 We have to reverse the schedule on this. Luke Marklin came in and suggested that we have the witnesses talk first because then it would make more sense when he talked to the bill. So that's what we're doing. So Matt, come on up. I know who you are, but the rest of the committee might not. So yes, we did. Thank you, Anne. Thank you. I think we're back. OK, welcome. And you know the routine, just introduction. Thank you. I'm Matthew Rubin. I live in my penal and almost 40 years now. And I own several two hydroelectric plants and was one of the owners of the Munozki One project. And I'm here today to ask the committee to consider favorably a very small amendment, really, to the standard offer bill for the standard offer legislation in regards to existing hydro sites. As you probably know, the standard offer is for new projects that we're not talking about any new hydro sites. Our concern is, I'm speaking as president of the Independent Power Producers Association. OK, that's helpful. Thank you. Is there were, when the independent program started in the mid-'80s, there were long-term contracts already in 30 years. And there were about 52 megawatts of hydro sites that came online and are still alive. But after their long-term contracts expired, there really was no option for them under existing law because the statute under which the long-term contracts basically left. They basically had to sell to the grid, was that? After the contract was up, there was no option other than selling to the grid, your local. My heart, so to the local power company, which would then to be done, OK. Could I just ask, is this, this bill was in here, but natural resources has proposed an amendment as I was talking about? I don't know that this bill was here. This bill just. Well, it's on the wall. But it gets. Is it passed in the other, did we pass it in the other game where I started? Yes. Yes, OK. Yeah, OK. It gets together. That's research. That's right. And my understanding is, this is S-170. Which we don't have. There it is. OK. This got introduced like after crossover. I don't know. We heard about it a month. We heard about it, but I don't think we ever had a bill. It was in natural resources. It was. Yeah, it got introduced, it got sent here. Senator Bray came over the same day it got introduced and asked me to send it to him because it was his bill. But this was all last week. And then we sent it back. And then you sent it back here on Friday. But it did not make cross-over. So if it's going anywhere, we are going to hear about an energy bill that's miscellaneous energy bill that's coming up. So if it's going anywhere, it'll probably go on there. Just on your own, Chair, we'll repeat the witness issue. Understand that we'll find, if we'd like it, we'll find a place to put it. Yes, we will find a place to put it. We love Christmas trees in this committee. And we decorate them. Thank you. OK. So just briefly, in 2012, the legislature recognized that the long term contract under rule for 100 would be expiring. And so within the standard offer legislation, a little section relating only to existing hydro projects. And it said that just as standard offer projects sell to a vacuum purchasing agent, that hydro sites would follow the same route. But that the output would be sold at the market price. OK. Now, you used to get a preferred price, when it was small hydro. I have a new original contract. It wasn't exactly preferred. It was a 20 or 30 year range. In hindsight, it turns out there have been higher than the market price. Would have been, but. This came in, this was before my time. But my understanding was, I do remember the oil embargo. And it was a big push for some energy independence in this company, because overnight one, we kept one car in the neighborhood with gas in it for emergencies. Yeah. So I thought this real port to develop small hydro came out of that experience. It did. And the result was that 150 megawatts of projects were proposed, and 75 got built, 50 hydro and the Rygate Woodchip Plant. And all of these plants are in the Vermont Energy Goals for 2030. So we're not posing to do anything other than just keep them here. And so after the long term contracts ran out, the question was, what would these projects do? And the only option they had was to sell at the spot price to their local utilities, who were unenthusiastic about any compensation from wine losses, or not really interested in long term commitments. So the legislation that was passed in 2012 gave a market rate. Average price of energy, taking a two year moving average, the same thing the ISO price for capacity, an adjustment for wine losses, depending on whether you were going through one transformer or two, and a premium for the long term contract, 10 or 20 years. And finally, an adder for the environmental attributes, which now are called RECs. So the problem with the 2012 legislation had two clauses which effectively gutted the legislative intent to make it a market rate. The first one said, no matter what happens to the price of electricity, the price paid to independent producers can't go up fast in the consumer price index. And that page is a chart of what happens historically and the price of energy. Do you have that testimony from last time? I wasn't given anything. OK. I know that. I feel OK. Put it in front of you for a second. Just come this way. It's OK. Yeah. But you can't get it up. OK. That made things a lot clearer than I remember them in your head. OK. That's got no point of faith. No. We got it. We got it. OK. You can't get up. That's for you. That makes you weak. All right. Apart from all the confusion of numbers, the long and short of the discussion, if you look at the top line, you can see that the first rate was set pursuant to legislation by the Public Service Board of the PUC in 2013. And the rate cannot go up faster than inflation. And then the middle section is what the calculator rate would be under existing law. And then down below is the second statutory cap, which means no matter what the rate was, it can't go up faster than inflation. And the bottom line is my dog doesn't think it's a dog. And when you're hard of hearing sometimes, aren't you going to answer your telephone? So the real comparison is the actual order rate in red at the bottom versus the calculator rate, which is the blue line. And the long and short of it is that no one has ever signed up for this rate in such years because of the statutory cap, the two statutory caps, which practically means the rate can't go up faster than inflation, even if the real world does. So inflation can be flat. Don't make it last two months. All right. So we have a question. Can you just, in any case, can I ask a question? Can you, I can imagine a little bit of the answer, but can you explain why it is not adequate to be selling on the spot market in this part of what it looks like? It is adequate. And we would accept that by taking the 24-month moving average, you smooth out from month to month and not to say how an hour of fluctuation is. But that's where you're at the end. At this point, it's a project with no contract. They would have no choice but to sell to the local utility at the actual hourly rate, which you could find out online. So that's your option. And that's, I guess I'm not understanding the distinction. So what do you call it? Could it be selling to the local utility? Then you'd be selling to the local utility. Exactly. And what's wrong with that? First thing is there's no long term commitment. And for example, the New United Solidarity