 Good morning and welcome to the Vermont Legislature's House Committee on Environment and Energy. This morning we are going to continue conversations about S5, the Affordable Heat Act, and we have with us Laura Murphy, the Assistant Attorney General. Welcome Ms. Murphy. Thank you. Good morning and thank you for having me for the record. I'm Laura Murphy. I'm the Director of the Environmental Protection Unit at the Attorney General's office and an Assistant Attorney General there. And again, thank you for having me this morning. So I thought what I would do is talk through some of the prior testimony that I've given on this bill and as it specifically relates to a constitutional issue, the Dormant Commerce Clause, if that sounds okay and if that would be helpful. And I should also start by saying that as you probably know, Attorney General Clark is incredibly supportive of the Global Warming Solutions Act and also the Clean Heat Standard and reducing Vermont's greenhouse gases. So thank you for your work on this. Representative Sebelia. Yes. Good morning. It would be helpful if you would also just refresh for the committee or help the committee understand the obligations that we have under the Global Warming Solutions Act as well. Yes. So the obligations under the Global Warming Solutions Act and they're tiered, but essentially by 2050, Vermont needs to reduce it's the greenhouse greenhouse gas emissions that it produces by a certain amount. And I don't have that number right in front of me, but it may be on the findings of S5. I think we got that testimony yesterday. So that's okay. So I apologize. But yeah, there's certain levels of reductions that need to be achieved on a timeline with the end goal of 2050. I believe it's 80%. And those are mandatory reductions, of course, as you probably know. And is that kind of like a mandatory reduction from where we sit? What is that? So previously, before the Global Warming Solutions Act, there were goals for Vermont to achieve greenhouse gas reductions. And with the passage of the Global Warming Solutions Act, the legislature essentially said, Vermont, these aren't goals anymore. These are things that you must do under this law. And that since it's mandatory. And if we don't do them, what happens? Well, that is actually the piece, Madam Chair, that I think it's important for the committee to understand what the remedy is if there is a lawsuit. So if it depends, and essentially I think what, first of all, what happens is we don't achieve the reductions and we don't have the associated benefit, very important benefit of mitigating climate change here in Vermont, which of course is what the Global Warming Solutions Act is concerned with. In terms of accountability, which I think might be something that the committee is interested in, it really depends on how things play out. There is, there are a few mechanisms by which interested parties can sue the state if we don't meet the reductions. But it really depends on the circumstances. And so for instance, if so, so one of the requirements of the Global Warming Solutions Act is for A&R to adopt the agency and other resources to adopt regulations by certain dates consistent with the climate action plan, which is developed by the climate council. If A&R doesn't adopt the regulations that are essentially called for by the climate plan on a certain deadline, there's a cause of action or a lawsuit available to essentially sue A&R and say, hey, you didn't meet your deadline to adopt these regulations. There's a second cause of action in the Global Warming Solutions Act that says, okay, let's say A&R adopts the regulations consistent with the climate plan and down the road after a greenhouse gas inventory comes out, and those come out on a periodic basis that essentially catalog our reductions. If A&R's regulations are, and if that's showing we're not in fact meeting the reductions under the Global Warming Solutions Act and A&R's regulations are a substantial cause of the failure to meet those reductions, and that's kind of a separate issue, then there are remedies that the court can order, including essentially telling A&R to go back and write stronger regulations. So those are basically the two mechanisms. And the other accountability is, I would say, political accountability. Thank you. Sure. So with that, if I'll move on to S5 and the Affordable Heat Act, which establishes, as you know, a clean heat standard, and I understand you've already had some testimony about this. So one of the things when a law is passed, one of the things to consider of course is whether it's constitutional. And when something touches on commerce or articles of commerce and interstate commerce, sometimes a question that comes up is whether it survives the dormant commerce clause. And what that is is essentially the flip side of the commerce clause in the U.S. Constitution. So the United States Constitution says Congress has the power to regulate interstate commerce. The flip side of that is that states essentially can't unduly burden or discriminate against interstate or out-of-state commerce. So there's a series of tests, you may have heard of constitutional tests before. There's a series of tests you walk through to see whether a state law is in fact permissible under the dormant commerce clause. And so I thought what I would do is walk through some of those today and explain our thoughts on how they relate to this bill, S5. And I should also mention, if you're not already aware, Jeff Hand and what was formerly known as Dunkeel Saunders, I believe it's now called SRH law, they did a memo for the clean heat standard working group in January of last year that really walks through in more detail the various legal issues related to the bill. So if you were interested in more detail, I would certainly recommend Jeff to provide additional testimony on that. You have a question? Yep, that's great. All right. So I'll start with the caveat, lawyer caveat. There are no guarantees when you go to court. That's always the case, but our assessment of this bill is that it is constitutional under the dormant commerce clause. And I'll kind of walk through why we believe that to be the case. So the first test when you're looking at the dormant commerce clause is whether there is facial discrimination. And this is essentially what it sounds like on the face of the bill does the language discriminate between in-state and out-of-state products. So an example is, and this is from 2005, there was a Michigan law that banned out-of-state wineries from shipping directly to homes, but it didn't ban in-state wineries from shipping directly to homes. That was on the face of the law. So that was not okay. This bill, S5 does not do that. It applies equally to heating fuel, whether from in-state or out-of-state. And similarly on, and this again is on its face, the opportunities to provide the clean heat measures in Vermont, the opportunities to sell products to satisfy those clean heat measures are open to companies whether in-state or out-of-state. So it's not a law that says only Vermont companies can provide these measures. The next test is what I will call the discriminatory purpose or effect. So this is where the face of the law doesn't say in-state or out-of-state, but in fact there's a discriminatory purpose or effect. An example of this is kind of interesting from North Carolina. This was back in the 70s where I guess North Carolina was competing with Washington state in terms of Apple production and Apple sales. So North Carolina passed a law that said all apples sold in the state can only have a certain kind of label. And on its face it applied to in-state apples and out-of-state apples. But the purpose and effect of it was in fact to ensure that the Washington state apples couldn't be labeled as Washington apples because that was something that people would want, which would increase the chances of people buying North Carolina apples. So and there was in that case, I believe some testimony in the record about the purpose of the North Carolina lawmakers to promote North Carolina apples at the expense of Washington apples. So that wasn't okay. So again, S5 doesn't do that. It applies equally to heating fuels, whether in-state or out-of-state. And I will emphasize again the opportunities to provide the clean heat measures similarly applied to in-state and out-of-state companies. And in truth, and I don't know this, but it could be that most of the manufacturers for the clean heat measure products could be out-of-state. So that should not be a concern here. And there's kind of a related issue that has come up in Vermont before on the related to the discriminatory purpose or effect, which is out-of-state companies who sell their products in Vermont having compliance costs and simply having a compliance cost to comply with Vermont's law doesn't rise to the level of discriminatory purpose or effect. An example is when Vermont passed a labeling law for mercury and light bulbs. That was challenged and the court said, no, Vermont can do that. Upstream compliance costs doesn't make this law invalid. And similarly, when we passed our law on labeling of genetically engineered foods, although that was ultimately preempted before that happened, the court said that is also the fact that these out-of-state food companies have compliance costs doesn't invalidate the law. So the third test is yes. The question, when would a compliance cost invalidate? That is a good question and I don't know the answer. I don't and I don't know if there is a point at which compliance costs would be too heavy to actually invalidate a law in part because sales into the state are voluntary. So I'm not sure about that. Thanks. The third test is the extraterritorial test and this essentially asks whether the state is requiring out-of-state commerce that is wholly outside the state to be conducted in a certain way. An example of this, which is a little bit complicated, Connecticut passed a law that required breweries to essentially make an affirmation in Connecticut that they would not charge lower prices for their products in any other state than Connecticut. The problem was the Connecticut affirmation lasted for a month. So during that month, companies out-of-state were essentially precluded from raising their prices in other states because they had made this affirmation in Connecticut. Again, extraterritoriality should not be an issue with S5. It very clearly regulates in-state products heating fuel that is used in the state. Additionally, which is sort of icing on the cake, the obligated parties are the parties who bring the heating fuel into the state. So there's a really strong connection with what's happening here in the state or if it's not the the party bringing the fuel into the state, it's the party who produces or refines or compounds it here in the state. Again, it's very focused on Vermont. So we don't think extraterritoriality should be an issue. And the fourth test is called the Pike balancing test. This is, if a court, once a court gets to this, typically a court will go through all of these tests and then get to the Pike balancing test and laws are usually upheld under this test. And the question is whether to the extent there are any burdens on interstate commerce, whether they are clearly excessive in relation to the local benefits. And again, that should not be the case here. This bill is very firmly grounded in strong traditional state interests, protecting health, safety and welfare, protecting the environment. Whereas any burden on interstate commerce is is not excessive, much less clearly excessive. Again, sales are voluntary. There are different types of methods that companies can choose to comply with the clean heat measures. They can go through the default delivery agent, they can provide that themselves. And again, out of state companies have the same opportunities to sell these products in Vermont. So those are the four tests for the dormant commerce clouds. Again, there's no guarantees. We do believe the bill is constitutional. I don't know if there are any questions. I'm happy to talk further. President Smith. Thank you. You started off your testimony stating that the attorney general fully supports this bill. Am I correct? Correct. Why doesn't the state's attorney general remain neutral in something like this rather than show support for a bill that a good percentage of Vermonters don't agree with? Before I would answer that, I would have to go back and I believe that's a question that I can't probably answer without having the attorney general provide her answer. Isn't it, is it the attorney general's position to remain neutral until something is presented in front of the attorney general in a court? I can't answer that. I'm sorry. You are an attorney, correct? I'm an attorney, yes, but you don't know the answer to that question. Well, I'm afraid I can't speak for the attorney general right now without having vetted these particular questions with her. All right. Thank you. Representative Cousin. Thank you, Madam Chair. So in the beginning you stated, thank you for testing. The goals, the mandatory goals for the Global Warming Solutions Act, if we don't meet those goals, okay, we can't mitigate climate change, right? That's what you said. Well, I suppose there could still be some mitigation of climate change here in Vermont, and by mitigation I mean reducing greenhouse gas emissions. So maybe we'll reduce some, but if we don't meet the goals we won't have achieved what's contemplated in the Global Warming Solutions Act. Okay, so what I guess what I'm getting at is say there's flooding and it's determined that it's a climate change issue. Would we, if we didn't meet those rules and we could we lose funding from FEMA from any of those, any of those, any kind of flooding issues? Not that I am aware of. Okay. Again, that's, I have to say, I don't know the answer, but I I don't believe there's any such requirement. Okay, all right. If we don't, like, you know, the federal government says, oh, you didn't meet this, so we're not going to give you funding for this. That's my, that was my hole. That was, that's where I was going. I don't believe that to be the case. Again, I haven't looked at that specific question, but I don't believe that to be the case. Thank you. Any other questions? Members? Representative Morris? Thank you for coming in this morning. Talked just briefly. We kind of skimmed over the lawsuits if we don't. I'm struggling with how that would even be, what impact it would have on our court system or how it even gets to a court system. And second part of that is if a person that doesn't initiate or believe in the Warming Solutions, the Global Warming Solutions Act or doesn't participate and alternative heating, are they going to be allowed to sue? So the question about who can sue is related to a, as well, it is a doctrine called standing to sue. And so the question, I hate to opine too much on hypotheticals, but the question would be in any inquiry where someone wants to bring a lawsuit, there's a constitutional threshold that has to be met. And the test is, is there an injury in fact to this person that is imminent and not hypothetical? And that can be, the injury test can be met in a variety of different ways. There's all different sorts of case law about that. Was the injury caused by the action that's being complained about essentially is their causation? And third, can the court redress the injury through a decision and some sort of remedy? So those are the steps that would need to be walked through for someone. And this is always when someone brings a lawsuit. That's the threshold that needs to be met, really depends on the circumstances. So whether or not someone had participated in rulemaking might be relevant, it might not be depending on the circumstances. It depends, as lawyers like to say. I'm just curious when you were talking about the interstate commerce issues, whether you had looked at the regional greenhouse gas initiative that electric utilities in New England are bound by, including Vermont. In that case, it's not the entities that import into Vermont, but the entities that import into the states that are part of the ISO New England, which is the New England states. And I wondered whether that issue had ever come up. Because what it does, who generates funds, some of which then come to Vermont for things like energy efficiency, are companies that are generating and importing power into that group of states? I have not specifically looked at that issue. I do believe that others have. I would say that as long as something is being used in Vermont or intended for use in Vermont, so if there's some portion of what's being imported into the region, it's going to be used in Vermont. So that's a hook, and that's really important in terms of the extraterritorial analysis. Thank you for your testimony. It was really helpful. Good framing. Thank you very much. Actually, yes, one more question. So if there were a suit filed alleging that this at the S5 violated the Dormit Commerce Clause, the Attorney General's office would? The Attorney General's office defends the constitutionality of statutes when they're challenged. Representative Smith asked a couple of questions. I'm wondering if you could circle back and share those answers with us. Sure. And if it would be possible to have them framed up, that would be great. Absolutely. I think you would do that, right? Representative Smith? Sure. Okay. Thank you. Thanks. All right. Thank you again for your testimony. Thank you very much. All right. Next we have Richard Cowart from Vermont Climate Council. Actually, I'm just going to take a second for our public service announcement. Folks in the room, we have a room number limit that I just need to put out there as we move forward on testimony here that gets 16. So we're okay today because we're down some folks, but there's a little appreciation of self-monitoring if possible. But witnesses, of course, have priority and then first folks and have second priority. We