 All right. Good morning and welcome to the Montt Legislatures House Committee on Environment and Energy. Good morning. We are taking up S5 and we are going to welcome Matt Coda, the Director of Government Affairs at Meadow Hill Consulting. Welcome, Mr. Coda. Thank you. Chair and members of the House Environment and Energy Committee. As a way of introduction, my name is Matt Coda. I own a company called Meadow Hill Consulting. I have four clients that are in the thermal space and have interest in Senate Bill Number 5. This is Split the Ticket Fund, which is a non-profit 501c charity that I started 15 years ago. It includes the Northeast Heart Patio and Barbecue Association, which are the manufacturers, the sellers, and the installers of wood and gas heating equipment. It includes the heating and cooling contractors of Vermont, which in collaboration with Meadow Hill and the Vermont Fuel Dealers Association is the largest provider of technical training for the heating industry in Vermont. You can see all of our classes at heatbt.com, where we train oil, gas, and heat pump technicians, and we also train tank installers. And, of course, the Vermont Fuel Dealers Association, which is the most inclusive of all those organizations because, while primarily oil, heat, kerosene, and propane retailers, it includes utilities. It includes supply warehouses. It includes heating service companies. It also is mostly heating oil and propane retailers and wholesalers of heating oil, propane, and kerosene that are in state as you'll figure out. So, explain in this testimony. So, I have 10 recommendations for Senate Bill Number 5, and I'm happy to present those plus the company language. But I've also brought with me three individuals that represent different companies all across Vermont, from the northern part of Vermont to the southern part of Vermont, all are on the Connecticut River Valley, all service customers in Vermont, all sell all the energy products. Heating oil, kerosene, installed, full crime heat pumps, as most of our companies do, and also service heating equipment. And so, I want to make sure that they have plenty of time to speak, and I'm so I'm happy to cut my testimony short and come back because I work here and they don't. But I do need to address what I think is the fundamental misconception about this legislation, which is that it is somehow a fee paid for by large companies. Indeed, there are large companies that will pay the fee. There's two very large companies, which are members of the VFDA that support this legislation, but it has nothing to do with size. I understand there's some cognitive dissonance in this room about this, so I'm going to say it one more time. Whether or not you are obligated under this legislation and required to make a quarterly payment to a designated default agent or prove that you have obtained or created credits in accordance with the law, has nothing to do with the size of your company. Whether you sell 400 gallons or 40 million gallons, you are obligated under this legislation if you have title of the fuel when it enters into Vermont. That's it. That's the story. And because of an accident of geography, because we have no sea terminal, because we have no pipeline, whether or not you're obligated really depends on where you're at. So if you're in Bellows Falls, like Tony James is sitting to my right, you are not going to drive to the Flynn Avenue terminal on the south end of Burlington in order to purchase heating oil. You need three loads a day. If you can see the North Walpole terminal from your office across the river in New Hampshire, you get a sense at all that you would go to an in-state wholesaler of heating oil. So whether you sell 400 gallons or 40 million gallons, you are now obligated and required to compete in a credit market with some of the largest or profit corporations that are in the energy space in Vermont. I want to put that out there because there's a lot of misinformation that's being spread, but this is somehow a tax or a fee or something else on a large wholesalers. It is not. It doesn't have to be so. It's just suggestion one of ten. Push it upstream. I think you'll hear from the Green Mountain Power Attorney that's going to testify later as he testified in Senate, which is that it's a much more efficient program if the point of obligation is upstream when you agree, but that is not so. That is not how it exists in the bill that has passed the Senate. The point of obligation is the entity that takes possession of the fuel, takes title of the fuel when it crosses the border, and that's fundamentally how heating fuel is distributed. This performance standard is an amazing idea, but it has never been done before. Not California, not Oregon, not Colorado. Never on heating oil, kerosene, and propane providers. It is not comparable to the gasoline industry. The gasoline industry, they sell twice as many gallons and have half as many distributors. Why is that so? Because when you buy gasoline, you come to us when we deliver heating oil and propane, we come to you. And a third of the trucks delivering it don't have green plates on them. New Hampshire, Massachusetts, and New York. 200 different entities scattered across Vermont. And if you're up in Burlington, you're up in Colchester, over by Mallets Bay. Well, we know where you go. Go to the global terminal in Flint Avenue. You're down in Bellows Falls. No, you are now obligated and now have to compete with some of these companies for these credit markets. So move the obligated party upstream. Number two, thermal only. We sell lots of heating oil. What's this? Number two fuel oil. Right? It's a great product. It goes in more than just your burner that creates hot air or hot water. Number two fuel oil is used for lots of purposes. It powers school buses, farm tractors, generators, feller bunchers, hitters. Feller bunchers don't run on heat pumps. Sorry to say. We still sell it in the same truck, but the same delivery driver, the same company because our agricultural and our forest economy depends on this product. And there is no credit that someone's going to get buying an electric feller buncher. Propane. Propane is used for power generation. Those propane generators sell amazingly every time there's a power outage. Demand for propane generators is astronomical. Yeah, cooking. Propane is used for cooking. It's used for water heating. It's used for snowmelt. It's used for a lot of purposes that have nothing to do with thermal and have no chance to find an alternative that earns credit under S5 as design. Restrict gallons to thermal only. That's not done in this bill. As you've seen it from the Senate, you can do that. Number three, we've got a kerosene conundrum. We've got a boutique fuel. Number one fuel, right? What's different about kerosene? Why do people use kerosene still? It's like jet A. The reason to use kerosene is because we have homes that don't have basements. We all know what those homes are that don't have basements. They have to have an outdoor tank, so they can have propane, but they can have kerosene. They can't have heating oil and they can't have a renewable fuel like a biodiesel because of the gel. We have homes that simply cannot have electric heat because they have no basement. They have water pipes that are exposed. You're going to hear from the gentleman that could have come after me explaining all the homes that they're into, where they have to give real advice to their customers, where they see in the grocery store in a church on Sunday and at the Little League games, and they can't say, oh, just stamp in a Mitsubishi mini-split and you don't need any more kerosene because that is not so. Those pipes will freeze and that home will have damage. You can fix that. You can remove kerosene from the list of obligated fuels or to allow kerosene to propane conversions. The bill that you have before you does not do that. What about fuel assistance? We don't own oil wells or the retailers. We don't care what they do. Whatever the fuel is that keeps your home warm, that's the business that we're in. Fuel assistance, as many of you know, this winter spent $30 million, $217,638, almost entirely with fossil fuel companies. It is the largest subsidy for fossil fuel companies in Vermont. Less than 4%, fuel assistance customers, again, according to data readily available from the Office of Economic Opportunity, Richard Giddings, less than 4% are using electricity. Our prices are fixed. They're regulated through a marginal rack program. And how do they obtain those prices? Well, because we don't have access, because no one from Bell's Falls is driving a Berlin to pick up a load of fuel. It is determined by the average of the average of four different terminals in Portsmouth, New Hampshire, Albany, New York, Burlington, Vermont, and Portsmouth. Portsmouth, Albany, Springfield, Massachusetts, and Burlington. Now, we'll talk about this on the next one, but that price is set, not with a credit price. You're going to need to investigate what those credit costs are, or you're going to need to exclude the gallon sold to fuel assistance. Otherwise, you've just ruined, you've just significantly reducing your buying capacity for fuel assistance. You're adding your credit costs to this because it's based on out-of-state, out-of-state rack prices. That gets to the real but not of it, right? There's wide disagreement, misunderstanding of what the credit costs will cost per gallon. We've heard numbers as high as $4 a gallon. That seems absurd. That seems like an economy-ending event. We've heard 70 cents a gallon from the Secretary of the Agency of Natural Resources, understanding that the price per credit is based on the ability during those four years before we hit 2030. For four years, starting January 1, 2026, when the first check will be written to the default delivery agent, what will be needed in order to convince people to reduce the amount of fossil fuel they use here in Vermont, commensurate with the 2020 Global Warming Solutions Act. You're trying to convince people to have a perfectly good heating system in four years to buy a new one. It doesn't have to be that way. You could do two things in this committee. You could cap the price so anyone that says it's 70 cents a gallon, no, no, no, we've capped it. We made it a nickel. We made it a dime. It can be less but no more than 10 cents or five cents or seven and a half cents or whatever number you choose. You can do that. Or you could not make the 2030 event that's in law, not make it the requirement of S5 that that's the number that you have to hit. So with the Public Utility Commission in a vacuum, got to follow the law, designs a program which in four years raises enough capital to convince enough people to install wood heat or electric heat that they are not restricted by that meeting that 2030 number. That can happen. Number six, fix the DDA. The DDA, as written by the Senate, can be not one, not two, as many as possible entities. The design and default agent is who these fuel dealers who are all obligated will turn to in order to purchase credits in order to beat their compliance goals. Right now that can be a for-profit company. If I'm a for-profit company and I make the case before the Public Utility Commission that I should be the DDA and I sell one product, I'm pretty sure that's how I'm going to meet those goals of the DDA. I've just found amongst the more than 100 obligated party, 90% of them are small mom and pops, retailers, people in their communities delivering these services. I've found an interest free source of capital of funding, quarterly checks come in my way if I can get through the PUC. Think about this. These are quarterly payments that fuel dealers will be required to make and we sell more than half our gallons in just 90 days. So on Q4, the payment that has to happen on January 1 of 2026 based on Q4 of 2025 for a small company, for a small company, they might sell a million gallons in that quarter because it's cold. They sell a million gallons. Just pick a number just for argument's sake and it's 75 cents for that credit. That DDA, that for-and-own for-profit company could get 75 cents a gallon from the honest dealer that pays exactly what they sold, but what about the ones that don't pay? The Senate made the penalty 4X for them. Four times that payment. That's $3 a gallon. That's more than the cost of the fuel itself. You sell propane for $2.50. You sold a million gallons in Q4. On January 1, you're going to be required to pay 75 cents a gallon on that, $750,000. And if you fail to do that or you're two days later, the bail's not working or maybe you were busy helping your customers stay warm, times four. That's the law. That's $3 million. More than the value of the company. Not even more than the gross margin. Not even more than the actual cost of the product to the consumer. It's more than the value of the companies. At that point, here are the keys, government. Or the government says, no, no, that's too cool. You're providing an essential commodity that keeps people warm in January. We can't take the keys of your car, of your trucks, can't lock you out of your business. You're helping Vermont stay warm. Well, at that point, say there's an act of forgiveness, an act of kindness. What about everyone else that's been paying? And has been charging that additional fee, that surcharge, in order to comply with the law? What happens to them? It's a conundrum. It's what they call a wicked problem in their public policy. Fix the DDA. And the DDA, what if they, this for-profit, foreign-owned conglomerate, accepts this money from Tony, and from Rob, and from Dennis, and promises at the end of the year we'll show you all of our accounting and we'll show you how we help reduce greenhouse gas emissions. But they don't. What's their penalty? Nothing. What if they have scorned with the money into Florida? Nothing. There's no penalty in the law if the DDA fails to deliver greenhouse gas-reducing technologies and services to Vermonters. There is no penalty. But you're a couple of days late on that million-dollar note? Four times. Doesn't seem fair to the people that are actually doing the work and are actually keeping Vermonters warm. Number eight, almost done. Great is good. Now, there's wide disagreement on how much biofuels should play in this new energy transformation. Certainly electricity is going to be part of it. These three gentlemen will tell you, they install electric heat and they can tell you anything you want to know about it. But we also think that biofuels will play a critical role. But what the Senate did, difference to what H715 did last year, is they reduced the ability for us to use biofuels, liquid biofuels, and gaseous biofuels, and wood pellets in order to meet our compliance goals. Right? At a certain point, the services that we deliver for credits have to be services and not fuel. You heard that. You also heard that in the outer years, there has to be less of a dependence on biofuels and more on equipment, such as electric heat pumps, not the fuel itself, but the equipment that goes in. Change that. Change the stipulation that it does follow the greet standard, which is the greenhouse gas-regulated emissions and energy use and transportation. That's the national standard for figuring out how much greenhouse gas emissions is in each energy source. That's good. Greet is good. That is the national standard. We have not that. In S5, we have, it could be that, or it could be some other methodology which fits from off. That scares me. Number nine, you get the wrong regulator. We have an alphabet soups of regulators. IRS, EPA, DC, ANR, weights and measures, we don't have the DPS. We don't have the PC, though. In fact, when you talk to them tomorrow, they'll admit they don't have this map. It's publicly available from opfuel.com, board slash five, but they don't have, thank you very much. They don't know who we are. They don't know how many are coming from out of state. How are they possibly going to take a trip down to Keen and knock on the door of a Keen dealer that delivers fuel in Bradipur and say, hey, we've got this thing called this obligation and you've been bringing fuel into Vermont. We're going to need a payment. How is that going to work? Number third, the trucks delivering fuel don't have green plates. This is not the motor fuel industry where you come to us to pick up the fuel and we go to you. Those trucks drive freely over the border in the middle of the night. How possibly, what would be the agent that could stop a truck and determine whether or not they are delivering at four in the morning that they are in fact registered in our compliant with the clean eat standard, the four bleed act? What entity that could do that? DOT, it's a DMV. The men and women with trucks, they have badges and guns and lights and they pull over our trucks all the time, making sure that we're following the law. PUC has none of that. And I don't think there's money in the budget to enforce the borders to get the PUC to ensure that every single entity that delivers fuel in Vermont, the more than 100 obligated parties, it's all in black and white, no confusion here, more than 100 obligated parties