and the U.S.C., Patty's project, and the Wrightsville are all looking at relicensing hundreds of thousands of dollars of studies and so forth. And it's a very different situation if you don't know what your money is going to be and for how long. So having a 10 or 20-year contract with a premium of 5% for the 10% or 20-year contract is a real benefit to me. The spot market is highly volatile, right? Extremely so. Also, these sites are all, the turbines are 30 years old. And they'll show sites that are around for 100 years, especially up in the Northeast Kingdom. But the machinery does need to be significantly rehabbed. And that is in the hundreds of thousands of dollars. Kind of a decade old. So the producers would like to make a long term commitment that the power would be in the market and stay in the market. And are the utilities far from doing that? Or they're just not motivated to do that? They weren't significantly motivated. And I would say that we talk to all the utilities. And I think it's fair to say that there is no objection to this stuff. And we originally had discussed it, especially the Green Mountain. And their concern was that the price for the REX environmental attributes in the language of the bill, that that not be set tomorrow, but rather that it also will follow the two-year moving average. We said, OK, that's acceptable. So at this point, there's no. Do you see one as still on by you? No. That's why I was confused. Thank you, sir. I'm just trying to be able to speak here. Dr, I can't remember how long it's been since we played with standard offer in here. So it takes a while to get our heads kind of left around what's going on. We all have a concern about standard offer and it being extended. This is really outside of that discussion. Just you've got an aging infrastructure, like many others. They started with the infrastructure with new components. OK. About 40 years ago. Wow. Yeah. We had old dams in advantage. They put in new generators and new components. And they were rewarded with a standard offer for about 30 years, which of a price was above. And now they seek, this is where my words are, they seek to get an average return like everyone else and that's a potential return. What they are following now doesn't work and isn't being picked up on. They're providing an alternative way to get around the middle of prices. OK. OK. And it's something long term. So you have a long term investment stream. So you know, you can invest the capital you're going to need to. You've done it. No, but you're saying after 40 years they need a little work. I get a little nervous when the Waterbury Dam, that was the Army Corps, need to be redone. We would have 20 minutes to notify the town of Waterbury before. I believe it was a 20 foot wall of water that went down Main Street. If that dam fails. And... You have minutes to run uphill. You got it and there's no big kills for Waterbury. So the dams, maintaining the dams is important. The cost of not maintaining the dam could be catastrophic. But we don't like what it's going to look like. And these projects have been part of Vermont's energy supply for a long time and we'd like them to continue to be. Oh, is that it? We got talking and I wanted to make sure you got more... Any other questions? I mean I would see you in Washington later if we don't have our tools ready by this. Well, they're coming up. Okay. Thank you. Thank you very much. Okay, yes. I'm going to feature Richard's. Michael, is it a happy surprise? Is it? It's a little bit too much. It's a little bit too much, yeah. It's happening now. It's going to be a happy wedding. Hi. Hi. Thank you for asking me to come in. Patty Richards from Washington Hunter Co-op and General Manager at Washington Hunter Co-op and Senator McDonald to answer your question is Washington Hunter Co-op threatened? The answer is no. Wreck is a small utility. We are exempt from standard offer but I still care about what's happening in the standard offer paradigm because in the event the exemption goes away then that power we would be obligated to pay for. So I'm here. I'm going to be completely disclosed that the exemptions were a hundred percent renewable. Our power supply is full out for the next 20 years so if we took on standard offer power it's just excess added on top of our resource mix which we don't need. The proposal that's in front of you is a proxy for a market-based contract. It's not purely market-based because the energy doesn't flow. As the power is produced the energy isn't paid on an hour by hour as it's produced but it's pretty close. So it gives the developers it gives the hydro operators some little bit of specificity they can model and produce power to maximize their revenue stream and as Matthew said we're all going in for hyper relicensing. It's a very expensive process so it's a tune to basically either revamping your car or renovating and gutting your house and taking out a new mortgage. It's like you're establishing a new facility. Basically you have to get the facility and inject new parts and incur all that expenses. So from our operator owner of a hydro plant I would want some specificity that I'm going to get paid for some degree of time ten years, twenty years of what that is. And also some project ability to project what you're going to get paid and all of that. And the proposal is still a proxy relative to market with a two year swing to smooth things out a little bit. But that any developer that's coming into the marketplace is going to look at a market projection and say what do I think I'm going to get in the marketplace. So it's as if a utility is looking at that same economics I'm looking for for ten years, fifteen years, twenty years this is the revenue projection I expect to get then I base my finances on that revenue projection. So from Rex's standpoint this is laid out it's fairly close to a market based contracts there's not a ton of risk to the repair paying above market. The old contracts that were in place prior to the standard offer allow it to come VPEX contracts or VEPI contracts they were very expensive. At some point somebody 25 years ago sat down and said usually I think power prices are going to be in 25 years and of course anybody that's estimating that long is going to get correct and in this case they're fairly for the utilities for lack it is our most expensive resource in the mix. The hydro plants and the projects are great renewable projects it's just the rate we're paying for them powering into the VPEX VEPI contract it's a clean game it's expensive. So this gives us a pretty good close proximity to market prices so we have no objection. So this would make them much more marketable. Exactly. They get taken when all the other cheaper sources were already when you had demanded you had to buy something that the small hydro was at the bottom of the list that the utilities would because of the price that you would access. Because they're also not dispatchable so basically whatever they can generate is what we would take for that power. That same dynamic is still in place today so whether it's a hydro plant or wind plant or anything if it's an intermittent resource whatever it can produce at that time is what it sends to the market it's not a dispatchable resource. Wind isn't a great system. If wind has a shape and a profile hydro has a shape and a profile depending on the river characteristics if you have ponding capability lots of hydro this time of the year. Not so much in August. But in the southern part of our region in