 Alright, good morning and welcome to the Vermont Legislature's House Committee on Environment and Energy. This morning we're going to continue taking testimony on S5 and we have Neil Lunderville from Vermont Gas with us this morning. Welcome. Thank you. Good morning, everyone. Great to be with you. My name is Neil Lunderville. I'm the president CEO of Vermont Gas Systems BGS. In addition, well, before I was in this role, just a little bit about me, I served as the general manager of the Burlington Electric Department in Burlington, Vermont, for four years. I've also served various roles in the, in for the state, including Secretary of Transportation and Secretary of Administration for Governor Jim Douglas and everything recovery officer for Governor Peter Shumlin. So today I'm here to talk about S5, the Affordable Heat Act, and I would like to start. It is alright with folks to just talk a little bit about BGS from our gas and about what we do, what we do, how we're doing it and the things we're doing to address climate change and then talk about the bill specifically and then leave plenty of time for questions. I understand. I'm sure I have 45 minutes. Okay, but I'll probably take about 20 minutes or so to talk and then leave time for questions. And if you always, of course, interrupt me at any point that it might be helpful to get clarification on something. So, VGS, Vermont Gas Systems is our formal name. We call ourselves VGS. We refer to as VGS a lot. VGS is the is the largest thermal energy provider in Vermont. We serve about 55,000 customers in Northwestern Vermont in Franklin, Addison, at Chittenden and Addison counties. We have a pipe that runs from Canadian border at Highgate that runs down through Franklin, Chittenden and down to Middlebury. And from that we have distribution lines that run out to various communities and service lines that connect our customers. And through those lines, we serve natural gas directly to customers. That's been our principal business for almost for over 50 years, going on 55 plus years at this point. So, in that sense, we're a distribution utility, we're distributing natural gas, but we're also an energy efficiency utility. We have like EV, Efficiency of Vermont. We do thermal energy efficiency for our customers programs that we actually started in 1992. So now over a lot of years, 30 years. So we've been doing energy efficiency work 2016, we got an order of employment from the Public Ability Commission, and that makes us a also an energy efficiency utility, an official energy efficiency utility. And more recently, we've sought to become an integrated energy services provider, meaning that we're doing more than just serving gas and doing efficiency but also looking at a whole range of other innovative, sustainable energy ways to serve our customers, which I'm going to talk a lot about today. So we, we've always had a history of innovation at VGS going back to when we first started the company. I wasn't there obviously but back in 1966 when the first lines were drawn in and first customers were connected. We were displacing what was then a dirtier and more expensive source of energy, the Royal Propane in some places, in some cases, coal gas or manufactured gas. So, right from our history, we were we were innovation ourselves at the beginning, but over the last 55 plus years, we have been continuing that innovation I mentioned the energy efficiency utility, and then bring us up to the sort of the the forward time that we're in. In 2019, we set a new course with the launch of our climate action plan. We did that for a lot of reasons and and I want to spend a little time on that because it's important to to to understand that relative to our support for this bill. Our long term objective, you know, yes. You were our climate action plan. Do you mean the states or sorry, the VGS climate action plan. So in 2019 we the VGS launched our climate action plan. Why we why we did that our long term objective is to provide zero net zero emissions energy to our customers at a price that safely reliably and price to bacon for we recognize that natural gas, despite the many benefits that we've been able to deliver to our customers safe, reliable, it's affordable. Some of our customers really like they're really happy to to receive it. But despite all those benefits. It does contribute to climate change. It's in fact a significant driver climate change generally look through the world so we acknowledge natural gas plays a role in climate change. Our acknowledgement means that we have a responsibility to address that. Now we can't do that overnight. We can't just turn off the line and stop serving customers that would be irresponsible wouldn't make sense. In 2019 we launched our plan to the idea that we will undertake a transformation of our own business to serve in a more sustainable way without sacrificing. We're doing that in three principle ways. And these sort of are the building blocks for for our climate plan and for all the work that we're doing. The first, and in a lot of ways the most important, the place we always start when you think about climate action is energy efficiency. How can we use less energy. So we have our own energy efficiency program this is a this is really easy for us. We start by thinking about how we can just simply deliver more energy efficiency services to our customers, how we get them to use less over time. So if we think about that our entire greenhouse gas emissions right today, and we look out for about 30 years the first block of how we reduce that is we simply get our customers to use less energy. So this is a benefit overall, and we know it's not just the kind of benefit, but homes that are weatherized are also comfortable. They're, they're, they're put money people's pockets right away. And I think there's strong support for for weatherization among our customers certainly among the legislature. One of the other roles that I have is the co chair of the energy action network weatherization at scale network action team we've something we've been working on for years to work with partners in the legislature to back get more money overall for weatherization so that we can start to meet those very robust weatherization goals at VGS we want to do our part there and that forms the cornerstone of our efforts around our climate plan. And part of it is what we call our in home innovation. This is how we are, we are working to go inside of our customers homes and help them with sustainable solutions to either use less energy at that systems level, or to make conversions to, to different ways to heat their homes for instance, last year, we were the first gas utility in the country, launch and electric heat pump water heater program. And a lot of gas utilities wanting to think about working on electric. We disagree. Ultimately, it's what's best for our customers and, and, and how they're able to continue to warm their homes and businesses in a way that is safe. Excuse me reliable and cost effective for them heat pump water heaters do just that. This year we're launching a hybrid plan where we will be putting in electric heat pump. Alongside of furnaces so that these systems are a hybrid using electricity. When the system supports the temperature support and when it gets too cold the, the natural gas system kicks on to make sure that it is even heat for our customers even piloting this for some months, and we're a couple months away from launching this product. So when we're able to deliver this kind of in home innovation. That's another way that we think about. First, we take the home efficient. Second, we, we deliver energy to them, allow them to get their heat in a different way. That's the second way that we drop our overall greenhouse gas emissions. The third piece is to displace fossil fuels with alternative supply. And this gets into a whole range of activities where we are simply using less fossil gas. And this includes renewable natural gas. It includes green hydrogen, which I can talk more a little bit more about it includes things like geothermal energy how are we using ground source heat pumps are networked ground source heat pumps to deliver energy to people's homes. It also looks at things like district energy we've been working for years with Burlington Electric in the city of Burlington to take the steam from the McNeil, the new biomass plant Burlington and pipe it up to the institutions on the hill to displace fossil gas in their boilers. That's the project that we've been studying the feasibility with really closely with Burlington Electric in the city. And we ultimately hope to have a go or no go decision very soon on on that project. All of those things will displace fossil gas that that represents the third big chunk of how we reach our climate action plan goals. Our climate action plan goals VGS is climate action plan goals are also for global warming Solutions Act requirements. They align. We said we launched our plan of 2019 global warming Solutions Act was passed after that, but we said our 2030 goal is the state's 2030 goal which is 40% less than than greenhouse gas emissions in 19. The 1990 levels we we believe that we are on track to do that and ultimately we believe that the affordable heat act will will help us achieve that that goal. A couple of the things about about VGS before I turn to turn a little bit more closely to the bill. We have about 130 130 540 employees that work out of in our in our company that work out of office about principal offices in South Burlington but we have satellites in Hudson County and Franklin County. We also, as I mentioned before we are energy efficiency program. It's pretty robust we have a pretty large energy efficiency team works really closely with EVT, and also Burlington Electric to help customers we think it's mentioned mentioned that it's a cornerstone for us but it's also concerned that our customers really love it we know from ask their customers they really appreciate when our technicians can go in and help them get their homes. More comfortable. Then we also provide income qualified assistance programs to help the most energy and income low energy burden than low income customers. So a big part of what we think about affordability is we think about affordability for low and moderate customers those least able to pay so a lot of our efforts are really targeted to think about how we can help those low and moderate customers first so that they have options to have a sustainable affordable long term energy energy for the long term. And one of the things that as we undertaken this journey since 2019 to work on our VGS climate plan. We have been pushing a lot of innovative ideas I mentioned already the heat pump water heater program. I mentioned a little bit about our weatherization rebates for low and moderate income. We're doing a lot of research around geothermal. We actually participated in the electric boiler pilot with JP as you don't serve. Now they actually are a big propane customer but they're on installing an electric boiler this place propane it's a project that we got involved in. We got involved in it because we want to understand how electric boilers might be a viable solution especially for large industrial and industrial customers. We've also been involved as I mentioned the green hydrogen pilot project with global factories of the semiconductor facility in Essex and with our research partner UVM to pilot how we can use renewable energy to create hydrogen hydrogen that's ultimately blended directly into the gas supply displacing fossil gas at the boiler at the boundaries plan. We think hydrogen has a lot of value for large commercial industrial customers which are really hard to decarbonize. We know this from the science they can't just install a heat pump and do some weatherization work and help to displace all the world we need things that can deliver energy at sale and green hydrogen has some real promise to be able to do that. Yes, of course. One more time. Yeah. How you're creating the green hydrogen. Sure. We is the project that's still in the early phases of putting the engineering together for it. But we will ultimately use renewable electricity to to run an electrolyzer that will that will be run that water will run over the water just H2O it'll split the H2O into oxygen and hydrogen and the oxygen will be released out and the hydrogen will be captured that hydrogen will be will be will be a blended directly into the gas stream and fed into the the boiler at global boundaries. That hydrogen can bust and when it can bust because it, unlike CH4 which does release carbon, CH4 being methane does release carbon, the hydrogen the H2 the hydrogen doesn't release any carbon it is the carbon free energy. The early phases of that project will use power from the grid, the later phases of that project will use renewable power, some of which will be generated right at the plant. And the definition of renewable electricity is is a first solar wind hydroelectric. So, in doing all of this, this innovation work one thing that we, we realized is that we can only go so far to be able to do that with the sort of the current statutory and regulatory construct and that ultimately, in order to achieve the cold warming solutions we need some additional green book statute and then and regulatory framework to be able to do it and this is something that we have. We've been thinking about and working on for some time and and as I'll come back to S5 does provide a lot of that framework for us to continue to grow in in this direction in the future. We have been involved with the development of of a clean heat standard affordable heat act for some time we were early participants in the energy action networks clean heat clean heat standard development process and actually started back in 2020 something that that I personally been involved in quite a bit. And we've, we