that deliver fuel in Vermont, how possibly they are going to get them to comply. And failure to do so means that the local companies that live in their communities, if they tax in their communities that are in the church, the little things that slide boards, they're the ones that are punished. They're the ones that are punished. Seems like a heck of a way designed to disaster to disrupt the distribution of an essential commodity. Should stop. But if it does happen, number 10, July, not January, we are super busy in December. And most of these companies that deliver these fuels now, hopefully in the future, but right now, our mom and pops into the idea that during the busiest time of the season, January one is when this is implemented. And when we brought that up in the Senate, we said, can you move it to July? We're super busy. And we don't have lawyers that can do this. We're up straight. And the answer we got was, if we want to make it more difficult for you to deliver fossil fuels, we should make it more difficult for you to deliver them. And that's not, that's how you design a disaster. That is not how you distribute an essential commodity that for every fiber modder's need, heat, hot water and cooking. Respectfully asking to make these 10 changes. And I get to see my time to the individuals who are a lot smarter than I am regarding how we take care of for modders to make sure that they're safe and warm. Thank you for that testimony. Are you, I assume you can provide us that in written formats? Absolutely. Yes, we missed something that was impactful. Do members have questions? Representative Pat? Earlier in your testimony, one of your recommendations was to push the responsibility upstream. Could you say about who, where and who that would be and who it wouldn't be compared to what is in the bill of the Senate? So here's the conundrum we're in. I think we all agree and advocates would agree. And I think Mr. Hand would tell you that the ideal situation from a compliance standpoint is further upstream, ideally at the well, right? As we do have with some federal tax policy where it comes out of the ground or when it comes in by ship. We can't do that in Vermont. And that's our problem. Could you do it like the transportation climate initiative in a regional approach? Since we're so interdependent on one another fuel comes from Quebec, comes from Albany, comes from Springfield, Massachusetts, comes from Boston, it comes from ports with New Hampshire. It comes by train from Point West. How could you do it in a way? Well, a regional approach would probably be the only way because we're up against, as you know, the dormant commerce clause. So I think with good intentions, my discussions with Chris Neeming at Energy Futures Group and Richard Coward at Regulatory Assistance Project who have had discussions about this legislation since July of 2021, which is how do you accomplish that? And what we're up against is the fact that fuel is fundamentally heating fuel is distributed differently because, again, we bring it to you because of the way our geography works. So I would like to say that there is a legal pathway so that the wholesalers of fuel, not the retailers, the out-of-state wholesalers, ultimately responsible for paying the fee and all of my companies that install electric heat pumps, they would be credit earners and not be obligated. But that is not so because this is not a regional approach. This is a Vermont goes it alone approach. And because of the dormant commerce clause, it's my fear that, and as discussions with some of the authors at Energy Futures Group and Regulatory Assistance Project, and in fact, we can't have that ideal. So we must have the imperfect, which is more than 100 obligated parties and five wholesalers, those are the in-state wholesalers. So this is a, this is a, I don't have an easy answer for this, but if there's a way, if you hear from the Green Mountain Power Attorney or the District Attorney General that there is a way, grab it. I don't know if there's a way without a regional approach. I have a couple of questions. So you said you represent the Vermont fuel dealers and there were utilities in that group. Who are those utilities? Vermont gas systems and efficiency of Vermont are dues paying members of the Vermont Fuel Dealers Association. There are members that support this legislation. They are largely the large companies and utilities. There is one small member that supports it as well, which you may hear from later today, but the board of directors of the Vermont Fuel Dealers Association, which is largely comprised, almost entirely comprised of small family fuel dealers. So the name on the side of the truck is the person driving the truck or the person answering the phone at 2 a.m. They do not support this legislation. They're asking you to vote against it, Ezra. And then we've heard from a couple of perspectives on trying to focus on thermal only. Is that possible to do? Can you separate the fuels out in the way that they are? By May, highlight and support for the piece of this legislation or a discussion that came along with, by May, discussions with Energy Futures Group and regulatory systems project and some of the other real, real smart policy thinkers here, including Secretary Moore, which is the way we have accounted for or collected information on propane heating oil and kerosene in died diesel sales in Vermont. How do I say this gently? Is flawed. So we pay on heating oil, propane, kerosene, died diesel fuel. Remember, it's the same product. Number two fuel oil. Sell the farmer, sell your home. Is all aggregated into one number that we pay on the 25th of the month on form FG615. That's the fuel tax. That's the two cents per gallon. Believe it or not, a farmer that's getting died diesel or is farm tractor, the locomotive, the train, the m-track train, the fellow buncher, they're actually paying into the weatherization fund. At the time, when it went from half a percentage point to two cents a gallon 10 years ago, 12 years ago, we suggested they take that out. And the issue was is, well, no, because you're all in the same form and it's one number. And you add a propane kerosene, died diesel heating oil, and then you multiply by 0.02 and you put it in the form. That was the excuse then. I don't think that should be the excuse now. We should break out that number. And when you do that, you immediately remove died diesel for the farmer. You could plausibly say, hey, listen, the number that you collect when you pay the tax, the tax department, we're breaking out died diesel. It's no longer going to be obligated under this new law that we're creating. You could do that. So that's easy. When it comes to process fuels or or non-thermal uses of gas, such as heating, such as natural gas or propane, it's a little bit more complicated because, again, we deliver propane to a 1,000 gallon tank. You may use it for generator and cooking and hot water and heat, but we don't want to burn it, right? And we don't want to set separate tanks for that. You don't want to set separate tanks for that. You don't want multiple tank propane tanks there. So it becomes a little bit more problematic from a consumer level to break out cooking gas admittedly from our sales. However, industrial users, no, you could break that out. We do that with, for instance, the sales tax exemption to manufacturers. If you're a business, you pay 6% sales tax on your heating fuel or your process fuels, unless you have a manufacturer's exemption and then you don't pay the 6%. Remember, there's the petroleum cleanup fee once that. There's the fuel tax that's 2 cents and there's the 6% sales tax if you're a business unless you're a manufacturer. So there is a way for large users, if, but not in the laws written or legislation is written, right now, everyone's in. We think that should change. Representative Tori and then Celia. Thank you, Matt. The 2 cent fee, is that all for weatherization? What else? So it's not a fee. It's a tax. It's called the fuel tax. We pay it monthly and it's all for low income weatherization. It used to be, it was started in 1990 as a fuel gross receipts tax and it was 1.5 of 1%. And then in 2011 or 12, I've been here since 2007, we changed it to be a cents per gallon tax and was moved to 2 cents. And at various times it's been recommended that we increase it because for low income weatherization. Do you know how much that generates? It's about $10 million a year for the low income weatherization program, but it's also on natural gas, not as a cent per gallon because they don't sell gallons, but it's still a gross receipts tax on electricity, natural gas, and coal for the liquid fuels that are regulated by gallons by the agency of agriculture. It's a cent per gallon, 2 cents per gallon. So propane, di-diesel, eating oil, kerosene, 2 cents a gallon. For the other product, energy products, it's at, we'll shoot, it's 0.75% of their retail sales, but you'd have to check with the my gas people. Representative Sebelia. Actually, I think I'm going to set a member, other questions from committee members. Thank you again for your testimony. Thank you very much. Next up, I have Tony James. There are James and James. Welcome, Mr. James. Good morning. Thank you. Tony James, James Plumman and Heaton Oil out of Ellis Halls. Born and raised in Vermont, chose to stay here, run a family business, take it over, buy it out. Started in the Plumman and Heaton by folks that in 1967 primarily service installations before we got into the fuel oil. So heat pumps would be a service guy's dream, but there's not enough help. There's not enough workforce to meet the demand of what S5 would require to meet the criteria. So we started in the fuel business in 1995, fuel oil sales and then propane sales in 2009. The credits that we would be required to pay as far as the workforce goes, we can pump out a fair amount of oil. There's no way we could meet the credit regulation. It petrifies me that the way S5 is written, this would put us out of business in probably two to five years of being in place. I think it's going to put out a lot of mom and pop. As Matt said, most of the fuel companies in Vermont are mom and pop shops. My staff is running about at six right now. I could be at 12 and love it. The workforce is not there. It's stressful. So if we start putting heat pumps in, everybody in the brother is starting to put heat pumps in. People have never been in the business or going out. They're getting trained. They're getting educated. They're installing heat pumps. And pardon me if it seems like I'm bouncing. I'm going to back up a little bit here. I first talked to Matt about this. I started taking notes at pages and pages and pages and he's like, you have six minutes, which I think is really unfair. So I take my notes down to one paper of about seven bullet points that I'm going to talk about. So I'm just trying to bounce and touch a little bit on everything and utilize my six minutes. If I get it right. I guess I'm going to clarify. I want to clarify there was never a six-minute limit. And in fact, we scheduled Matt to have 45 and the three of you to have 45. Oh, cool. I didn't know that. So thank you. Appreciate that. That was a comment made in the Senate committee, which was also testified in. I apologize, Chair. That was not something I said about this committee. So sorry about that, misunderstood that. So so with the heat pumps, I'll try and slow down a little bit with the heat pumps. Last time I came to testify, I think it was like 12 degrees out morning by six o'clock that night, it was eight below. A lot of my reps will tell you heat pumps will heat your house to 70 degrees at 14 below zero. I tell them when you go meet with me and we're talking to my customers and we're selling them heat pumps or getting them to transition over. Don't tell any of you that that I have to see in the grocery store, the local meat market, the football game in church, because it doesn't matter when someone you don't meet their needs and their expectations. It doesn't matter if you're in church, you're standing there in the grocery store at the local football game. They want to beat you up. They verbally, they want to just sit there and hammer away on you and tell you how the heat pumps did not perform, how they didn't work. You sold them a bill of goods that you lied about. When I meet with every one of my customers, people I know in my community, in my area, my service area, I tell them right out to about 33 degrees, shut them off. Now, they're probably going to try and run them 20, 18 degrees. They'll be satisfied. They'll be happy. I've met their expectations. Some people are like, he did my house great down to zero. It all depends on location and outdoor unit, the style of house, how new the house is, how tight it is. The lot are traditional Vermont homes. It's very difficult. Last time I testified when it was 12 degrees and 20 below the next morning, my number one call was frozen pipes. It didn't matter if it was hydronic baseboard outside walls or their domestic hot and cold water. A lot of people were trying to heat their homes with heat pumps. That failed to happen. They switched over to their fossil fuels. When they did that, at that point the pipes were frozen, they're calling us out. I tried to triage our calls. I was out in the field with my guys, thawing pipes out, but our number one priority was if you had no heat, our obligation was to get their heat up and running. Then we'd come back and thaw out pipes. Mobile homes. Mobile homes are designed where typically up underneath the mobile home, there's an insulation blanket right from the factory. It's sealed nice and tight. You have ductwork that goes down through the center of the mobile home. Usually the pipes either run right next to it or in that ductwork. So if you had a heat pump system that took the place of the furnace and blew down through the ducts, as long as we didn't get down below that 20 degrees, their pipes are probably not going to freeze. It starts getting 20 degrees and pushing that zero mark. They're without water. People say, well, they can heat tape. Heat tapes are my last resort. I tried to never use a heat tape unless we absolutely have to. Heat tapes, if installed wrong, a lot of homeowners they can't afford to call a plumber at today's rates and install a heat tape. It's wrong. It's going to cause a fire. So the issue with mobile homes, which is a lot of in Vermont, those folks are going to be without hot and cold water when they're forced down this path of the heat pumps. One of my biggest concerns is if this tax fee goes through businesses in Vermont, rather than the fuel company supplying it, I'm going to pass on the fees. My biggest concern is I'm passing on those fees. Again, I'm down in Bellis Falls, Vermont. I'm right on the border of the Connecticut River in New Hampshire. I see trucks every day from Massachusetts and New Hampshire. I don't know how you plan on regulating them. I won't be able to compete with them coming out of Keen or Greenfield Mass if they're not paying the fees. If I'm 70 cents more per gallon, it's not going to work. If you're accompanying in Southern Vermont and you're having to pay these taxes, you're either going to go with a New Hampshire company or you're going to jump into New Hampshire to run your business. We have a couple of questions. Go ahead. What is a heat tape? Is that electric resistance? It's an electric wire that generates heat. Approximately along the pipe. Yep, you wrap it around the pipe. Thank you. Where you're located, where a lot of the fuel dealers are located throughout the state or near a border. Have you heard people say, I'm going to put 55 gallon drums in my truck and I'm going to go to New Hampshire and get my heating fuel? Absolutely. Absolutely. I hear the fair amount. I mean, people right now, you folks are voted in by the people and I don't know how much research you've done. If you've reached out, I mean, no one's reached out to me as a company. I've talked to Christie Morse about it about a year ago. He's the only person in the state house that I've talked to about. Write my thoughts on that spy. Talking to customers. They're up in arms. It's not like you're saying, well, we got to make the change. I haven't heard one of them say that. I mean, we're all about saving the planet. Don't get me wrong, but I haven't heard one say, oh, geez, we got to make the change no matter what the cost is. This is insane. I'll haul my fuel. I'll go put a 55 gallon drummer at 275 in the back of my truck. Is it legal or illegal for an individual to go to New Hampshire and buy their heating fuel and bring it back? No, they can do whatever they want. Yeah. It's legal. That's going to hurt every business here in Vermont, isn't it? It's going to hurt them no matter what with this kind of tax fee. I mean, there's a lot of people rather than they have a big facility building that they have to heat the building, but all depending on what they manufacture, I have accounts that are large fuel users that use a ton of oil, number two, heat and fuel, diesel just in their production, rather it's outside or inside. That's not going to be cost effective for them to stand business