by actually let me get rid of that one that's better um okay so what the goal of the clean fuels program in the state of oregon is it's the goal is to reduce greenhouse gas emissions from its transportation fuels um and so this is a program that we began implementing in oregon in 2016 and so we've got you know the first kind of seven years under our belt as far as implementing this this is a policy that was created um by uc davis for the state of california and so california also runs um this program as well and they've been implementing this and since 2010 actually so they their program does predate us um it was valuable for us to be able to take something that has been implemented in california um and then be able to customize it for the state of oregon where it is not identical but it is a harmonization of the programs just so that the market for the fuel providers and and those that are subject to the standard have the same general uh rules of the game as far as how to participate in the program and so that it is valuable there um i think another thing that i would point out and why it was really nice to um be implementing this with um with um other states is that a lot of of the technical kind of um points of the program can be shared that we don't have to recreate the wheel um and we'll i'll get into that a little bit more in future sides um so basically what this does is what i'll break down this graph for you and so beginning in 2015 this is a baseline year for our program um we look at the carbon intensity of oregon's transportation fuels um in 2015 uh by and large our transportation fuels were gas and diesel and so you take the carbon intensity of those fuels and when i refer to carbon intensity similarly as as in your clean heat standard proposal it is life cycle emissions of how those fuels are produced so what is it made from where does it come from how is it refined how does it get transported for to oregon as well as how is combusted in in a motor vehicle for in our case but it could be in in other kind of um sources as well so you take what that uh the amount of greenhouse gases that are emitted from those fuels and we averaged it for the over across the state and then in ensuing years we decrease the standard and we make the reductions from the 2015 years more and more stringent so as you can see from the shape of this curve starting in 2016 then is the first year that we implemented increasing amounts of reductions that are required so first you know quarter percent a half percent one percent um reductions we are in 20 third 2023 now we are requiring a six and a half percent reduction of the overall carbon emissions from when we started in 2015 um and and i'm going to make a little comment about the shape of this particular curve you know we know that in the fuel sector it does take time to build capacity to expand capacity for technology to kind of take over and and and really be able to reduce the carbon emissions from these fuels and so you can see on the early years we did have really really minor uh reductions and then as capacity and as technology takes over much steeper reductions moving out into the future so when we passed our first bill in for this program it required the department of environmental quality to set out standards into 10 years for the program so from 2015 to 2025 a reduction of 10 percent from its baseline year what we have done last year in 2022 is additional rulemaking to expand the program and so you know this is greenhouse gas emissions related and you know to do to to set regulatory certainty about the reductions that we expect from this program in the context of our state greenhouse gas climate goals we felt that it was necessary to do the rulemaking to expand the program so last year we did expand the program beyond 2025 out to 2035 and so you can see here that out into 2035 now we're requiring a 37 percent reduction in average carbon emissions from our 2015 baseline year and I remind you too here that we're talking about life cycle emissions it's not tailpipe emissions but what that 37 percent life cycle reductions actually does represent almost 50 percent of tailpipe emissions reductions and so in many many state action goals uh that is that and that's what we have in the state of Oregon is an interim reduction of 50 percent of emissions by a 2035 time frame so that is this this this program will be consistent and and reduce its proportional share of greenhouse gas emissions for the transportation sector so next we'll speak to kind of what the obligated parties are in the program and so we speak to the fuels that are covered under the standard and here the mandatory fuels is if you import gasoline diesel ethanol bad diesel renewable diesel into state you are the obligated parties um an import for us means if you own title to the fuel as it crosses into the state of Oregon uh Oregon does not have any refineries and we only have a small handful of in-state producers that actually produce transportation fuels so by and large the importers are who owns title to the fuels as they enter the state and so these fuel providers then must register with the program they must submit quarterly reports about the different types and amounts of fuels that they're bringing into the state on a quarterly basis um and then on an annual basis must then demonstrate that they are attaining the clean the annual clean fuel standards um and those again those those standards get more and more stringent over time um so those for if you're handling those five fuels gas diesel ethanol bad diesel renewable diesel you must participate um what then you have on the second kind of second list of fuels so you talk about your natural gas products propane electricity hydrogen and sustainable aviation fuels so these are