put in, we've provided input technical support for development of the white paper legislation at different points and we spent a lot of time reviewing the concepts that are that are ingrained into to S5. This all leads me to say that we support S5 the affordable heat act as it is passed by the Senate we supported it as it was introduced. We actually supported each 715 that was passed last year as well and as I'll talk about S5 believe makes improvements on that it also had some complexity, which I'll, I'll flag a note of caution as I as I talk about that. What we support as five and because we believe that a balanced thermal sector performance standard will give us the clear guidance and framework that we need to achieve the state's requirements into the global warming Solutions Act. Importantly, we believe that a balanced market based system, where we have obligated parties that need to generate or or acquire clean heat credits is one that will that will promote lowest cost, most more most cost effective solutions toward completing our, our climate challenges in the future. And this bill provides for that market based approach by having a tradable system of clean heat credits and allowing obligated parties like ourselves to be able to to generate and and acquire those. This is, we think this is important, a really important piece of the legislation we want to make sure ultimately that we have a the widest array of flexible options to address our greenhouse gas emissions reduction targets. I want to make sure that that that those clean heat measures are compared apples to apples. So there's a part of this village I'm sure you've heard about the life cycle emissions analysis. This is where every clean heat measure is through a process by which you're, you're studying the pathway you're studying the other carbon and carbon impacts of many measure and then ultimately getting a score for those clean heat measures this sort of life cycle emissions analysis, we think is a really transparent, fair, equitable way to achieve this that creates that the market to allow the system to really work. I also say that the s5 is improvement over over last year's bill, because it strengthens how we support low and moderate income customers. There are new provisions that are in s5 that weren't in last year's bill that put more of the effort on making sure that low and moderate income customers are protected. Ultimately, we need to support a really close eye on the people who can least afford to pay in this because the energy markets as we've seen there's a lot of volatility in those. That's going to happen, whether s5 goes forward or not that volatility persists the only way that we can protect low and moderate income customers for the long term and help future proof them against the ups and downs is to provide them in their homes flexibility and optionality to warm their homes. And this means a combination of systems. This means a weatherized home. It means a home that has a heat pump backed up by natural gas, propane or oil. And it means that the that they can in in all seasons heat and cool their home. And really, that's both safe, reliable and affordable. I think another important part of s5 and one of the reasons we support it is that it does not mandate any of these changes on customers. Customers retain full choice of how they choose to heat their home in the future. Customers to have that choice. We think that choice is important to make the system work and we don't want to be in a position to tell customers how they should heat their home. We want to give them the options and and the affordable options to be able to make them to make good choices and at VGS we are. That's the work that we're doing. I want to, I want to, I noted that as five add some complexity over last year's bill and I wanted to flag that a little bit for, for the committee. As compared to last year's bill. This bill is somewhat more. It's sort of a narrower set of clean heat measures that that that we can do it. They're both changes to carbon intensity score process. There are there are additional additional specificity on the types and quantities of credits. All these things increase the complexity that that that we will have an opportunity to deliver that. I think that as five as came as it came to the Senate does hold the balance well, but I would, I would encourage the committee not to add additional complexity to that because we add complexity and inflexibility. It serves to make the bill harder to implement and which ultimately will make it less affordable. So by having a really balanced approach there is ultimately what makes the bill. From our perspective. And when you pull all these parts together. You get a piece of legislation that we think creates this generational opportunity to make our energy our thermal energy more sustainable for for the long term. And this is the fact that that that this sort of transformation is not costless. There will be a cost to this. There will be a cost that will be ultimately borne by obligated parties and by our customers. But I also think that that we are well positioned to manage these costs, because we are fully regulated we're established company. And we have been working for years now to pull things in place to be able to to move quickly to help our customers take advantage of this. Also flag that, along with cost and benefits, every time we need to, when we when we think about how we make this transformation, we need to be making investments both as companies and as for monitors to put in place. So these are things that will allow us to have less volatile energy sources over the last year, and largely due to the war in Ukraine, but also other forces that play we've seen the commodity cost gas go from a year, a year and a half ago, it went up three times 300% The cost was about $3 per NCF or and BTU, which is the unit we operate in and it went at one point over $10 for one of us, and it has come back down again now down to around $2 and then BTU, but that demonstrates the wild volatility that we've seen certainly the oil propane markets have seen similar volatility. One way we include from this volatility is we provide options and flexibility. That's a really important part of this and it's that's the kind of flexibility and optionality that our customers need to be able to manage the changes in the market. The affordable heat act and clean heat the clean standard that that is right along with it does allow us to provide incentives for customers to make the switch toward toward these more robust systems in their homes. And that is that's sort of the mechanism that allows us to make these these transformations and we, we think this is a pretty, a pretty important piece of what we're going to do and ultimately we can help our customers take advantage of. I think I'll could just close by by saying there's a lot of the work in this bill will be done by the public utility commission and a technical advisory group. There's a lot of sets. There's a lot of technical pieces in this when it when it comes to outlining the types of credits that the score for for the credits that will be available. The life cycle analysis, a lot of the other pieces. We have great comfort in that we've, we have have a long history of working with public utility commission and technical advisory groups in other areas. We think this is a sort of tried and true methodology that has worked served as well in Vermont overall not just for VGS but for other regulated entities such as the electric distribution utilities. And this is a, this is a good measure that's that that makes sense in the bill. So with that, I'm really pleased to to offer our thoughts on it express our support for the bill encourage you to continue the, the good work that was set forward by the Senate. We're happy to answer questions today and we're also happy to be a resource to the committee on this bill or any other bills that that are relative to our radius here. So, thank you. Thank you for your testimony. Thank you very much. You described the things that you are doing already to really, you get, I think you think that you're on your way from trying to get to 40% plus by 2030 in any event. And then you said that the mechanisms that would be put in place by the bill will help help you. Yeah, and so on the one hand, I just want to understand it because it would earn credits by doing what you're already doing, which would mean you wouldn't have to pay anything. And so how do you actually benefit by the by the system beyond what you're already doing you already kind of in the business of transformation. So you get those credits and how does that actually, how does the new market actually benefit you for what you're already doing. Yeah, so a bit of be more clear on that on that point. Some of the things that we're doing are running up against a wall because we are, we can only go so far as a regulated utility and with the current statutory construct that we have particular in areas. There's a lot of different areas but we run up against that wall in some places so there are things like the thermal that we might like to do more of that. That we really that that there's not sort of the statutory backup to allow us to do right now. A clean heat standard affordable heat act will unlock some of those areas for us because they will allow us to press forward, sort of more aggressively into those spaces and deliver more value to our customers over over the long term. So we need the additional statutory framework to be able to have the regulation that would allow us to go forward in those areas so we do, we, if we didn't have something like this we'd have to, we have to get creative and find other ways to do it but ultimately this sort of framework as a performance standard as set forward and as five does give us much more latitude to be able to do that kind of work and at a quicker pace and ultimately I think at a more affordable cost for our customers. I want to elaborate a little bit more about some of the blocks the roadblocks that you're running into the regulatory obstacles. Why are why are they there and what are they, what exactly is going on some of that. Yeah, and they're happy to talk about a few of them. They're, they're, they're all there for good reason, you know, they're, there's a long history of strong solid regulation. A lot of it has to do with how we operate in our, in our footprint that is the, the area where we have type and have our customers connected. Ultimately, we'd like to be able to add additional customers. There's a lot of things like geothermal network geothermal, it might be outside of our service territory, because we are a gas utility regulated gas utility that is sort of, there's an interpretation that we are restricted to our service territory ultimately a cleaning standard but allow us to move outside of that service territory serve new customers with the safe reliable affordable energy that we think we can provide. So that's one example, where this bill certainly would help that. They're probably other examples that's the first one that springs to mind. Thanks. Thank you. I have the same question as representative bongarts and I was very curious, very interested in your answer and I guess I still don't feel like I understand what the disconnect is for you between what your plans are already, and how it would be helped with S5 it seems like said that it that it would that there's things that would open up but I'm wondering if you could really be very, that's a lot more specific about like maybe just pick an example of how this bill would help you do something that you wouldn't be able to do otherwise. And we'll take geothermal as a good example for this. We recently petitioned to the public utility commission to do a geothermal pilot in Rutland, Rutland today is outside of our service territory or tourist territory extends only to Middlebury, which is where our pipe is. And really the public utility commission denied that application for us to do that pilot in part because it is outside of our service territory. Now, with a clean heat standard in place. That is the kind of activity that would displace in this case propane for the customer by putting in a ground source heat pump that could deliver the energy more cost effectively and with a lower carbon profile. So the new standard would give us the ability to do that kind of project, get a clean heat credit for it and credit against our annual obligation. So that's a really concrete example of where in real life where we, we can't take action. Because we don't have the statutory framework that will allow the regulators to give us the ability to move this direction. That's helpful. Representative Smith. Thank you. Thank you. Going along with representatives question. Can remote gas succeed without S5 to succeed at their goals. Yeah, we're we're we're a tenacious and creative bunch, you know, so we're we're going to, we are, we're going to work with whatever is put in front of us. At the same time, I think we will be able to thrive more with S5 and able to work toward our climate goals. We serve our customers better with a bill like S5 in place. That is specifically a performance standard that allows for a balanced market based approach to to reducing greenhouse gas emissions over the long term. That is, you know, a program like that, which gives us which gives us the agency to have a lot of flexibility and how we deliver those greenhouse gas emissions really allows fuel providers to, you know, to be creative and to really find those low cost solutions that will allow us to meet to both meet our, our environmental goals but also keep costs low for customers. So, so we need we definitely need something like S5 if we didn't have it would make it more difficult for us to get there, but you could succeed. I think we, we, I'm, I guess a tenacious and driven so we're