basically have four extra spots available for being in the room for public health reasons. So I appreciate your understanding of that. Welcome. All right. Good morning. Happy to be here. And I'm sorry, I'm just trying to coordinate the overheads with the tech with doing this a bit differently. For the record, my name is Richard Cowart. I'm a member of the Vermont Climate Council. I am co-chair of the what's called the Cross Sector Mitigation Subcommittee of the Climate Council. So working on these mitigation climate emission mitigation strategies that were included in the climate plan. For those of you who don't know me, I got my start in state government in Vermont as executive officer of the Environmental Board under the first snelling administration and later served for 12 years as chair of the PUC, what is now the PUC. Since leaving the PUC, I've been working with a nonprofit called the Regulatory Assistance Project. That's a global, as I say, nonprofit that focuses on advising governments across the U.S. and around the world on principally on utility issues and climate and energy issues. So I have some decades of experience doing that. The Global Warming Solutions Act specifies the legislative appointees to represent different types of expertise and backgrounds. And specifically, I was asked by the speaker to join the Climate Council as a representative who works with an organization that does what my organization RAP does. I should make it clear that today, I'm speaking as a member of the Climate Council and really for myself, the Climate Council doesn't vet anybody's testimony. So I'm giving you my opinions based on my experience, based on what the Climate Council has done. And happy to answer questions about that. You have the opportunity with the S5, the Bill in Front of You, to take an important step that reduces, would reduce, Vermont's second largest source of climate pollution and would reduce the heating bills that Vermonters face over the long term due to the high and volatile costs of fossil fuels that we've been paying for years and years and years. And nobody needs to remind you how volatile those prices can be and how high those prices can be. And getting off of the fossil fuel roller coaster turns out to be good economically, as well as important and essential to reduce climate emissions. That's basically, you know, my message in a nutshell. We're going to see whether if I advance these slides they work. As you may have heard already, fossil heat is a really tough challenge. Like I said, I've been working on this topic for a couple of decades around the world and pretty much everywhere I go, fossil heat in buildings, you know, what the energy consumption in buildings, you know, is one of the thorniest problems that we face. And, you know, in meeting the requirements of the Global Warming Solutions Act, the legislature required the Climate Council to come up with a plan that would reduce emissions in the thermal slash building sector proportionately to its obligations generally. So and to answer a question, you know, asked a minute ago, that's a 40% reduction from 1990 levels by 2030 and an 80% reduction from 1990 by 2050. And there's some interpretive, there's some ways to interpret the 2050 language a little differently, but basically you got to think 40% by 2030 and 80% by 2050 benchmark that the legislature has created. And the Climate Council attempted in its plan to come up with strategies that could do that. I think you heard yesterday extensive data presentation. So on the data, I'm going to go a little light on the data side of my presentation. But to let you know, and I'd like to emphasize something that the strategies that we developed on the Climate Council to address the building sector, that we're concerned with addressing the emission reduction required with ensuring that we do so in an equitable way in making sure that the proposals that we would recommend to the legislature would be effective, realistic, achievable. And I believe that's what has occurred with the development of S5. You know, it's important to understand that the legislation is your legislation. The Climate Council recommended it, but the Climate Council didn't write it. It's written by legislators. And as you know, in large measure, it was the subject of testimony and passed in both houses last year in somewhat different form than what we have today. I am not finding this slide going forward. Let's see if I can do this one. Here we go. All right, you've seen this slide, a version of this slide yesterday. But it bears repeating that the high and volatile prices shown here for heating fuels in Vermont per million BTU delivered are largely the fossil fuels. And lower cost options are available to us if we make the transition to at the bottom of this chart, you'll see heat pumps, advanced wood heat solutions, for example, wood pellets at the bottom of the chart, whereas propane, fuel oil, kerosene are at the top. Representative Sebelia. Rich, I just want to take a minute and ask you a question. So on that last slide, you know, I have gotten some pretty panicked emails from folks who are worried that we're going to require them to take out their fossil fuel systems and replace it with electricity or heat pumps. So when we look at a slide like this and we see the volatility in the fossil fuels and the stability in the electric, and we think about what the clean heat standard, if enacted would do, it's my sense. And I want to ask you, check with you about this, it's my sense that we're looking to reduce fossil fuel usage primarily and also encourage implementation of new heat sources that are less fossil fuel dependent. So things like weatherization and such. Would you say that's the- Yes, that's correct. And I'm going to get to this in a minute. But it's important to emphasize that when we looked at the options available to us, one of the important criteria that we had in mind is that, you know, I'm a vermonter. I have like four different ways to keep my house like a lot of people. And I would like to make those choices myself. So this is not a mandate on individual consumers to do anything. It is a mandate on the importers of fossil fuel to offer options to consumers that result in lower emissions. And as we see with efficiency Vermont programs, for example, today, people aren't required to do it. They choose to do it because it makes sense for them to do it. And it fits in their timing. It fits when they want to make a change in their appliances, whatever. So I would like to emphasize that point in response to your question. As you probably saw yesterday, the heating sources in Vermont are primarily fossil, much more so than the U.S. average. And we have, in compared to other states, a larger proportion of what's called delivered fuels than other states do. Most other states have a lot more gas pipeline penetration than we do. We're roughly, you know, 75% delivered fuels and 25% pipeline. And Massachusetts is just the reverse. And some other states, you know, very low fractions of delivered fuels. So we needed to design a policy that would work with what we have in Vermont. I mean, I have an oil tank in my basement and many of you probably do too. You know, it needs to work with where people really are, where our buildings are. Thank you. Thank you for your testimony. You said that it is not going to be mandatory that this happens. It's a fossil fuel burners. Correct. It's not mandatory on home owners and business owners. For example, someone decides, well, I'm going to keep burning fossil fuel. I'm going to burn oil in my oil furnace. Will they be paying, if they choose not to do anything different with their heating system, will they be paying more for heating fuel? It depends. And I'm going to get into how the market might work. Okay. Okay. The basic concept of a clean heat standard is that it is the used to the phrase performance standard requiring the importers of fossil fuel. I hear it says heat providers, but it's the importers of fossil fuel into Vermont to deliver a gradually increasing percentage of low emission heating services to customers. So it's akin to the renewable portfolio standard that you may be familiar with on the electric system. We require over time the electric utilities to have an increasing percentage of renewable electricity. And this is quite a, it's a similar also to what we do with energy efficiency. There's an increasing percentage of energy efficiency services required under our law over time. This would apply the same kind of principle to the fossil heat business, which has so far not been subject to requirements like this. We've done a good job on electricity. We've done a good job on energy efficiency. So far, the fossil side has, except for the Vermont gas system, the fossil side has not borne any performance obligation of this type. It's important to understand that there are a variety of ways to meet the clean heat obligation. This is another aspect of, you know, to answer the question about customer choice. We believe that a performance standard will work better if it gives the providers and the customers choices about how they want to proceed. Some people might really prefer to run a pellet stove. Some people might prefer to put some biofuel blend in their oil tank and change nothing in the way they heat their home. Some people might prefer to engage in a big renovation project and put in a lot of insulation in order to lower their bills. They might prefer those things at different times in the life history of their family or their building. We wanted to write a bill that would allow a variety of choices. So weatherization, electric heat pumps, low emission fuels, geothermal heat pumps, controlled electric hot water heaters, heat pump hot water heaters, insulate erratic, there's lots of things that customers can do that would generate clean heat credits. Now with respect to performance standards, it's important for us to take note of the fact that we have a lot of experience around the country and around the world with performance standards. At least 30 states have renewable portfolio standards on electric companies, 25 states have efficiency performance standards with respect to liquid fuels. There are low carbon fuel standards for transportation in California, Washington, and Oregon. The Massachusetts climate plan calls for a clean heat standard. The Vermont climate plan recommended to the legislature to adopt the clean heat standard. The state of Colorado has adopted a clean heat standard for its pipeline gas utilities. I mean there's a lot of experience out there to learn from about how performance standards work. And I think that in the climate mitigation world, there has been a lot of talk for years and years and years about carbon taxes and cap and trade systems. And I want to be clear here that the performance standard we're talking about here is neither a carbon tax nor a cap and trade regime. Just like a renewable portfolio standard for electricity is not in and of itself a carbon cap and trade. Although in this region, because we have the Regional Greenhouse Gas Initiative, you can have a cap and trade regime and a renewable portfolio standard working together. They do work together. But we don't have a cap on fossil fuels. We don't have a carbon tax on fossil fuels. And we, Climate Council considered it and decided that a performance standard would be more flexible, more attractive to consumers. And that's the recommendation that the council made. So we, I can go, I could go into more depth as to why we concluded that a carbon tax is not the way to go. But maybe just thinking about the experience of the past year. Heat is an essential service. People are going to heat their homes. The price goes up like it did last year, like it is right now. Price goes up, people still heat their homes. So just raising the price is a relatively weak way to reduce emissions. And it's also unfair if you're not actually helping people to make changes that would reduce emissions and lower their bills. So a performance standard is intended to not to go in that direction, but instead to go in the direction of helping people to make changes that would lower their bills. The Vermont Legislature studied this matter in 2019. And you, you all came to the conclusion that a carbon tax was not the way to go. And of course, the climate council took that into consideration. With regard to a price cap, can you talk about, can you talk a bit about a price cap? So I've heard some folks discuss that, that that might be a better, a better thing to do to set a price cap in our market that we're doing. What would be the effect of setting a price cap? I guess I'm, I apologize for the credits. Let's come back to this. Let's come back to this. Yes, let's come back to that. Yeah, we can talk about that as a potential guardrail or or mid safety belt, whatever you want to call it. Can I, I think that's an excellent question. Happy to talk about it. So my job is to kind of introduce you to how a clean heat standard would work. You know, and I refer to that as the architecture of a clean heat standard. And just so you get the basics, I'm going to take you through what is the obligation? Who is obligated? How fast, how far? How to promote equity? What earns credits? Do we have special consideration of things we want to affirmatively include or kind of exclude from the program? And then how is it administered? So it's first important, you know, to keep in mind the balance of goals that we, and I think you, I think the legislature would like to meet here. And if you read the Global Warming Solutions Act, it actually requires that we do all these things, these fourth, I just put a simple square in the middle here and make it different than the three-legged stool because there are these four basic objectives. And, you know, first the Global Warming Solutions Act says we need 40% reduction and 80% reduction. Is it equitable? Are we protecting the most vulnerable Vermonters, the folks with the highest energy burdens, and the folks who need to get off of high-price volatile fossil fuels more quickly than many others? Is it achievable? Is it realistic given our building stock? You know, we have one of the oldest building stocks in the nation. We have a high proportion of protein and fuel oil heated homes. We have, um, Vermonters want to choose how they heat their homes. And we have workforce constraints to think about as well if we want to make this really important transition. And then how do we lower bills and make this affordable across the board? All of those things are built into the design of the clean heat standards. Now, what is the nature of the obligation? There is not, this obligation is a positive obligation. You know, people sometimes get this sort of backwards. Instead of putting a restriction from the top on the amount of fossil fuel that can be sold, or the amount of emissions that can be emitted. And some states do that. You know, they have a, the European Union just adopted a cap and trade regime for the building sector and the transportation sector, for example. California and New York, or since California has and New York is considering an economy-wide cap and trade that would cap also this, the building sector. The clean heat standard in Vermont doesn't do that. Clean heat standard in Vermont basically starts with the customer. And ask the question, what do we want to see happen in buildings? What we want to see happening in buildings is that they transition to less emitting and over time, more affordable heating sources. And so we're counting the addition of good things, like we do with renewables. We count the addition of appropriate renewables to the Vermont electric grid, as opposed to putting a cap on how much electricity the utilities can sell. So it's an obligation to deliver clean heat measures that grow, that grows over time. It's who are the obligated parties? We began this process with the understanding that Vermont fuel dealers themselves are important parts of our community. They have important customer relationships. And we wanted, but on the other hand, they're selling a product that is polluting, climate polluting, and over time has to be reduced. So a goal of the clean heat standard is to create a pathway for fuel dealers to sell different products, to sell heat pumps, to sell pellet stoves and pellets, or biofuels, or other ways to help their customers transition from fossil to non-bossel heat. And for this reason, in order to make the fuel dealers world a world of transition and recognizing that some of them are small businesses, the obligation is not put on them. The obligation is put on the bigger, wholesale level importers of fossil fuel into the state. It is those importers who have the obligation to demonstrate that clean heat measures have been delivered in the state. So, and by the way, it's only, credits are only earned by actions at Vermont customer locations. You don't get credits under this clean heat standard for, you know, as we used to say, planting trees in China. There are big cap and trade regimes that give credits for offsets that might happen somewhere else. This does not do that. This credits actions in Vermont buildings. We have to have two questions. Representative Smith first. Thank you. You tell me how much a credit is worth? That the market in credits will determine that. Well, so no one knows what these credits are worth when we talk about giving fuel dealers credits. They don't know what they're going to be getting, do they? They will, I'll state it a little differently. Credits are earned for clean heat measures that are delivered to Vermont customers. And they're measured according to how much greenhouse gas emissions they reduce, right? So your credits are earned for actions that reduce emissions. The credits, the obligated parties are obliged to acquire those credits. There will be a market in credits. And I can't tell you what the market price of a credit is going to be. Shouldn't we know that before we proceed? No. In fact, one of the design