Connecticut, Massachusetts there's natural gas power plants they can be ramped up and down to fill in the void of when the renewables aren't producing. So all the intermittent resources fill in the bottom of the the vid stack for the ice in New England and then later on the ice in New England fills it in to basically match the load shape. I think there was some old one maybe that's the Winooski there's one they fire up in Burlington is a true last resort. It's probably a peaker project. Then it may be for a calf. I know there's one up there that's very expensive. Yes, it's going to be an oil-fired peaker project. And it just I would guess Winooski was pretty consistent. So it's going to take the shape of you know spring is going to be higher production because we have all of the melt and the rain the fall is going to be a little higher production as well. In the summertime there's like a valley. There wasn't a lot going on over there last August in September. We were pushing drought conditions. Okay, any questions? Any questions? Thank you. Thank you. That's what you said, Senator Pearson. I just got to be someone with jets like this. You may be surprised today. I'm trying to always be suspicious of bills that everybody agrees on. I understand. That's true too. I think we'll be able to deliver this afternoon. This is Warren Cole, but I'm here for a GMP and I'm on electric co-op. I think what you've heard so far from Patty and Matthew summarizes the issue well. The way the pricing structure was set up it was producing sort of an artificially unattractive price for these types of projects. And GMP in particular Doug Smith who's the chief power supply executive work with Matthew and some of his colleagues to look at the statute and basically through it you'll see we sort of eliminate one of the two pricing structures. You can do this or you can do this. And it was always sort of defaulting to the lower of the two. So in glucose, you'll see how it sort of builds the price stack based on a rolling to your average. And the one key piece that was touched on was that the renewable energy credits, the wrecks were one of those things that were not floating. It was fixed. And that had the potential to very quick, unfollow loss for both the project owner or the repairs. So by having that float with the other pieces and track the market rate it takes that volatility out basically for both parties. So with that change GMP was supportive of making this change. Switching hats real quick from our electric car is fine with it. It's neutral on it. We can see a problem with doing it similar to what you heard from Patty earlier. Okay, questions? Alright. I don't understand what you say. Everyone likes it. Good afternoon, everyone. Luke and Lars. Thank you. I'd like to cancel the general assembly. I'm here on S170. I don't know if you should have a copy. I think it's for you. That's not the bill was introduced. Correct. You should have the strike all measure. Yes. So I think you have an excellent introduction from the other witnesses. I'll go through the statutory language and as always please stop me if anything is unclear. So this is amending 30VSA 8005 small a which is the bill. You know what I just said? I just keep blazing ahead. It's a standard offer. And as it is indicated we're only talking about section P as in Peter which is what concerns small hydro. So the first page of your handout really nothing's been changed. That's the existing law. I want to start with the very last two lines if we have the same copy. It says the term includes hydroelectric plants that have never had such agreement and hydroelectric plants for which such a turn over to H2 has expired. You can see this language has been stricken out. The current statute says provided that the expiration date is prior to December 31st, 2015 so we'll pass that time. This proposal will eliminate that language in other words it will no longer be that time limit. If you keep coming down to the middle page too you'll see some of the substantive changes. So right now as Mr. Coleman indicated it's an either or price structure. We'll see under 3 under capital A under current law it says unless inconsistent with the applicable federal law the price of a standard offer contract shall be the rest of the following under current law either 8 cents per kilowatt adjusted for the CPI after 2013 or then there's a list of various factors that are rolled into the other alternative. What this bill would do is eliminate that first 8 cents per kilowatt adjusted for the CPI. That's taken away. Instead the price would be set by all those other factors and those factors are basically retained except for one change. They're re-numbered, they're reorganized but it's basically the same factors and the rolling average of various current factors with the additional money of 18 or 19 the market value of the environmental attributes. And as was indicated to you right now that is not a two year rolling average of these environmental attributes under this bill it would be a two year rolling average like it is for the other factors that are considered in setting that price. If you go to now page 3 you'll see under 4 capital A it says that the commission in other words the PUC shall recalculate and adjust the various factors and now environmental attributes are included in that because once again they're more than the spot price of the rolling to your average. Yes. You'll see down in the middle of the page on lines 10 through 12 there's underlying language that the commission may periodically adjust the value of the environmental attributes. That language is actually incurred in law which is simply moved up. So that is not a new language it's just being reorganized. If you go over now through page 4 this is another substantive change you'll see under number 5 you'll see that there's a paragraph that's crossed out and what that paragraph says in current law was that in no event shall an existing hydro plant receive a price in one year higher than the price in the previous year and that's a Mr. Rubin referred to who can't have a price higher than the preceding year that language would be deleted so that would no longer be solved that the plant could get a price higher than the preceding year if under the rolling average of all those factors we talked about that was determined to be the appropriate price. And then finally there's to be some remembering on the rest of page 4 when you have the effect of date which would be July 1st of 2019. Are there any questions? Is there anything unclear? Thank you very much. Thank you. I think maybe we will allow this to settle so we can rotate and we will take this up for both. Actually I just want to think to go has to go on an H bill and we do have the next week miscellaneous energy bill I think so that's probably a good place to put it. I have to confess I don't entirely understand this. None of this. I mean I'm looking at some of the calculation here in which the contrast will be the sum of the following elements and the last element is the value of a 10 or 20 year contract. I haven't a clue what the value of a 10 or 20 year contract is where that number comes from. That's item 1. But then when I see that it cannot when I go over to page 4 Maybe you should have someone from the commission come in and talk to us about how they do this. In other words the calculation in future year cannot be greater than that's that's an existing language how they got that I don't know. But again some of the I have a clue where those come from or where they need. Let's