going to find a way to succeed no matter what but I, but I, but I to be clear, I think a program like S5 would be set in place like it through S5 would allow us to do that more quickly and also in any more robust way that would serve our customers better. Thank you. And another question. When you started your presentation, but it led to my thought of, are you in competition with the Vermont field dealers. At the burner tip we are, you know, we, we have to compete at the burner tip with the field we are a field so I should say stop I say we are a Vermont field dealer. And we remember the wrong fielders association oil dealer oil and propane customers. We compete with oil propane and electricity for service. And that that's happening today it's been happening for the last, you know, 55 years plus years for our for our customers so we are in competition. I was going to try to find out while while I was listening to your testimony. And I will find out and I don't need an answer now. Not sure I know. I'm sure. But from what I understand heat pumps are not going to work in a mobile home. And there's no such thing as a $3,500 heat pump in a mobile home because of the added expenses to set up a mobile home or if they can be even set up. They're going to help these low income people. I mean you're going to have incentives and in a system in that but is it going to be a 50% incentive to help these people are for a 5% incentive, because whatever you do decide for an incentive amount, it's still going to be a struggle for these people live in that way that are making 4035 40 grand a year. I, I know well that the struggles of low income Vermonters and I, I have a true passion for weatherization. In part because I grew up in home where when the wind would come off the lake and call Chester, it will lift the carpet off the floor. That's how weatherized it wasn't, I know that feeling. Yes. And I know well to instead a lot of nights with my mom curled up next to the wood stove. I'm trying to stay warm. And so, you know, 5% incentive is not going to help customers like that. I'm trying to bring those incentives almost to almost if including 100% for low income customers. We know this from years of doing weatherization work in this space. And ultimately, it's those customers that we need to target first and we need to target most aggressively in order to future proof them against any volatility that exists in the energy market. And that is, that is a passion for DGS. It's a passion of my personally, but I'd say that in the energy with all the weatherization providers and field providers, you'll hear that common refrain. We want our customers to be warm, warmth is the key. That's the business that we're in. So with a clean heat standard, we're both obligated by the bill. We're going to be able to deliver incentives for low and moderate income customers, but also in practice, if we want to be able to weatherize those homes and do other upgrades, we're going to need to bring those incentives way up. Not every type of of improvement is going to be available for every type of home, whether that's a mobile home or just a standalone home, you know, they're really truly are custom jobs for everyone. And I, so I, so I know that that it is when you look at mobile homes in particular, some things might not work other things might. I think we have to look one off occasion, but importantly, we can't ignore that we need to look at them squarely and address them early. And because we do this bill and that needs to be part of the policy of the state is helping those low income reminders, get off the roller coaster of volatility that we faced in Vermont with energy prices over many years now. Thank you. Thank you. Thank you. Thanks for your testimony this morning so I think you gave a great example about the Rutland geothermal project that you're in. For me when I think about over the years that we've been talking with so fuel dealers. I myself for years have been saying how do we help you transition your business because we know that you all are key, you have your customers need to keep them warm. There's a lot of fuel. There's a lot of pressure to reduce it. How do we help businesses and so this is a great. I love that example of how you are diversifying your business model, and also adding workforce into this transition, which is key. You're in a place where there may be not be workforce. We have another example so I've heard you talk about some of the pilots that you're doing. And do you have another example of diversification. How how your business is transforming to meet the transition. I do and let me talk a little bit about the. Yeah, let me give you an example. I thought a little bit about the force that play. So, one of the large force that play in the energy sector globally, certainly nationally and in here in Vermont is the carbonization so any business that is in the thermal energy sector needs to be thinking about decarbonization as one of the major trends that's affecting us for the long term it's not the only trend there are other trends like digitalization decentralization this is digitalization being like our technology to our to the to sort of the bits and bytes to the molecules and electrons and decentralization how we are how how energy is being produced in a smaller scale and be connected to the greater grid. But decarbonization is one of those big trends and so we are we are thinking about how we can be carbonized across all these sectors. Let's talk about district energy. I think this is another another area that maybe a helpful helpful construct because it deals with something that that feels a lot like the business we do now but it's a lot different. So district energy and also network geothermal they're kind of the same idea is that you lay pipes in the ground that connect to a thermal energy source that delivers either steam or hot water to a network series of buildings. The big difference is that it's not gas. So I'm like our business now which you know we take pipe we put gas through this we take a pipe we put water or water and water form or you know liquid form water and steam form through that pipe. This is a pretty big move for gas companies gas companies have known one thing for a long time which is putting gas into that pipe, pushing it through the customers running it through the meter and and being done with it but one realization that we had is that that is really agnostic to what flows through it's just a pipe pipe doesn't care but in fact the pipe that we use for geothermal and district energy is the very same pipe that we're going to use to put natural gas and high density polyethylene pipe. You put in the ground ones. One has a blue strike that one has a yellow strike yellow straight for gas blue straight for water. They're very very similar so we think about when you talk about workforce. We're thinking about how we can take our existing workforce and transition them from putting one type of pipe in the ground actually put in the same type of pipe in the ground but running a different medium through to deliver energy. For us that's a really powerful transformation we are using the skills that we have owned over 50 years of delivering this kind of energy to customers and tweaking them just slightly to deliver the safer liable and affordable energy for our customers. So I think we have we think there's great promise for both district energy which we look at Burlington with just steam energy and geothermal where we are looking at a variety of different projects that are either networked or single source. This is an area where companies like ours can can press ahead and deliver a results customers. Thank you. My second question is around the creation of the market versus just a direct appropriation towards weatherization or fossil fuel reducing measures. Can you speak to the advantage of going with a market or lack thereof, as opposed to a direct appropriation. Yeah, I think I mean I believe in markets. I think that markets will, you know, over the long term provide the most cost effective and ultimately the most innovative solutions to challenges that we face. Certainly, there's a lot of applications of direct appropriations that that makes sense. But if you're looking for a long term systematic generational change to how we warm, heat our homes and from our homes and businesses and run our processes, then we need to be thinking about a market based approach to that. There are a lot of other committees heard other examples of states that have delivered this kind of market based solution and the benefits of doing that. And in particular in California with on the transportation side. So I think that these models have been shown to work. And we believe it can work in Vermont just as well. We haven't heard from Oregon. So what is the effect. What is the effect. Yeah, not yet. Not yet. Okay, so, you know, I would let her speak to this specifics but you know they've implemented a performance standard there. They've had a lot of similarities between the Oregon model and what we are what you're proposing here in S5 that allow this market based approach to work and what they found is that it's working quite well they're getting the best gas emissions to reductions they desire for a pretty affordable price. She can speak to the specifics I'm not as versed in them. I know you know general outlines of the plan but I think it's an important model for us to look at. Okay, there's a lot of questions. I'm going to indulge the chairs for just a second. You talked about this, the new balance in the bill balance is necessary I think I heard you say the current version that we have before us is still balance it's but that it narrows the measures. Can you help us understand what the measures narrowed means. Yeah, I can. So, I'm asking, it's really my, my point was compared to last year, which we did support and, and this year, there are a number of parts in the bill that that make it just a little, little more challenging to for the types of things that we would be able to do. For instance, there's a declining carbon intensity score in the bill that will require only certain fields of carbon with carbon intensity to be eligible for clean heat. That's a narrowing of this it's a narrowing that we we support. It's a narrowing of the types of measures that would be allowable here. There's more specificity around fuel pathways that have been included in the bill. You know, ultimately, I think that there's some good precedent for those types of fuel pathway analysis so we support it but it does sort of narrow in and add specificity to that process, which ultimately make it a little bit more complex to deliver on, but, but it is a narrowing. There's more specificity around how we can deliver measures for low and moderate income customers. So, the fuel supply as compared to age 715 added that half of the measures for low and moderate income customers have to come from installed measures versus fuel supply measures. This again is a narrowing of, of what would be available in the bill. Any one of those seems like that may be fine when you add them all together it just provides fewer options for obligated parties to be able to deliver. We think it's still sort of holds the line on balance but I would encourage the committee not to go further than what's been put in the bill already. Thank you. Workforce issues have come up in our conversations. How are you addressing those and. Yeah, work for so. We, we have one of the largest thermal workforces in the state of Vermont and part of our, our team we have almost 30, we call service technicians these are the, the folks who go into people's basements and all spaces to work on furnaces and boilers and actually do the work. We have, I can say that over the last year, we have worked very hard to make sure that those service tech that the team of service technicians fully staffed that they're receiving a really, you know, real fair pay and investments in part because we have high demand, and we have a lot of customers that do the work that that that's contemplated in, in this bill. And so we want to be able to both address all the service calls that we might have in any given year. That's a portion of the new directions to do installation of those electric heat pump water heaters or, or hybrid heat systems. And so I do think there are, you know, great, very large in the state, we do have work for challenges in nearly every sector. I think that one positive addition in the NS five is the inclusion of potential study in this bill potential study is something that will look at those workforce challenges in addition to other market conditions that exist and give our regulators and the future a picture into what is achievable in the next three, six, nine year term potential studies are a real, and other folks were here to speak to better than I can but central studies are a well known tool in the space of energy efficiency we do a potential study before each of our was called a triangle plan or three year plan for energy efficiency that looks at all the things I just mentioned. And it gives you a sense of what's possible. And the potential study that was added in as five will also help will also look at the workforce challenges that might exist out there, so that we can, you know, we can cut the suit to fit our to fit ourselves here around this and I think that's all right. I know there's a lot of other people question so I wanted to remind folks we need, we're bumping up against an hour we need to take a break before the next speaker. So I'm going to prioritize people who haven't asked questions yet so representative Morris and Pat. I'll go fast to. I'll try to speak fast to and I stumble when I do that. I apologize. Thanks for coming in with a test one is here about your company and initiatives that you're undertaking. But I want to drill down a little bit, and this