features of a credit-based system is that we want to unleash market forces. We want entrepreneurs who can deliver heat pumps more cheaply than the next guy. We want that person to have an incentive to deliver them more cheaply. Therefore, the cost of credits will go down. And if customers decide to choose pellet stoves instead of heat pumps, then the question will be, what is the rebate that's required in the market to incentivize a customer to make that choice? So in fact, this is a positive feature of bringing market competition to the delivery of clean heat measures. If someone decided they wanted to put a heat pump in to establish, they will receive credits for that. Am I correct? Yes. But the person putting in the heat pump isn't going to know how much the credit is going to be worth until after he pays for his heat pump. Am I correct? No, because the market price will be known to anybody who's operating in that market at that point in time. And the legislation has mechanisms in it to ensure that there's some stability in the credit price. So the actors who are taking actions to earn credits will know at the time they're doing it what the credits are going to be worth. They won't know five years in advance necessarily. Will the public know before S5 is either passed or they say, for example, S5 passes? Will they know the people involved with these credits know a credit is worth before this bill passes? No. And I don't, like I said, it will be a market-based system. And the price of credits, to the extent that they're sold, will be set in the market over time. And I think it's worth noting we don't know what the price of fuel oil is going to be five years from now either. And the fuel dealers aren't going to tell us what the price of fuel oil is five years from now. And if you ask them to guarantee their prices five or ten years from now, they would say, you're crazy. I can't possibly do that. But they're asking today in their bill insert that the proponents of S5 be able to predict five and ten years in advance how much a heat pump is going to cost and how much a credit preheat pumps is going to be worth. I don't think that that's a legitimate request. It's nice. I'm going to give you some reasons in a few minutes why I am pretty confident that this is an affordable and achievable goal. But people need to understand that when you create a market, the whole point is not to create a fixed market price. Shall I go on? Well, yeah, I do. I appreciate all the questions. I want to be aware of time and Representative Stebman. Thanks, Madam Chair. If you go back a slide, it says the obligated parties, all fossil heat importers, Vermont Gas and Delivered Fuel Importers. Do you know how many there are? Where are they? Because I think, at least for me, besides Vermont Gas, the only other fuel delivery mechanism I know is the company that brings a truck to my backyard. Like, are there, there be? Are there? We in the state of Vermont know how many there are. The tax department knows who they are. But the tax department doesn't share that information with us. I had a long conversation with the Head of Fuel Dealers Association about this, and I suspect the Fuel Dealers Association knows how many there are, but they weren't revealing it. It suffices to say there are a much smaller number of importers than there are fuel dealers delivering to your house or my house. Some of them are both. My provider is Irving. Irving is a big importer and a very big company. But if I had one of the more so-called mom and pop fuel dealers, they're not importing huge quantities of fuel. They're buying it from a wholesale location. So there may be 180 members of the Fuel Dealers Association. I don't know the exact numbers, you know, probably in that range. Maybe, and there are probably, I don't know, 20 importers. I confess, I confess it's a guess because we haven't been told. Thank you. Representative Clifford. Thank you, Minister Chair, and thank you for your testimony today. A couple of questions. Nationally, if we were more energy independent, has there been any research done on how fossil fuels might be pricing up or down? I mean, is that also a market issue? When you say fossil fuels in the national market, if we were more energy, more energy independent? It really cuts both ways at the national level. If we were energy independent to the extent that we didn't export so much, the United States exports a lot of natural gas and oil. If we didn't export so much, then prices in the West probably go down. But we're not really energy independent. We're part of a global oil market. Which is why the war in Ukraine has driven out the world price and it showed up in my fuel bill. As there has been any research done, if Vermont meets its goals under the Global Warming Solutions Act and this bill, if I were to pass, what impact will that have, will Vermont's part be on a global scale? Obviously, Vermont is a small part of the global problem. When the Paris Climate Accord was adopted, like under 96 countries that all pledged together to reduce their emissions, that includes the United States. Everybody recognizes that every individual, the United States globally historically is the biggest polluter. Although China now emits more per year than we do, we've got about a 100-year head start on them. So, cumulatively, we're still number one. The answer is a matter of political cooperation, frankly. We agree to do our part. The Global Warming Solutions Act says we will do our part. That's it. Now, the next question is, if Vermont acts, does that influence others to act and therefore is our impact creator? I believe that when Vermont acts, actually, it makes a difference in the world. I have personal experience with that. I was advising the European Parliament on energy efficiency a few years ago and I laid out for them the example of efficiency of Vermont, what we were doing in Vermont, in order to, by obliging electric companies and gas companies to reduce emissions. They were influenced by that and adopted an energy efficiency law for the European Union, where now 16 European countries have obligations on energy efficiency similar to ours. And I don't want to over exaggerate that, but the idea that Vermont has no, that Vermont is so small that it doesn't matter what we do. I don't think that's morally correct. It's not correct in thinking about the problem of global warming and it's not actually accurate historically. That wasn't where I was going. I was going to, what impact would have, I mean, you just explained it. Yeah, we recognize that we're a small state. We're just doing our part. I know I hear you. We don't know where the fossil fuel, we were talking about this before, where the fossil fuel prices will be and no one can guarantee that going down the road. I mean, we've asked, said you've asked the fuel dealers and nobody can really give you an answer. But wouldn't that be the same with electric prices too? I mean, we really don't know where those are going. I mean, I know they're regulated, but two things about that. First of all, they're regulated. Secondly, they're more significantly more stable because the resources that we get our power from are long-term resources for which the price trends are pretty well known. If you look at the charts that you've seen, the price, the cost of running a heat pump in Vermont, it's pretty much of a flat line. We will change this, time goes by short, but is it going to be lower and more stable than the price of oil? I believe it will be. Thank you. Representative Smith. Thank you. What are your thoughts on nuclear power as far as clean energy goes? Well, I should emphasize that my personal opinion is not really very important, but I'm of the opinion that if we have nuclear plants running today, that we should keep them running because the running costs of nuclear are barring accidents. The running costs of nuclear are pretty well known and they're pretty low. You feel that will solve a lot of our concerns. I mean, France has, I believe, five nuclear power plants. They have more than five. They're predominantly a nuclear power system. Do you feel that our situation here with global warming, we would be doing our part by going nuclear? No, because I want to emphasize it's a really good question and I appreciate the question. The problem with nuclear isn't the running costs. The problem with nuclear is the cost of building them. The only nuclear plant that's close to relatively new in America today is being built in Georgia. That plant has had billions and billions of dollars of price overruns and many years delay in getting it going. I would not recommend that anybody try and do that, particularly since the cost of wind power and solar power has been dropping so much that it's cheaper now to build a new wind farm than it is to even operate a coal plant, much less build a nuclear plant. It's a really good question, but until someone invents a brand new modular, low cost, easy to site nuclear plant, I just don't think that's in our future. Thank you. Should I keep going? All right. I like answering questions too much. And we like asking them. One thing that, so this picture, it doesn't answer a question actually. It asks the question and then it only gives you one possible answer, but I just included in the slide deck because I want to make the point that we're going to meet the clean heat obligations and reduce our fossil emissions by a combination of things. There's going to be weatherization, heat pump out water, air or ground source heat pumps, pellet stoves, a number of other things that can be done to improve our heating situation. And what this chart shows, however, is that in order to meet the obligations of the GWSA, we're going to have to go a lot faster and we're going right now. The United Nations released a report on Monday. We're going to have a problem if my computer just died. We can run it from our end, and we all have it here, so you can keep talking and see we'll put the slides up. So if you stop sharing or I don't know, somehow. I don't know why it just decided it was tired. The United Nations report boiled down this week that we need to be sprinting to meet global requirements and we're only walking. And I would say frankly with respect to clean heat and buildings in Vermont, we're not really walking very fast. We're kind of ambling, I think. And this... So we have the slides now going behind you on... Oh, okay. She's got them. All right. Thank you very much. I'll just let that be if you've got them. Tell her when you like the switch. I don't know if you want to be on 12 or 13, but you let us know. Do you want how many switches do we need? How many switches do we need? Okay. The only point here is that because it will be a market... I have these. Thank you. Because it will be a market and because customers will choose what they want, there's no point in predicting exactly what's going to happen. But we know that some combination of all those major things will need to happen. Happy to talk about any of them, but let's go to the next slide. The Global Warming Solutions Act requires and also just as a matter of fundamental equity in Vermont because we care about equity and we care about our neighbors. It's important that the clean heat transition be a just transition. And so the clean heat standard, the legislation you have in front of you calls out specifically a requirement that a more than proportional fraction of clean heat services be delivered to low and moderate income households so that there's a fear that if you just sort of let things happen that the lower income households and folks with higher energy burdens would be at the end of the line. And this legislation goes out of its way to say we're not going to do that from the beginning a proportional slightly better than proportional fraction of clean heat measures have to be coming from low and moderate income households. And in addition, a substantial fraction of those savings have to be in the form of installed or called installed measures like weatherization or heat pumps or pellet stoves, things that are going to deliver lower bills for those households year after year, not just tomorrow or not just next year. It also creates an equity advisory committee to advise equity advisory group to advise the PUC and the other implementers of this legislation so that the voices of rural Vermonters, low income Vermonters are heard in the process. Next slide. Cleaner heat and lower heat bills. All right. This I don't know yet. You can watch them. I think it's important to emphasize the degree to which the legislation you have in front of you is intended to deliver savings to Vermont heating customers over time. And sometimes people will concentrate on just one aspect of this question and say, well, hold it. If there's an obligation on the importers, won't that drive up the price of delivered fuel to people still buying from those folks? And to the degree that clean heat credits are expensive, then that could be, that could show up in fuel bills. I'm going to give you a few reasons why I think the legislation that you should feel confident in passing this legislation, even though no one can tell you exactly what a clean heat credit is going to cost. And first of all, it's designed to be flexible, as I mentioned a while ago, that because we're not fixating on one technology, if think about how much what we do today with efficiency Vermont. Efficiency Vermont and the utilities offer rebates to customers to install a pellet stove, to install a heat pump, to do a weatherization job, that kind of thing. Those rebates are the program costs, and they're a relatively small fraction of the total cost of doing something. The people whose bills are going to go down are willing to pay the large majority of the cost of doing it. So you don't have to think about the clean heat program as buying a heat pump for every homeowner in Vermont, or a pellet stove. Making it flexible is a key feature of the legislation. It's also gradual. The amount of change that has to happen is roughly 4% per year. We're not trying to go out and renovate the entire housing stock tomorrow, or the day after tomorrow. Third, consider what we're comparing to. The comparison is to stay chained to the fossil fuel roller coaster. So what things cost has to be evaluated compared with the heat bill you're no longer paying. As we've already seen, many clean heat options already cost less than fossil. So switching to something that costs less is a savings for households that do it. And we've got in four on this list. The clean heat standard, think about what just happened. Congress enacted the Inflation Reduction Act that provides tax credits and cash payments to people who invest in clean heat. The money is sitting there. How much that is such a boost to getting these services delivered in households around the state. So the program, our program cost, is only whatever is needed in addition to the federal incentive to inspire a homeowner to take an action, or a business owner to take an action. And by the way, the business credits in the IRA are very substantial. So both in business and in homes, these funds are sitting there, and I personally think it would be a shame if we didn't enact legislation soon that enabled us to capture more of that federal, those federal incentives. We have studied in a general way how much the clean heat obligation would save Vermonters over time if it were adopted. And the abatement study that was conducted for the climate council found that the measures installed by 2030 would save over their lifetimes two billion dollars for Vermont households. And this is because we would be switching from higher priced fossil fuels to lower cost alternatives. And in addition, they didn't even, you know, there's an additional factor for what's the economic value of the avoided climate pollution. And that was estimated to be about three billion dollars in additional energy performance standards. Now just sort of cast your mind back a little ways. I used to, when I was at on the public utilities commission, we thought long and hard about how much we should be investing in wind and solar. And I'm sorry to say that was long enough ago that wind and solar were really expensive back then. So we took baby steps. But so did other states. And over time, the existence of the performance standard has driven down the uptake of wind and solar and the cost of wind and solar, depending on what year you start with, the cost of wind and solar have dropped by, depending on what you count, 75% to 90%. In other words, if we had done the analysis ahead of time and said, oh, it's going to cost too much, we shouldn't have a renewable standard, we would be ignoring the benefits of markets that drive competition when you have a performance standard. And the good news in those sectors is that the cost, we've learned that the cost of wind and solar has come down because of competition, because of performance standards. And the same thing is true with something as mundane as lighting. When we first started installing a single compact fluorescent light bulb, it was a fairly expensive item. And now LED lighting is commonplace. It lowers lighting bills by 90%. These technologies can improve over time. And the programs to deliver them improve over time. And costs go down. So to think that we know now what a heat pump is going to cost, when we're establishing a competitive market for heat pumps, installations would be a mistake. We just have to be cautious about thinking that we know the answer to that. S5, as you know, requires that a potential study be done alongside the rulemaking that the PUC would be doing. And that that potential study and the rules come back to the legislature and delivered to you all, I think January 2025, before the program would even go into effect. And so you have, if you need belts and suspenders on this, you're going to have belts and suspenders. I think you're going to have both. I would also note, by the way, I mean, as someone who's been working in this field for a long