what we consider opt-in fuels so they're not required to participate but the reason why you would want to participate is because these are lower carbon fuels that can generate credits in the program right so um this program works on a series of credits and deficits uh credits and deficits are both measured in a ton of greenhouse gas emissions reductions um and so um similar to your proposed clean heat measures right the list of the different types of uh projects or that can qualify under uh the clean heat measures we what we do is we have these fuels that can we know because they're lower you know can generate credits and so if you opt into the program again report to us how much uh what you're providing that is the mechanism to generate these credits and then these entities that provide those voluntary fuels can actually sell those credits into the market where the mandatory fuel reporters which are primarily the higher carbon fuel providers you know um can purchase so that's kind of the market aspect of of how this works um and I think I'll stop there for this for this slide okay so when I speak about the different kinds of clean fuels um there are a vast number of different kind of alternatives to fossil gas and fossil diesel that we are talking about um we do work very closely with the California Air Resources Board on this particular slide and so what this is is that a producer of these fuels will come to the agencies and submit um an application basically it's it's they run this Greek model so gret is the model and it's developed by the Argonne National Laboratory it is the state of science as far as how you calculate what uh carbon intensities are for transportation fuels and so what this model considers is all the energy inputs and greenhouse gas implications of the life cycle of a fuel and so all producer of biodiesel for example will submit will run this model and submit it to the agency with supporting documentation to basically calculate out what the carbon emissions are um and then the agency reviews all of that documentation and approves a carbon intensity for that fuel um because we're talking about life cycle emissions um it is custom for every producer of a fuel to um need its own carbon intensity because if you're talking about something like biodiesel you know um is it made from soybeans or is it made from used cooking oil is it made in a facility that burns coal for its electricity or does it have biomass you know running it the emissions are vastly different is it made in Iowa or is it made in Oregon right and the transportation distance to get to the market all of those things matter which means that every producer actually comes into the agency and asks for one of these carbon scores so what you see on this um on chart here is a summary of the different applications that that are approved by the state of Oregon to participate in in the clean fuels program um so what I'll note here is that on the x-axis the carbon intensity values the carbon intensity of gas and diesel fossil gas and fossil diesel are approximately 100 and the units here are grams of CO2 equivalents per megajoule and we use this measure because we are dealing with liquid fuels gaseous fuels electricity whatnot so we uh normalize to the megajoule and so uh for fossil diesel fossil gas it's about a hundred and so what you see here is that for every circle on this chart is a different pathway so this is a different producer that has come and gotten a score from us and these are the approved values and so what you can see here is this wide range of fuels that actually um range from you know minus 750 I believe is kind of that far left dot for electricity um all the way up to hydrogen which you know um and that would be a fossil-based hydrogen that is kind of in that you know closer to like 180 or something like that you'll see a lot of the liquid biofuels so biodiesel ethanol renewable diesel renewable naphtha is something that's um um liquid fuel propane all those things you know they are lower carbon than the on the gas and diesel and they range all the way down to basically zero what you see in the electricity and the compressed natural gas the ones that are negative these are ones that are primarily made from feedstocks and something like uh uh animal manures that are then run through digesters so whether it's uh cow dairy manure swine um those kinds of manures and then run through either they're just creating a renewable natural gas that can be run in a natural gas truck or put through a generator to produce renewable electricity and the reason why that these are negative are because um if if if if that manure was not put into these digesters and used for this reason they would be land applied and all of the methane would just be fugitively emitted right so part of taking the methane and creating a product of fuel from it is to avoid those fugitive emissions and that's how you get negative carbon intensities um so in Oregon we probably have about 190 probably pushing 200 right now of these applications that we have approved um and we also excuse me um and um one of the latest things that most recent things that we've implemented our program to is not only our producers submitting these applications to the to the agency but we are also requiring third party verification of these of these pathways as well so another set of eyes because there are so much data behind these producers and these pathways so another set of eyes to basically confirm that what we're using here in the clean fuels program is accurate and the reason why there's so much emphasis placed on what the accuracy of those carbon intensities are is because the lower the carbon intensities the more credit generation is potential therefore and then the more money that is associated