might be theoretical it might not be. I'm sure you have expectations but we've had a couple of previous representatives ask you about your earning credits now with your installs or you would be earning credits under this bill. So that's a due to the initiatives that you're undertaking now. And the question was asked is how will they pay you back. And I just want to put this into a formula so you're you're going to undertake initiatives to reduce the fossil fuel usage, but you're going to be installing alternative initiatives that are kind of like paying for themselves. And so less gas, more cost. I'm just wondering if you have an expectation on what that's going to mean price per unit or measure. Yeah, I'm so just the first party question, you know these when we are doing a lot of the things that I've talked about that would be qualified as clean heat measures there is a cost associated with those by by doing those early, we are, we are, we think that we're ultimately lowering the long term cost to our customers. So by doing them early, trying to take advantage of opportunities right now in the market to, to, to do things like the heat pump installation or geothermal or no natural gas etc. We are minimizing the cost or trying to draw down those cost effective credits by doing them early. So there's no, the benefits to, to us, and to other fuel providers who take advantage of that is by doing things that are available later at a lower cost today. And I think that that's a key point in this that's why we are one of the things that this bill would unlock and that's to the benefit long term benefit of customers to the extent that we can deliver early action at a lower cost. That means that we're keeping our costs down for customers. We have a lot of as a, as a fully regulated stylish company we believe that we can deliver as five to our customers in a way that is cost effective everybody's different because a lot of largely depends on on if you've done some of the installation done the work on the front end to diversify how you're, you're warming your home or business and so, importantly, doing early action to help customers make some of these changes early. Now, we'll future proof them or insulate them against against price volatility in the future that that could come from any from any from any quarter. And that's why we're trying to get ahead of it early. And that's why we've been trying to get ahead of it even without this bill is that we think that that you're going to see that that volatility into the future and we don't want our customers to experience that so that's why we're moving quickly on this and that sort of works inside of it for us. You don't. I'm still not here if you have an expectation on what the cost might be per unit. You know, we, we've done some preliminary analysis but there was the bills continue to move to the Senate and things change that, you know, I'm not prepared to, to offer, you know, a number on that I have said that it's not going to be, you know, it's not free there's a cost to this that that will be that will be borne by, by, by folks involved. We think we can manage that cost affordable and ultimately, you know, for people who are able to take advantage early to diversify their fuel supply that that that they'll mitigate any of that increased cost pressure in the future. Representative Pat. A couple of questions. I'm trying to understand as a regulated utility and I'm trying to, as you know, I'm trying to distinguish between the familiar with. Yes. Are there. By statute and regulatory action electric utilities are now allowed to spend money on things that they were never allowed to spend money before because they were not quote used and useful and delivering electricity. You know, to your three things like that. Is that an issue for you. I mean you mentioned a project that where the PUC turned you down. Are there things that are, are you, are you subject to the similar kinds of requirements that every everything you spend money on that regulators are going to be approved, approving must be used and delivering your product. Yes, I mean that is getting into the sort of the regulatory reads of it yet we need to make sure that we're making prudent investments that are ultimately used and useful to our customers and by adding additional like so the S5 spans the types of activities that would be considered prudent and used and useful. And that's very helpful as we worked toward meeting the state's requirements set forth by the government. And that because of S5 the PUC would can consider those as used and useful words that five years ago that might might not. I think certainly we're we're seeing, you know, an evolution across all these sectors as to what we think of as used and useful and least cost relative to our goals and the, the specificity that S5 would bring we believe would give our regulators more ability to help us, you know, meet states goals and our own goals inside of our construct. A different question. When you talked earlier about different, different products that you might be delivering through your pipeline other than natural gas. So when and I understand this again from an electric point of view but if you insert a biogas some amount of biogas into the pipeline somewhere. It is. How does that how do you. How do you credit that in terms of what the impact is in in in Vermont or Vermont. Yeah, so that the a couple points there. First is that the the North American natural gas grid is fully interconnected so both Canada and the US so that that's important. It's a little different than the electric grid whereas their regional independent system operators isos that operate with with limited interconnections between those regions the gas grid's fully fully connected. So we think about in in putting in alternative supply like renewable natural gas biogas or hydrogen or in the future things like since synthesis gas and other things is ultimately all all combustible at the burner tip that is an important piece of of what we do anywhere we are injecting alternative supply it means that we are ultimately using less fossil gas that. And that is to the benefit of the climate and to the benefit of our emissions reduction schools or requirements that we have by by the state. And we are we've been prioritizing projects in Vermont around some of those but we're also looking at some projects out of state where that gas is ejected and displacing our fossil fossil fuel use fossil gas use. Okay, the reason I'm asking this because in some ways this is parallel to what an electric company company may have a contract with a generating plant that's outside of Vermont. That's renewable. Those electrons are not delivered to the outlet and your home or my home but they get credit for having. Yeah, exactly. I will say it part of your question to that we take we took a lot of inspiration from electric utilities have done over the last 20 years, and looking at a portfolio approach to diversifying our supply and if you look at our portfolio. A few years ago it was 100% one thing which is fossil gas. You know now it's, it's 97% fossil gas but it, but an important small but important component of it is is renewable natural gas. We think over time we grow the amount of other sources inside of that so that as a portfolio. And we're bringing all carbon emissions down, ultimately also important in there is we're going to because of our energy efficiency efforts because we're in home innovation, we're going to need less gas and we see the amount of gas overall going down, so that we take works left at the end of that and diversify it we're taking together that's how we achieve our, our goals and requirements here. Okay, so Tori then Logan and then we need to take that. Thank you. Thank you. My question is about supporting. All of the work that you get your house in order. Is there, I think I saw, there's a program pilot that clean. Yes, yes, yes. Yeah, I mean I can, I can tell you part of the part of it. I try to tell you parts I don't know. So we have a group of partnerships submitted a congressional direct steady response to Senator Leahy ultimately funded $8.5 million for clean heat homes and clean heat homes takes a comprehensive approach to, to helping low and moderate income companies. And doing all the things that I, that I just spoke about, but doing it in a way that is really seamless to, to the customer, you identify a really a challenge in the space which is these things are fairly complicated you got to not only are the systems located, but you have to, you have to talk to the energy efficiency person you have to talk to the boiler person you got to talk to the, you know, whatever the other energy systems are well clean heat homes, ultimately hopes to make that fairly seamless working with efficiency Vermont who has, you know, best in class sort of practices around around delivering these kind of results for Vermonters. Ultimately, I think there's a appropriation that the governor proposed for the legislature that would that would add additional funding to this. In the end that that the federal funding plus any additional state funding helps to provide sort of the wraparound service to augment and compliment things like the weatherization assistance program any distribution utility incentives any any incentives like the heat standard, or any other incentives that makes ARPA incentives that come down from the federal government or the ira I'm sorry that's the inflation reduction act incentive so when you with clean heat is kind of think of as the to help customers really deliver that. Well, there's also a program green saving green smart savings green saving smart that's being led by the, by the by the WAP agencies that is, I think will integrate really well into the clean, clean heat homes program. You know, ultimately, we're trying to make it as simple as possible for folks to take advantage of this. And it's one of the things one of the reasons we're excited about it we've been working with our customers for decades. They trust us they know that we're, we're, we're inside their basements fixing stuff a lot of times people customers say we left the key under the match just let yourself in and fix it and let us know when it's done you know that kind of trust means that we can also help them deliver that, not just when they have an emergency but but deliver the more more complex work later down the line. Representative moving. I'm actually just curious about a tiny thing really the potential for biogas, how, how large a market for how much biogas do you think you can use and how large is a local market. Yeah, we have studied this this question. And we think about biogas we're thinking specifically about renewable natural gas in Vermont derived from, you know, principally from farms could be from wastewater potentially landfill farms are the best for that and actually get the most most stacked benefit starting with the farm I mean that's the big benefit comes from helping the farm with their financial economics. Also the environment would run off but then there's a climate or energy benefit. We've recently completed a study on this and I found that there's about 1.5 BCF, which is our unit of potential statewide renewable natural gas, which is, which is really solid amount for us. And that's the potential so we'd be able to deliver less than that. A lot of that is, is, you know, near near to our pipeline, which is pretty helpful in this case. There are certainly other projects that are, you know, around the line and connected to the line that we'd be looking at as well but in Vermont that's that's 1.5 BCF. So which is billion cubic billion cubic feet. Yes. Yeah. Great. Great. Thank you for your testimony. My pleasure. And if you have a thank you for the time if you have any other questions will be helpful anything else. Please let us know. Right. Thanks. Right members are going to take a break until 10 past. We're going to reconvene our morning meeting with Kyle Landis and Thomas and now we're both with the public utility commission. Welcome. Thank you for having us. Good morning. My name is Tom now or on the policy director for the utility commission. I'm Kyle Landis Maranello. I'm general counsel at the public utility commission. So we submitted some potential red lines for the committee's consideration. And if it's okay with the chair and the rest of committee we're just going to use that to kind of guide our testimony but obviously time in any time with any questions that you have. First off just a general point that our agency is not taking a position on S5. The comments and red lines were providing the testimony we're providing today is just to show potential improvements to how it could be implemented if the legislature chooses to enact this bill. So the first place we have some suggested edits is in the section about that. So each obligated party chooses to meet its requirements and meet the amount of eligible clean heat measures that need to be retired. So this section I apologize for some formatting issues in this document but the change we recommend here would be to make it clear that the way that we're expecting people to meet their obligation is through delivery clean heat measures by a designated delivery default delivery agent. And so that designated statewide delivery agent is going to be doing the vast majority of the measures is how we anticipate this will happen. And we want that to be the assumed way of compliance with the clean heat standard. We also have language in here that allows any obligated party to apply to the commission to petition us to meet their obligation through an alternative method but they would need to do that ahead of time. And we would look at their proposal. There could be a lot of flexibility built into that proposal in terms of they could say our plan is to meet it through this amount of a payment to the default delivery