time, the clean heat standard is not standing alone by itself. Clean heat standard is set so that the overall amount of reduction, let's say it's four or five percent a year, overall amount of reduction gives credit to, takes account of, the things we're already doing. We already have weatherization programs. We already have tier three of the renewable standard. We already have energy efficiency programs. We have the cap agencies delivering low-income weatherization. We have now the federal revenue for tax credits for the IRA. All of these things count and earn credits. So the obligated parties, when they're looking out there to say, well, where can I get credits? They can do things themselves. They can blend biofuels into their fuel mix. They can help their customers buy pellet stoves. Or they can buy credits from all of these other programs that are already doing things. So the idea that we're trying to climb a steep cliff here is just not right. I mean, we're actually building a set of stairs that include all those other programs. So I just needed to do a time check with you. You do need to wrap up by 10. And we have a lot going on and we also need a break. So thank you. I totally appreciate that. And I will also, and finally I'm going to add on this point, that we know from experience that when you have complementary programs like this, they can work synergistically and positively. The climate plan also recommended weatherization at scale as a program. It also recommended doing something called on-bill financing to help people to invest in better furnaces, better insulation, what have you. And those measures have been proven to lower the cost of delivering these services to households and businesses. And so that for all of those reasons, I think you can be comfortable. You can feel really comfortable that this program is designed to be flexible, affordable. And besides which, you're going to have a chance to kick the tires completely when it comes back to you. I will be happy. I'll stop right there. And I'm happy to talk about other design features anytime. That would be great. We'll probably have you back for the rest of your presentation if it becomes apparently appropriate representative. Stephens, did you have a question? I did, but it's a nitty gritty in terms of how the credits work, so I'll save it. Okay, thanks. Representative Lawrence. Thank you, Madam Chair. Mine may be similar. You mentioned the importers would be the obligation part of this. How does S5 set up the intended credits? Is it going to be paid for by the importers or the companies delivering the services? By the importers. By the importers. The importers are obliged to acquire credits and retire them. And they can acquire them in a bunch of different ways. They can deliver services themselves if they want to. Let's say they put a biobland in their fuel tanks, or they work with their fuel dealers to work with customers to install heat pumps, or they hire an HVAC contractor to install heat pumps. They can do it themselves. The legislation is set up to say that they have that choice. But in the absence of making that choice, their obligation would be performed by something called the default delivery agent, which is, you should think of this as akin to efficiency of Vermont. Right now, electric utilities in Vermont are obliged to deliver energy efficiency services. And they can do it themselves. Or if they don't, efficiency Vermont does it for them, and they pay efficiency Vermont for that service. And this legislation is set up to have a very similar structure for the obligated parties. So let's just say if Irving Oil doesn't want to do these programs, their obligation can be taken up by the default delivery agent appointed by the PUC and regulated by the PUC. And that DDA, we call it, the DDA would be like efficiency Vermont delivering the services. And enlisting customers to participate in different programs, helping them install heat pumps, et cetera. I have a follow-up question. So the bill recognizes that Vermonters will have a choice. And their choice can be to do nothing and continue burning fossil fuels. So in order to achieve our goal, we're not asking everybody to participate. So my question is, based on the importers and the obligations they have, with the delivery companies, I have heard, and I don't know the actual facts, but I've heard that 80% of our fuel dealers install alternative heating sources. And 20% are just fuel delivery only. And like I say, I'm not sure about the numbers. So we're anticipating or expecting that those 80% will achieve our goal that is outlined in the Global Warming Solutions Act and our Climate Action Plan. I am concerned about penalizing the fuel delivery companies only that don't do the alternative installations. So if 100% Vermonters aren't required to participate, I'm concerned about some mechanism of penalty or fuel delivery cost to those companies that don't install the alternatives. And I don't know if you could speak to that. Well, I'll state it a little differently. Everybody, to the degree that credits cost something, the obligated parties will bear that cost. And let's assume that they, you know, sometimes these costs don't all get passed through, but let's just assume that the costs are passed through. They would be passed through not as a penalty to anybody, but it would just be as an increase in the price of fossil fuel, generally, at the wholesale level. So I view that as an obligation that is worn by the fossil fuel sector, generally. And it's exactly similar to the way we pay for renewables and the way we pay for energy efficiency. The difference is that this would be the first time that we've actually said that we think the fossil industry also has an obligation to take steps towards addressing global warming. So, right now, the cost of renewables and efficiency is being paid for by electric companies and their ratepayers. And it's roughly, depending on what you count, it's 7%, at least, of the cost of service of an electric company. That cost is being paid for by the clean fuels. The dirtier fuels aren't paying it. So that's the mismatch that we have in the energy sector right now. For years, we've been imposing the costs of addressing climate change. We've been imposing those costs on the cleaner fuels and the more polluting fuels have not paid an equivalent cost. And this performance standard would, to some degree, require the fossil fuel industry to step up as part of the energy economy and contribute, therefore. Okay, with that, thank you very much for your testimony. And we will take a break till 10 past. We're going to reconvene our morning meeting and welcome Secretary Morve back into the committee. Thanks for coming on to this two days in a row. You're welcome. Let me see if I can get my screen share working. For the record, I'm Julie Morve, the Secretary of Natural Resources. And I have a couple of different pieces I'm going to try to address here in fairly short order this morning. And then I'm glad that T.J. Pore from the Department of Public Service is here and able to talk in more depth about some of the data we have available regarding the thermal sector. I thought I'd start just with a reflection on the charge that's contained within the Global Warming Solutions Act that is sort of driving the Clean Heat Standard Initiative. A little bit of an overview of how the Climate Action Plan envisioned the thermal sector would be handled, address some points of concern I have with S5 is currently drafted, and then end on what will hopefully feel like a positive note by going through some of the ongoing implementation efforts that the agency and more broadly the executive branches engaged. So hopefully this is nothing new to anyone, but the Global Warming Solutions Act was enacted in September of 2020. The first meeting of the Climate Council took place in November of that year, and we adopted the initial Climate Action Plan in December of 2021. So we've had that initial Climate Action Plan on the books for just about a year and a half right now. And the charge to the Council through the Global Warming Solutions Act in developing the Climate Action Plan was to prioritize the most cost-effective technologically feasible and equitable greenhouse gas emissions reduction pathways. And then what I've listed there just for your reference is the series of specific charges that were included in the Global Warming Solutions Act that absolutely go beyond greenhouse gas emissions reductions, but thinking about smart growth, adaptation and resilience, carbon sequestration, and effects on marginalized and rural communities. So the Climate Action Plan, as I heard Rich Cowart talk to this morning does in broad strokes seek to cut climate pollution by 40 percent below 1990 levels by 2030. And that's also approximately half of 2005 levels, as you probably recall, from the greenhouse gas inventory yesterday. It all matters what's being measured relative to what. But it's significant reductions that are sought over the next six or seven years. The Climate Action Plan strives to prioritize those who are most affected. We worked hard to coordinate the development of the Climate Action Plan with the Comprehensive Energy Plan that was being worked on in parallel by the Department of Public Service. We'll update the Climate Action Plan at least once every four years, so our initial update will be completed in the summer of 2024. And then there's an implementation section, which is intended to inform decision-making by the General Assembly. And then finally, and I'll speak to a little bit, this a little bit more at the end, the Climate Action Plan does speak to the need to have a framework for measuring progress over time and can talk a little bit about the work we're doing in that space. Representative Stabilia. So can you just talk a little bit about just the mechanics of the Council of South where it's at, the number of counselors that are there, the terms, what's happening with the Council of South? Well, put back up to this. The Council is comprised of 23 members, eight members of the administration, eight members who are appointed by the Speaker of the House, although currently we only have seven of those eight appointees. All of the House terms expired in, I think, October of this past year. About, I want to say, five of the members ultimately asked to be reappointed and three stepped down. Two of those three vacancies have been filled. Currently, we have not received an appointment to represent the fuel dealers. And so obviously that's a challenging or a missing piece of interests and expertise within the Council currently. And then there are seven members appointed by the Senate Committee on Committees. Each of those members appointed by the General Assembly has a set of expertise that they are intended to represent interests or expertise that they're intended to represent to give us a diversity of perspectives. I think you will hear and may have even read and digger this morning that there continue to be real concerns about whether the counselors actually represent a diversity of Vermonters in terms of lived experience, geography, economic background, racial makeup, et cetera. And so that's something we continue to wrestle with and work on. So in addition, can you just talk, because this Committee did not work on the Global Warming Solutions Act, so just to give a little bit more shade, you just talk a little bit about the five subcommittees and how that work hold out and then roll back up into the Climate Action Plan and what the participation in those subcommittees was like. Sure. So the work of the Council is supported by five subcommittees, four of which were established in the initial enabling statute, which were a cross-sector mitigation committee that really looks at greenhouse gas emissions reductions, a rural resilience and adaptation subcommittee that is very much focused on how we get to landscape level resilience and agriculture and ecosystem subcommittee that was focused both on our working lands and the role they can play in making a resilient landscape, but also opportunities for carbon sequestration and then a just transition subcommittee that was focused on making sure marginalized and underrepresented Vermonters voices were heard by the Council in developing the plan. In addition, the Council determined to have a science and data subcommittee so that they could have some additional or particularized technical experts reviewing certain reports that very quickly get very needy. Subcommittee memberships were opened more broadly. Every Councilor was expected to serve on at least one subcommittee, some served on multiple. Each subcommittee is chaired by someone from the Executive Branch and one of the legislative appointees. We solicited interest and applications from Vermonters interested in serving on subcommittees and gave ourselves some guidelines about how many members would be workable and have done one recruitment sense to fill vacancies as they've arisen on our subcommittees or particularized needs. In general, during the throes of developing the Climate Action Plan, these subcommittees were meeting monthly or bi-weekly and at some points even weekly. I think you would hear from people serving on them that it was an incredible workload that they took on during that time and unsustainable, which also is reflected, I think, in some of the turnover we've seen since. Since the adoption of the Climate Plan, the work of the subcommittees has slowed somewhat. There are a number of technical analyses that A&R has contracted for and continue to rely on review and comment and feedback from relevant subcommittees and ultimately the Climate Council as we move through those work products. But it's a different role now than it was. What is that? It's looking at these technical work products and providing advice. Frankly, implementation, I see, is the work of the Executive Branch. The Climate Action Plan gives us a roadmap or a framework for pursuing implementation. But at this point, the subcommittee role becomes more advisory, but also helping us make sure that we're collecting the information they will need and conducting the analyses that will be required to update the plan in just a year and a half time. Thank you. So this chart, I think you've probably seen a couple of times now. Again, just different ways to slice and dice. The orange band on the figure on the right hand of the side of the screen represents the thermal sector and the reductions over time. The statistics I have on the left-hand side there, I've taken from the Pathways Analysis Report, which I'll talk about in a bit more detail, but they're specific to the thermal sector as opposed to the reductions shown in the chart on the right, which are overall greenhouse gas emissions. And you can see that in general, the expected thermal sector reductions or required thermal sector reductions are generally consistent with the overall greenhouse gas reductions expected under the Global Warming Solutions Act, but actually, if anything, a little bit more oppressive. Representative Sebelia. Yeah. So I just want to clarify, Secretary Moore, so I heard you say that you're going to be talking about these pathways report, but the percentage emissions reductions, that is different than what was in the Global Warming Solutions Act, what you've listed there, and different years. So it's a different scale. So I'm worried that people might be confused by that. Can you just talk a little bit about that? Sure. So the Pathways Report, ultimately, the target that we are looking to achieve are the targets or the requirements established from the Global Warming Solutions Act. So for 2040, the requirement is that we, or 2030, excuse me, the requirement is that we achieve a 40% reduction as compared to 1990 levels. The Pathways Report sort of took a current status quo, which is the 2018 levels, and it shows that the reductions that are required as compared to our 2018 levels, which are in some instances higher than where we were in 1990. So the Climate Action Plan looked at each of the different sectors, so the building thermal sector, transportation sector, agriculture sector, etc., and developed a set of pathways and strategies for addressing greenhouse gas emissions from those sectors. In the thermal sector, there were a half a dozen high, half a dozen different strategies that were recommended. Rich Cowart spoke to several of them this morning, including dramatically expanding weatherization, the development and implementation of a clean heat standard, looking at other ways that can drive less carbon-intensive heating practices, incentives for the adoption of what are now being called clean heat measures under S5, instituting a rental property efficiency standard, and then regulatory code updates to ensure that the building code for new construction is consistent with what we're trying to retrofit existing construction to achieve. Also, I just think it's important to keep in mind the analysis of the clean heat standard that was actually included as part of the Climate Action Plan. It was limited, and much of the work, and I heard Rich speak to this this morning as well, has really been done subsequently both by a sort of self-identified working group convened by the Energy Action Network, as well as the General Assembly and the work that was done last session around age 715. Specifically within the Climate Action Plan, it says in regards to the clean heat standard, we have enough information to evaluate the impact. We believed equity considerations could be considered based on program design, but it would need to be intentional, and we weren't able to comment on the cost effect. So I'm going to shift gears a little bit and talk specifically about the Pathways Analysis Report, because this is how we figured out exactly how much of what we needed to do. It's a scenario modeling tool, and it really helps give that sense of the scale and pace of what's needed to achieve the emissions reduction requirements. Specific to the 2030 Building