ask the utility commission does this you come talk in simple English that work? What this is a small organization and the notion that they had a 30 year contract they no longer do small potatoes now I would say like a professor or a meritist they're and they're not going to get a 20 year contract so accepting is we'll take this one as long as we can produce power and we'll accept the rates that other people get for producing the same amount of power and not expect to get a guarantee we'll go with where they like the prices go and that's the question we can verify that's what's happening inside parts and not harmful to the system that's my understanding no matter what all of that says they are getting essentially market rate whereas the 30 years they had a guarantee rate that by the end they're probably the middle was substantially above market but it's a done deal with earlier perhaps it was we could write a plan for X number years of that plan as the mortgage ran out now market we were not focused on the cost of power we were focused on the availability I don't want to explain to you and this is not rolling rolling average but they're assured it's 10 years we'll give you this rolling average for the next 10 years but then again what's the value of 10 or 20 years what does that mean I don't understand that somebody here may be able to explain there's really no difference on any commodity you could buy a spot market I'll take a long-term contract that commitment is a value to both the buyer and the seller and they decide that we'll do it that way the contracts are based that way and so as a producer I'd like to know what if I borrow money from the bank they want to know that there is a power purchase agreement for a decade or two and the fluctuation in the market is here at the risk of business there is a market for power that's really the reason for it the utilities have decided and the department of services know the premiums 5% or 10% of the healthiness is reasonable I have a question I think for Luke that this did get wrapped up in our standard offer program from 2012 or whatever is this taking divorcing those two I think they're already quite divorced it's in the same statute but Hydro is its own little quarrel so I don't think this bill affects anything else not a standard offer but it sounds as if I remember from a month ago Hydro got sort of bizarrely impacted by what I think of our standard offer project and I just want to this is sort of undoing that that fair yeah no one has taken up the standard offer in Hydro which tells you there's a problem you know all the way it was constructed with glitter and I think we did that to talk about this a lot and we'll win and by that no these can do weird stuff before things get through there's a reason it didn't stand off on a bill and the reason is a subtly accreditation that standard offer allows essentially for generation to be pooled and allocated to all the utilities program except we may have already met their amount goal and that's the reason that was included in standard offer because when you start dealing with what is 17 or 18 utilities now it's a bizarre situation in the real world and so how does utility A benefit the power to the other 16 utilities and so the standard offer socializes the whole thing and makes it a great deal simpler and also doesn't rather follow the FERC rules like you can't transmit power so it just simplification bottom line so socialism is simple and fair is that what you heard? at least when it comes to piles okay we will have asked somebody from commission to come over and just see if you can help us understand what these elements are and how they assess them okay okay anybody else alright that's it for this one we have somebody from commission to come over it's supposed to be here at 3.30 oh 3.15 okay good we are that far no no no this is this is this is an energy efficiency day in the state house this is oh that's that's the wife yes and she's has to just come in and talk to us a little bit because this is their day I think it's okay okay okay okay okay welcome perfect timing thank you just need you to tell us who you are we represent just for the record we know certainly Rebecca thank you so much my name is Rebecca Foster I'm the director of efficiency Vermont thank you for the opportunity today with you about some of the updates efficiency Vermont has been making in 2018 I have a slide deck I want to pass out with some information about how we're changing and what we're doing that's maybe new and different for the committee so okay we've got enough to go around great ready to go so we're going to start out with a little bit of background then focus on some of the key themes under my leadership at efficiency Vermont I've been the director now for four months and I'm new to the role so there's a lot that's happening that's new and different I won't quickly so you'll see that in the presentation so I'll focus on operational efficiency delivering more value to customers and partnerships and then toward the end if there are questions about the energy savings account we can get into that as well to start off I assume that most of you are familiar with efficiency Vermont there is a slide on who we are really the highlights are that we were developed as a result of a legislative act and began operations in 2000 so we've been around for nearly 20 years we are administered by the Vermont Energy Investment Corporation a nonprofit entity with dedicated staff and a dedicated brand efficiency Vermont and we're regulated by the Public Utility Commission on three-year cycles we have a performance contract and we work kind of over each three-year period with the various budgets and savings metrics mostly driving toward delivering megawatt hour reductions in energy cost so that's what we're going to do about the state the next slide history of efficiency talks about where we came from this has been a pre-efficiency Vermont there was a real patchwork of energy efficiency programs around the state 22 utilities having different programs different incentive levels different requirements for contractors and builders to comply with so really difficult to get contractors or builders the right information and requirements to follow so the energy efficiency model which is what we run now at efficiency Vermont is really focused on transparent performance statewide equity thinking about delivering services and required to deliver services across different counties in an equitable way based on population we're independent from the utility kind of really focused on the customer focused on helping them meet their goals and as I mentioned a performance-based approach so this is not cost of service regulation or anything like that this is really about setting the goals that the state has for us and then us complying and delivering year after year after year so the next slide gets into some of those results efficiency works so you can see that the work that we've done since 2000 now accounts for 16% of electricity use in the state so what that means is that another way without efficiency Vermont services over the last 20 years Vermonters would be buying 16% more electricity than they are now that's a big deal and they'd be buying it more expensively so we've got some comparisons here we know based on our budgets and all of the savings that we generate we know we're able to deliver a kilowatt hour of energy savings at about 3.6 cents comparing that to the cost of electric supply about 8.4 cents so 3.6 cents is that taking