with those credits um and so what I'm showing here is that um since the beginning of the program in 2016 these are the transactions for the credits in the clean fuels market right so again as I mentioned in the first slide the providers of these cleaner fuels generate these credits and they can be sold to other parties so what the blue bars are are the number of credits that are being transferred and what the green line is is the trend in the average credit prices and so there was a period of time you see kind of in that 2019 period where the peak of the credit prices got to about 160 165 dollars per credit and again that's per ton of jht's reduced here and it is really normalized out for the past several years kind of in this hundred and twenty dollar range um the average credit price for the for 2022 was a hundred and nineteen dollars um I will note that um I don't have a picture of this but in the california market right now the credit prices are about 60 or 65 dollars a ton and so it is interesting how you know yes california is a bigger market in a bigger state but they have different standards and they have different fuels and so you know this is this your basic kind of concepts of economics about how many credits how many are needed how many are being generated and that is what kind of that influences the supply and demand of those credits influences what those credit prices are um and so right now our credit prices in Oregon are actually higher than those in california and what that indicates for us is that there is an economic advantage for a clean fuel provider to bring fuels to the state of Oregon over california so obviously there are a lot more logistics that are involved in contracting and how do you get certain fuels to Oregon as opposed to to california and all those kinds of things but one of the things that does um direct the decisions of those of these clean fuels producers to bring the fuels to the market are the credit prices um in this in 2022 this market was worth about 185 million dollars so again this is like a new program since 2016 and this is the kind of economic activity that it has uh spurred for the state of Oregon and I remind you here too this is not a tax so this is not like the agency or the state assesses these fees on a program and then the revenue comes to the state of Oregon it's not that this is a financial transaction between credit generators and deficit generators you know people that need those credits to comply and it is completely outside the purview of the state as far as what what that transfer of funds is and additionally there are no requirements by the program of how they have to use the revenue um um as well um this is you know this is a market-based program that we allow the participants to make those decisions about what's the most effective way to comply which fuels to pick how to like partner with with different kinds of companies um and so we've seen a really good kind of response across the board as far as like how fuel providers um have reacted to the requirements so what I want to do now is translate those credit prices right so I refer to you know the the fuels that can provide credits and they can sell those credits but what does it really mean in in what context um and so I'm going to start first at the top two lines so in Oregon we require um all gasoline to have 10 ethanol and all diesel to have five percent diesel so those are our base fuels um those are the base fuels that we baked into our baseline and so if a provider of these fuels again these are the higher carbon fuels if they um do nothing else then the status quo of what they were doing in 2015 there is a cost to this program so you know if you have to if you're providing these fuels you're generating deficits you're going to have to buy uh credits to offset that price so in 2022 that translates into about six cents cents per gallon um for gasoline and about seven excuse me seven point nine cents per gallon for diesel right so if you do nothing that is the cost to comply with the program but what you'll see in the following lines below that is the ways that the credit generation can actually help incent uh trans you know transitioning to these lower carbon fuels and so the most uh so the next line here is a b20 so a b20 is a really common blend in the state of Oregon uh we've had a lot of 20 percent uh biodiesel blends in the state for several years and because the biodiesel that is used to blend is credit generating um there are many many truck stops that you can go to where they offer a b20 blend where the cost of the b20 is cheaper than the cost of the b5 right it's that credits that are attached to it that are being sold and then passed on to the fuel consumer in this sense um and for about two cents per gallon it is when you go and actually go to the truck stops i mean you can even see a more uh a bigger delta in the prices between the b20s and the b5s and but this would be an example of how a higher blending of a lower carbon fuel actually helps the consumers on the on the you know as the truck owners um being able to provide a fuel that you don't have to change your truck for at all and you can still use um and and you know and so be below that so what happens if you're using like 100 percent biofuel or 99 percent biofuel you know if you're using like a biodiesel that's made from canola so the credits associated with that are in in the range of 54 cents per gallon if you use something like a used cooking or biodiesel that we have had um a lot of in this in the state of Oregon as well you can see um because it's a waste product and it's used cooking oil the carbon intensity there is much lower than that of the canola um and so then those lower ci's generate more credits and so now you're talking about