Thermal Sector Reductions, the Pathways Report did raise a couple of flags that are worth keeping in mind as we talk about the rest of this. One related to workforce, I think that that is going to be a really significant challenge. The EAN Report, for example, noted that we currently have about 770 weatherization workers in Vermont, and to achieve our ultimate goals, we need more than 6,000. So this is a really dramatic increase in the number of workers and businesses needed in these spaces. And then also just thinking about the pace and scale, it's important to look at supply chain concerns, but also financing to help make those initial costs of upgrades affordable, and Rich spoke to Anville financing as a tool in that toolbox, but that may be a challenge for lower income. Representative Stemison and Smith. Thanks, mentors. Good morning. I just wanted to ask you with regards to workforce. If you're aware of the climate workforce collaborative and the efforts that are going on there and things that are in the workforce bill. So just flagging that, yes, I think that is an area that is both positive because it's good paying jobs that Vermonters can do. And there are efforts to support that. Agreed. And I think the challenge is just finding people that want to take those careers. Our unemployment roles currently only have about 4,000 Vermonters on it, so it's asking people to make a transition that they may not necessarily be ready or interested to make it. There are efforts underway for that too. Representative Smith. Thank you. Morning, Secretary. Morning. Where and how soon can we get 7,000 additional laborers? I don't have a good answer. I don't think anyone does, but thank you. Representative Sebelia. Yes, Secretary Moore. Do you know what the vacancy rate is for corrections right now? I know that it is higher than the average across state government, but I don't know what their specific vacancy rate is. And what is your vacancy rate? We're running about 8 to 10% depending on the timing. And how about transportation? I don't know. Generally, government? I think ANR is on par with most of state government corrections and state police being the exceptions where I understand that they have a significantly higher vacancy rate. Is there any recommendation that we cut services in the state of Vermont based on the vacancy rates? No, but I think it's challenging. For example, our agency is really struggling under the weight to fully implement all of the federal funding programs we have available. And I think there are at times limits on the throughput capacity of what we're able to achieve as a result of the fact that we simply can't find people to do the work. So the Pathways Analysis Report assumes that emissions reductions between now and 2030 primarily occur in the residential sector. It notes heat pump technologies are not currently resolved in the commercial sector and that they're really only capable of servicing an area of I believe it's at 500 to 750 square feet. And so I put up the thermal sector emissions by commercial versus industrial versus residential to essentially say that those reductions we're looking to achieve that 40% range really need to come from just the green portion of this overall pie chart. And that's reflected in the numbers, the numbers of units of things that we need to do from homes weatherized, heat pumps installed, heat pump water heaters, advanced wood heat systems and homes that will be heated with biofuels. So between now and 2030 or by 2030 we would ideally achieve 120,000 homes weatherized, 177,000 heat pumps installed, etc. And at the bottom for perspective, I just offer the numbers that were installed. These are totals for that five year period from 2015 to 2020. Yes, madam. Thank you. Secretary Moore, with regard to the Global Warming Solutions Act and their requirements that are in there, what's the outcome of not weatherizing 70,000 homes, 69,000 homes by 2025? What happens as a result of that? There's a legal clause of action that could have anyone who is any citizen who is concerned about our lack of progress, take me to court. And what would the court's remedy be? I think that was spelled out in the Solutions Act and we talked about that this morning. It's unclear. There are several, I think, options available to the court if they believe that we have taken reasonable steps in the right direction. They could simply require us to continue along the current path. I think if they believe what we are doing is unlikely to achieve the requirements of the act in some reasonable amount of time, they could ask us to take a regulatory approach instead. The reasonable steps is. There is a reasonableness test contained. Thank you. Representative Smith. Thank you. At 2025, 69,000 homes weatherized. Does that mean 69,000 more have to be weatherized? Or does that mean there's 20,000 now that have been, we need 49,000 more? Correct. So this is from the weatherization at scale working group. Originally, they had a straight line between where we sat at the end of 2021, which is about 30,000 homes that had been weatherized at that point and the 120,000 needed by 2025. There were some real concerns expressed by partners within the Office of Economic Opportunity at DCF that runs the low-income weatherization program as well as our community action partners and resulted in this more exponential curve being shown. As you will see from this graph, based on that recommendation, we will miss the number of weatherized homes by 2025 with projecting something closer to 48,000 homes weatherized. And that feels like, frankly, the bounds of reason of what we're able to accomplish. Vermont is currently and currently predates the very significant commitment of weatherization funds. The governor and the general assembly made last session through ARPA, but prior to that, Vermont was weatherizing about 2,000 homes per year. And you can see that we need to scale up to weatherizing almost 20,000 homes. So with the labor force that we have right now, how many are there in that labor force? The number I have is from the EAN report, and it said there are 770 people. Do you know how many more we would need? Also working from the EAN report, it estimated 6,200 total, so that would be about 5,500 additional workers. We can do this. So I have a question about, how does one count the number of homes weatherized? So that may be a question that TJ can help answer, but both Efficiency Vermont and DCF, through their Office of Economic Opportunity, are keeping track of that information. There isn't a single database, is my understanding, where that information exists comprehensively, but we do have the ability to sort of gather that information from partners but if you didn't qualify for Efficiency Vermont, you wouldn't show up in their data. But if you were doing weatherization wholly on your own with no incentives from Efficiency Vermont, that would not show up in that data. I wonder how many people be in that bucket? I'm a two. Small sample size. All right. And just for perspective, about three quarters of all of Vermont's existing housing units will need to be weatherized by 2050 to meet the requirements. The other thermal sector measures that are included in the Pathways Analysis really focused on increasing use of biofuels and advanced wood heat. Ultimately, in 2050, just to keep this in mind, wood heat and biofuels are projected to serve about 20% of the residential energy demand and expanded use of biofuels is really the primary driver of reduced emissions from the commercial and industrial sectors. So this is another slide. And I know you looked at yesterday and just want to pause here and acknowledge, I agree with this slide. This is not the issue I'm trying to raise and expressing some concerns about the design of S5. Those long-term benefits associated with making this transition are real and they're impactful. And really, the challenge is how we get there, particularly in the first handful of years. We know that you have to invest, make these upfront investments in order to accrue those long-term savings. And this is looking at the costs, which are what's below the line and the benefits that accrue, which is what's shown above the line. And the area that I want you to focus on is this red hatched area. And that represents the period of time where the costs are outpacing the benefits. So ultimately, your fuel costs may go down, but it will require an upfront investment in order to lower that fuel bill. And we need to be very thoughtful about how those costs are spread about across society. So S5 directs that the annual requirements for clean heat measures be set at a pace sufficient to meet the thermal sector reductions required by the Global Warming Solutions Act. And so going back to the Pathways Report, roughly, that is 85,000 homes that need to be weatherized between today and the end of 2030, 145,000 heat pumps installed, and 125,000 heat pump water heaters. I have a unitized cost for each one of those. Those were obtained from the Department of Public Service based on data they gather on average cost. I would offer that the heat pump cost is likely low because it assumes a single heat pump can serve most homes, and we know that that is not always the case. But if you add those numbers together, that gross upfront cost, just for the stuff, is about $2 billion. It doesn't include administrative costs. So nothing in state government to sort of administer these programs, nor the cost of the default delivery agent. And for prospective efficiency, Vermont has indicated that their administrative costs are about 20% of the overall program costs. This is not dissimilar from what the Pathways Report found, which estimated that the net costs in the residential sector, so they accounted for some of those fuel savings, ended up being about $1.6 billion. Actually, I'm sorry, but we're really at capacity for the room. I'm sorry, you need to stream us on YouTube. What's that? I felt like at the other rooms, they just said that people could put masks on if they needed to. That's not what we're doing. I'm sorry. Oh, it looks like Dylan's stepping out. So you can stay. Dylan just stepped out. Yeah, okay, sorry. Yeah. So just as a gut check, I compared it to the number in the Pathways Report, which was able to take account of fuel cost savings and suggested this net cost was $1.6 billion between now and 2020. Representative Tori. I know we have a lot more savings analysis. I'm just curious. I think a lot of us have a lot of resources that need to be replaced. That's a great question. I think that's part of the challenge here, right? I talked to Efficiency Vermont and they indicated that generally their incentives for clean heat measures for low and moderate income from monitors are about 75%. The timeline that's envisioned by S5 means you're not always meeting people where you're at. You're right. If I was going to replace my furnace anyways, or if they came out to service my furnace and said, you know, within the next couple of years, this thing is on the way out. A several thousand dollar tax incentive or rebate would be very attractive in helping me to select a technology over the other. The pace of the change that's required in order to meet those 2030 requirements, I don't think only meets people where they're at. We need people who are willing to swap out a functional system for a clean heat measure in order to achieve the magnitude of what's required, which is this 145,000 heat pumps installed. There's nothing that requires people to do it, as you've heard repeatedly. This isn't a requirement that flows to homeowners. So the only way to incentivize people to do it is to make them very low cost, where hopefully those fuel savings quickly outweigh any upfront investment homeowners might need to make. And that's why in developing my own cost estimate, I assumed that a 90% cost share would be required. Homeowners, I'm sure, will pay a portion of it, particularly faced with the current high fossil fuel prices. But I think it's a small portion given the aggressive nature of the schedule. And so if you assume homeowners bear 10% of the cost, that means the unmet need of that $2 billion in upfront investment is about $1.8 million. You're still up. Yes, I'm representing civilians. Yeah. Thank you, Chair and Secretary Moore. Can you go back to them for giving this slide? Notice this is the gross cost, and this has gotten a lot of airtime. Can you tell us what your analysis is of the savings, fuel savings that homeowners will experience equivalent to that, to those costs? Yeah, that's what's shown down below. There's about $400 million in estimated fuel savings during this 10-year period, according to the Pathways report, because that's a net cost number at the bottom of the slide. There is also significant federal funding. Sorry, where was that analysis? Where does that analysis spend on the Pathways report? Great. It's your part. Yeah, I can send you this. That would be great. Okay. Ever to remember to do that. There is also significant federal funding that is available right now. The ARPA commitment that the General Assembly made previously, and I'll provide a little update on that at the end, under the IJA where the Department of Public Service is slated to receive about $60 million that can be used for incentives. Under the IRA, there is a number of different tax rebates and other initiatives that will be very attractive to certain types of consumers. Then we've been the beneficiary of several different tranches of congressionally directed spending. I've assumed that in total, those will work out to be about $75 million a year of benefits for each of the next eight years, reducing that upfront cost by about $600 million. Then the total needed investment remaining will be $1.2 billion. I'm really struggling with some of your analytical points. For example, that the 90% cost share, having worked at efficiency remands, regardless of the customer that we supported, we would not have been able to give a 90% incentive. That's really the weatherization agencies. I'm wondering how you think that would ever pass muster. It's just simply not a valid assumption in my perspective. My question is, do you know what, for efficiency remands incentives, what percentage those typically cover for most Vermonters if they're doing, say, a weatherization project? Is it 90%? It is not. What I'm saying is because of the pace, the way S5 is structured, it needs to meet the 2030 requirements of the Global Warming Solutions Act. So it needs to endeavor to achieve 85,000 homes leveraged. What I'm saying is in order to incent enough Vermonters to weatherize their homes, a very high cost share will need to be provided because we're not needing people where they're at. It's probably less true for weatherization than it is for heat pumps and heat pump water heaters, where if you have a functional heat pump or water heater in your basement that has many years of useful life left, it will require a very high incentive to encourage you to change it out. The way we're going to drive people to change it out is through the sale of clean boot credits that we'll be able to use to provide incentives. And so because S5 is required to meet these targets, it is going to effectively require incredibly generous incentives to achieve the rate of implementation that's set established here. So I understand your point. Over the next five, 10 years, one of the things we heard from other testifying people is we've seen what the cost of an iPhone has been market-wide in terms of decreased cost, electric vehicles. Did you factor in what, I mean, I personally know of an NREL report that shows what the assumption is for heat pump costs over the next 2020, 2030, 2040. Did you factor in all those market externalities that are expected to make this a shift? I did not. Thank you. So at this point, I believe there's $1.2 billion of remaining investment need. There has been a considerable discussion about how much fuel suppliers will absorb of that cost rather than passing it along to their customers. I have assumed 25%. I have certainly heard from the Fuel Dealers Association that they don't think that that is practical, but I've left that assumption in place indicating it will be a smaller number. But that would make the total investment needed, upfront investment needed through 2030, at $900 million. So absent dedicated state revenue, it's reasonable to expect that the rest of that cost would be passed on to customers in terms of fuel sales. So if the clean heat standard takes effect January 1st, 2026, as is currently envisioned, there's five years to achieve the 2030 Global Warming Solutions Act requirements, which would result in a cost of about $180 million a year. And then I simply divided the amount of fossil heating fuels sold per year in Vermont by that $180 million to develop a 70 cent per gallon estimate. I know that that estimate makes people wildly uncomfortable, but I think absent the kind of comprehensive analysis that I believe is essential to understanding what the cost of the bill will be. This is frankly about as as good as we can get right now. Is that a step in? You know, one of the interesting pieces that I think is we have a climate council, which was the sort of legislative effort. And then we have, which is an administration of administrative entity. And we have a climate action plan that has been doing analysis. I guess I'm just curious. I'm concerned with this analysis. I don't understand why you chose to take it when you have a climate council that has hired, you know, people to do analyses. And I, you know, you said you need a really thorough analysis, but then you just said you didn't include any of the, you know, like what we have seen repeatedly in history for changes and reductions in market costs. So I would beg you moving forward, if you're not completely comfortable with your analysis, and that it is at the level of scrutiny that everybody else is getting for S5, I would beg you to please lighten up on it because there are many, many issues with