the therapy on our lines and dividing that by the kilowatts you've saved the energy efficiency charge that's charged on all electric bills we know every year through that charge that's our budget for the year and then we can just divide that by the savings that we generated in a year to get the math about what it costs us to generate a kilowatt hour of savings so that's very positive it's good numbers to point to basically the bottom line is that it costs less to save energy than it does to go year after year by it and we see that year after year and this comes up as you know we have to answer for your charge which we would be would be accurate to say well that charge is 9% on our everybody's electric bill and it has saved us 16% so sort of absent that we would anticipate and other 16% on your bill yep higher bills for sure efficiency has helped to keep bills low over time so that's one point of fact the other on the next slide might also help to answer that question I think there's a direct correlation that you built with the 16% higher overall the monitors would use 16% more electricity and they would have to purchase that electricity at a higher rate so the relationship is not exactly 9% to 16% but we know that efficiency helps keep the bills low because it is a less expensive mechanism to procure our electricity supply okay the other way that I answer that question senator when I am asked is on the next slide here thinking about the overall lifetime value of efficiency Vermont so since 2000 if you total up all of the efficiency Vermont budgets year after year after year those total to $600 million so that's a significant investment that the state has made in efficiency and if you total up all of the energy savings costs that we have saved customers year after year after year that number adds to $2.5 billion so with an investment of $600 million we've been able to pay back the state in energy savings $2.5 billion so that's another way to answer the question about the cost benefit is to look overall at what we've generated time after time there's also greenhouse gas reductions that are listed here on the slide basically $12.5 billion metric tons equivalent to over 2 million cars being off the road because of the work that we've done the question that you've been at this now for 20 years is the low hanging food all gone? Great question one of the my favorite answers that I heard director of the national organization gave to that question is the great thing about efficiency is that the low hanging fruit grows back so we have gone out and procured lots of efficient lighting savings and we've helped people transition from incandescent lamps to CFLs and now to LED's the great news is that those technologies and other technologies continue to improve so one of the functions of efficiency Vermont that's really behind the scenes is to look at all of these emerging technologies to identify where are the future savings going to come from and then work with the manufacturers and the distributors and the contractors to make sure that the generation of efficient technologies is going to be available for Vermonters so we can continue to see these savings over time Logically if I'm devoting a major effort annually for 20 year period weatherizing my house eventually it's going to be weatherized if everyone in the state took that same step and went 100% efficiency I see the logic but what we know is that we haven't reached everyone with efficiency yet so we have an amazing database of customers throughout the state that have participated in some way but usually people are taking one or two actions so these savings are generated by a homeowner when their dishwasher breaks going and buying an energy starter dishwasher and receiving an incentive for doing that and then maybe it'll be 3 years from that point when they'll decide to change the lighting so they're 2 years when their furnace breaks and then they're doing something about that so we know people take steps at different times and during those periods when they're not taking action that's when we're working to make sure that the next time they go to the store the next time they interact with an HVAC contractor they have the most efficient option to choose from and that we're helping buy down the cost differential so they can afford to make the efficient choice when they're ready So this figure on the cause this is remarkable if you look at 2.6 million cars and you're going to realize Shelburne Road is a crap If I live off of Shelburne Road so I wouldn't love it if it were less crowded that would be great Now what do you do for cars? So that's a great question right now the scope of efficiency Vermont is solely buildings so we work mainly in electric efficiency mainly in buildings Yeah this is not about taking cars off the road literally or making them electric vehicles this is the equivalent car emissions just as something to put the 12.5 number into context And is is that based on our actual energy portfolio or if we were using I mean we're fairly green grid I'm just curious Those are based on Vermont numbers even in Vermont with our energy mix energy supply mix the way it is and moving more and more renewable all the time those are the savings we're still able to generate Were there any studies done on the dinosaur cells back when you were established to show projected paths of energy savings from the individual utilities versus what we were able to accomplish I am not aware of any studies that has been done that would look at that it's an interesting question okay so let's talk about the way that things are changing so what we've just been talking about is really the past and what efficiency Vermont has been able to do in the past but we know that things are changing we know in the energy system for example efficiency is not the only tool in our toolkit we know utilities are working on their two or three programs that customers are now interested in renewables are interested in storage are interested in peak reduction they're calling us to ask how they can reduce their greenhouse gas emissions so things are changing in the energy system we also know that in Vermont we have changes of a demographic nature we have economic challenges that we really feel acutely now that maybe we're not so acute in the past so the map that you see here on the slide talks about total energy burden so this is some analysis that the EIC did the parent organization years ago were actually in the process of updating it now and any of the red that you see in this map means that the average resident in that town pays more than 20% of their income on their energy bills that includes transportation so it's electricity home heating and transportation so we can see there's a lot of areas of the state that really need additional support 20% of your income on energy is a big deal especially given some of the economic challenges we already know are facing people in these regions so this is an important fact and it's what I wanted to bring to this room because one of the ways that efficiency of Vermont is now regulated by the public utility commission is focused on geographic equity and it's focused on making sure that our benefits of efficiency programs match the population centers so we actually deploy our resources to make sure we meet that performance metric but that means we're putting more resources into Chittenden County where all of the blue is and we're putting fewer resources where there are fewer people and those parts of the state where the red is where actually