agent. And this amount of other measures but if the payment to the default delivery agent ends up being more than the other measures we might lessen that and we would add these additional measures instead. We have some sort of plan ahead of time for how each obligated party meets meets its obligations. So it's a in some ways a small change but we think it's a really important one because particularly from an enforcement standpoint. This would make it much easier to implement and enforce if we get to a situation where it appears that some entities haven't actually met their obligation. So in this case an obligated party with let's say we heard from the few of the others yesterday, they would be an obligated party, you're imagining that they would be meeting the goal by going to one person who provides the services to make the transitions, or they individually would have to come to you and petition to become someone who helped in the transition. That's correct that the bill as past the Senate has this idea that there will be a statewide one or more statewide default delivery agents. And so we, we really like that idea, the change that we're proposing kind of tightens up the requirements for an obligated party to do work on its own. And as past the Senate allowed an obligated party to elect out. We think it would be better to have the Commission review a plan by that party in advance and approve it so that we know that the obligated entity has, has thought about it has the resources is aware of market conditions, etc. So it's helpful both for the obligated parties and frankly I think for the default delivery agents, that helps them know in advance what is the scope of work that they will be asked to do are they doing 10% of the statewide work or 100%. I think that'll just make make implementation of this block cleaner. Just along this same line. So the default delivery agent. I'm envisioning will be utilized probably more by small dealers who are not necessarily providing other clean measures to their customers that's smaller entity, so they just be providing funding. And what this is saying is, you would like that to be the assumption is that everyone will be using default delivery agent and then if you are not using the default delivery agent, you'll tell us what your plans are for meeting your obligation not just saying, we're going to do it our own but give a little bit more information about how you're going to do it. I think we're going to want to provide clean heat measures. Is that right. That's exactly right. Okay, yes. And I would just add though it's not just give us more information it's submit a plan that we have to approve ahead of time and, and again a lot of this comes from. I've been at the commission about five years now but before that I spent about eight years at the Attorney General's office, mostly doing environmental enforcement cases. So if you bring an environmental enforcement case. The other side comes up with a bit near reasons of why they actually did meet whatever requirements they are being charged with not meeting. And so when I look at a bill like this, a new program, a whole host of entities that have never interacted with us before. I've just heard from the one entity that we do interact with on a regular basis but all the other people being brought in as obligated parties for not Vermont gas. Our new entities to us and we do have concerns and have from the beginning about compliance and you want as close to 100% compliance as possible. It doesn't comply increases the cost for everyone else. So one of the ways you get good a good compliance rate in a new program is to have very clear definitions of who's on the hook. The current bill does exactly that with the definition of obligated party and we have a comment in here about how we like that definition we think it's good and we think this committee should stick with that definition of obligated party. In a second you have very clear definitions of what the obligation is. And so this change here from may obtain the required amount of clean he credits through, and then a list of measures allows for a lot of options if someone doesn't meet their obligation to come up with excuses why they didn't meet it. If you implement the change we're suggesting here, it takes all those excuses away it says, you must obtain the amount of cleaning credits through delivery of eligible cleaning measures by the default delivery agent, unless you've gotten prior approval from the commission to do something else. So then if we find it. The commission met their obligation. It's a very simple enforcement action whether it's in front of us or if it's the Attorney General's office going to superior court. And they just look. Okay, are you an obligated party. Yes, I do you have a pre approved plan to meet this through some other measure. No, did you make a payment to the default delivery agent. It's as clear as day that that's enforcement action that they're on the hook for to make right for failing to comply. So that's why we're suggesting this approach we think it's going to simplify both the implementation and the enforcement. Thank you. Representative Clifford. Thank you Madam Chair. Help me to try to understand. So the designate statewide delivery agent. What about those yield dealers the small dealers that actually go and pick it up and bring it back. What are they considered. And would they have to in fact go through that whole process with you individuals. So if a fuel dealer is, you know, in states then the insidiety that imported the fuel at the wholesale level is who has the obligation under this bill, if the fuel dealers bringing the fuel in from out of state. They're the importer of the full sense that they have the obligation and have to meet the requirement for clean the credits based on how much fuel. They're delivering to Vermont residents. And this approach the way they would meet that requirement is, and I think, as Representative Scalia said that the smaller fielders we do expect would meet the requirement through a payment to the default delivery agent, and then the default delivery agent is actually going out and installing the clean heat measures in people's homes. Thank you. I have a feeling we can probably spend a lot of time on just your first how many edit how many suggestions are in your documents. Yeah, it's not a lot more this is the biggest. Okay, I would say but we do have some others that we would like to. Yeah, so awesome. Yeah, so we had testimony from some fuel dealers yesterday. Some of whom may be obligated parties or not based on what what you were what you were just saying, but, but there are at least some fuel dealers in Vermont now, who are for instance, installing heat pumps. And they don't know whether they do that through contractors or their own employees or whatever. So they would, if they would need to, if they wanted to continue doing that if they were an obligated party and want to continue they would need to basically go to you and and propose that and you would need to take a look at what they do is that what I'm correct. And I would just add if they wanted the installation the measures to be part of how they meet their obligation under this bill, they could also meet their obligation through a payment to the default delivery agent and then it can simultaneously be a contractor with the default delivery agent to do that work and get paid from the default delivery agent for that so they would have both those options. Representative Morris. Thank you madam chair, and thanks gentlemen for coming in, just like a new speak a little bit. It's about it's about the payments from the smaller dealers, and within the bill there is a four times penalty. If they don't report. Do you have a comment on that it seems kind of excessive for a small mom and pop dealer that potentially could the penalty we heard yesterday could be more than what they're delivering so it just wondering if you had a sense on whether the four times penalty would is appropriate or reasonable. I don't have a comment on that it's a policy decision for lawmakers. Yeah, and the only thing I'll say is that you do increase compliance in terms of getting people to register if there is a bigger penalty and so there is a benefit from that standpoint that again one of our big concerns is companies not even registering at all. And I believe Mr. Kota has testified to that as well that that is a real concern whenever you're adding an additional cost to existing businesses and so that would be part of the policy considerations. That's a fair answer. Thanks. Representative seven extension. Have you seen program designs that like, let's say for the first year have a one X panel once to X penalty. And then the penalty increases as the assumption is that businesses become more aware of what they're supposed to be doing. Have you seen that type of program design or things coming to mind. Yeah, I'm not aware of that. So I guess they're, I will say there is a benefit to we have an early registration deadline in here of I think January 31 2024. And then we think that's important part of the bill so that we know who are these entities that we're not currently regulating them, regulating them so we need to know who they are. We're also trying to get their provisions in here to get more information from the tax department those are really important provisions so that we can match up. Okay. Based on the fuel tax that's being paid here's how many gallons seem to be consumed in Vermont by Vermont residents. And then we're looking at the registrations and seeing is that the same number or do we have a gap. And that'll be a good early indication of whether everyone who's supposed to register has in fact registered. And so I do think there is that worry about how to get the word out and make sure that it happens. I would hope if, if this bill is passed that there would be an effort to do that early on and these entities aren't currently regulated by us that but they are highly regulated they do need to be filing tax forms every three months I believe on all the gallons that they're selling in Vermont we set that retail level. And so we would know who those entities are based on who's doing those filings the wholesale entities in Vermont are not currently paying those taxes because they're done at the retail level and so we would need to make sure we're capturing who those entities are but one of the things that's in this bill that's really important is it requires those tax forms to be changed so that the retail providers say who they buy how much fuel from and then if they list a wholesaler in Rutland and we look at our list of registrations and don't have that entity registered with us. We know we need to get them on board. Thank you. So I this is a minor change but definition of a low income customer is to need some additional language because later on in the bill and 8124 d6 there's a reference to customers who qualify for government sponsored low income energy subsidy. So it seems like the intent is to group them together in the group of low income customers but we think some additional language be helpful there. So as I noted earlier, we didn't think it's important to keep this clear definition of obligated party. Just a note that we agree with the Office of Racial Equity about moving the reference to translation services to another section of the bill and their comments they have that spelled out. And we noticed on the temporary suspension. It was originally drafted with not to exceed 18 months put in there, but as the bill developed in the Senate. They it's moved to cycles for the potential study and looking at the amount of work that's done at three year period. And so we think if there's going to be a provision like this that allows for a pause. That it would probably make sense for that pause to be for the fall, three year period. Representative civilian. Yeah, thanks. Kyle, I want to make sure I really grasp this and no connection with the other pieces. So, we can even bring this down a little bit more to be your mortal level explanation. Can you walk through that again. This is this provision here is actually I want to interrupt you for one second for the committee. So this piece here, I have labeled as a circuit breaker and I think there are two where when something goes awry. A chance to stop and we could talk more about that. So I want to understand what you're doing to the circuit breaker here and other things. How do you interrupted me because I was having trouble thinking of that phrase. So I was looking for a circuit breaker that yeah this is a provision that saying, you know there are a lot of unknowns about what the ultimate cost is going to be of the clean heat standard and so when we dive into this, if we're given this to I, we may find that there's good cause to pause the implementation. Until there's a larger workforce or there are different reasons given here why a pause might happen. And so if that pause is triggered, then we do think it might make sense to have that a three year pause. Because the entire three year cycle wouldn't, it would be hard to start halfway through that. I would like to use a slightly different word rather than pause I would say maybe throttle down. Because, you know, let's say, you know, we we want to achieve the emissions reduction, the full amount of emissions reductions but a potential study or market factors might indicate it's not technically feasible it's not there there might be a number of factors that indicate getting 100% of our goals over the next three years just isn't there and so we and say throttle down, you know to some fraction 90% 80% something like that. I think that's important because I heard pause and I was like, what are we stopping the whole thing that seems pretty disruptive. Yeah, no I appreciate that clarification. Representative Simmons. Thanks for the trip. Do