it. I don't disagree. We are doing work now. But I feel like by moving forward with this legislation, absent the benefit of the reports we are currently contracted for, I have no choice but to offer the best available estimate based on the best available data. I think to do anything otherwise is a disservice to the launchers. If you don't feel like it's a disservice that we have not addressed how we heat our homes. There are people who have just seen their prices go up two bucks, two bucks 50 depending on where and when. You don't think it's a disservice to not do anything for them and to continue to punt at our first climate action plan report was 2006 under government help Douglas. I'm not arguing to do nothing. And I think if you let me finish my presentation, I'll show you the pieces that are in action in motion right now. Okay. And just want to reflect back. The climate action plan did not have any information on the clean heat standard specifics. The language on this slide is the language taken directly out of the climate action plan in regards to the communities. I also just want to reflect back that there was work done in response to accent 62 of 2019 that looked at the fuel tax. The fuel tax is currently 2 cents per gallon. That raises about 4 or 4.5 million dollars a year. Those funds are mostly spent on low income weatherization as well as a little bit of that money is allocated to buy heat. That report did recommend increasing the tax on the sale of fuel gradually over time to 4 cents in 2021 and 6 cents in 2023. But no legislative action was taken as a result of that study. So representative Stevens, this gets to some of your points. There are some pretty critical data gaps in what is currently known. Some of these are in S5 and then some of them are ones where we are working to address. Fuel data currently tax just asks fuel suppliers to report the number of gallons of fuel they sell. And it's everything all added together. Keating fuel, propane, kerosene and other di-diesel. They're form FGR 615. Sales of natural gas and coal are tracked separately. But I think this will impact the ability to establish clean heat credits based on the different carbon intensity of those fuels. We have been actively working with the tax department to disaggregate that data and believe they are about to publish an updated farm. Understanding what the existing regulatory relationship is with obligated entities. Most of our fuel suppliers and wholesalers do not have any existing regulatory relationship with the state of Vermont, unlike Green Mountain Power or other electricity utilities that are regulated by the PUC. And depending on where those obligations land, it will be more or less that need to be brought into that universe. Also just want to talk a little bit about the need to support Vermonters who are queued waiting for clean heat measures. Obviously not everybody will be able to have clean heat measures installed day one and thinking through what will happen in the interim. And then some questions about the rate of deployment of clean heat measures can this be achieved. And I did hear Rich mention this morning the potential study that is referenced in S5. I think that that's a potentially important tool. It would provide information on the technical and economic feasibility of the implementation of clean heat measures. Unfortunately, it's a little bit of a regulatory or it's a little bit of a dead end right now and that it doesn't tie back into any action that the General Assembly is being asked to consider. President Sebelius. Yes, recognizing that we're coming close on time to prior to the end of your testimony. The legislature right now this bill is poised to come back to us for approval. All of the work that will be done to create the market and do the analysis is poised to come back to us before we approve. And so I'll be very interested. I hope you'll be telling us what specific aspects we should be also considering adding when we have to vote on this before implementing it. Some of these we spoke to yesterday just issues of administrative complexity. There are clearly some differences between the greenhouse gas emissions inventory that is sort of how we're going to judge if we're meeting the requirements of the Global Warming Solutions Act and the proposed framework for clean heat accounting in S5. Calculating clean heat credits is challenging. I know members of my team have tried to dig into that and I don't believe have been able to determine exactly how that system will work. Certainly that is an effort that the PUC is committed to undertaking, but I think it's something to be aware of. And then finally the carbon intensity of fuels appreciating the intention there. I am concerned it adds an additional layer of complexity to an already complex undertaking. In terms of the equitable distribution of clean heat measures, the climate plan recommended that the legislature ensure that a high fraction of clean heat solutions were delivered to low and moderate income households in the early years. S5, and I believe in response to that, has indicated that each obligated party needs to retire at least 16% of clean heat credits from customers with low income and 16% from moderate income. Personally, I am not aware where those numbers came from, but would point out that based on data available through the tax department from 2021, about 71% of Vermonters would be considered, Vermont households would be considered to be low or moderate income. And so currently the only income sensitivity requirement in S5 is that at least 32% of clean heat measures are delivered to this 71% of the population. And know that this is a slide I think Jared spoke to yesterday when he was in that really focused on sort of the incentives and rebates that are available to help fill that red circle. And the challenge, and I was trying to speak to this a little bit earlier, is that I think where we're at is that those blue costs still exist, right? And if you have a functional heat pump, essentially these blue bars go away and you're looking at your average annual heating bill, not just the gap that can be made up with a grant or incentive. And so I think we have to think really carefully about how we help best help low income Vermonters cover that initial upfront cost because otherwise it's comparing what may be a significant blue bar to an annual increment. Although we know the lifetime fuel costs will be significant, that next annual increment may be far less than what the cost of a new system would be. A couple words about public engagement and procedural equity. S5 has about 16 months for this process to take place. This includes pre-roll making engagement with stakeholders, drafting rules, the formal public comment process, and then preparing and submitting proposed final rules to the General Assembly by January 15th of 2025. As the head of an agency that does a lot of roll making, I just want to reflect this is a very aggressive schedule. We have spent more time in this currently working on leak boat rules, which are far less reaching than what is envisioned under S5. I'm just glad you didn't say far less comfortable. Nope, that word carefully. Well, thank you. And I am concerned that this timeline is inconsistent with the guiding principles developed by the just transition subcommittee, which talked about moving at the speed of trust, but also balancing planning and implementation around varied ways of learning, understanding and being able to reach out and do meaningful engagement with different cultures and communities. I would offer S5 is really akin to the creation of Efficiency Vermont in 2020. It's critical that we understand those upfront costs and practical challenges, in addition to the long-term benefits. I very much agree with your point, Representative Stebbins, and I think the challenge is we just haven't done that like work yet. The climate plan did note that while the goal is to reduce greenhouse gas emissions, it is critical to understand the effects of these policies on Vermonters, especially those who struggle with the costs. And I just don't think we're there yet. The proposed timeline will impact procedural equity, and I do think it will limit opportunities for communities to participate in program planning and design. So the rest of my slides are sort of the good news story about the work that is underway appreciating. I'm probably up against it in terms of time. I've got about five or six slides that I can just flip through quickly to give you a sense of the work that's underway. First is the creation of the climate office. Sometimes I feel like that's an inside baseball win, but we're really thrilled to have a place, a centralized place within state government that can coordinate our overall efforts. There are eight different agencies that are participating in the work of this climate office and the interagency team that they've sponsored, along with Lesley Ann Dupigny-Jeroux and her capacity as the state climatologist. And I see the climate office both essential to coordinating these efforts, but also tracking our progress over time towards meeting the requirements of the Global Warming Solutions Act. So in the past two years, since the Climate Action Plan was adopted, the administration has completed rulemaking on the clean car and clean trucks rule that were followed with the Secretary of State this past December. We are working to deploy about $250 million in federal ARPA funds and one-time state monies for things like weatherization, EV charging, home electrical system upgrades, municipal energy resilience, some flood buyouts, work in the agriculture sector, and work to expand urban tree candidates. I have a question that I don't know how long I've missed from Representative Logan, who's not with us. So I just want to give her a chance, her sheet. Okay, great. Representative Logan. Go ahead. Oh, you can't hear me, Representative Logan. There's anything. I'm sorry. I had myself muted. Great. Really appreciate you finding me, my hand raised chair. It hadn't been that long. And thank you, Secretary Moore. My question was related to the standard set here in F5 to address the needs of low to moderate income households. So as I understand it based on the analysis of personal income tax returns, it looks like 63% of Vermonters fall under the low income threshold, 71% in total fall under the moderate income threshold. So my math says that that 63% of Vermont households are low income and 8% are considered moderate income between the 80% and 120% of median household income. Is that correct that I'm understanding that? So I believe the definition of low income is less than 80% of median household and I can get that information for you. I don't have that on my life. Oh, I see that. Okay. Okay, but I think 71%. Okay, gotcha. So it's somewhere it's less than 63%, which is 100% of median household income, but seems like it's probably the majority of Vermonters likely fall under the low income threshold. I would be helpful to know that that proportion exactly. And where I'm leading with this is essentially that we see that of the overall 32% of clean heat credits that need to be retired by through services provided to low and moderate income households. There's an equal split between low income households and moderate income households. And so I have two primary concerns here about the guidance that we're giving to the PUC in planning for implementation of the clean heat standards. My first concern is that what we know is at the outset, the majority of emissions reductions in the thermal sector will come from residential customers. So it does seem that given the proportion of low to moderate income households as customer households, 32% annually upfront might not be sufficient as we make this move towards greenhouse gas emissions in the thermal sector. We might, especially given, as you said, that there are 75 million dollars a year over the next eight years in federal incentives, many of which are targeted to these households. It seems like we could do more for low to moderate income households upfront in reducing greenhouse gas emissions, especially because we see that from the Energy Action Networks presentation that we saw yesterday that these households are very overburdened by their heating costs, which means that it's likely due to extremely inefficient heating systems or homes in need of weatherization. So my question to you is, do you believe that we need to be doing more for low to moderate income households in the early years of implementation of the Affordable Heat Act? And furthermore, do you believe that an equal split between low income households and moderate income households in terms of our guardrails for the PUC for these households is sufficient? I'll take your second question first. I hadn't considered the split the way you're framing it before. I think that that is a really interesting consideration, and I will get those numbers to you because it does seem like it even as currently established could weight moderate income households ahead of low income households in the way that the language is in S5. I am significantly concerned that the bill doesn't do enough to think about low income households, and it's not just low income households that are participating. It's low income households that will see increased fuel costs, and I have a slide on that towards the end. I think while people may agree to disagree about how much fuel costs are likely to increase, I suspect that there are not really anyone that believes fuel costs will be unaffected by the clean heat standard. And so just thinking that through, particularly for Vermonters that access LIHEAP benefits, and that this will further diminish their spending authority or capacity with those benefits is, I think, something that requires further attention and discussion. I would encourage the committee to hear from somebody like Paul Dragon with CBOYO or student mentor with Capstone Community Action. Okay. We're going to limit questions from your out and try and get through the last few slides. All right. So we talked about the federal funding that's currently being deployed. We're equally looking at opportunities that will exist under the Bipartisan Infrastructure Law and Inflation Reduction Act. Both TJ's department and my agency have looked at opportunities that are available specifically to ours, but also know that there are other Vermont entities that may be able to pursue certain opportunities, including appreciating that the Vermont Bond Bank, BHFA, and VITA are currently teamed up in looking at pursuing a green bank funding opportunity through EPA. That said, federal guidance for many of these programs is under development, so we still don't know what we don't know, but did want to flag that earlier this week, and our did submit a notice of intent to participate in EPA's Climate Pollution Reduction Grant Program. In phase one, we have been told we can expect a presumptive allocation of $3 million, and then there will be further funding opportunities that follow later in 2023. In addition, we are doing work related to technical analyses needed to understand greenhouse gas benefits costs and net savings over time of different climate initiatives, very much to the question you asked, Representative Stebbins. And work continues on the Municipal Vulnerability Toolkit, and we expect that will be completed this summer. And the FY, the Governor's FY24 budget recommend and appreciate your support for those that, for the climate components of that budget, that include funding to do education and outreach to support municipalities and implementing the Municipal Vulnerability Index once it is completed. We are continuing to work on our approach to public engagement around climate action. We took what I feel was a fairly novel approach in reaching out to the public about the clean car and clean truck standards, and really sought their input on what supporting policies would be needed to make that work successful. It was certainly a different way for asking for public input on a rural package, the agency advanced, but felt like it created richer conversations. And we are coordinating our engagement work with the Environmental Justice Unit at ANR. And then this is just a little bit about some of the technical pieces that are underway. Looking to identify means to measure and track progress over time. We are in the process of developing an RFP, and I expect that will go out this summer to help us build that data management system. As you heard from us yesterday, we've been working on that update to the Greenhouse Gas Emissions Inventory and Forecast, which should come out next month. We are undertaking an analysis to understand the cost implications of different thermal sector policies in meeting the Global Warming Solutions Act. Appreciating the timing of that work is imperfect with the timing of this body's work on the clean heat standard. We expect to have the initial report back on that effort in May or June. And then as I noted earlier, we have been working with sister agencies and departments to get better data on the type and volume of fossil fuel deliveries that are being made into Vermont. Currently, there are parts and pieces of that that live with at least different departments and trying to make sure we have a comprehensive picture. I think you should leave with that. Leave with that? I'd actually have them at the front and I was like, I want to end on a positive note, so because there's a lot of good work being done. And we just take the moment to say, this isn't an all or nothing proposition, right? And I think that's important to keep in mind. The clean heat standard is a really significant piece of policy, but with or without it, there is incredible work being done right now. It's not that we're just sitting around twiddling our thumbs waiting, waiting for the next piece of legislation to drop, including in using these federal plans to help drive the implementation, take full advantage of them and drive the implementation of clean heat