a dollar 15 cents per gallon that you're generating from the credits that are bringing down the price of the fuel as well and uh and then another example uh like a tallow based renewable diesel that's another situation where the carbon intensity is like a 30 right so we're talking about 70 percent reductions in greenhouse gases and it translates into about a 98.5 cent per gallon uh value so this is so right we're not trying to stick with the status quo of what the the high carbon fuels that we're using now we're really trying to incent the transition to lower ones um just just for comparison's sake as well I did include on this slide on the bottom um electricity because in the transportation fuels space electrification is a big deal and um whether it's in a light duty passenger vehicle or heavy duty truck um electricity in the state of Oregon is pretty clean um and so you see these about 60 percent reduction in carbon um going from um you know a fossil fuel to electricity as well and that translates into um in this sense the electricity kilowatt hours about a 7.6 and then a 14 cent um amount of savings as far as um the electricity um we also do have provisions for if you're using renewable electricity so zero carbon and then you you know then you're getting um um value out of those credits in the range of like 12 to 20 cents per kilowatt hour and as a comparison uh average uh price of electricity in Oregon is about I would say nine to 12 cents right so what the credit generation from converting to an electric vehicle really does is it pays for the amount of it pays for the price of electricity and then some and then you can use that revenue to also you know make more improvements towards transitioning the the you know to electric vehicles as well so it's been really handy um in a state like Oregon where we don't have a ton of public money that's honestly you know in grants in incentives directly to and set this but you know this this market-based program and the ability to generate these credits have become a pretty significant kind of line item in somebody's project costs okay so I just wanted to end here actually with just kind of a recap of of um the what we have seen in the clean fuels program since its assumption in 2016 um for the state of Oregon this is represented um about eight million tons of greenhouse gas reductions over the course of the program that also translates into displacement of about two billion gallons of fossil diesel and gasoline for our transportation fuels um the carbon intensity of even the biofuels that we have been using for several years ethanol and biodiesel gets cleaner and cleaner and cleaner and because it's then sent up to the producer to continuously uh make changes to their processes and make it more efficient to produce and get it to market you know because of the life cycle nature of this any point of this life cycle you can make some reductions and ink and and make your carbon intensities lower and then again more credit generation more valued for that biofuel um so that the carbon intensities of those fuels have gotten cleaner as well um and and then the the blend rates especially on the bio diesel and the renewable diesel and the diesel pool side you know I as I mentioned the the requirement for the state of Oregon is a five percent blend rate um but we have seen because of the credit generation from bio diesel and renewable diesel that uh like there are quarters that have been up to 15 percent right so displacing fossil diesel and I want to say we just are starting to look at our q4 data from 2022 and um they told me my my staff has told me that I think for the q4 these blend rates are up to 20 percent so 20 percent of the diesel pool is now renewable so that's it's remarkable for us and then just this this last portion too um I know we're not really talking a ton about electricity today I mean but I guess there are some thinking measures that that that can take advantage of electricity um but one of the provisions in in the program right now is is the role of the electric utilities that provide um um electricity to charge electric vehicles um and so um instead of you know I I have the example of Iona leaf and you know there are in Oregon there's probably about 60 000 EVs right now registered and I have no interest in cutting a check or you know issuing credits to 60 000 different individuals so what we do is we roll up and we aggregate those credits to the utilities that you where you live and so my utility is Portland General Electric so they get my credits um and then they are uh they have oversight by the public utility mission about how what to do with those credits how to sell them and then how do they invest those um those credits to then benefit all of the ratepayers in these utilities and for this provision in the program it is generated like almost 50 million dollars worth of revenue to the utilities that they have then turned around and invested so in grants to a lot of community-based organizations for electric vehicles, electric charging, the first of Oregon's electric school buses, education and outreach campaigns, just a lot of you know a vast portfolio of different ways where the state's electric utilities are really kind of diving in um you know into the space of decarbonizing transportation as well and so that is the end of my presentation and I guess I'll be happy to take any questions that you have. Thank you so much for your testimony. I'm curious about who is it your PUC that stood up this program? Uh no so the our program is uh implemented by the department of environmental quality so we are the environmental regulators for the state of Oregon. We do work in partnership with the public utilities commission but only on this electric utility space. Representative