in Vermont when they can just jump across a river a mile, mile and a half away and set up shop. And it's not just bellowsalls north off, it's going to be brown roads and bellowsalls, it's going to be Windsor or Scottney right up through. Thank you. Are there further questions? Representative Jory, thank you. A while back, I remember hearing. So, how's it going? I started the oil side of my parents' business. The oil side became mine in 1995. Drivers were in demand. They were great. Today, I'm driving my truck nonstop. I get up early in the morning, so I can go in and establish a workload for the guys, women, make sure we're good to go for the day. I tried to be on the truck at 6.37 a.m. yesterday morning. I didn't get in the truck until 11 a.m., so I worked until 8 o'clock at night, so I could be here today. It's painful. There's a massive shortage of drivers. It's difficult. It's all part of business. You do what you're going to do to make it go. Great. So, keep going. Yes. I mean, we do, yes, we have two more to hear from and need to take a break before we do. So, just my biggest concern is, yes, I'm here for me and my company, a good portion, but I'm also a community person. I'm here not just about my community, about my state. People can't afford this bill. They can't. It's set up in the wrong direction. It's about enough there. So, one sin, when I deliver to Hampshire, I take my gallons, if it's 100 gallons, and it's $499 a gallon. New Hampshire residents get a bill for $409.90. I get to the bill for Vermont. It's $4190. Then I have my one-cent tax. So, then that's another buck. Then I do my two-cent tax. So, it's another two bucks. And then if you're a business, there's a six-percent tax in there. And it's just tax after tax after tax when I'm in Vermont. And then I go a quarter mile across the river and it's gallons times a dollar. We need to figure out a way besides what, I mean, we're calling the Affordable Clean Heat Act. I call it an Affordable Clean Heat Act. That's my fire picture. I'm on the fire department, too. I just asked that we vote down S5. People can't afford taxes. Revisit it. Come up with a solution that works. That could be another half a day of discussing what works. No one has come to me as a business, and this is what I do for a limit. Said, hey, what do you suggest? There's a lot of ideas. I would love it. Actually, if your testimony was on that, it would be really great. I could go all day on changes. There's a lot of old homes in Vermont, whether it's Bellasol, Berry, Springfield, apartment houses that have four or five, six boilers pumping pollution into there. Those houses can heat on one boiler. We need to mandate the landlords that, hey, as these boilers get old, you have to abandon this boiler and add this tenant's heat to this boiler and include it. To top it off, the state of Vermont is supplying fuel assistance to most of these tenants. Talk about redesigning and saving money, the fuel assistance that, once you get that six family apartment house from six boilers down to one, or maybe two that talk to each other and modulate, because you may need to if it's a big enough building. You're only running one boiler, probably 80% of the time. That would be for starters. The amount of money the state would save in fuel assistance, and you no longer have six burners pumping pollution out of six boilers. You have one boiler, maybe two tops if it's a large building. Nobody's addressed that. My dad's house, we went from five heating systems to one boiler, along with one wood boiler because he heats with wood. He did. I heat with oil and wood. My biggest concern is S5 becomes law. You're going to have 475,000 verminers burning wood. They're going to be going to tractor supply. They're going to be going to Home Depot. They're going to be buying wood stoves. They're going to improperly install them. House fires are going to be on the rise. Oil at 409 a gallon. House fires are on a rise this year. I think in the month of roughly between November and December, Vermont had five fatal house fires, mainly in Southern Vermont in the first rough month of heat and season. There's a lot of changes to be made. I asked if you guys shoot down S5 this year. If anyone wants to talk about it, I'd be more than happy to give you all the time in the world. All right. Thanks for your testimony. Thank you. Thanks, Toby. Members, we will, I think we'll go to Dennis Percy, General Manager of Fred's Energy. Welcome, Mr. Percy. Thank you. I'm from Derby, Vermont. I'm in Fred's Energy. We have four locations, approximately 15,000 customers. They care of all Northern Vermont. Richard Morrisville and the Bill and Derby. Last I knew, we were the second largest fuel assistance dealer in the state of Vermont. I can say that, you know, if we go out here and start putting heat pumps in low-income homes, pay for them, that's a great thing. They won't service them because they don't have the funds. They won't replace them because they don't have the funds if they break. So, because we're finding that out now with the fuel assistance and we work closely with the weatherization companies. We're out here cleaning furnaces and getting people heat when they have no heat with the weatherization companies trying to put in, well, we put in new furnaces for them when they call us up. And when we go out here and clean these furnaces for the weatherization people, they haven't been serviced for years. They don't have the funds. Then all of a sudden, they go in and weatherize the house. They insulate, talk around the windows and do whatever, which is a great thing. A lot of these places, excuse my expression, you can throw a cat through the wall. That's my idea of cutting back on fossil fuels is we can cut fuel costs immensely by putting new furnaces in new heating systems. We've cut up to 50% of heating costs in gallons by putting in new equipment. We put in heat pumps all the time. We've been putting in heat pumps for 10 years. I'll be right up front with you. I won't tell the customer, it's going to heat your house in December, January. It made more for milder climates. You can go out here in December, January, and the customer will complain. We're not getting any heat out of the heat pump. While they go into a defrost cycle, they go into the defrost cycle, it doesn't put out any heat. Well, it's cold there. There's some downfalls. The people that we put in heat pumps for had good intentions of using them for the winter. We have a local library that we put heat pumps in right across the road. As a matter of fact, we donated to the library and we told them to put some fossil fuel in too. They argued they didn't want to do that because they wanted to be totaled in. We got the phone call in January. This was back four or five years ago. We can't afford to run these things. We told them to turn the propane heaters on, which they do every year. I just see that we're opening ourselves up for failure to the public and for mom. I won't lie to them. I'm going to tell them right up front, they're not going to heat your house. I just did an estimate last week on a house for the second floor. They had propane heaters on the first floor. Nice house. It's probably within the last 15 years. $29,000 to do four bedrooms in an office upstairs. The people that we put in heat pumps for, probably 75% of them, unless they have a brand new home. I just built a brand new home for heat pumps. I'm not using them in the dead of winter. My reason for it was spring and fall. I have rated heat in the floor. If you try to heat out of the ceiling, cold floors, all you're doing is moving cold air around on the floor. It's not comfortable. There's some good points about heat pumps, but there's also some bad points. I won't send my service texts out there in the middle of night or on a day that's zero degrees to work on a heat pump. We service everything we sell, like Tony said, the workforce. I employed 96 people and they're not all service tags. We're out there 24, 7, 365 days a year. On a no-heat call with the fossil fuel like in Welter and have them heat within an hour. Most of the time, if the boiler goes, I can have them heat within a day. We'll put temporary heaters in. I can't do that with heat pumps. A lot of times in the last 10 to 15 years, heat pumps have advanced a lot in the industry where they're working in colder temperatures. We're not there yet. We're not there. It's not going to work at 10 below zero. They start losing their efficiency. I go down Main Street in Derby and I go down Main Street in Derby Line. A lot of these houses are built in the 1800s. There's no way possible that you're going to heat these houses with heat pumps. They're old houses. A lot of those people are retired. A lot of those people are on social security and try to force them to put an alternative heat source in when they have a heating system in there that's 50 years old and they can't afford to change that because they're on a fixed income. I find that all the time. If they would just come out and incentivize more efficient heating systems to cut their fuel costs and their gallons of fuel used, well, here we are. We cut the carbon footprint. I think we've put the cart before the horse here. There's not been enough study out there to know where we're headed here, but I think we're headed into disaster. As far as employees, it's constant. I'm training probably seven people right now in the four locations and it's constant. Since COVID hit, I don't know where people are getting their money, but I have signs out there for employment all summer long, all winter long, and that's to get people to come through the door. I think we pay the average scale as far as employees for licensed plumbers and heating technicians and we give them the training, we send them to school. Right now, I've got a guy down in New Hampshire at the trade school incentivize those people to get training and stuff because if you're going to push heat pumps out here, I'm not going to serve somebody else's heat pump that somebody else has put in and there's a lot of people out there putting heat pumps in that have no clue of fixing them. They can install them and it's not rocket science to install, but to go out there and service it, you're going to have the ability to troubleshoot. I just sat here and looked at where we're headed with this and one of the things that bothers me the most is all you folks here are representing people back home. I talk to more people and they don't even know what S5 is. Last month or so, fuel dealers have been putting advertisements out there. These people are blind and we're going to shove something right up their nose and they're going to feel it, 70 cents a gallon at a minimum. Now I sat here and looked at once the grocery store. You go to the grocery store, how many people here have seen groceries go out? Every one of these industries, we don't have a lot of industry up in the Northeast Kingdom. You're going to put a herd because they're going to heat their home. They're going to heat their businesses. I see fuel dealers, one of the senators at the, when we were standing out in the hall and they were going to go vote, he stood right in front of us and said, you fuel dealers are making way too much money for many years. It's time to put a stop to it. There's no guarantees that a fuel company is going to make money. We grew out there and delivered 200 gallons of fuel, $1,000. We're at that customer's mercy for them to pay for it. There's been so many people out there that have had good credit over the years. All of a sudden somebody gets sick, they can't pay the bill. We're sitting there holding on to that. We try to get people, we've been in business 50 years. These customers are our livelihood and we try to do whatever we can to keep people in heat. I don't know if you're going to find that. If you're switching everything over to electric and the power goes out and stuff, our hands are tied. The whole thing in a nutshell is we've done things, made changes. I don't know if it's going down the right road or not. We put ethanol in the gasoline. What'd that do for us? Screwed up the engines. We put death in the diesel engines. What'd that do for us? Screwed up the engines. Costs more money. We all absorb that. Whether you all think of it or not, we're all sitting there absorbing all these extra costs because it just gets passed right down. I can sit here and say that if this thing passes, we might just hold our hands up and say, hey, we're not doing any fuel assistance. There's companies that have opted out of it. When they can sit here and come in here and tell us what we can charge or whatever, and that's what the fuel assistance does. They tell us what we can charge a customer and the state of Vermont pays the bill, by all means. We're here to help people, but we can't fight the city hall. That's what it's a mountain to. This bill is putting us out of business. They pay these credits and stuff. I picture this whole bill like a divorce. You don't know what the end result is going to be until you sign the paper. When that happens, oh well, suck it up because we're all bitten by that same horse. So please, think about it because I think we're just opening ourselves up for failure all the way around. President Smith has a question. Thank you. Thank you, Dennis. In the fredged service area, cover quite a bit of area. Do you know how many mobile homes there are? Yes, sir. We have trailer park after trailer park. And the majority of those people are elderly. Are there a thousand mobile homes or more? I wouldn't dare to put a number to it, but between Lindenville and Derby and I look at the areas where Stowe area, there's a lot of second homes there. You know, I see that there's a lot of money in that area. You get into Richford, Derby and Lindenville. There's not a lot of industry, not a lot of geology and stuff. So people are struggling. With all these, you know, the American way is people spend what they made. And I find it, we pay a pretty decent scale. And I find with employees, what they'll do is they'll spend according to what they made. Well, you're going to have homes that are going to get repossessed. You're going to have people that just aren't going to make it when you start putting 70 cents a gallon onto their plate. I'd like to ask you another question about heat pumps. They're new to me. Do they also provide air conditioning? So somebody's going to use twice as much energy because, wow, I've got an air conditioner now. I'm going to use this because when it gets hot in the summer, that's what has happened. The majority of the people we put heat pumps in for that never had air conditioning and lived without it all of a sudden, oh, we got air conditioning. So who gains out of that power company? Now, I think we've all heard that in the summertime, when it's extremely hot, they'll tell you conserve on power. Well, the grid can't handle. So I talked to the guys that work on the lines and stuff, and the grid is old, and I'm getting figures and I can't guarantee this, but they're saying to increase the grid in Vermont is looking at $2 billion. Okay, here we go again. Who's going to absorb that? I've already, you know, Barton Electric just came out, rate height. It's just New Hampshire, the guy that bought the car wash in Derby, raised his power 40%. It's coming. It's coming. And what are we going to do? We're just going to add fire to the whole thing by adding all this much more electric heat and heat pumps. My suggestion is, hey, let's put more efficient systems in, cut the carbon footprint. The fuel over the last 25, 30, 40 years, it's been so refined that the carbon footprint out of that is less than wood. And you're going to have everybody out there burning wood. We're going in the wrong direction. Well, I've got one more question for you. It'll be short. $3,500 for a heat pump. I've seen those numbers. Is there any truth to it? No, no, no. Yeah, five grand. Sorry, everybody, I'm going to give you a minimum. With the technology where it is today, you can shop multiple suppliers for a reliable cold climate heat pump that will perform in this climate minimum, one head, five grand minimum. So for the record, you actually just get to be state who you are and then we'll try to minimize these kind of interruptions. And it will be more if it's an old house, you have to do a lot of wiring. Am I right or wrong? A lot of the houses, if you have a house that's probably 20 years old, you might have a 200 amp service in your house. If you don't, and you're trying to do the wall green, if you get a 100 amp service there, you ain't got enough power. You ain't enough power to heat input heat pumps then. I just built a new home. I put four heat pumps in, two outside condensers. And I tried to go electricity. And here I am in the fuel business. And to go as green as I could. Then I find out after I get all done with a 200 amp service, I don't have enough power to put electric charging station in for a car. So, you know, that's a big expense for anybody out there that's having to increase it. First off, they only get a 100 amp service. Yeah, you can change it to a 200 amp service, but then you're going to change a line out to the pole to a 200 