measures. So it would be helpful for me to have your positives translated into how they are affecting the clean heat measures. So we're necessarily expecting that right now, but that would be super helpful. So maybe can I answer your question or respond to the couple questions of my own, which is we are updating as part of the work we have going on and TJ may have this in his slide deck as well, but we're updating our business as usual case to account for some of these federal or to account for these federal funding programs, especially understand them right now. So to say, absent a clean heat standard, essentially, what's the likely uptake going to be in Vermont over the next several years simply by virtue of all this federal money. And I think the timing of that is May, April. The study is going to be complete by the end of May or June for the final report, but the business as usual should be updated by mid to late April. Okay, so I think we can get you I'll get you that information as soon as we have it, but just know that we've asked that question to just to try to put into an apples to apples comparison, the impact that will have. And then the ultimate answer to your question I think is in the measuring and assessing progress tool, but that's throughout and part of our challenges. We don't have a great way to aggregate all the things we're doing right now in order to be able to track progress beyond sort of these national regional and in some cases state data sets that Collins spoke to yesterday. And I'm very interested in the folks who've already implemented measures without being able to be counted, which may be a TJ question, but I think that's a really important piece of this as well. I'm fine actually taking this just really helpful representative Clifford. Thank you. So thank you for presentation. This bill, it talks about well it's it's talked about as a heating fuel bill. But given like the interconnected nature of the fuel markets, are there mechanisms in this bill that ensure that it won't impact like process fuels like for April syrup operation or like natural gas that's used like in the paper goods like West Rock up in Shelton. That's a question and the answer is no, we don't have a way to make those distinctions. The framework is based on fuel type, not end use. And so at the highest level, we are able to make a distinction between thermal fuels and transportation fuels, but making a distinction between thermal fuels used to heat a building and thermal fuels used to run an industrial process. There I don't, it is my understanding there is no way to make that distinction right now. And so to the, while there wouldn't necessarily be anything required of maple sugar producers, for example, or fuel prices to rise as a result of a clean heat standard, it would in all likelihood, if that's the fuel or I have no reason to think it wouldn't affect the prices of fuels they're using to run their their businesses. Thank you very much for your testimony today. We need to respect our next witness ourselves and our and ourselves. So we need to screen that break. We are going to reconvene and continue to discuss S five and we welcome T.J. Porter back to committee. Thank you. It's it's actually been a little while. So today my presentation has asked to provide a thermal energy update and where we are in the thermal sector and what we've been up to kind of program wise with the programs we'll get to think a little bit it will get to some of the questions you just asked chair Sheldon about kind of what what do these programs look like kind of some preliminary estimates on like what weatherization might happen because of the federal funding and what happens after the federal funding is gone, things like that. I did want to start before I get in just to reflect on a couple of things that Secretary Moore said, based on my experience and really not talking specifics of S five, but in respond to a couple of questions. But first one, you don't actually mention the comprehensive energy plan in these slides that may be a first for me for the legislature because I can live and breathe the energy plan for a long time. But I want to mention it now because it actually talks about the clean heat standard and it identifies it as a promising policy option. And what the energy plans recommendation was was to conduct a robust and transparent analysis on the costs and benefits, not only societally but to the monitors and to different customer groups. And that's the analysis that Secretary Moore talked about and we're implementing that and to do that before we actually get to legislation. So there was a difference climate action plan and the comprehensive energy plan on that point, both kind of identifying the clean heat standard but taking different. That's important. Can you say one more time what the approach from the energy plan is? The approach is to consider a clean heat standard identifying it as a promising policy option and to evaluate the costs and benefits across perspectives societally to the cost for monitors and to different customer groups and really understand the benefits and costs of the clean heat standard and then, you know, if that analysis warranted it to then go forward designing a clean heat standard. So just clarifying that work is happening. And that work is happening. We'll talk a little bit about that at the end and that's the work that, you know, it started to happen through A&R and the department and I'm personally kind of participating in that analysis with the consultants and that's the one that we said the study will be done in June. Obviously the timing is not ideal for this process in a part-time legislature but it is what it is. I wanted to respond to the question of representative Stebbins about the incentive levels on weatherization. I think historically it's been true that we've never had incentive levels for non-low income at that level. The $35 million in ARPA funds that was allocated through the department to Efficiency Vermont were negotiating that or putting in place that grant agreement right now and the plans for that money that Efficiency Vermont have come up to are a 90% incentive for low moderate income customers up to $8,000 and it's so capped at that amount. So that doesn't mean that market rate participants above that won't be at that level for sure. Well, I imagine they won't be at that level and then low income is 100% by OEO. I just wanted to put that point out there and what that means for the analysis. I'm not exactly sure but just to clarify and then talk about the Efficiency Vermont corollary a lot. A lot of folks have talked about that and I found over the last couple of years something about myself that I'm very process-oriented. I didn't actually realize that till I did some retreat-y type stuff. But the process, so we've talked a lot about the corollary of Efficiency Vermont and the structure, like the default delivery agent is kind of like an Efficiency Vermont structure. And the process, I think that it's important to reflect on the process for implementing Efficiency Vermont as well. And in that process, the Department of Public Service did an analysis. It had a yellow cover it was referred to as like Old Yeller in the office and it was like this thick. I'm using my hand. I don't know if the camera can see it but it was thick and it was like a really robust analysis of what it meant for rate pay, what Efficiency programs meant for rate payers, what it meant societally, how we should analyze it and the design. And so again I think of that as the corollary of the analysis that we're working on now. The other thing about when that went into place, there was a cap on the costs of the program for the first couple of years. And then the cap was eventually lifted by the legislature. So it was kind of this stepwise process that identified, it identified the costs that the legislature was willing to pay to kind of go with Efficiency to, you know, to implement this program to start and they rose over time but then they were capped and then it was eventually lifted because the programs were so successful and great. Representative Stem, I'll keep it short. I understand your point about Old Yeller, which is very funny. But do you not agree that that was like 30 years ago and now we have 30 renewable portfolio performance standards and 25 efficiency performance standards and three low carbon fuel standards. So it's not quite a, we do have a robust example set to look at in terms of how performance standards are structured and implemented. Yes, I do agree that we've learned a lot over the last 20 years of being a leader with Efficiency of Vermont and, you know, award-winning edge programs. And so yes, I also, I guess my point is more on like the analysis on how that impacts the people who are going to, you know, either be benefiting from the programs and the results and who will be paying for it and to understand who those, who's are. So, but I do agree. There's a lot more information than we had 30 years ago. Okay, so now I'll get into the presentation. I have about half as many slides of Secretary Morse, so hopefully I'll be able to get through. I'm going to just kind of quickly go over some thermal fuels, demand stats that we had in our annual energy report, and then both demand and supply. Talk a little bit about pricing and then get into some program updates, including weatherization, what's been happening with our events with heat incentives, building codes, renewable energy standard, and then touch again on that thermal policy analysis towards the end. So, this slide is thermal demand. On the right, you see kind of the heating fuel and protein sold in Vermont over the last five years. I think the real point in this slide is just a reminder that, well, on the left are heating and cooling degree days. And that's a measure of really just generally how cold it has been, number of heating degree days needed, and how warm it's been, number of cooling degree days. And these are indexed to a baseline of 2001. So, the lines you see are a percent change from that index. And so, you can see that, you know, I think the point that I'm trying to make here is just be careful looking at any one year of data. You need to look at the trends. And especially with the heating oil, you can see kind of where we've gotten kind of up and down really consistent with the number of heating degree days here. So, we're about the same over the last five years, despite some programs to address and kind of getting started to thermal programs. So, where in Vermont is our thermal energy come from? Mostly fossil fuels. The chart on the left is, you know, 31% heating oil, 23% natural gas, and that's a significant portion from heating fuels. We're about a quarter, a little over a quarter renewable from wood or electric heating. There's a little bit of biofuels blended in there, probably mixed into the other tab. I think most fuel oil has a some amount of biofuels in it that kind of blended at the rack, but it's actually not tracked right now. Under 5% blended at the racks, the rack is kind of those hubs in Albany and Manchester and Quebec, where fuel dealers go to get the actual fuel and bring it to Vermont. There are biofuels blended, but not tracked at all by anybody. So, greater than zero, less than 5%. By sector, almost 60% of our thermal energy use is in the residential sector, but still leaves almost 40% in the commercial industrial sector. Moving on to prices, this slide shows the thermal energy prices over time since over the last two decades. You can see some pretty upward trends here in propane and fuel oil in particular over the last year. This is from November of 2022, when this data was pulled. The fuel oil and propane prices have softened a little bit, back to where they were in 2020 by any means. And electricity prices have increased. We've seen rate cases. Last month, I think I talked about rate cases anywhere from 5% to 14% for our electric utilities. That is in turn related to some of the wholesale market prices of natural gas, liquefied natural gas, and fuel oil, that then kind of pushes on energy prices. But I think the general gist of this is that there's a lot of volatility in the fossil prices, and the fossil prices have increased quite a bit lately. Okay, quick question, Mr. Clarification. Thank you, TJ, for coming in. You just mentioned the electrical price going up 5%, but I'm seeing on the graph here, the chart, it's electrical resistance that is at the top of the chart. Right. So in this, you'll see there's two things that are powered by electricity on this chart. So that top one is electric resistance, and then there's, and then kind of lower than the fuel oil line, you'll see cold climate heat pop. So both of those are powered by electricity, but the cold climate heat pump is two and a half times as efficient as electric resistance. And so that's kind of the effective fuel price. Okay, time for question two. So on the previous slide, you get the breakdown of thermal heat sources, and it says wood, but then on this slide, it's only really has pellets and wood chips. Many Vermonters use cordwood. Is cordwood not included here? Cordwood is not included on this chart. I would say it's been relatively stable. It's a little that one's harder to get good data. I can follow up with our Clean Energy Development Fund who's done a lot of work when I would in the biomass sector, but and see if I can get any more specific data. There's a lot of people that get a lot of their cordwood on their own. That's true. Representative Smith. Thank you. Do you have any idea? I'm hearing about these new modern wood stalls that they're talking about compared to some of the wood stalls about 50, and it heats perfectly overnight, and it burns my wood into a fine little ash. What's the difference between my $300 wood stove and the new wood stalls of today? I think there's a few differences. One, if you're just talking about a wood stove that's heating a space, I think they burn one more efficiently and with less particulates coming into your living space. There's a couple of benefits there. A lot of the advanced wood heating, if you hear that term, is for pellet boilers, for instance. It's similar to the pellet stove, but it's an automatic feed pellet boiler and works with your existing force hot water system, your baseboard heat. That is kind of a full-on replacement for your fossil system. It's a one-for-one. You don't need to keep the fossil system as a backup. You need something to power your, if you use it for hot water, you may need to set up something. They're talking about when we're referring to advanced wood heating as pellets. I generally, yes. There's also woodchip, especially in the commercial sector. A lot of our schools have used chips. I think that can fall into that category. This building uses chips. Thank you. It's a little broader than that, but on the residential scale, we're really talking about pellets. Thank you. This chart takes that last one from November 22 and looks at it on the residential sector, on the effective cost per, and puts it on a comparable scale of MMBTUs. Again, in November 2022. We see natural gas is the most affordable on a dollar-for-MMBTU basis. I will say, since November, those prices have also gone up. I said that earlier on natural gas. They've had some pretty significant rate increases over the winter. Electric prices, again, have gone up a little bit, but we see that heat pumps on a BTU basis are relatively affordable compared to these other options. Using the same data, the chart on the right translates that into average household heating costs. It's a big range across the state of what people are paying to heat their homes from $1,300 for natural gas to over $5,000 if you have kerosene. These charts just won caveat. They don't necessarily represent a blended. Lots of homeowners have multiple fuels that serve their homes. Heat pump that serves 30%, 40%, and fossil backup, same with wood pellet stuff. That was a whirlwind over supply and demand data and pricing data. I just want to get into the pricing updates. I think I'm doing okay at time. Some program updates, I should say. We're going to spend probably the most time on weatherization here. Just to level set, we have three main weatherization program implementers. It's the Office of Economic Opportunity for low-income weatherization, Efficiency Vermont for both of the state and Vermont gas systems for its service territory. Burlington Electric Department also offers services in its territory, but is mostly covered by natural gas. Then you'll hear a bit about 3E thermal. They deliver multi-family programs. They do that in partnership with OEO and Efficiency Vermont. I just want to make sure you're aware that they're out there, but as we go forward, we'll really talk about these three primary weatherization implementers. You may want to have folks come in to give a more robust set of what they're up to. In 2022, and this goes for OEO, even though it's not on the slide, there was actually less weatherization completed than any of these entities projected. Part of that was some delays in the ARPA funding. Some of it was workforce. Some of it was supply chain shortages. OEO in particular just presented to the Climate Council and mentioned in 2022, fiscal year 2022, they had a 15% vacancy rate. We talked about vacancy rates a little earlier. They've worked to fill some of those vacancies, not all of them, but one of the reasons that not able to really do as much as they projected. That said, in 2023, OEO is projecting a 39% increase to 1400 units in fiscal year 2023. A lot of that increase is due to those ARPA investments. I listed out those investments, but over $50 million in ARPA investments, so all of that needs to be spent by 2026. Efficiency Raman, same story with workforce challenges and pandemic-related challenges, but forecasting a significant ramp in 2023. Now we're on calendar here with also over 1400 units. A lot of that is coming from, again, ARPA funds. I'll note now and maybe go into more detail. There's