Smith. Thank you um thank you for your testimony today uh just curious can you tell me what your primary source of generation of power is in the state of Oregon? Uh yeah most of our electricity um we we still do have a pretty broad portfolio I would say the majority of it is natural gas um and then hydro uh from the Columbia River system um we do have still we have some um you know increasing portions of renewable and solar and wind we also do still have some imported coal um in the mix as well um there is a complementary uh regulation it's our clean energy bill from 2021 that will require that uh to be uh all the state's electricity to be zero carbon by 2040 I believe so that is something that's separately regulated. And do you have uh do you have any nuclear plants? I we don't have any nuclear plants in Oregon I think we might still have some in the region where we might be importing some electricity that is um from nuclear. All right thank you. Representative Stevens. Thank you. Thanks so much for this testimony I personally find it helpful can you uh I don't know if you were around back in 2016 but when when this program was being proposed as compared to now um do you have any observations in terms of how various stakeholders and in particular the obligated parties like responded in 2015 and now today? Um absolutely I've started with the program actually the the authorizing bill for this program actually goes back to 2009 Oregon legislature I joined the program in 2010 in its initial stakeholder and rulemaking advisory committee kind of process so I have been with the program from from almost the beginning. Um it there has been a lot of involvement from stakeholders um and a lot of change since the beginning um I would say back in 2010 2011 2013 even um you know it was a brand new policy it's a complicated policy it is different because it's market-based it is different than a lot of the command and control regulatory programs that the agency runs um we I think there was a lot of just learning that needed to be done and um I think a lot of fear about how this was going to affect the price of fuels in the state um a lot of the opponents of the bill said oh it's good to raise the price of gas and diesel they hired consultants it's going to be a buck a gallon difference you know those kinds of things and you know in a worst-case scenario um situation um I could I definitely uh can see how the you know again I you know you point to like if you do nothing of course there's going to be a cost of compliance and and as as you know the the requirements get strent more and more stringent than of course that the cost is going to go higher what I think has been really helpful since we've begun implementing is that now we have real life kind of experience and stories about what is actually happening as opposed to kind of you know forecasting and and modeling well the thing is going to happen um what we've seen is that the price of fuels has not significantly increased and as I showed a lot of times it has decreased when you switch off of the liquid fuels and when you start talking about things like natural gas and propane electricity I mean the fuel itself is just cheaper and and then you add on the credit generation for that and it really makes it a cost effective way to talk about decarbonizing the sector of the economy um I think the investments that have been made by the utilities again you know like but for the clean fuels program revenue there wouldn't be electric school buses in Oregon anymore um I you know there's just a lot of anecdotal case studies now where bleeds and governments and other programs and and just um have really seen the benefits of this program you know the benefits here are not just in greenhouse gas reductions all of these cleaner fuels have reduced tailpipe pollution and so you're having improvements in public health um we're and we're seeing just you know improvements in air quality because those tailpipe emissions have been reduced um when we did our rulemaking last year to expand the program we did contract we worked with the UC Davis Institute of Transportation Studies to model what some of those public health benefits would be and you know the reduced particulate matter in and of itself is just you know was estimated by about 90 million dollars in savings as far as avoided health costs annually from the program and again to like continue to um you know to reduce those tailpipe emissions as well into the future and so you know for folks that are concerned about high asthma rates um in Oregon which we do have really high asthma rates or the fact that because these are transportation emissions and communities that are live most closely to these high pollution transportation corridors are environmental justice communities and they benefit more from the reductions in these transportation emissions you know those are all kind of played into um really I think bringing support to be much more widespread um than was initially anticipated and initially seen back in the beginning of the program so that that's been really nice to see and I would I would also say that you know that the the fuel providers themselves right um they it was a brand new market and a brand new program and they had no idea how it was going to play out and now that they have experience doing this and the emergence of you know much lower carbon fuels and a lot of renewable diesel and renewable natural gas again you know it's like um they have figured out ways to get those products into the state and distributed amongst the fleet so that more and more companies are benefiting from the program and I think that's been really good to see thank you thank you so much for your testimony that was really helpful committee we will um adjourn for the morning