amp service. And then the power company, a lot of times is now they have to change a transformer on the pole because it isn't heavy enough to handle a load that you have. And then they tell me they're a year out. So, you know, we need to do a lot of study on this because the car is before the horse. Representative. That's one of those things that. A couple more questions for you. I just want to make sure we get to them. Representative Sebelia and then Clever. Yes. Thank you for your testimony and for traveling here to speak with us today and share your expertise. How much are you paying for your folks? You said you're paying them a good change. For technicians, what's up? Is any range as far as air conditioning technician 30, 35 bucks an hour? Okay. Okay. And then I just wanted to regarding the power and the grid. So I think those are two different things. How much power we have and the resilience of our grid. And I think we've seen a lot with the stronger storms that we're seeing because of climate change. We've seen that we need to harden our grid. But in terms of power is available for our monitors in our grid. We've taken testimony over the years with plenty of power. So those are. Those are the lines that came to area. The lines because of the stronger storms because of climate change. We are racing to harden. And there's a lot of federal funding is coming in here to work on that right now. I would agree with you. There's a lot of things we're trying to do all at once, including with hotter weather. I'm sure that Vermonters can keep cool. So even though this bill doesn't require you to take out your heating system and put in a heat pump, for those that do have it, that ability to cool your home as we're seeing heat increase and climate change may be important. Again, thank you for your testimony. And it's really important for you all to come and share your experience with us. So well, like Tony said, this is our livelihood and we're going to fight for it. And you know, all I'm asking is, I think we're all in the same boat here. We all want to save the climate. And it will happen. It's happened and we've seen it happen over the last 10 years. But it's happened that people's expense to do that on their own and make that decision, whether they want to go that route or not. It's not like we're having to force them and to penalize them in order to do that. And of course, we're not forcing them in this bill either. No, you're not forcing them, but you're going to add money to their heating fuel. Along with a tremendous amount of federal and state funding that is coming in to help augment programs like this. And will that dry up? Representative Clifford. Thank you, Madam Chair. Thank you for your testimony. How many employees do you have? 96. People at families? So they would just, and I'm sure you all do. So, saying if you ever had to go out of business, then also those families would suffer as well. Absolutely. Absolutely. And then where are they going to go work? They've learned to trade. A lot of them are at the age where they're not going to start over. So at that point, they can go on the system. Thank you. Thank you for your testimony. Thank you. I'm next. We have Rob Stanger, owner of Simple Energy. Welcome, Mr. Stanger. Thank you, Madam Chair. Thank you all. I appreciate the invitation and opportunity to speak to you today. I'll back up a little bit and apologize for budding in. I'm a Taipei entrepreneur. I'm 100 miles an hour hair on fire. Don't always follow the rules. I'm going to do my best to share my experience and perspective with you all today. Today marks the third time that I've spoken to members of the Vermont legislature dating a year ago, under a different name, but very similar piece of legislation and twice this year. Back up in terms of full disclosure, my name is Rob Stanger. I'm the owner of Simple Energy Partners. We are headquartered in West Lebanon, New Hampshire. I have a bulk storage facility and a trucking terminal located in White River Junction, Vermont and an ancillary business located in North Fetford, Vermont. I'm not a voter in the state of Vermont, but I am a taxpayer. As a business entrepreneur, I have to evaluate the cost of goods and the expense of running my business on a regular basis. It's been my testimony in the past and my testimony again here today that out of the several, I've operated in several states. So my trucking business, I haul all of my own oil and propane and my trucking business extends to New York State, Massachusetts, Maine and Vermont. So I travel across four different states that creates a tax liability and a regulatory obligation in four different states. So I have some experience in different jurisdictions and municipalities. I will tell you that hands down Vermont is among the most difficult and most expensive for me to operate my business. When I've been asked in the past, what can the Vermont legislature do to help me? The first thing I've always said is make it more affordable to do business in your state. In full disclosure, I purchased the business in Vermont in 2009. I subsequently closed that business because the cost structure that we use for our parent company would not support keeping a business in Vermont open. That displaced employees and has created vacant real estate. It's not something I'm proud of but it's what I'm here to talk to you about today is confronting the reality of how I run my business and what the impact of running my business in Vermont is to me. There are three things, three points that I'd like to make today and I'm prepared to answer questions and speak at length within my time, of course. Point one is what's happening in the energy space in not only in Vermont but everywhere in the residential thermal space. The second thing is the consequence intended or otherwise of S5 becoming a law. And then finally, what you've heard from my colleagues here in the room is the nature of the workforce and the challenges, the headwind that we all face in order to reach our mutual goal. And I will concede that our mutual goal is to be good stewards of the environment, to care for the land that we share. Vermont's natural resources are unmatched. It's a beautiful state. It is a beautiful place and I take very seriously the obligation that we have to protect, preserve and preserve those resources. So for starters, and I'm going to give you a little background since I have more time than I originally prepared for. When I got into the heating business, I wasn't a generational business for me. It wasn't my choice. My father-in-law inspired me to get gainful employment. And the first job I took was with an oil marketing company headquartered out of the state of Maine. I learned the residential heating and delivery business at that company. I became a licensed oil burner technician, Class B CDL delivery driver at that company. I went on to manage various departments and built a base career there. I then got recruited by a refiner headquartered in Canada and was responsible for developing multiple business lines in the state of Maine for that company. It's great for my career, not great for my family. And I made the decision when my kids were young to divorce myself from the rat race and I moved to New Hampshire to the Upper Valley area and became the general manager for a small family owned business where I sort of fell in love with what I do today, which is standing in front of customers, delivering product, advising people on how to maximize efficiency and economies inside their home. I still drive the truck. I still do service work, but my company that I started in 2006 with my business partner with one oil delivery truck has grown from two guys, a truck and a phone, to a full service HVAC mechanical company with 90 employees. We deliver millions of gallons of fossil fuel and do hundreds of key pumps. We have a huge appetite for alternate energy. We work in the photovoltaic solar space. We work in cold climate heat pump, hybrid electric hot water heaters, and we install geothermal systems. So I have more than 10 years of experience in the mechanical side of the business alongside the trucking logistics and delivery business as well. Having said that, I'd like to share with you a little bit about what's happening or what's been happening over the last 10 to 15 years in the residential energy space. The energy sector has been transitioning without you. It's been transitioning naturally because the people that we work for, our customers are requiring it. There is an appetite in the residential heating community to get away from the price volatility of heating oil and to diversify energy products inside of people's homes. We're confronted small and large. We're confronted with one option. We can dig in and do what we've done and fight to deliver the conventional gallon and make a living on that, which is getting harder and harder. Or like the three of us that have testified today, you can adapt and diversify your company. We've done that for a variety of reasons. The big driver for me personally has been asked to by my customers. The smartest thing that I ever do is listen to the people that pay me. And they've been asking me for years to help them find a way to divorce themselves from the price volatility of heating. The two biggest growth areas of my company right now are delivering propane gas and installing cold climate heat pumps. My current schedule in the service department for installation and a gym. I checked this morning before I left. Our schedule for three full-time sales guys, 60% of what they're doing right now is related to a cold climate heat pump or hybrid electric water heater or photovoltaic. And that's consuming more and more resources for a growing service company. But in a minute, I'll address a little bit of the expense associated with funding and developing a workforce to meet the existing demand for, again, these are consumers. 50% of my footprint is in the state of Vermont. 50% is in New Hampshire. So we're working on both sides of the border across every possible economic spectrum to help people install cold climate heat pumps and other devices to maximize efficiency to make their heating footprint more diverse and more affordable. It's a tall order. The second thing I really want to get into is the consequence, intended or otherwise, of the S5. As I said before, this will be the third time I've spoken in opposition to S5. I'm not a fan of further regulating our industry or of trying to create a credit scheme that creates an incentive that I believe to already be in place. As I said, 60% of the installation portfolio at my company right now is in what we call the clean energy space, not because of an incentive, not because of fear of tax, not because fear of an apocalypse, because it's good practice. It's what consumers want. As an entrepreneur, it makes really good sense for us to move in that direction, not exclusively, but alongside our core business. As far as consequence is concerned, I will tell you that a year ago, I offered very different testimony. I was better prepared. I did more research. I had bullet points that were scripted, and I felt like I was engaging in a political discussion, I guess, for lack of a better way of explaining it. Over the last year, what I've done is using compromise, common sense, and the confrontation of my reality to say, okay, where am I going to really end up? What's really happening? Which is, frankly, what these guys and I do every day, we have to confront our reality, and we have to take a common sense approach and compromise in an employment relationship when you own a business isn't an option. It's necessary, or you don't move forward. You don't hire employees. You don't meet demands. Using a foundation of compromise, common sense, and confronting my reality, I embarked on a one-year effort to engage this conversation, not from my perspective, but from the perspective of those that support it. I read and studied, even had a conversation with Matt one day, and I don't remember what the comment was, but Matt said, you're actually watching the testimony, and he said, are you crazy? I said, I might be. I think you have to be a little bit crazy to operate, to depend solely on your own resources and run a business and navigate the challenges that we confront every day. It takes a little bit of craziness, right? But yeah, but I said, I want to know. I want to know why. I want to know what's behind it. I want to expose the things that I'm suspicious of, and I want to see if I can educate and learn myself. Oh, yeah. I have educated myself. I've learned a lot. I've also been horribly offended and sometimes vilified because I don't always agree. It's a little bit troublesome to me because that doesn't apply to me in my daily life and my business. You might think as a business owner, it's my way or the highway, or I always get to do what I want. Nothing could be further from the truth. I think that's the recipe for disaster. You've got to adapt. You've got to compromise. You've got to flex. You've got to give in. I think what I've been doing for the last year makes a lot of sense. So I reached out to some of the members of the Senate committee that I testified in front of, and I said, I've tried to become a student. I've done independent research on the five members of that committee. I've gone to their websites. I've read their commentary. I've watched interviews that they've given. And so I offered a letter. I sent it to there's one senator in particular that lives in the area that I service, and I invited that individual to my business. And I said, she's willing and we haven't been able to sort of work out the logistics yet. But I said, I'm willing to engage you in a conversation because I truly want to understand your perspective. I may not agree with it, but I'm willing to listen. Are you? And I think that she is, but I can tell you that the sense I've gotten, not from you folks, and I don't mean any disrespect, but the sense I've got from my prior testimony and the engagement that I've extended to evaluating S5 and trying to think objectively about it is that there is not a lot of compromise, common sense, or folks on the regulatory side of this equation willing to confront the reality. So let me talk a little bit about the reality, if I may, because I could be wrong. And as I said, I don't mean offend anybody. Here's the reality. I don't believe that making public statements that we have to or we are going to get rid of fossil fuel is responsible. I don't think that it's good public policy. I think that compromise in an all of the above approach is more rational or level headed and more palatable to the people that pay taxes and live in the state of Vermont. I know that because I ask them all the time. And as some of my friends here have already testified, I'm frustrated that your constituents are largely unaware of what's happening. And I know that our industry is organizing to educate. And I just listened to Matt and I've listened to most of his testimony. Matt just gave you nine points. And Matt does a great job. Hey, I can tell you that as a member of his organization, I feel listened to by Matt. And Matt impresses on me that he works in your orbit and he speaks your language. He's really the guy to listen to. I'm asking you to please listen intently to what he's telling you. I think Matt takes a fair and balanced approach to this. I support that. I may say it differently because I'm not familiar or comfortable in your orbit. I don't do what you do. But I want you to be aware of the impact that it potentially has on my business. So to be more specific, let's talk about if we, first of all, we are already seeing a massive decline. I can't quantify it, but you can because every company that sells fossil fuel in your state is required by law to report it in quantity monthly and annually. The EPA knows every gallon and every storage tank that exists in your state. So you can quantify this and check the facts. And I don't want to split hairs. But what I can tell you from my 31 years in the fossil fuel industry, it is not the same industry that I entered in the early 90s that it is highly, highly engaged in the environmental discussion and debate. It's motivated, adequately motivated to eliminate emissions and to create economies of scale and efficiencies. And we have very, very solid examples of exactly how to do that. Those are the questions you should be asking us and the work that we should be doing between the private sector, the business owners and the regulatory community is where the rubber meets the road. Figuratively and literally, how to reduce emissions. We're experts on how to do that. We do it every day. The guys that are sitting to my right and left and beyond that, the people that work in this industry, those of us that are engaging cold climate heat pumps because it's good business, are displacing gallons that we would otherwise deliver to the same number of people or in some cases to a declining population. Although I will tell you in the area that I service, we have seen a little bit of a population boom since the pandemic. And the areas like Woodstock, Vermont, Regis, Vermont, what used to be seasonal, occasionally