the need is greater so we're working with the PUC now on that topic it's just what I wanted to provide for this group so we know the times are changing the next two slides I'll talk about how efficiency of Vermont is changing as well I'm going to talk through some work on operational efficiency some work on customer value and some work on improving our partnerships with different stakeholders in the state so the first slide on operational efficiency this is showing since our inception in 2000 what the cost effectiveness looks like this is a cost benefit the blue lines that you can see the smaller lines are our budget that's the cost side of the equations and this is just our electric budget since that's the vast majority of what we work with the green lines are the savings that we generate with that budget each year so you know you can see the ratio is quite good this is what we want to see we want to see a lower investment and a higher return and you'll see over to the right-hand side we're going to talk about how efficiency of Vermont needs to reflect the changing economic environment in the state we didn't think it was appropriate to continue to grow efficiency of Vermont's budget so we wanted to make sure that we went in with a flat budget to keep that energy efficiency charge flat over time and then above that what I'm happy to report is that in 2018 we went in with a flat budget to keep that energy efficiency charge but in 2018 we engaged in a really serious organizational effort to reduce our cost so every year up until then we have been you know rewarded and encouraged to go ahead and spend up to the full budget allotment by the public utility commission this year we didn't do that this year we spent 2.3 million dollars less while achieving our goals so that took a lot of internal work but we thought it was the right decision to do to tighten our belts to get more and more efficient internally and then reflect that savings back to electric repairs in the form of a reduced energy efficiency charge in the future so that's something that we would like to continue we're working to continue this year and next year and we're really looking to see how much we can push efficiency Vermont's systems services staff people to really go the extra mile do more with less and try and reduce the cost of these programs while we continue to deliver the same high quality benefits so that's an important point at the same time and the next slide you'll see a few points on customer value we're committed to changing our programs to try and meet the most serious and pressing challenges that face the state there's two that I want to draw attention to really in terms of the Vermont that we serve one is small businesses so we have for years had a group of engineers and account managers that work with the hundred largest businesses in the state and so we go out to those businesses every week every day we're there we're working with them we're on their sites in their facilities and we're talking to them about how they can reduce their energy costs and save energy that's a level of service and a level of personal attention that was not available to small and medium businesses before now but we've created something called a business energy walk through and that's where we take those same field staff we take them and we are deploying them now in much smaller organizations going out to mom and pop shops going out to convenience stores going out to kind of neighborhoods restaurants those sorts of venues and we're finding really good uptake about 35% of the businesses we visit in this program turn around and they do an energy project and they've said we're just the small business owners so we're so pressed for time we don't have the resources we can't figure this out on our own we need someone to come help us so that's the way that we're helping to contribute to economic fatality of that particular group excellent I'm so glad yep it's one of my favorite programs similarly small to small businesses there's also a focus on low and moderate income residents and renters and with that group really unique needs there's a lot of different ways that we need to reach out to that population and make it easy for them to take action and they face unique challenges in terms of affordability, access time so we're really taking a hard look at all of our programs to say how can low income people participate in this and we're creating separate programs specific to low income to help offset their energy costs and reduce the amount that they pay one example of that is we're working right now with Capstone on a pilot where we would go together to the people who are on the waiting list for weatherization who are between 60% and 80% of area median income and we together would offer them an option if you could stand the wait list if you'd like or if you want services sooner here's a package for Efficiency Vermont that you could participate in and the package would include for weatherization services increased incentives that are more than a typical homeowner would get it would include 0% financing so if they needed to take out a loan we could help them do that at 0% and it would include the connection to the contractors who are market rate contractors and we've gotten their agreement to participate in this with a fixed price list so that we're able to just make this offer to every person on that waiting list there is a glitch in terms of getting that off the ground which is just access to the waiting list families so we're working now through some channels to try and get access and make this offer and see how that works and I will give you a heads up I believe we have 2 cent increase in fuel tax coming our way I was thinking I joined community action which is now capstone when my daughter was a newborn she turned 41 3 weeks ago we were doing the weatherization of low income homes then we've been doing it for at least 40 years and I understand now we could put out plastic and furnaces that the low hanging food has joined but I'm trying to after 40 years to say who's got a map because the housing stock outside of Chittenden County has not changed very much in 40 years who's got a map that says I also sold real estate and I would say to see a house that was weatherized which at some point was fairly rare I'm dealing with more middle income homes but I'm trying to get a sense of when are we done and when do we move into that more middle income area which you know and where do we invest limited state funds and I have a feeling that you may know a part of those answers but not all of them so when we get to that the heads out certainly we have to go back and talk about that sure that's great okay so the other thing I wanted to add on this customer value slide is working and this is a segue to the next slide working through partnerships to address needs that maybe we couldn't address before the capstone pilot example is one good example of that but we also see a role for Efficiency Vermont in ensuring that the utilities electrification programs that are working through tier 3 are efficient as possible so we've had some good dialogue and some good collaborative program delivery with really all the utilities in the state helping with tier 3 programs we have now built a delivery vehicle for coal climate heat pump program so that any of the distribution utilities that wants to promote coal climate heat pumps as part of their tier 3 programs can participate with Efficiency Vermont and just jump right on to that infrastructure that we've built