we have a, I hear your point, I guess I feel like three years is a lot is that consistent with our other performance standard programs like the renewable energy standard or it's not quite a performance standard but the efficiency utility requirements. On the top of my head, I can't think of anything in statute that sets specified period, when we would change. I believe the renewable energy standard law does say on addition of an electric utility we could change its, its annual obligation. I don't have the red statute memorized so I couldn't say if it's a temporary amount of time. There's a temporal element to it and fairly certain that there's no statutory provision governing the energy efficiency obligation. If market conditions change material, then a three or performance period efficiency utility could file with the public utility commission just say hey you know the, you know during coded someone could have filed and say we just can't get into people's homes right now or businesses. And so we need to change what we're doing we thought we'd be doing X, we need to do a little bit less than X. We're always on the table for the efficiency. It was an inventory. Thank you. What would it look like for you to make that decision. What form of that. It could be that when the Department of Public Service files potential study and workshop that stakeholders that you know we might discover that there are very real world conditions that would dictate. You know, exercising the statute provision, going throttling down as I using the phrase I used a few minutes ago. And I do think that would be in the form of an order that the Commission would issue yes so the order, the Commission operates through rulemaking and through orders and yeah. And there is some we have some suggested that it's later on about when we can use which forms and I think that I will put out there that whichever form we use. I think our agency is a creature of statute and so if we ever do anything that the legislature doesn't like a legislature can always pass a bill that overrides any decision we've made and so that that could happen if we issue an order throttling to let's say 80% and the legislature thinks it should have only brought it back to 90% then they could always pass a bill that directs us to ratchet it back up to a higher level. And this is kind of just a technical change that on the information that Department of Taxes has to provide us we realize there isn't a specific deadline in there so we thought that would be helpful. At that end, similar change. Representative Bongar. We go back to that, the 18 months. Yes. And just noticing, I hadn't focused on this before but the last sentence in that paragraph. What if you really had what if it was coven and you had to throttle back to 50% or whatever that actually would material effect so is there is there a conflict. There could be so this and just so everyone's aware the reference to 10 vs a section 578 a two and a three those are the 2030 and the 2050 requirements under the global warming Solutions Act. And so, I think it's really the a to the 2030 requirement where this could come into play that if we have a pause in the early state or not positive throttling back in the early stages. So, if we had to throttle back would be dependent on whether we think we can be done and still made the 2030. And yet if it's not actually usable. So you, I mean, so possibly you can have the conflict where it's not you turn that for whatever reason it's not technically feasible and yet, if you do that because not technically visible and materially effect. Do we have a sort of conflict in this. I just want to. Okay, I just want something we need to look at that's all I wanted to know. Okay. I think that there is that possibility. Yeah, just on this point. So this is a place where the potential study is kind of telling us what's possible. Next to representative bond guards question about COVID. So you know we've got the potential study it's telling us what's possible with regards to the 2030 goals. COVID hits. One of the many emergency measures that we pass on the floor as a sorry your targets that were lined up with the potential study on a different set of, you know, in a different world, those need to be ratchet depth that's an emergency measure that could further ratchet that down. Yes. I think that likely is what would happen if we found ourselves in that situation that we would come to the legislature and say something needs to give. As this is written it is clear that any ratcheting down that we make cannot materially affect the ability to meet those global warming Solutions Act requirements. As I mentioned, these are just technical changes on the deadlines for the tax department. This is the provision I referenced earlier where we have in here that if a customer qualifies for government sponsored low income energy subsidy, then they would pay. Yes, yeah, I'm sorry. Clean heat measures would qualify as delivered to low income customers. They qualify for government sponsored subsidy. That's an app page 17. These are these changes are related to what we testified about earlier about instead of allowing the obligated party to accept how it's going to meet the requirements. They would need to get approved and fans what their their plan is and we do anticipate that the larger entities like Vermont gas, some of the larger wholesale entities that are obligated parties are likely to submit to us to ask for meeting the requirement in a different way. And the smaller entities are more likely to make a payment to the default delivery agent. And some of this to and you'll hear after us from a representative from efficiency Vermont which may be one of the designated default delivery agents. Whatever is in that role needs to know how many P pumps weatherizations, additional work there, they need to do to meet whatever is being asked of them. And so, we would approve a plan for an alternative way of meeting the clean heat standard. The designate default delivery agent or agents would be informed of that and I told that you're not going to be getting a payment from this entity because they're doing renewable natural gas or some other method of compliance in the future. I'll talk about this note. This is where the commission is setting the cost per credit that an obligated entity would pay to the default delivery agent. And right now the bill has the commission providing not less than 120 days notice of that credit costs to obligated entities. I don't have tension here. I don't you know we don't have a week we live with 120 days. It allows obligated entities some time to think about, you know what's best business case for me is it to do the work on my own is it to work with the default delivery agent is it to go to the market. There's a sequence of giving 120 reasons that really we might be setting the credit cost on stale information, because in practice will be using costs data, you know, at the end of one year to set the per credit cost, two years in advance. And if, if the 120 days were shortened in the bill, or if it allowed the commission to short that short and that is found that it would provide better data to the obligated entities and to the default delivery agent. I think that might be helpful. Before we move on from this page back in the blue, if you will, and the plan what's the standard review for the plan. Sorry say that obligated party submit the plan. Yep, do not have to pay into the full. What's the what's the standard review. So the reasonable standard. I think that I, we would essentially be looking at, okay, what is their obligation how many gallons of what type of fuel, are they delivering. And we would be looking at their plan for how to meet the credits, the tag would be in that technical advisory would be informing us on which measures cause what reductions and so what would we get about in terms of a standard I would think about almost as a mathematical exercise that we would be looking at okay. This is what reduction they need to meet and hear the measures they propose that has to line up and actually cause the reduction if they're substituting payments to the default delivery agent with some other method of compliance. I would also be looking at considering whether you believe they have to do what's in the plan. Yes, that would be something we'd look at as well that the reasonable standard when you're looking at that portion of that. Yeah, I think that's a fair way to characterize it. I think the details of that review we would work out, you know, in the engagement process that that we could be conducting in the next 18 months. It is important to establish what what are we reviewing when when those plans are submitted and so the parties know in advance but. And I should mention also that I said, we do things in two different ways through room I can add through orders. Whenever we issue an order, it is subject to appeal to the Vermont Supreme Court by any party that's adversely affected by it. And so, there is always that check on there that if someone submit a plan and we've injected it and they disagree but the rationale for our rejection then there could be an appeal mechanism available to them there. Tom, do you want to mention this one. I'm recommending the insertion of the words at least. And basically this is you know we're commencing a proceeding potentially in a few months from now, and working at a breakneck pace for a year and a half to get this thing up and running. And the bill currently has us opening a proceeding at least every three years, or every three years to establish the per credit cost and be at the commission and everyone who's involved. So we're likely to have some learning, or so the first year or two. So it may be advisable to have us open a proceeding sooner than three years from the commencement date to update that credit cost. I think a lot of these changes are aimed at giving us more flexibility because so in my role as general counsel one of the things I do is advise the commissioners on what we're allowed to do and what we're not allowed to do and as I said we're a creature of statute so we can't do something we can't do it even if every single stakeholder comes to us and says hey we need to update this as the bills ran now we look and say it says every three years. But if you had the words at least every three years, then we have that flexibility to do that in a sense. So now we're into the rulemaking section. And I, I think some of the changes we're suggesting here are the results of the way that the bill moved through the Senate that there were some changes. There were some changes to the Senate natural resources, and some of those that led to some, I don't know if I want to see inconsistency but it's it's some tension between some of the different sections and this is one where we do think there was a broad based check back provision that was added in the Senate. And we have some comments on that later on, but the way it's worded it, it might actually preclude us from issuing orders at all during the interim period. And so I, and it could also prevent us from changing the rules down the road again even when all the stakeholders come to us and say, we need a tweak to the, the rules. So, this is just making clear that we can issue orders or take other actions, even if there's a requirement for legislative approval before the actual standard goes into effect. So again this is a policy decision if the policy decision is we can't do that. Legislature obviously can do that but then it's going to raise a lot of questions like if January 31 of 2024, no one registers with us. We can't do anything about it. And so, I think having some flexibility to be able to, for instance, start an enforcement action or start or go to the Attorney General's office that's them to bring enforcement action against. And these that clearly are delivering fuel but haven't registered. All that would be put on pause if the current version is is passed that there at least that would be one interpretation of it. And we don't think that was the intent of the Senate it could be that was but that's, that's not the sense we have from understanding of that provision. Okay, we're almost at the end here. This is a related change that in the rulemaking authority. This provision was added on the Senate side after it had left. And that's a resource committee and it's a it's a currently says shall not file for post rules for the Secretary of State for issue any orders, implementing the clean heat standard without specific authorization acted by the General Assembly. So, at a minimum recommend scratching the phrase or issue any orders. We also just have a general comment on that approach. And so we've raised three overall concerns with it. And the first one is if we don't have the authority to go forward with the clean heat standard. And that could be a barrier to getting all an active participation by all of the stakeholders in the rulemaking process. So, we also just have a concern about we're hiring three new people to help us with this program, and there's funding in there for that and we greatly appreciate that and we hope that nothing changes about that part of the bill because we're a small agency and we're not putting the three commissioners. So we need three new people to help with this new program, but our ability to attract the best talent to fill those positions could be impacted when the their questions about where the program will ever actually go into effect and questions about the long term funding. So we have a long term funding for one year for those positions, but in a proposal we come back to the legislature for to look at long term funding that the long term funding isn't there now. We as the Senate for the long term funding to be in this bill, it didn't happen. A second concern is just about setting a precedent of going forward with a full rulemaking process and then need to come back to the legislature for that approval. It's a big deviation from the well established legislative committee on administrative rules process. So just a concern is that become the norm for rulemaking at our agency or others. And then the third thing is just the, we have a concern about the uncertainty over what our authority is in the main file. So I gave one example of this, and it is failed to register. It's unclear if we can do anything about that so as I mentioned before I have a background in enforcement. If you really don't want people to do aggressive to do. Don't give the regulatory authority any ability to do anything about it when they got the comply and so began a minimum of this type of check back provision stays in place we would want to change so that's clear we can issue the orders and then meanwhile even if the standard itself can't go into effect. So does that does that does that alleviate this concern or it's still there. Your concern if we make the changes proposed earlier around the issuing orders. It goes a long ways toward alleviating some of these concerns that we've raised. It still leaves a lot of uncertainty out there that I think is going to impact how much participation active participation we get from all the stakeholders when we're doing the, the making process. My question. 