occupied homes are now full-time residences. And they are full of people that are very engaging, by the way, in the conversation that we're having. So here's a technical argument that I want to make about cold climate heat pumps. A, you can't do it properly without years of training. It's just not a YouTube video. This is not a vendor-sponsored one-day training event. I've been 31 years in the service business. You don't just take a guy that can tune up an oil burner, or a guy that can set a propane tank and connect to high-pressure propane line, not a transferable skill. As a business owner that started with two employees, I built a company to over 80, 24 of them have less than two years of experience at my company. I know how to build a workforce. I also know how much it costs. And the cost, when you evaluate the labor expense, it's not just where do we find people. It's once we do, how do we pay for the years of training, tooling, technology, classroom, field experience it takes before we are in the reputation business. Some of these guys put their names on their business. All of us, at the end of the day, put our name on the check that we send to you guys once a month. If you're going to cash those checks, you should listen to what I'm saying. The workforce that we develop, you cannot just release them into someone's basement. We assume the liability for the outcome of that. There is less and less support, help, even for things as simple as an oil tank. We don't share liability. We accept it. We own it. The second we walk into your home, whether it's two o'clock in the morning, Sunday afternoon, Christmas morning, those are the hours that we work. The second we show up, we are responsible for not only the integrity of the home, the safety of the home, but the relative safety or not of the appliance that we're now or the performance of the appliance that we're installing. One of my colleagues brought this point up. Cold climate heat pumps appear to be a panacea. They are not magic. They are wonderful and I saw lots of them. And today, you can buy an Arctic series cold climate high performance heat pump that is effective and will make heat below zero. It's very new. I have cold climate heat pumps that are in my house. There's two of them. They were spelled 10 years ago. I shut them off in the winter time because the performance coefficient stops at 35 degrees Fahrenheit or 10 years old. Today, that performance coefficient goes much lower. However, here's a question I ask homeowners all the time. Do you consider 30% efficient? No one has ever said that seems great. I love 30% efficient. Well, that's the efficiency that you're getting on the best cold climate heat pump as the temperature drops below zero. That's it. Running full speed, running full time, trying to overcome something as simple as a 9,000 or 12,000 BTU heat load. That's basically what it takes to heat this room. 30% efficient if it's cold outside. And if you have a house that's bigger than this room, you can't do it with one of them. I just want to show that folks have time to ask you questions. Of course, five minutes. Okay, perfect. I'll I'll I've almost said everything I want to say. So more on the heat pumps and hybrid water heaters. Someone mentioned the electric panel. Again, with a even with a skilled workforce, you don't just let anybody install a 230 volt circuit in someone's house. Additionally, and alongside that, a large percentage of the homes located in Vermont don't have an entrance a hundred greater than 100 amp 200 amp or higher that's rated to install that equipment to begin with. Maybe it'll install install one, but as soon as you try to ramp up the electric footprint of most homes, I can tell you that around 40% of the heat pump installations that my company does in the state of Vermont require a panel service upgrade. And there's incentives for that. So someone has said, well, okay, we're going to have to create some level of incentive. You can incentivize this transition to zero. You can make it free. Here's my here's my big finish. And if you do that, my company can't meet the demand. Can't. I've been asked by a major manufacturer that wants to do a micro install, a micro grid install in Vermont. If we have labor to supplement it because they're they're supplying trade professionals from Massachusetts to do it. And I said, no, I would be cutting off the existing and potential new customers that I can service in Vermont that have smaller scale residential needs and dedicating resources to one project. It would someone said in earlier hearing that I listened to from the state of Vermont that we would need 6000 new trade professionals to meet the electrification of the thermal sector. I would argue that I can't find six of them. It's professional truck drivers in its trade professionals and a little economics on the trade professionals that did the math several months ago. It's it cost me real numbers around $125,000 over three years in training, tooling and technology before I can have an individual install a cold climate heat pump that's working in a panel getting the EPA certification handling the very, very hazardous refrigerant properly and installing and commissioning the system. So we don't just let anyone drill a hole through the through the wall of your home and handle our our 410 or there's new refrigerations coming. And one more little quick point. The technology, the innovation that is supporting this transition already, not static. It's not static. It's not something that we can all say to our industry. I've done I have friends and colleagues in this business sell heat pumps. They're great. I can sell heat pumps. But if I want to sell heat pumps today, that's a different proposition than selling heat pumps five years from now. New certification for new refrigeration that's coming in 2023. There's new technology. There's new installation techniques. There's new manufacturers that are coming online. You can't do this properly without a profound and very expensive training effort. Take the $1.7 million. Here's a here's a recommendation $1.7 million that you're going to put into consultants. And I work for the big guys for the refiners. I work with consultants. I remember this one guy was brilliant. He worked for the McKinsey company. And I said, how do we solve this problem? And he said, just tell me what you want for the answer. And we'll create the data to support it. That's my experience with consultants. So here's my recommendation. I'm not suggesting that they're all bad and they're necessary. Take the $1.7 million and invest it in the development of the trade and in the labor pool in this state. We will not let you down. We'll employ them, we'll pay them well and we'll help you transition on terms that make sense, not with a fictitious deadline that's supported and benchmarked by fear. Again, without compromise, common sense and confronting our reality, it's not going to happen anyway. I'm happy to answer any questions. Thank you for your testimony. My pleasure. Representative Smith. Thank you. Thank you for your testimony. It sounds to me like you don't feel that we need S5 because you've got people right now that you're installing for and asking for improvements in the technology that they're preheating right now. So this bill seems unnecessary to you. Am I reading that right? Correct. Authority answer, it's already happening and I can't meet the existing demand. So the public is very interested in conserving energy on their own without being ordered to do it? Definitely. With few exception, yeah, almost, yeah, we're building a business on it. Thank you. Representative Pat. Question for you, but maybe also some of the other people who've testified. I've heard everyone talking a lot about heat pumps. I haven't heard anything about advanced wood heat systems and I'm wondering, I mean, I, for a homeowner who, this is my example, whose home was built with either a distribution system for a furnace or a boiler, it might make sense to have a pellet boiler rather than going with heat pumps and I buy my both pellets from a fuel dealer. So I'm just wondering if anyone wants to add anything about I actually grew up in a house heated entirely by wood. I credit my mom and dad for pushing me toward this business because I've split it, carried it, cut it. Now I turn up the thermostat and I'm content, but I also am a consumer of wood heat and I think wood heat, especially in New England. I grew up in Maine. I live in New Hampshire for 22 years now. I love wood heat. It's great. There's a technical argument against the fuel density and the return that you get from even the best wood heat. So it's a conversation that we should have. I don't favor a singular solution. I tend to talk a lot about cold climate heat pumps in that emerging technology because it's very, very good, but it's not the singular solution that many people think that it is. I'm in the wood business. It's not huge for us, but I think for any of us that are adapting our business plan, pellets are on the radar. Cordwood is even on the radar. I just got back from a show and my business partner and I were looking almost exclusively at new high efficiency both electric and wood central heating systems to see how practical it is to move that in to the discussion. But I will tell you this, it's not inexpensive to do it from a central perspective and it's very, very laborious. So it takes a segment of the population. When I was a kid, my parents, I think, would tell you wood heat is great because we have an on-board, we feed the wood processor that heats the house. And if you get up on your shift and heat my house growing up, it was a bad day for everybody. So I learned how to work and I learned that responsibility from a dairy farm and from a wood stove. I'm channeling my father, but there are lots of people that live in the state of Vermont that simply can't. My father-in-law, it was a manor, born and raised, was lugging 20 pound pails of wood pellets from his basement to his newly installed pellet stove in rural Maine, in Machias, Maine, in 2008 when the last oil spike occurred. And my wife was saying, can you just take one of the trucks home? Anyway, it's just not an option for someone to, for some people it is, but it's it's not a singular solution. All right. Thank you for your testimony. My pleasure. Members, we're going to take a five minute break and we're going to reconvene with our legislative council. All right, we're going to reconvene our meeting and continue and hopefully finish our walkthrough of S5 with our legislative council. Ellen Chekowski, welcome back, Ellen. Good morning. Ellen Chekowski, Office of Legislative Council. I am here on S5 as passed by the Senate. And someone remind me exactly where we... Top of page 27. Excellent. Top of page 27. All right. So we've covered some significant ground so far. So these are going to be the last handful of statutory sections and then we'll get into the rulemaking process and what that will entail. On page 27, section 8128 establishes the Clean Heat Standard Technical Advisory Group. This is largely unchanged from last year's bill and there have already been a couple of mentions of the Technical Advisory Group in the text, but this is really going to flesh out what they're going to do and then who this group will be made up of. So on page 27, the commission shall establish the Clean Heat Standard Technical Advisory Group or the TAG to assist the commission in the ongoing management of the Clean Heat Standard. Its duties shall include establishing and revising the life cycle carbon dioxide equivalent emissions accounting methodology to be used to determine each of the obligated party's annual requirement pursuant to 8124A2. Establishing and revising the Clean Heat Credit value for different Clean Heat measures. Periodically assessing and reporting to the commission on the sustainability of the production of Clean Heat measures by considering factors including greenhouse gas emissions, carbon sequestration and storage, human health, land use changes, ecological and biodiversity impacts, groundwater and surface water impacts, air, water and soil pollution, and impacts on food costs. Setting the expected life length of Clean Heat measures for the purpose of calculating credit amounts. Establishing credit values for each year over Clean Heat measures expected life, including adjustments to account for increasing interactions between Clean Heat measures over time, so as not to double count emission reductions. On to page 28, facilitating the program's coordination with other energy programs. Oh, yes. Sorry. Yes. On number five, can you just explain that a bit more? Sure. So, and so broadly the list that I've read so far, there's a lot of math that is going to need to be done. Formulas that are needed to be set to establish these baseline emission reductions that Clean Heat measures will need to. And so down to number five, I made mention of this the other day. As a home becomes more weatherized, more efficient, as more Clean Heat measures are added to a single home, each upgrade will lead to less emission reductions because the emissions have already been reduced. So if a home is weatherized, the emissions will go down. And then if a heat pump is added, the emissions will go down, but less than just a standard heat pump because the house has already has lower emissions. So this is something that the Clean Heat group need, the tag needs to look at is increasing interactions between Clean Heat measures so that, because basically what they're going to have to establish initially is the schedule and how much on average each Clean Heat measure is going to gain in terms of emission reductions. But when you combine them, you don't want to double count. So we've got to address the combined amounts and how much emissions are reduced. Thank you. Yes. So on page 28, number seven, calculating the impact of the cost of Clean Heat credits and the cost savings associated with delivered Clean Heat measures on per unit heating fuel prices. So in addition to looking at what emission reductions Clean Heat measures are going to lead to, they're also going to look at the price of these things and how that's going to impact the price of heating fuel. Number eight, coordinating with the agency of natural resources to ensure that greenhouse gas emissions reductions achieved under another sector through the implementation of the Clean Heat standard are not double counted in the greenhouse gas emissions inventory forecast. Nine, advising the commission on the periodic assessment and revisions, a revision requirement established in 8124A3 of this chapter and any other matters referred to the tag by the commission. So we'll get to it more in a minute, but there's, so we're setting up sort of a three tiered system here. And then on the next page we'll discuss first what's going to happen is the POC is going to hire a third party consultant to do a lot of the upfront math with the greet model and the analysis that needs to be done on how to calculate emission reductions. The tag is going to review that work and then use it to create the emission schedule on what every fuel type, what the emissions that each fuel type results in, and then what clean heat measures, what each of them reduce in emissions. And then that work is then supervised also by the POC who has the ability to override these decisions. But it's creating a, a group, this tag is a group of experts. They have to have some expertise in this, this calculation work who can advise the POC and assist them because this is a pretty math heavy subject and it will have a lot of upfront work and then there will be less work over time, but they will also evaluate newer technologies that come online that could be eligible to become clean heat credits in the future as well. So there will be a lot of work up front for this group and then over time less work, but they will still be part of the clean heat standard program. Representative Tori. Just a question for you. Is it the same kind of emission emissions? Like is this kind of setting the ground for what we could eventually do? Yes. So no other state in the country has a clean heat standard. However, this program is modeled off of the clean fuels program that Oregon, Washington and California currently use. And so it has similar framework to that. And so the Greek model, which I mentioned last week, that is the analysis that they use for transportation fuels. This system using the tag and the independent consultants will evaluate that model and transform it to use it for thermal sector fuels. And so if at some point you want to do something like this for transportation fuels, you could. You could look more closely at the other state programs though, because there is actually like existing programs. Yeah. So this program is a little bit of a hybrid of the renewable energy standard that we have in Vermont and the programs that are in other states for transportation fuels. Representative Clifford. Thank you, Madam Chair. Going back to number eight on page 28, Vermont greenhouse gas emissions inventory. I don't know. Can you tell me what that is? Yes. So last week you heard from Colin Smythe. And so