and kind of easily keep their program going in their area without needing to add all of the program infrastructure to their operations so that's something we'd like to see more of and that's a segue to this partnership slide so one example that we used and it's not unique at this point but it is something that we want to draw attention to is the example of Brattleboro Retreat so this is an example where Efficiency Vermont partnered with Green Mountain Power and with a small organization out of the southern part of the state called Dynamic Organics and we worked with them to make use of an existing ice storage facility to cut their cooling costs per hour by $20,000 a year and how it works is kind of demonstrated here by this chart you can see the two stars represent in a given summer day what are what electricity price is looking like there are some parts of the day three o'clock in the morning you can buy electricity fairly inexpensively then as you get to three o'clock in the afternoon you get up to $380 per megawatt hour so that's when electricity prices are very high and the companies tend to incur demand charges on their bills and that's when Vermont's entire population is really impacted by usage at that point because those high peaks set the rates for everyone in the state so the more we can bring those peaks down the more we can lower power costs for everyone so what we did with GMT and Dynamic Organics was to work with Brattleboro Retreat to make use of this existing system that they had to find some technical fixes and solutions so that they could make ice in the middle of the night when the electricity costs are low store that ice throughout the day and then when they needed to on those really peak hot hot summer afternoons instead of making cold water with compressors and then piping that through their buildings to cool the buildings down they ran the cold water through the ice and used the ice to cool the water and they got cool buildings from ice storage rather than through air conditioning it's a chiller system the old heat storage that went in and has been taken out in most of the condos downloaded and heated bricks, stones something same principle this one was heating and then during the day you you wear over the hot still and you're buying electricity when it's below the market rate and you're avoiding it because it's well above the market rate except there was, if you ran out of hot water you made a very high rate that much so if the family came to visit and took an extra shower yeah yeah there was an emergency switch oh my so similar concept I think we hear a lot about storage as one of the new exciting energy technologies and the reason I like to use this example is because this was an old ice storage it's not lithium ion battery it's not a Tesla power wall but it really works and it's saving their treat $20,000 a year that they can then put into delivery of services to so it's a great story it wouldn't have happened also without each of these entities coming together the retreat interested in doing more very progressive energy manager who wants to try projects like this efficiency Vermont who was able to work with them and deploy our engineers on the project to make sure that everything was going to work as expected and we wouldn't get surprised by anything on the other side Green Mountain Power who had to come to the table with a very innovative rate to make sure that the customer saw these savings so it took a lot of engineering from dynamic organics this firm down in the southern part of the state to really pull this all together and when we can work like this as partners with these different segments of the energy system coming together that's where I think the next generation of savings will come from because we'll be able to look together at new ways to generate energy reductions for customers that maybe look different than they have looked in the past so the other topic I wanted to touch on oh questions ok just the next slide talks about Act 150 the self-managed energy efficiency program I know this was a topic of conversation in the committee last year and I just wanted to provide an update so this is basically the energy savings account pilot is the current nomenclature that provides flexibility for larger energy users to retain their energy efficiency charge funding and then use that in various ways in their facilities that might be different than they could have used it under the traditional energy efficiency charge and the traditional efficiency remote program so the way that the pilot works is a three-year term up to $2 million total in energy efficiency funds will be used and importantly the projects include electric efficiency but they can also include demand response which is really kind of moving that peak down to try and reduce energy use at a given time and reduce demand charges energy storage as we were just talking about and also energy productivity so if an organization wants to add another line to its facility maybe it's overall energy use goes up but maybe it only goes up by half then as it would have otherwise because energy efficiency was a part of the mix so this is working its way through a public utility commission process right now we issued a efficiency remote an RFI request for information in the winter to really understand what the demand would be what kind of businesses are interested in this, what kind of projects are they thinking about, what questions do they have and what advice do they have as we're working with our partners to put the pilot together we got a great response and many organizations responded and if we add up all of their energy efficiency charge contributions they added to more than the 2 million that's available annually so we know that this will be a very high interest pilot we know that when we actually see the RFP issued in May by the PUC that likely there will be more interest than available funds so we're working through that now and trying to encourage all sorts of companies to submit the best responses that they can we'd like to see geographic diversity we'd like to see a range of industries represented and to us the really exciting thing about this speaking for efficiency, Vermont writ large is we would like to see what we can do here, what kind of savings we can generate that then could be brought to the larger portfolio so moving this from just a small pilot we're planning for our next three year cycle just getting started that cycle starts in 2021 so the early learnings from this we would love to be able to incorporate in the bulk of the program going forward especially this flexibility point around not just electric efficiency reductions but also other benefits that we know will accrue to the grid like demand response storage flexible load manager great, perfect so what's next efficiency of Vermont is you would expect to be working quite a bit across the street with the public utility commission right now there is a proceeding on energy efficiency utility regulations so efficiency of Vermont, Burlington Electric and Vermont Gas all need to comply with a series of regulations that govern all efficiency utilities and the PUC is asking questions there like just as we've been talking about what are the right metrics what's the right planning process to continue to regulate efficiency utilities completely separately from distribution utilities or is there any role for overlapping goals and collaboration on these projects that may require multiple perspectives and multiple entities to pull off and