some IRA funds, the Inflation Reduction Act that's $30 million for weatherization. That's really not going to start until late 2024. It was all announced last year in 2022. We're going to get program guidance in 2023. Actually, even though it's formula, we do an application at the end of 2023. Really, if everything goes apace, it's still mid-2024 anyway before those that funding can be implemented. That's probably okay because there's a lot of ARPA money that we're working to spend. I should say, this will come up in one of the next slides, that for Efficiency Raman, their base funding is from the Regional Greenhouse Gas Initiative and from the Ford capacity market. Those are two electric-based markets where the legislature, I think over a decade ago, now directed those funds to go to Efficiency Raman for thermal efficiency. We can talk more about that if necessary. Then Vermont Gas Systems, they're funded by the Efficiency Charge. Their weatherization programs are. They're recently, the department supported them as a way to limit rate impacts, but do more weatherization. We supported them actually allowing a return on shareholder investment in efficiency. Previously, they just were required to do a certain amount of efficiency that they proposed it. The commission said, yes, that's a good amount. Now, we're able to ramp up while smoothing the rate impacts of that ramp up. It costs more to do that, but it better matches the benefits with the costs of the program. That's it for that slide, I think. This is a slide that I think may start to get to some of the questions that were asked at the end of Secretary Moore's presentation. The chart on the top is the annual amount of weatherization units completed over time, and hit both historically and projected. The chart on the bottom is the cumulative. You'll see it's kind of varied over time what our implementers have been able to accomplish. In the early 2010s, there was a significant influx of money from Aura, another federal program, right after the Great Recession. Really, a lot of that went to the Office of Economic Opportunity for low-income weatherization. Then that kind of went away. We've been fluctuating around 2,500 units for a long time. 2023 to 2026, you can see a projected ramp up there based on the federal funding that gets us up to 5,000 units a year. When these entities presented to the Climate Council subcommittee on mitigation, they basically said, we're going as fast as we can, and this is about as much as we can do in ramping up in this way. Then you see a drop off in 2027. If that happens in 2027 or if it's 2028, depending on how the funding flows, who knows exactly when it happens, but the point is it's going to happen. That federal money is going to go away and we're back down to a couple of thousand units a year. I think that's an important thing here. As we look to develop programs going forward or encourage this market, we really need to have a sustainable program and a sustainable source. It's going to be really hard to ramp up and then lay everybody off. If implementers or contractors see this drop off coming, then they're going to not want to build their staff capacity. I think it's another issue with workforce. I think it gets really stark when you see this chart this way. One other thing I'll just mention on this slide. We have the bottom chart is the cumulative by provider. I made the scale there 120,000 units just so you could see even with this ramp up how far away we are from getting to 120,000 by 2030. You can kind of see a kink in the line where there's the boost in 2024 through 2026, but then it levels out again and we're only at a little over 60,000 units since 2008 completed, so a little more than halfway. I think it was asked. I can't remember who asked it in the last presentation. What happens if we don't hit the 2025 goal or number of units weatherized? I think that same thing is what happens if we don't get to 120,000. Then those mitigation savings need to come from somewhere else, I think is another way to answer that. It's not necessarily that we don't hit our targets. It's that we need to reevaluate how we hit the targets. I hesitate to say this because I think it's important to have a really ambitious target, but we should be cognizant of what is technically feasible and actually really a treat achievable and be kind of clear eyed about when do we identify when that target is not technically possible and pivot to meeting our reductions in a path. Do you have a suggestion for the other way? Well, I'm not being slipped. No, I think there's a number of technology options that are actually limited in scope. It's more heat pumps, it's more biofuels and more heat pump hot water heaters and it's other ways or you could say I think that climate council kind of made a decision to go proportionally by sector with their targets. You could ramp up a different sector to meet the GWSA targets. So it's different technologies and then S5 gets to one of the possible policies to meet those, encourage those technologies in the thermal sector, but it's also different sectors and is there room there? I think the answer is no. There's probably not room in other sectors either. They're very aggressive targets, but we just need to be clear eyed and think about that if, hey, we're assuming we're going to get 120,000 weatherizations. Not sure when we call it, but if we're not going to make it, we need to say we need to keep going as fast as possible there and get our reductions somewhere else. I actually need to go to Representative Smith and then Sebelius. Thank you. Does the word impossible ever come into your meetings? So I will, I'll say, you know, originally that when the climate council was discussing the targets, it was 120,000 new, not including what had already the 30,000 that had already been done. And there was significant pushback that that was not going to be possible. And so then the target was chosen to be 90,000 new and 30,000 old to kind of get to that 120 number. So it had, it came up then. I don't want to say anything's impossible. I think we can, you know, with the right amount of money, you could probably do anything. But you know, it's also the workers, it's the housing to house the workers, it's, you know, there's all these interrelated issues. Oh, let me rephrase it then. With the current workforce and the current material available, is this impossible? With the current workforce, I would say it's, it is impossible. I don't, I don't think 700 people could do this many authorization units. Thank you. Check in on, I believe you said we're assuming 120,000 units. I think actually we're planning for 120,000 units, which is different. Thank you for that correction. Yes, I agree with that. I think that's appropriate that we're planning for that, because that's what the goal in the Global Warming Solutions Act kind of set out for us. And then the test for that, we talked with Secretary Morris morning for meeting that is reasonable, right? So are we making, do we have a reasonable plan? Are we making reasonable progress? So certainly I'm going to expect that the resources that are available to us factor into that determination is reasonable. Would you agree? Yes, I, but I think that, so I agree with what you said. I would add to that that the reasonable progress needs to, it's still at some point we need to say, where are we going to make it even with reasonable progress? So if we're, if our reasonable progress is to 100,000 units, we, the mitigation reductions are requirements, right? So we have to still pivot to get, to have a plan to get there. So it's reasonable progress. And then we may, I think, continually need to reevaluate. And the climate action, the process calls for that. You know, we need a new climate action plan in 2025. So I think it does, it can allow for that. Okay. I do want to talk about some supporting programs that have been developed. First, briefly is the weatherization repayment assistance program that's, there was a $9 million appropriation to the Vermont Housing Finance Agency to support this in 2021, where VHFA will provide the capital using that money and incentives for, to support upfront costs of weatherization. These, this $9 million isn't actually in the previous slide projections. But, and then that money would then be repaid through a on-bill financing mechanism supported by the utility. The utility, electric utility would administratively kind of just do the billing and be paid for that administrative cost. So ratepayers aren't paying for it. And what this allows for, well, the payments, the payments are, would be designed. So you buy down the capital costs with the incentive, and then the payments are designed to be less than the energy saving. So then there's money coming back that could be used again, targeted to low-income households. One of the things that this does is, is allows for the loan payment is actually to the meter. It's not in customer's name. Customer doesn't have to go take out a loan or anything. It just, the loan is assigned to the meter. So if a customer leaves, a new customer comes in and kind of assumes that payment on the meter. There's kind of reserve funds held, you know, to cover gaps in a tenant. You know, if there's no tenant for three months, there's kind of a reserve fund that covers those payments that would have otherwise been made. And it's kind of, it's a way to allow more entities to actually, more people to actually participate in weatherization, right? They don't have to come up with their own upfront costs. They can put it to the meter. And it also, if this pilot works well, and this turns into a more of a full-grown program, it could become really sustainable where those payments coming back turn into something that VHFA can use to support a bond issuance and then have more money for, to put back into weatherization and do it again. You know, in the ideal scenario, it turns into kind of the self-sustaining funding source for weatherization. So I think it's a really important pilot. Well, we'll see how that goes. But that just started, it took about a year to implement and it just a year and a half and just started the beginning of this year offering that to utilities. The other thing I will mention is the weatherization and health initiative is something that the department organized, the Department of Health and OEO around using some of those thermal efficiency process funds. And the idea of this is to really better prove the case and support it with data that investments in weatherization support residents' health, and particularly with low-income customers. And that healthcare industry actually could have a role to play in supporting weatherization in terms of they could lower their premiums and they could lower costs to healthcare costs because their customers aren't running to the emergency room for asthma issues or COPD is the other really big one. And so this is another pilot to kind of try to better prove out the concept. There's been some efforts in this over the last five years, but this one's really trying to focus, organize the data and prove that healthcare should really be helping here. So I'm going to intervene because we're almost at noon and Gabrielle has a question. You're on slide 10. I'm going to suggest that we probably need to stop it. And we'll have you back to finish. So I'm going to let Representative Sevens ask a question as far as we can get. It's more just a thank you for the weatherization we pay in assistance program. For committee members, this is a really critical piece to address the high upfront cost that Secretary Moore was stating because this is how people can actually pay for these projects for one or two months. So thank you. So it's great. Thank you. Thank you for that. Okay. Building energy standards, Secretary Moore mentioned this. I think the big we updated these last year, we update them every three years for new construction with the residential commercial sector. The important thing here is that this recent update established a pathway for these homes to get to net zero ready over the next three code cycles. So by 2030 homes that the plan is, is that homes that are built to meet the code that have to be net zero ready. That doesn't mean they're required to put in the renewable energy to actually be net zero, but they're capable of doing that. And I should note related to energy standards last year that you all established a Vermont Builder Registry, which I think will really help with getting information out about the energy standards and hopefully help to improve compliance. So pretty quickly through these the renewable energy standard just remind you all that that actually has a component for fossil fuel reductions. And it is remains to be seen how S five and the tier three of the renewable energy standard work together. And the primary measure here that utilities have been using to meet the renewable energy standard are heat pumps. And it's another item on heat pumps. And this is something I say in a lot of venues, but it's really important that we keep our electric costs down. On the left, it shows the the homeowners annual cost comparison. So they have fuel oil only at $4 a gallon, paying, you know, $2,300 a year. If they have fuel oil with one cold climate heat pumps that displaces, I didn't put the assumption on the slide, I think it's 40% of that fuel oil. Then you can see their continued operating costs is really close to what fuel oil is at $4 a gallon, right? It's in GMP, it's a little less. But this doesn't account for the cost to the customer of actually installing heat pump. These are just kind of your operating fuel costs. And so this is another reason why it's really important to understand the analysis on what the impacts to customers are when they under a clean heat standard or a different any other policy that we have. As we're promoting these, we want to be sure that we're not promoting something that are going to increase costs for customers. We do have a forecast installation for heat pumps. This is before the Inflation Reduction Act had 30% tax incentives, but I think was a reasonably aggressive scenario. This was done related to an electric energy efficiency potential study that the department did last year. So Efficiency Vermont and Brilliant Electric Department, Vermont Gas, had a lot of input into this and shows kind of a range of possibilities for heat pumps. And I'm not sure if this is exactly where the business as usual will pan out to be, but showing we're already getting 10, 11, 12,000 heat pumps a year with the current programs and have about 50,000 installed so far. So if we're getting 10,000 a year, we should be at 120,000 by 2030. If the rate increases when costs come down, the tax credits are in place, then we're at 150,000, 160,000 by 2030 under the business as usual scenario. So I think this is a technology that's coming. It's doing well with the incentives that we have now. And I think the question is, is the pace? How much do we accelerate it? And then I have two more slides. So I don't know, three more minutes to see. Advanced Wood Heat, our Clean Energy Development Program has had limited funding over the last several years, but has been supporting those advanced wood heat units. We have over 400 of them now, and you could see quarter three of 2022, we had a real increase in the installations by quarter. A lot of that has to do with the additional ARPA funding that has been used. Some of it was directed to the United States Development on renewable natural gas. My gas is an alternative regulation plan, allows for the procurement of renewable natural gas. The department has successfully advocated that they cannot pay more than the social cost of carbon for this. And I think they, for PR reasons or whatever reasons, if they had wanted to just say, we're becoming more renewable, it's consistent with our position. Yes, that's good, but not at any cost. And we use the social cost of carbon as developed by the council to put a cap on that. And then what we also advocate is, that's the cap. And you also need to be cognizant of rate impacts, because the social costs, the social benefits accrue to everybody societally outside of Vermont's borders globally. But then the costs are all borne by Vermont ratepayers. And so we need to look at both the societal impact and the Vermont impact. And so, and those are how we measure that based on the carbon intensity of the resource. That's a big slide on federal funding and all the things we're doing. And I actually already mentioned most about the thermal analysis that we're doing. We're at the stage where they've narrowed down the policy options that they're going to look at quantitatively. A clean heat standard is one of them. Of course, that was kind of the impetus of this, but also just expanding our existing programs. And that combined with a fuel surcharge, what are the differences in the program administrative costs and how that affects people? Cap and invest system through the thermal sector and a cap and invest system sector-wide. So bringing in transportation, more options to comply under that roof. And there's one other one that's escaping me right now. And then, like I said earlier, the final report is late May, early June. Climate Council is very involved in this through a task group and the cross-sector mitigation committee, which for disclosure, I co-chair with Mr. Cower. That's all I had. I can go back to talk about the federal funding, but you do have that list on the slide. I could answer questions. Thank you for your presentation. It's really very helpful for us. And I'm sure you will have questions for you, but I don't think right now is the time for that. We'll have you back. Members, I talked to some of you about this. We need to come back here at 12.30 to take up amendments. So we have very limited time to talk about amendments and a 26,000 amendment from the Ag Committee that we need to take up. So that's been part of my pressure to get us out of here, so people can at least have a half an hour for lunch.