A&R has been producing this greenhouse gas inventory for the last five or maybe more than five years. And that is what is used to keep track of how many emissions there are in the state yearly as well and then break it down by sector. So that's where we get a lot of the basis of this bill from in knowing that approximately 34% of our statewide emissions come from the building sector. And so you did hear from Colin last week, I think he provided you some of the recent data. They are going to be coming out with the most recent greenhouse gas inventory, I think they said April or May. So it has a lag time on the report. So it's a couple of years behind. So they're only up to 2019 at this point. But they do gather a lot of different data sources using both the federal sources as well as in-state sources to calculate the emissions produced in the state and which sectors they come from. Thank you very much. All right. So on page 28B, members of the TAG shall be appointed by the commission and shall include the Department of Public Service, the Agency of Natural Resources, and parties who have or whose representatives have expertise in one or more of the following areas. Technical and analytical expertise in measuring life cycle greenhouse gas emissions, energy modeling and data analysis, clean heat measures and energy technologies, sustainability and non-greenhouse gas emissions strategies designed to reduce and avoid impacts to the environment, delivery of heating fuels, land use changes, deforestation, and climate change mitigation policy and law. The commission shall accept and review motions to join the TAG from interested parties who have or whose representatives have expertise in one or more of the areas listed in this subsection. Onto page 29, members who are not otherwise compensated by their employer shall be entitled to per diem compensation and reimbursement for expenses under 32 BSA 1010. Representative Sebelia. Just clarifying in this highly scientific technical advisory group, the expertise that we're seeking, is it possible that we would see someone from the fossil fuel industry on here? It seems like it is to me. Yes. So if you look at the third line from the bottom, it does include having expertise in delivery of heating fuels. And I think that will potentially be really relevant to when they look at, they're supposed to specifically be looking at heating fuel prices. So yes, I think a member from that industry could be included. And as this, the commission is appointing this technical advisory group. I don't see a limit on what the commission can do. So it gives them flexibility for bringing in the experts that they need without limit. Correct. There isn't a set number of people and there aren't set term limits. Thank you. Yeah. So on page 29 subsection C, the commission shall hire a third party consultant responsible for developing clean heat measure characterizations and relevant assumptions, including CO2E life cycle emissions analyses. The tag shall provide input and feedback on the consultant's work. The commission may use appropriated funds to hire a consultant. Commissions, analyses and associated assumptions developed by the consultant shall be reviewed and approved annually by the commission. In reviewing the consultant's work, the commission shall provide a public comment period on the work. The commission may approve or adjust the consultant's work as a team is necessary based on its review and the public comments received. So this is the system I was just mentioning. So there will be an independent consultant doing a lot of the upfront heavy lifting on the math. The tag and the PUC are going to review the work. They are going to potentially make changes to the consultant's work. Then the tag is going to use this emissions characterizations and assumptions to do further analyses based on the types of fuel and the emissions reductions that can be achieved in the different clean heat measures. And then the PUC does have final say over all of this work as well. And there is public comment period on the analyses themselves, as mentioned here in D. So it won't be in a black box. Section 8129 establishes the clean heat standard equity advisory group. Like last year's bill, I think this is nearly identical to last year's bill as well. So the commission shall establish the clean heat standard equity advisory group to assist the commission in developing and implementing the clean heat standard in a manner that ensures an equitable share of clean heat measures are delivered to Vermonters with low income and moderate income. And Vermonters with low income and moderate income who are not early participants in clean heat measures are not negatively impacted in their ability to afford heating fuel. Its duties shall include on to page 30 provide feedback to the commission on strategies for engaging Vermonters with low income and moderate income in the public process for developing the clean heat standard program. So I'll stop here. So this is initially as part of the public engagement phase. So the group is supposed to weigh in on how to engage the Vermonters with low income and moderate income so that they're able to participate and weigh in. There's language at the end of the bill that specifically directs the PUC to invite anyone that the equity advisory group wants to see participating so that they can directly invite people that the equity advisory group think are necessary to the conversation. Representative Stettin. Thanks, I'm sure. Yeah, just a reminder, Jay. Yeah, I wrote that too. Yeah, that says this needed so many groups. Maybe you could figure out a different way to do this. David also testified in the Senate that you could also consider maybe making this a time limited group. So the TAG is a perpetual group. This group as we'll read through the rest of this has a lot of upfront work and how we will engage with low income Vermonters and those with high energy burdens, as well as making sure that there are aspects of the program that are helpful and protective of them. But you may want to consider if this group will sunset in five years or seven years after the program has already got established and running. So number two shall support the commission in assessing whether customers are equitably served by clean heat measures and how to increase equity. Identifying actions needed to provide customers with low income and moderate income with better service and to mitigate the fuel price impacts calculated in 8128 of this title. Recommending any additional programs, incentives or funding needed to support customers with low income and moderate income and organizations that provide social services to Vermonters in affording heating fuel and other heating expenses. Providing feedback to the commission on the impact of the clean heat standard on the experiences with Vermonters of the experience of Vermonters with low income and moderate income. And providing information to the commission on the challenges renters face in equitably accessing clean heat measures and recommendations to ensure that renters have equitable access to clean heat measures. On to page 31, the clean heat standard equity advisory group shall consist of up to 10 members appointed by the PUC and at a minimum shall include at least one representative from each of the following groups. The Department of Public Service, the Department of Children and Families Office of Economic Opportunity, Community Action Agencies, Efficiency Vermont, individuals with socioeconomically, racially and geographically diverse backgrounds, renters, rental property owners, Vermont Housing, Finance Agency, and a member of the Vermont Fuel Dealers Association. Members who are not otherwise compensated by their employer shall be entitled to per diem compensation and reimbursement for expenses under 32 U.S.A. 1010. All right, that is the primary main sections of the statute. Now we're going to get into some of the details. So on page 31, section 31, 8130 is the severability section. This is fairly, this is boilerplate language. If any provision of this chapter or its application to any person or circumstance is held invalid or in violation of the Constitution or laws of the United States or in violation of the Constitution or laws of Vermont, the invalidity or the violation shall not affect other provisions of this chapter that can be given effect without the invalid provision or application. And to this end, the provisions of this chapter are severable. So 8131 is the rulemaking authority section. This section was added in the Senate appropriations amendment. The language in this section is part of what is known as the checkback provision. So at the bottom of page 31, notwithstanding any other provision of law to the contrary, the commission shall not file proposed rules with the Secretary of State or issue any orders implementing the clean heat standard without specific authorization enacted by the General Assembly. This is nearly identical to what was passed last year in H715. What it does is it overrides all of the prior sections in that the PUC cannot issue any orders and it cannot adopt final rules. So it will allow them to draft proposed rules, which we'll talk about in a moment, are going to come to the General Assembly, but it can't issue any orders without specific authorization enacted by the General Assembly. Enacted is a word with legal implications. Enacted means passed into law. Passed into law means passed by both houses of the General Assembly and sent to the governor under the presentment clause. So it will be a bill and that will need to have specific authorization. And so we'll talk about this a little bit more in the last section, but in order for any rules or orders to become effective, that would implement the clean heat standard that General Assembly will need to give the PUC approval to do so in the form of legislation. So I have a question about that. Does that mean that like so they would have the rules and we would codify the actual rules or would we codify the intent of those rules? So you won't need to codify them and there's more details on this later. You will need to pass specific authorization. And so one way that that would happen is you could have a very simple bill that would repeal this small section of law because I think of this section as the roadblock. And it does conflict with the earlier sections of the bill that give the PUC authority to issue orders and rules. And so I do think this language will need to be repealed at some point if the General Assembly wants the PUC to do those things. So the rules, and we'll talk about this a little bit more, but the rules are going to come to the General Assembly for review. The General Assembly, those rules need to be in, they need to be legal under the law in this bill. And so the General Assembly didn't like something that were in the rules. You could amend the statute, which would then require the rules to be amended to conform to the statute. You could potentially seek to codify the clean heat standard rules in statute and that would look something like the Fish and Wildlife rules. They're in Appendix 10. And so that's one of the only other places in statute where you have rules in the green books. You could choose to do that, but you wouldn't need to because there is a process in here where the rules will need to go to LCAR anyways. And so you will have the ability to change the rules when they come to the General Assembly, either by directing the PUC to change them or modifying the statute so that the rules conflict with them. Or you could have LCAR tell them to do that because that is one of the processes that LCAR uses is asking agencies to amend their rules to be in alignment with legislative intent. So you will have a few different options, but you will need to pass something. You will not be able to do a resolution that would be unconstitutional because there is a legal statute here that provides a roadblock to the option of rules or orders. Thank you. Representative Sebelia, then Tori, then Clifford. So in act, does the governor have to sign in order for- It needs to be presented to the governor and then the governor has his usual options of signing, letting it come without signature or veto at which point you would have the opportunity to override veto. So it would be a standard bill like you normally do. So we could enact it and then have a third. Representative Tori. That's a really quick question. Just reminding you what year this is. January 2025. What's the question? The rules. We're going to come to the General Assembly. Yeah. Representative Clifford. Thank you Madam Chair. So do you see, okay, they cannot issue rules or orders without coming back to legislature. However, they can set rates for credits? Arguably no. So this is something I did want to raise. The, this language I think prohibits any definitive action by the PUC. They could publish draft rules, but they couldn't publish anything binding. So if, and so as we talked about last week in 8126, there is authority for the PUC to issue orders on like discrete parts of the program, like yeah, like setting the credit prices or setting the eligible list of measures. You may want to consider if they should have some ability to issue some of the preliminary work without wits and still preventing them from issuing the final rule. So you may want to consider if you want them to be able to issue any of the sort of preliminary step documents. Now they can't do anything without legislative approval. Is that correct? Yes. Yeah. So that is one difference from last year. Is that last year there wasn't that provision in 8126 about them being able to issue for early orders in the early stages? And so because that authority is in there now, that I do think this language, as it came over from the Senate, would prevent those early orders. And so you may want to consider if that's something you want to adjust. So that's the end of the Clean Heap Standard statutory text. On page 32, section four relates to the greenhouse gas inventory. So it's amending 10 BSA 582, which is the statute that requires that A&R issue, the greenhouse gas inventory. So it's adding new language at the end of this section, which reads, the Secretary of Natural Resources shall include a sensitivity analysis in the greenhouse gas emissions inventory and forecast that measures the life cycle greenhouse gas emissions of liquid gaseous and solid, biogenic fuels combust in Vermont. So you should probably hear more testimony about this. This sensitivity analysis is a specific type of analysis that looks at what types of variables were used and assumptions that were used in the calculations. And so it's requiring additional granularity in the greenhouse gas emissions inventory and forecast. And I am not an expert on those types of calculations, but perhaps Jared Duvall could explain them to you. Yeah. Okay, thank you. So section five, or perhaps A&R could as well and how this would fit into how they're currently doing their math. So section five relates to the tax records. So it's adding new language to 32 BSA 3102, which establishes the tax department's confidentiality. So I think you have heard a little bit about this. If you turn to page 33, so currently the tax department collects taxes regularly from fuel sellers on the heating fuel tax. That information is currently confidential. Earlier in this bill, there is a directive for the tax department to share that information with the PUC because that information will be very helpful. So they know the universe of people who are already paying taxes and how many gallons they're paying taxes on. And then that can help establish who are the universe of people who are obligated parties. And if they are accurately reporting their fuel sold to both the PUC and the tax department. So on page 33, subsection D, the commissioner shall disclose a return or return information. And there's already an existing list of people that are allowed to get this information. But it's adding the PUC and the Department of Public Service to this list. So to the PUC, the Department of Public Service for providing information related to the fuel tax imposed under 33 BSA 2503 necessary to administer the clean heat standard established in 3 BSA chapter 94. I represent seven. Thanks so much. The language that you referred to as a roadblock at the top of page five. Sorry, page 32. Does that timing line up with this data piece or does this data piece like again, as soon as you know, assuming that this moves forward, does that data piece move forward on its own and then the PUC being able to pass rules, et cetera, is a separate data piece. The sensitivity analysis. No, I'm calling the data piece page 33 of the nine. Yeah. So my question is the new thing that the Senate added in where there has to be a legislative approval in January 2025 or whenever does this is that looked into that or does this move forward regardless? No, this is separate. Okay. Thank you. Yeah. And because this is creating a directive to the Department of Taxes to share with the PUC. And so the PUC won't need to issue any order. The one one example of an order that you may want to consider is the earlier in this bill, there