10% of civilians. I mean, seven. Wow. Take a deep breath. Do you have some suggestion, you know, if typically what it is is rulemaking and then it goes to Elkar and what this is proposing is essentially a legislative approval. Do you have some other suggestion that might meet in the middle there. I think that's what the original version of as five as it was introduced. This session was attempting to do where we'd have to file the rules, January 15 of 2025 with the legislature. There's a pause and this is a true pause not a dawdling back we couldn't file it with the secretary of state till July one. And so that gives the legislature a full session to look at, okay, here's what the commission is proposing. Are we going to step in and stop that. And I will mention, the legislature always has that authority and so that's why I think you have the Elkar process where, you know, the way that works is at the end of the day the an agency can go forward with the rule even if there's an objection by Elkar. I only aware one time when that's ever happened I think it was an emergency circumstance and unique circumstances. Generally if Elkar is objecting to a bill. It's enormous pressure on the agency to change it and address Elkar's objections because if the agency goes forward with a bill that Elkar is objected to, then anyone can challenge that in court and the presumption of validity that a rule normally has is out the window. And with a program like this, there's significant moneyed interest that would likely challenge something like that, and they would have no present there be no presumption of validity that rule. Yes, we could go forward with it but at the end of the day. And it's probably not likely to survive a court challenge if that happens. So, we do think there's that type of check back already through the Elkar process there's the ability of the legislature to step in at any point and stop us from doing anything that we're doing if we're going in a direction. Legislature didn't want us to go in. Ultimately at the end of the day this is a balancing act where this is a first in the nation program, there's going to be a lot to figure out we're going to need to hear from all the stakeholders about how to make this work and we're going to have flexibility in how to implement it. And the more the legislature is getting involved after that process has started, the more that can impact our ability to actually go forward and do what we think is the best program we can do and and we have very talented people at the commission. They take very seriously meeting any statutory requirements that are put on us and looking at legislative intent and implementing legislative intent and so that's what we would be doing if we're given this program and ever straight from that. There are a lot of checks in place where the legislature could step in and change course or stop us at any moment. Yeah. I'm curious if the timeline and the bill is introduced rules can often take more time than we imagine. Is it a realistic timeline if we did go back to the original timeline and then you had to submit by January one and then there was that was six months. Did you realistically meet that January on the original bill. It's a, I think it was, yeah January 15 was the deadline and we would be using those additional 14 days. Right up to the wire for sure I mean is a very tight schedule as it is, but we would, we would meet that deadline or make every effort and if we thought we couldn't meet it then we'd come to a legislature and say we needed a change. Yeah, so there's been some concern that I have heard about the legislature being presented as part of this process that we've configured together a final rule to vote on that if we don't like, there's nothing we can do about so then the legislature can make changes. And I've been with the council to better understand that I don't believe that that's the case I believe there are actually a lot of options for the legislature, when the final rule comes if we didn't like it. Can you tell us what what options are available in this check back scenario with the legislature when the rule comes if the legislature just not like what they say. So, if the bill as it came out of the Senate is what's there, then that's interesting that could actually create some restrictions the way it's written now the bill is saying that rule that we propose can't be finalized until there's an approval of the legislature. I haven't fully thought through what that means I've been focused more on as five hours as it was introduced with the January 15 proposal and if if the language went back to that where we would be able to go ahead and file on July 1 2025. Unless the legislature steps in in the meanwhile, we give the legislature, here's the final rule on January 15. The legislature could pass a one line bill that says notwithstanding these other provisions. The commission shall not file that go forward with the clean heat standard and the whole programs dad. So it has that option. There's nothing and then we would go forward and do the rules. I, and I, I would not recommend the legislature does this because again this goes to a process concern a kind of precedent concern of rules going before the entire legislature to be finalized. But I do think under the as five is introduced, the legislature could easily crap the bill that says I any rules filed by the commission with the Secretary of State, regarding the clean heat standard may not include the following and give us changes that we need to happen to that rule. And then that might mean under the administrative procedure act we'd have to restart the process. Although again the legislature could say that notwithstanding the administrative procedure act they can go forward with these rules as long as the following changes are made. The legislature procedure act is default provision the legislature can change those requirements at any time. So, under as five is introduced, I do think there would be a lot of flexibility and how the legislature addresses the rules that they're handed. And we wouldn't recommend going that route and what you would hear from the commission two years from now whether it's Tom and me or other people in these seats is that this was a long process with a lot of stakeholders, lots of the pieces are in ways that I the legislature might not fully understand having not gone through that long world making process. And so I think the strong preference would be a kind of up or down vote if the legislature were looking at that two years from now. One other question just can you talk about. I believe the process that we would be facing looking at is we present us with a rule. We would have to vote. And then, then it would go to Alcar, which is also kind of a weird thing, but I think that's the process that we have in here that the Senate sent us. Like the process the Senate said yes does require a vote but I'm sorry you said and then it would go to Alcar. So it would not go to Alcar before the vote, it would go to Alcar after the vote. Yeah, that that may be. It does seem. It's entirely clear why the Alcar process would be needed if the whole legislature has approved and so it might be if that provision stays there that it would make sense to say that the other provisions the administrative procedure I wouldn't need to be required at that point. Thank you. Maybe all that we had. This is just another place we flagged where the reference to specific authorization by the General Assembly has been added. And this is what I referenced earlier about how the I clean heat standard rulemaking provisions. Earlier in the in the bill. There's an ability that we would have to propose rules that would go through the normal rulemaking process that would allow amendments to those same rules to be done outside of the normal rulemaking process and that's in provisions. I mentioned 8126 C and D, and there's other checks and balances that are put in place in those sections where we would have noticed and comment there'd be an ability for anyone to challenge a change to the rule at the Vermont Supreme Court if they thought the rule changed wouldn't make any sense. But if 8126 C and D remain and we think those are important provisions, then we think this is an important change to make in this section. And just to back up for a second, the reason the Senate had it in that flexibility to the rulemaking to have an alternative process for amending those rules is Tom and I both mentioned this is a first in the nation program we're going to be learning a lot as it goes on if we're given this task and we don't want to be in the situation of all of the stakeholders telling us hey, we thought that rule would work as it was but now we need this slight change, and our hands are tied we need to go through the lengthy rulemaking process to get a change made and it can't go in effect. That's what we needed to and so there's some flexibility built in there but to actually have that flexibility we need this change as well. And then just some one month additional time to propose suggested revenue stream so that that date lines up with on the next page there's a report to the committees of jurisdiction. On February 15, 2024. So that covers it. Thank you for that substantive testimony. Representative Morris. Thank you madam chair quick question. I'm starting the guardrail coming back to the legislature. What's the plan is designed before it's implemented. And I may miss speak a little bit and I, I understand that you have concerns for constituents as well, or customers. I think this was put in because if the plan comes back. And the price per unit measure of the fossil fuel in the credits that would be paid the level of credits whether it's 50% 90% for installations, which I think is part of the charge here. Just comes back and it's enormous. We have to answer the constituents and customers. You don't necessarily the PUC doesn't necessarily answer to the customers. You have a charge to meet a goal. That's why the guard rail was put in there. And I don't know if you have a comment on that. I didn't speak and I don't mean to be insulting at all you guys have an enormous responsibility if this thing was to pass so it's appreciated. Just concerned that this comes back and it becomes undoable and a lot of customers minds, you know we have to answer to that. But the guard rail was put in I believe for that reason that we wanted to have the opportunity to speak. I don't know what the result would be if, if we didn't approve the plan and what we would do to go back but obviously we have to make some adjustments to something you the goals amount of reductions or some something, but we're also bound by statute that that we implemented a few years ago that we need to do this. I don't know if I, if I, if that point is clear or if you have a comment. Suggesting we remove the guard rail is that what I'm hearing. The guard rail of the check of the legislature. We don't have a policy position on that. We just do you have concerns with. I think we would get a lot more clarity on what the costs are actually going to be and so I just said before the legislature always has the ability to step in at any point and you know this bill could be changed to put some sort of another circuit breaker in there if the costs were bought a certain amount then we can't go forward. That's there's precedent for doing that. For I, the legislature I'm sure would hear from it from constituents if the price is going to be more than what was anticipated and the legislators I said, that's a very simple bill. There's one sentence that says public utility commission shall not implement the clean need standard and everything stop this tracks and so those are the types of guard rails that are more common that there's more precedent for that and that don't raise the same concerns that we have over how as five is now. We have a policy position at the end of the day on whether to do it this way or a different way. Thank you. And I have a question I'm just going to follow up real quick. The precedent that exists for the cap is where some do you know examples. What example would be the renewable energy standard. There's a concept called the alternative compliance payment, and that kind of sets the ceiling on what a an electric utility would pay for a, you know, credit of compliance for renewal electricity. So that really sets the goal of you know, they want to do work or procure credits at a lower cost, but there's a ceiling that says, you know, this is the maximum amount paid to comply. Thank