at the same time we're just beginning planning for the next program cycle that begins in 2021 and really asking the PUC how they would like us to orient our programs do they want us to continue to focus on mega hour reductions do they want us to focus on other things how do we think about geographic equity should we be thinking about economic equity as an alternative so that we can't address that energy burden map that I showed what is the role of efficiency of Vermont in transportation should we be helping with the supply chain development there and working with dealers to get more electric vehicles available to Vermonters those are the kinds of things that we're working through with the PUC so are you like a partner with the PUC or do they actually issue orders they regulate the efficiency of Vermont so we are regulated by the PUC we go to them with formal proposals and work through dockets so that we can get clarity about our metrics and then they're the ones that hold us accountable to meeting those goals over time so while we would love to approach things as a partnership there is a relationship there that's definitely not equal but you propose things to them and then they would review them and say do you want this to do that yes and another partner I'd like to emphasize as well as the Department of Public Service so they're also part of the mix they're a great thinking partner and kind of a first line regulator so what we'd like to do and we're working to do now is envisioning a future where efficiency Vermont the distribution utilities the Department of Public Service all could come together to talk about how we think these kinds of programs could be most effective and presenting that in concert to the PUC I'm not sure if we'll get to that point but that's the approach that I'm taking with the team much more collaborative than in the past so the 9% that you were talking about before I mean that sounds kind of high in terms of how do you get there I mean I don't question that it's worthwhile to invest that amount to get the return you're getting but is it a question you go to the PUC and say we can get more from eight payers we can deliver this and they approve that rate we do we approve the rate each year good factor Senator Brock's question aren't you running out of low-ending proof a question that wasn't which has yet to be answered Senator Schrodinger's question and that's the same question that's hanging out so the process that we take with the PUC and the department is very rigorous and each time we approach a three-year cycle we do a lot of technical analysis just to be able to prove out that the investments that efficiency robot makes will payback and that they will result in benefits that are far greater than the investment itself and that kind of technical analysis includes getting down to a detail level asking questions like how many you know refrigeration systems do we envision being able to change out in gas stations you know coolers across the state of Vermont over the next three years and even something as minute as that has to be backed up and justified with a rationale that we have some data point and a report that says there's you know 80,000 of these systems in the state and we're going to go we think that 10% of those each year for the next three years is appropriate and we know the cost of the incentive will need to be in order to reach that level of performance so I don't want to leave the impression that setting the energy efficiency rate in the budget is arbitrary because it's not it's a very process and then we'll have others around the table at the PUC picking apart all of those assumptions and saying well I don't think there's 80,000 refrigeration systems in gas stations that need to be changed out I think it's really like 60,000 and I don't think you can get 10% a year you can only get five so let's reduce your budget so in the past that's how the process has worked we've really started from the guidelines that the PUC provides and the statute provides of what is the cost effective efficiency we can procure and then we've constrained it by what's actually achievable given the time that we have and the market that we have and the technology that's available to us and we work back from all cost effective efficiency that's what we actually think we can get and at each point along that dialogue there are other participants who are looking critically at those numbers and then the PUC ultimately arrives at the decision I think we've got a specific example of when you have the lowest hanging group where you go next and the next place you give this example is looking at replacing machines in gas stations or that's an example to the other question which I think Senator Pratt was asking is when does picking a low hanging group when do we say enough is enough what's the point at which enough is enough something else you're saying the budgets can be tracked all what is the apartment that goes off it says enough is enough sure so the one that goes off as currently constructed is any time we have a program or what we call a measure any piece of equipment that we want to you know promote that the cost benefit test comes back negative so we can't promote something if it's going to cost us more than the energy savings that will be generated I think that's yeah no that's fine I'm sorry let's get them because yeah we won't spend money that's when it's no longer energy efficient Senator McDonnell uses a sub-cratic method we'll ask you questions until you give him the answer he's low okay until you get a clear answer correct so we look at over the lifetime of the measure so let's take a clothes dryer if we know that a clothes dryer will typically last 10 years and the Association of Home Appliance Manufacturers based in Arlington Virginia will tell you the exact lifetime of a clothes dryer then it's not the plan to off the left yeah no they know these things then we say if over that period of time that efficient clothes dryer $100 worth of energy savings for a customer and so we have that data and we say what would it cost us to get that clothes dryer into somebody's home maybe it costs a $50 rebate just to kind of make that person make that decision then we're spending 50 the person is saving 100 that's a go but we also add in not just the incentive we add in the overhead we add in the program design cost we add in the all-in cost what is everything it takes to get that person to make the more efficient decision compared to over the life of that product how much energy savings is it going to generate and that's how we do them if I can set that up up there or you could say your clothes dryer was this many years old and people agree to use your clothes dryer only between midnight and four o'clock we'll give you a stipend if you keep that promise because four years from now there will be a clothes dryer that will squish you to that will make twice the advantage but it's cheaper today to use that one o'clock in the morning power that it is to replace them your clothes dryer today and that's picking which apple they choose and over again they don't but that's what they do that's a good job it's hard, it's difficult to explain and if it costs less to build new poles and wires and buy more electricity it's a bargain we here at Stuffer make that bargain and they gotta work hard they work for that challenge any other questions thank you thank you very much for the opportunity we'll have some of that we'll start with the other web civilization and so we're ready to do thank you