is the first registration deadline for companies to register is currently January 31, 2024. And so I'm not sure if the PUC was initially going to issue an order establishing the form that they were going to need to register on or the that sort of procedural detail. I don't know if they were going to do that by order. So that may be something but this the Department of Taxes needs to share with the PUC is not covered by the roadblock. Okay. All right. So section six is the big section with the details about the rules. So page 33, bottom of page 33, section six, Public Utility Commission implementation. A commencement on or before October 31, 2023, the PUC shall commence a proceeding to implement section three clean heat standard. Commence a proceeding is sort of a term of art here. The PUC has their their online database where they do all of their their work. So they open and invest they open a proceeding or an investigation through that system and that sort of sets up the the public's ability to access all information related to a specific topic. So on or before October 31 or August 31, they may do it before that. There'll be a public database on the PUC's website with all this information. The facilitator. The commission may hire a third party consultant to design and conduct public engagement. The commission may use funds appropriated under this act on hiring. Onto page 34, public engagement process. This is a bit different from last year's bill. It's a little more streamlined. Before commencing rulemaking, the commission shall use the forms of public engagement described in the subsection to inform the design and implementation of the clean heat standards. Any failure by the commission to meet the specific procedural requirements of the section shall not affect the validity of the commission's actions. Commission shall allow any person to register at any time in the commission's online case management system in PUC as a participant in the clean heat standard proceeding. All members of the equity advisory group shall be made automatic participants in that proceeding. All registered participants in the proceeding including all members of the equity advisory group shall receive all notices of public meetings and all notices of opportunity to comment in that proceeding. The commission shall hold at least six public hearings or workshops that shall be recorded and publicly posted on the commission's website or on EPUC. These meetings shall be open to everyone including all stakeholders, members of the public, and all other potentially affected parties. The commission shall also provide at least three opportunities for the submission of written comments. Any person may submit written comments to the PUC. And so just to stop there, there will likely be more than three opportunities because once they open a proceeding in EPUC, you can submit public comments at any time, but they are anticipating having multiple drafts for people to review. And so that's sort of what we're considering opportunities. So there will be any time at any time you can submit comments generally or at one of the meetings or when they release draft rules, people will be able to respond to them that way. On to page 35, the commission shall invite organizations and communities recommended by the equity advisory group to participate in the commission's public meetings and opportunities to comment. Advertising, the commission shall use funding appropriated in this act on advertising the public meetings in order to provide notice to a wide variety of segments of the public. Draft proposed rules, the commission shall publish draft proposed rules publicly and provide notice of them through the commission's online case management system, EPUC, to the stakeholders in this rulemaking who registered their names and email addresses with the commission through EPUC. The commission shall provide a 30-day public comment period on the draft and accept written comments from the public and stakeholders. The commission shall consider changes in response to the public comments before filing those rules with the Secretary of State and the legislative committee on administrative rules. So next comes the sort of big part. So we're going to start if this bill were to pass this session before the end of August, they're going to need to start the rulemaking process. They're going to need to have at least six public meetings or workshops. They're going to set up the online system so that people can submit comments at any times and all of the hearings will be recorded so people can watch them after the fact. They'll need to do some advertising and they can hire a public engagement coordinator to help them design effective public engagement processes. So this is all going to lead up to them submitting final proposed rules to the legislature on January 15, 2025. So on page 35, section F, final rules, on or before January 15, 2025, the commission shall submit to the General Assembly's final proposed rules to implement the clean heat standard. The commission shall not file the final proposed rules with the Secretary of State until specific authorization is enacted by the General Assembly to do so. Is that also added that language? Yes. Oh yeah, so sorry. F, this section F is also part of the feedback language that was added by Senate appropriations and it is nearly identical to last year's bill as well. So on page 36, there are a lot of statutory citations that I do have written down somewhere but I'm going to read through them but this section is going to establish a modified administrative procedure act process. So currently you hopefully have some familiarity with the administrative procedure act which is really important. It's a pretty formal process with the statutes in three of the SA chapter 25 setting out the steps that an agency need to take in order to adopt a rule. And so this section is going to wave some of those requirements because the rules normally don't come back to the full General Assembly. So it's going to wave some of the required steps because they're actually covered by some of the steps you're going to take anyway. So I will address them so that you're aware of what we're specifically getting rid of. One of the big things is that they won't have to go to ICAR, which is the Interagency Committee on Administrative Rules. It's usually one of the first steps and ICAR prescribes a public engagement strategy. Here we're going to wave that requirement because you are prescribing that public engagement strategy that we just went over by your page. So page 36, notwithstanding three VSA sections 820, 831, 836 through 840, and 841A. Upon affirmative authorization enacted by the General Assembly authorizing adoption of rules implementing the clean heat standard, the commission shall file as the final proposed rules. The rules implementing the clean heat standard approved by the General Assembly with the Secretary of State and the Legislative Committee on Administrative Rules pursuant to three VSA 841. The filing shall include everything that is required under three VSA 838, A one through five, eight through 13, 15, and 16, and 841B1. Do you want me to go through that list now? No? Okay. And so that last part, the filing shall still include all the things that are normally required, including the economic impact analysis and the environmental impact analysis that is normally covered with rulemaking. The review adoption and effect of the rules implementing the clean heat standard shall be governed by 841C, 842, exclusive of B4, 843, 845, and 846, exclusive of A3. Once adopted and effective, the amendments to the rules implementing the clean heat standard shall be made in accordance with the APA. So once the rules are enacted, the regular APA process will go forward in future. Okay. This is just a temporary one because normally rules don't come to the Legislature for full review. And so I would also just mention that there was mention in there that even after the General Assembly approved the rules, they're going to be filed to the Secretary of State and they are still going to go to Elkar who will review them again. And Elkar has a standard list of items that they review, including legislative intent, whether or not it was arbitrary and capricious. There's a couple more, I don't know, for a representative of Godguards to notice them. We are waiving one of them here, which is did they follow ICAR's recommendations on public engagement? But otherwise, Elkar will still be able to review the rules and possibly object if for some reason there's something in the rules that conflict with what's in the statute. All right. So G, consultant. The commission may contract with the consultant to assist with the implementation of 30 VSA 81-27, which is establishing the credits and that system. Funding. On or before January 15, 2024, the commission shall report to the General Assembly on suggested revenue streams that may be used or created to fund the commission's administration of the clean heat standard programs. So that's one thing I'll flag. There are no fees or taxes in this bill at all. And so there is an appropriation section that we're going to get to on the next page that will fund the initial public outreach work and the new staff. But there isn't a dedicated funding source. And so next year, the PUC is going to report back to the General Assembly on how this program could be funded in the future. On page 37, additionally, there are check back reports. So on or before January 15, 2024 and January 15, 2025, the commission shall submit a written report to and be available to provide oral testimony to the House Committee on Environment and Energy and the Senate committees on finance and on natural resources and energy detailing the efforts undertaken to establish the clean heat standard. The reports shall include, to the extent available, estimates of the impact of the clean heat standard on customers, including impacts on customer rates and fuel bills for participating and nonpartisan customers, net impacts on total spending on energy for thermal sector end uses, fossil fuel reductions, greenhouse gas emission reductions, and if possible, impacts on economic activity and employment. The modeled impact shall estimate high, medium, and low price impacts. The reports shall recommend any legislative action needed to address enforcement or other aspects of the clean heat standard. Representative Sebelia, nonparticipating customer means someone who is opting not to do any clean heat work. Thank you. So these are two reports. Let me finish, Jay, and then I'll give an overall what's happening here. So assistance, the Agency of Commerce and Community Development, the Department of Public Service, and other state agencies and departments shall assist the commission with economic modeling for the required reports and rulemaking process. So I did provide you initially last week with a timeline based on the specific dates in this report. At some point, we can look at it, and I will tell you that there are lots of other things that will need to be done that are not on the timeline because they don't have specific dates required. But if this bill were to pass, and there's one more section about appropriations, but the PUC will get to work on doing the rulemaking, and there are a few dates that they'll have to meet based on this. But one of the first is that next February, next January, they'll need to provide you with a suggestion on how this program can be paid for. And then they're going to, in February, have this fairly detailed report on economic impacts to customers, and then as well as some of the environmental impacts. And so that will be in February. Then there will be another report that comes out when they bring you the rules the following January. So there will be a full legislative session next year where you will have this report and update on where they are in the rulemaking process and what are some of the initial estimates on economic. So finally, section seven is the appropriations and positions section. So section A, the bottom of page 37, the following new positions are created at the Public Utility Commission for the purpose of carrying out this act. Onto page 38, one permanent exempt staff attorney, one permanent exempt analyst, and one limited service exempt analyst, limited service means temporary. The sum of $825,000 is appropriated to the Public Utility Commission from the general fund in fiscal year 2024 for the positions established in subsection A for all the consultants required in this act and for other additional operating costs required to implement the clean heat standard, including marketing and public outreach for section six of this act. The following new positions are created at the Department of Public Service Act, one permanent exempt staff attorney and two permanent classified program analysts. The sum of $900,000 is appropriated to the Department of Public Service from the general fund in fiscal year 2024 for the positions to retain consultants that may be required to support verification and evaluation related to clean heat measures and calculating the credits and so verifying that the credits have the amount of emission reductions they're required to have. We're conducting the potential study and for associated operating costs related to implementation of the clean heat standard. Representative Clipper. Thank you, Mr. Chair. So the question on page 38 of the E section B, the general fund, the one used to be coming out of the general fund fiscal year 2024 for those positions established and for the selection for all consultants. So does the PUC hire the consultants? Yes. They do. Do you know if there's a process that they go through and what that process would be as far as do they go RFPs, do they? I think they go RFPs, but I don't know specifically how that works. Okay. They'll be here tomorrow. We can ask them. Okay. Yeah. Okay. I'll do that. Thank you. Thank you. Representative Pat. From my recollection, this is general fund dollars and I don't believe that the PUC or the department other than this have general funds appropriated to them. Yeah. And you might want to hear from the PUC about this. Currently, the PUC I don't believe gets any general funds. The department I do think has a couple of positions that are funded. But yes, they are currently funded almost exclusively by the gross receipts tax, which is from the electric utilities. So currently, both DPS and the PUC are funded by the industries that they directly regulate. And so that's why there is the requirement in there that next year, the PUC is going to report back on how they think this will be funded. Because this will be a new, they will be regulating a new sector that they haven't regulated before, and they will probably need to fund this work in some way, perhaps from that. Just add, I mean, some gross receipts tax and fees. And fees. Yes. Sorry. Representative Smith. Thank you. Could you tell me where in this report does it start addressing Senator Kitchell's amendment? Sure. So Senator Kitchell's amendment is the check back section in statute, which is the 81 31 section. And then in the section we just went over, it was subsection F, which was on page at the bottom of page 35. 81 31. Yep. Which was on page 31. Thank you. Yep. And this bill will take effect on passage. Thank you, Ellen. That was very helpful. And so I did mention you had a brief summary chart. You do have a timeline. I don't think I don't think it's the best timeline, because I do think it only acknowledges the specific dates that are required by the act. There's a lot of work that the PUC is going to need to do, including hiring the consultants and then doing the math for these things that are not necessarily specifically addressed on the timeline. Is there a way to add those in? Or is it? Potentially. I'm not the best with graphics, but potentially we can talk about that. Okay, great. And then what I'd like to do is probably you offer to walk us through that timeline. And also the sections of the Administrative Procedure Act. Oh, yes. So at some point we'll have you back to do those things. Yes. Thanks. Yes. Great. Right. Next up we're going to welcome Jeff Hand. Welcome, Mr. Hand. Good morning. Thank you, Madam Chair. I've got a presentation to share with you all. Let me just see if I can do that here. Yes. Go on. Is the window open back there? It's a little more air. I would, feeling a lack of oxygen, looking around at your honors, too. Okay. Can you all see that? Good morning. Thank you all for having me. My name is Jeff Hand. I'm an attorney at SRH Law, which is formerly Dunkeel Saunders. I focus primarily on energy and environmental issues. I've practiced law for about 20 years. I represent a wide range of clients. I want to be clear. I'm here testifying today on my own behalf, not on behalf of any clients. We were asked a couple of years ago by the Green Heat Working Group to look at their proposed legislation and consider issues related to federal limitations on state action in this area. We did that work pro bono. I'm here testifying just as a citizen and as a resource to the committee on some of these more complex federal constitutional issues. What I'd like to do is walk through very briefly our review of the legislation and then save some time for questions from you all related to the proposed language, specifically as it relates to two federal constitutional principles. As I said, well, I want to start really, it's important when you talk about federal constitutional principles to think about how they balance with state jurisdictions or we're going to start talking about state authority to act in this area. And we'll talk about two federal constitutional principles. I think you heard some from Assistant Attorney General Laura Murphy last week or two on similar issues. So they should sound familiar to you, but I'm happy to answer any questions. And then a few thoughts on sort of how this program is designed to meet those limitations. First, starting with general state authority to act in this area. As you all likely well know, the state exercises within its boundaries, the authority of a sovereign within those powers are what are referred to as police powers. It has the ability to make laws and regulate for the public's health, safety and well being federal courts have recognized consistently that a state's energy policy and regulation of energy industry as are some of the most important functions when we refer to police powers. So clearly within the scope of that state police power. And similarly, it's very well settled via a case at the US Supreme Court that states have a legitimate interest in addressing the adverse effects of climate change on their residents. I want to talk briefly also just about how we currently regulate heating fuels in Vermont is at the broadest level. There are a number of programs that apply to heating fuels that have been passed by this body over the years. Those include but are not necessarily limited to sulfur content and heating fuels, licensing fees for the cleanup, petroleum cleanup for bulk heating fuel, tax on heating oil and propane for weatherization initiatives. There's a very comprehensive consumer protection rule passed by the AG related to sales in this area. And there's actually authority, I don't think it's ever been implemented for a state strategic oil set aside, similar to the federal strategic oil set aside. One, this is kind of like a pop quiz, but there's one important program that's missing from this list. I don't know if anyone knows what it is on top of their head. I'm not going to actually make you take the quiz. The one that's not on here is the Global Warring Solutions Act. So through that program passed by this body, heating fuel is already technically regulated. The emissions from that fuel is subject to the cap. And so it's important to keep that in mind that as we're working towards those goals already established in legislation for 2025, 2030, 2050, the state will need to meet those required reductions in some capacity. And what the Affordable Heating Act does is provides a mechanism for meeting those goals in a structured and timely manner. If you don't pursue something like that, which is certainly an option, it leaves the state in a position of likely needing to scramble to implement something later that may be less structured and maybe less well designed to pass some of the benefits of this kind of program on to individuals who may need more support, low-income, moderate premonters, who can provide, can receive benefits through some of the designs of this program. So just keep in mind that the emissions from these sources are already regulated. And when it comes to reducing emissions, we've made a lot of progress in the electrics sector. And so the thermal and transportation side is really where we're going to need to look for a lot of those reductions. All of these, I want to emphasize this, all of these existing statutes apply to voluntary commercial transactions for products that are sold into the state of Vermont. So we're talking about activities that happen within the state boundaries. And that is very important when we get to these two federal doctrines I want to talk about. The first one being the dormant commerce clause. This one is always, can be confusing and everyone says, what does dormant mean? But let's start with the commerce clause, which provides Congress the authority to regulate commerce for nations and amongst several states and as the Constitution is written with the Indian tribes. In that express grant of authority to Congress to regulate those issues, there is an implied restriction on states that they cannot act in these areas to unjustifiably discriminate against the burden of the flow of articles of commerce and interstate commerce. That is commonly referred to the dormant as the dormant commerce clause, the sort of quiet part of the commerce clause. Primary concern in that federal constitutional doctrine is to prevent economic protectionism that is regulatory mechanisms that are designed to benefit in state economic interests by burdening out of state economics. And historically, just to keep in mind, these provisions were added in the US Constitution because of a lot of failed implementation of the articles of confederation that predated the Constitution where states had much more authority to act independently without regard to the federal authority. And that led to a lot of conflicts between states at the time. So this was designed to ensure we have an overarching federal freedom that protects those interests, but still allow states to act appropriately within their area of jurisdiction. Representative Stevens. Thanks, Senator. So when did this come about? I mean, before this act in between like the revolutionary war and the civil war? Before the existing Constitution, there were other structures of government that were tried and that were not successful. And so the Constitution we have now took into account a lot of those challenges. And that's why we see many provisions, but including the Commerce Clause. So specifically, the Commerce Clause addresses, you look at three things. You're focused on, and this is when courts are reviewing state laws for compliance, does the law discriminate between in-state and out-of-state interests? That discrimination can be on its face. It can say we only support Vermont products or it could be implied or have the effect of discriminating. Second, does the law regulate commerce occurring entirely outside of the state? So not something where the state would have an appropriate interest in regulating something that comes into or the state. And then finally, does the law impose a burden on interstate commerce that is clearly excessive in relation to the punitive local benefits? This is really a balancing test of whether the state's goals are appropriately implemented in a way that doesn't unreasonably burden interstate commerce. This is often referred to as the Pike Test. And typically, if you get through the first two standards, most state laws are upheld under that third standard if they're appropriately justified by the legislature. So I want to switch from general principles to kind of how these principles have been applied in similar programs in other states. There are a couple that are worth looking at. The first one is the California low carbon fuel standard. That set standards to reduce greenhouse gas emissions attributed to California's fuel market. Fuel blenders are required to keep the average carbon intensity of their product below the standard annual limits. And they generate credits based on being below that standard and there's a market to sell those credits. Importantly, the fuels are evaluated on the lifecycle emissions of each fuel, not on the location the fuel comes from. So that program was challenged in mid-2000s. The 1954 of appeals upheld the program in 2013 and they found that it did not unreasonably discriminate, did not discriminate against out of state interest because the program was designed to distinguish between different fuel products based on their carbon intensity, not on their area of production or where they come from. And that is a proper exercise of state regulatory authority to address and recognize environmental concern. It was not an extraterritorial application. The court here made a clear distinction that California can regulate within the state to address local harms and structure, I want to emphasize this, structure its internal markets in a way that incentivizes firms to produce less harmful products in the state. So just because out of state actors may need to comply with an in-state requirement does not mean it's unconstitutional. Similarly, Oregon has a clean fuels program which you may have heard about, very similar design to California's program. That was also challenged and the Ninth Circuit upheld that program in 2018 on similar grounds. Again, it doesn't discriminate on the basis of origin. There's no discriminatory purpose found if the program is simply to reduce Oregon's contribution to global levels of greenhouse gas emissions and the impacts of those emissions in Oregon. And I think it's worth pointing out that one of the things the court looked at in that case is the underlying justification for the program. Is it really about addressing environmental concerns? Is it some sort of hidden protectionist program? And they may look at including things like what legislators are saying about the program. How am I talking about justifying this program to my constituents? I think it's important when this body is considering the program to be very clear as the statute is about what the purpose is for this program. Finally, in a slightly different context, there was a challenge to Connecticut's renewable portfolio standard. So as the committee may be aware, many states, including Vermont, have renewable portfolio standards which require certain levels of renewable production on the electric side. This program in Connecticut was challenged by a developer who was developing a solar project outside of Connecticut and was arguing that he should be allowed to participate in Connecticut's program even though his project didn't meet the standard for participation. And the court in that case upheld the program, founded the geographic limitation imposed in that program for generating those credits for activities where they were being produced was appropriate and that states can design these programs to meet their specific needs. So I want to stop there on the Commerce Clause. I'm going to turn the preemption doctor and make sure it's a much quicker presentation to see if there are any questions high-level on these issues. Representative Pat? On the California and Oregon programs, that is, that's, is that, when you say fuels, is that transportation? Transportation fuels, that's the focus of the program. Thank you. Yes. So the other federal principle, I think it's important for this committee and the legislature to have in mind is the preemption doctrine. This stems from the supremacy clause in the U.S. Constitution and essentially says federal law is the supreme law of the land. And when you look at this doctrine and apply it to state laws, you're looking at whether a state law is preempted by a federal program that's operating in the same area, either expressly or implied. And that can occur express preemption is where Congress says we are implementing this program and states may not act in this area. It's very clear. Implied preemption can be several different things. We often refer to this field preemption where the, where the federal government has acted so pervasively in one area on a specific issue. There's really no room for the state to act and not be in conflict with that. So one of the things we wanted to look at is in the design of the Affordable Heat Act. Are there any concerns with respect to preemption and related federal statutory programs? So we looked at a number of these in our in our memo and a quick summary of the important ones to keep in mind. The Federal Natural Gas Act provides FERC, the authority over intra, sorry, interstate natural gas transportation and wholesale gas transactions, but it leaves to the states the regulation of the production and retail distribution of natural gas. Because natural gas, particularly through a natural gas utilities included in this program, we want to make sure that we're right, that the program is only regulating at the distribution level, which it is not at the wholesale. So with that caveat, we don't see any concerns with respect to preemption. Clean Air Act also acts in the space to regulate air pollution from emissions from both stationary and mobile sources. But like the Natural Gas Act, it relies on both state and federal actions. It's not complete preemption. And it's very clear that states have substantial flexibility to regulate stationary sources more stringently than a federal baseline. So I'm not a concern with acting in this manner to regulate CO2 emissions from thermal sector heating fuels, I'm sorry, from heating fuels. EPA's renewable fuel standard, this applies to some domestically produced renewable fuels, think biofuels, and and acts to reduce emissions and limit oil imports and requires blending a certain volume of renewable fuel. Again, courts have held that stricter state renewable fuel limits that are complementary to this program are permissible. So we don't, in reviewing how biofuels are incorporated into this program as proposed in the Affordable Lead Act, we don't see any concerns there. And the last one is the Energy Policy and Conservation Act. Think of that as the energy star program essentially. Is there any action been taken in the energy area that would preempt Vermont from taking more specific actions to require more efficient use in those appliances? And there's nothing there that we could erase this for the levels of the cream cheap concern. So I want to turn now just to sort of get this without a couple of thoughts in the time for some questions. We should be sure that the program that's being designed is not discriminating based on origin. Here, as similar to California and Oregon, the program is designed so that the evaluation of each clean keep measure is based on life cycle emissions, considering the fuel pathways that are required to get those products to the state. And it's not based on the origin of the alternative. That seems to check that box. Another topic that I know has been discussed is the scope of jurisdiction. Where do we attach this obligation? And in our view, that obligated party, you should focus on jurisdictional transactions that are as far up the chain as possible, given the constitutional limitations. And there's a tension here. How far can we go up the chain of commerce from the retail distributor to the wholesaler to the producer without running afoul of any constitutional questions? The way the language is written in the statute right now, there's no 100% guarantee for you to definitely pass muster and any of these things. But this is written in a way that is very protective of those concerns. And it's modeled on California and Oregon's language, as well as language reviews in the state of Vermont and other similar programs. So right now, the obligated party is defined as a regulated natural gas utility serving customers in Vermont. Or for other heating fuels, the entity that imports heating fuel for the ultimate consumption within the state, or the entity that produces, refines, manufacturers or compounds heating fuel within the state for ultimate consumption within the state. And for purposes of that section, to be very clear, the entity that imports heating fuel is the entity that has ownership to the title when the fuel is brought into the state. So that language is very similar to what they use in California and Oregon. They talk about the first fuel reporting entity, their obligated entity for liquid fuels as the producer or the importer of the fuel. And they have similar language about the title requirement in terms of having title defining the importer. Oregon uses a very similar structure. And I did want to point out in Vermont in our gas tax, motor vehicle tax provisions, we use language that's almost identical to define the scope of the state's jurisdiction over fuels coming into the state. So they talk about a distributor, but that means a person who imports or causes to be imported gasoline or other motor fuel for use distribution or sale within the state, or any person who produces, refines, manufacturers, compounds, gasoline or other motor fuel within the state for use distribution or sale. So the way the obligated party language is structured, I think both is consistent with what's been used in the past and upheld and appropriately draws the line between where we can regulate and passing that as far up the chain as possible, given those limitations. Let me pause there. I know that was a lot, but I'm happy to take any questions. Yes. Thank you for writing us today and for your testimony. Yes. Representative Sebelia. Yes, thank you very much. Great resource for us as we're moving forward. Just wanting to clarify and be sure that you've reviewed the language as passed by the Senate. Yes. Yes. Other questions? Thank you for, thank you again for joining us. Yes, thank you very much. Members, we will adjourn for the morning.