you. Representative Morris's question. When we passed 715 last year, which is the original version of the clean heat standard prior to improvements that I think of me. We heard concerns about the legislature. We need to be more active in the authorization of it. But as we've heard from the you see, we just have to do our jobs, you know, like if there's a problem, we can walk in introduce a bill and say, we don't like this we want to change this we want to stop this. We can already do that. And that need last year was expressed by the governor, the Senate actually put in the check back provision a check back provision, which we ultimately agreed to and voted on last year so a check back provision so that we would have to look at, you know, the work, and then take an affirmative vote, and the bill is still vetoed last year. This was that was taken into consideration in the drafts that were brought forward this year, in that there was this pause that we've heard discussed that was proposed as part of the original S5 and the bill that we have on our own, so that the rulemaking all of that would come January with your be a pause. And that pause would allow us to do our jobs. So we could be concerned and pass legislation to address those concerns, or we could not be concerned and not again, the Senate, as added in this check back to make sure that we do do our jobs. Okay, I mean, I, that's my interpretation of what's going on here I hear the PUC saying, when you add in additional guardrails to make sure that you do your job does create some challenge for us in trying to give you what you've asked for. So with this that's what I think I've heard today with this check back piece, and I have some sympathy for that. That's what the Senate has sent us twice. Thank you for your testimony. Great, we're going to reach in being our meeting and our next witnesses David Westman with efficiency Vermont welcome. Thank you. Good morning. Yes, for the record my name is Dave Westman I'm the Director of Regulatory and State Agency Affairs for efficiency Vermont. And in my role at efficiency Vermont I often engage a lot with the Public Utility Commission and stakeholders who work in that department we have a lot of technical and regulatory proceedings and matters that would need to be worked through. If the legislature were to pass the cleaning standard at the affordable feedback and so my role here today is to identify, you know, as an existing entity with an order of appointment with Public Utility Commission. What a process would look like and offer some friendly suggestions for how the current bill as it stands might be improved and in specific sections. And specifically I want to I want to just preface my remarks by saying, you know, our focus and looking at the affordable feedback is its capacity to bring additional weatherization projects to the state of Vermont. And that tremendous value proposition that weatherization has not just for greenhouse gas reductions but energy reductions savings and as Neil pointed out this morning. And just overall benefits to households is really important. So we are very much thinking about the affordable heat act this in the context of how can it bring additional weatherization to our state. And on that point I'll have about four recommendations that I'll walk you through. The first is around clarity of timelines and awareness of parallel paths and interrelated processes. This is a significant amount of regulatory activity, as, as Tom and Kyle just alluded to several years worth of work actually and we counted about four different parallel paths that would all be taking place simultaneously. Those paths involve the PC rulemaking and the market formation which we were just alluding to with the, with what the check back provision will be specific to, but also the creation of the technical advisory group, the equity advisory group, and the default delivery requirement and the DPS potential study. So that's a significant amount of work that is possible. But what we would really like to see is a clear timeline with how all of those are to be rolled out. And specifically, we think, in a lot of these proceedings it's very helpful to work backwards in time. And so, one of the things that we would be thinking about is, when would the first retirement of credits actually take place. If we put that into the perspective of current efficiency utility, we claim energy efficiency savings from the prior calendar year in April of the next calendar. So, if you are anticipating that projects and are completed and fuel is accounted for in the year 2026, then it would be helpful for the legislation to be clear that the first compliance date would be April 2027, as far as when those first credits are retired. The second point of clarification would be when the default delivery agent should be appointed. We, as the entity administering efficiency Vermont take about 18 months to work through the process of both developing a plan, sharing it with stakeholders and then ultimately taking in front of the commission under largely contested case proceedings to then have that plan be approved. So that is a significant amount of time. I know that Ledge Council has provided you a calendar that identified the default delivery agent should be appointed sometime in February of 2024. That seems like a workable date from my perspective when we started started started working that calendar backwards, but I just wanted to point out it's not in the bill. If that is the intent of the committee to have the default delivery agent approved for the, say, the check back provision dates like that would be very helpful and illuminating as far as how these regulatory processes would all play out. Okay, now my second recommendation. This actually has to do with one of the, one of the topics that the PUC was just referring to actually which is the extension of the waiver provision from currently written at 18 months to 36 months. Yes, we agree with that 36 months would be our recommendation because it's the three year period that a DDA default delivery agent would be expected to implement programs under and for the same reason that Kyle and Tom just pointed out is that it would be really to have to readjust in the middle of a three year performance period. So I think that syncs up nicely. A further clarification and also what represents really you were referring to is the potential study right now that opportunity for waiver is limited to some notes but the opportunity for the waiver is a shortage of cleaning credits or undue adverse financial impacts on particular customers. We would add to that market conditions as identified by the potential study. That potential study is a really important indicator of exactly what is available for a default delivery agent to provide. If we were thinking about this in the terms of weatherization, we would be looking at a potential study that says exactly how much weatherization is available in the market what can the workforce bear, and how much would it cost. And if, if the goals are set above what the potential study says is achievable, then that is obviously putting the default delivery agent in a very complicated situation. Thanks for your testimony this morning Dave and I'm hoping that you will have some of this maybe in writing or some dates that we can refer to as we're we can we can provide that. Can you talk just a little bit more about the existing potential studies and the types of the types of measures. Except the word that I want. Yes, that might be used to measure and show and have you thought about that in light of this. Yes, absolutely. So, in perspective, we do an electric potential study, whenever the EU efficiency Vermont is going in for its three year triennial plan. A potential study is done by a third party contracted through the Department of Public Service, and they look at what is technically available. Market achievable and program achievable so those are three different levels of technical potential. So, I'll talk about the first one technical potential is essentially a state of the market. How many opportunities in total are there in the state to let's talk about weatherization how many homes can be weatherized, how many old heating systems can be converted. What is the total max capacity for the state to turn this over. We have not done that on a statewide level for the entire thermal sector. And the reason why is because there's always been a limiting factor to the efficiency Vermont thermal efficiency budget by the TEPF budget itself. And so very, you know, these, these potential studies do have a cost. And so we have not ever done that technical potential for the entire state. We've done it. We've done it for the DGS territory, because they're an EU and they're providing those services, but we have not done it for the entire state. So that's the first thing then the then the next, then the next level down would be, what is the market actually willing to bear. Not everyone is going to accept a contractor in their home. Not everyone is going to accept that my heating unit needs to be replaced. That's called the market. That's called the market achievable. That's essentially if you if in a perfect world you're giving 100% incentives. How much could you realistically move the market and I mean these are spread out over time as well this is, you know, 1020 years worth of activities. And so that's an important indicator because not everyone's going to participate in the in these programs and so we kind of have to take that into effect. And then the next level and this is sort of where things like budget planning and incentive levels start getting into consideration that's called the program achievable. And the program achievable is essentially what can you do with a realistic budget, and more most importantly I think what can the workforce actually implement. And all of those are sort of downward pressure on total projects that you can do in a given year. And so, for all of those reasons we think it's very important that you be able to take feedback from that potential study into consideration for this waiver and extend that for potentially the whole three years. And that's where the first discussion is taken, because that would then then give the default delivery agent the opportunity to do workforce development. Yet, more workers in the field implement things like apprenticeship programs training programs, and build that capacity so that you can actually raise that program achievable to something that is both workable from the workforce but also afford. That's really helpful. Thank you. Representative second. Any data on how good these potential studies that have done in the past are like how accurately do they tend to get it. A good potential study will look at what has been achieved over the last five to 10 years and use that as a barometer for these, these three levels in various constructs. Yeah, I think they're pretty accurate. And to that point efficiency Vermont will work with the contractor that the department hires to do this third party valuation sometimes will agree to disagree but largely we're looking at the same inputs and outputs and trying to see things in a in a similar way and as the practitioner of efficiency services we have a pretty good sense of what the market can bear based on various incentive levels and program costs and so generally speaking and if this we're actually in the middle of this right now are the third party contractor the department hired and what our perspective of what the market can bear is within two to 3% of each other so. So when you look back at previous potential studies and say how well that they get it right. They do a pretty good job is what I would I would characterize it is pretty good without actually having some of those lines in front of me the thing that will always throw it off is changes in changes in baseline baseline it means like if legislation passes, for example, last year we phased out four foot linear fluorescent bulbs. By act of the legislature that was not in the previous potential study. And so that changed the results of this potential study that we had to complete this year and so things like that will change the results all the time. So do previous potential studies in form. The potential studies that are created like you sort of learn lessons of how well they work in the past and I would say so yes, the, the, for example, the contractor that the department hired this round was the same that that was hired in the previous round and they're going off of, you know, they're building off of their assumptions from the previous potentials and the studies that we're talking about in this bill would be for the thermal sector would be there would be new ones that hadn't been done before so I think that's a certainty, perhaps, in terms of how accurate they are likely to be then we would, if we had more of a try. I think we would look very carefully at the accuracy of the projections yes. That's a fair. Okay, yeah. I'm trying to find the exact numbers and I'm not going to find the exact numbers but Secretary Moore provided us some really valuable testimony. Looking at the pathways report and what the numbers were of measures that would be needed to hit the 2030 numbers for the Global Warming Solutions Act. Which of course requires us to make reasonable progress towards the gold statue. So, with those measures, do you have the measures that I'm speaking about that we're in the pathways. Yeah, I'm broadly familiar with the pathways report as well as the department's clean energy plan. So how might a potential study work with those numbers and in a very specific Vermont space. I've seen potential studies like that introduce a fourth category of a policy option, which is to achieve the policy goals. These are the measures that would need to be implemented and this is a reasonable estimate for how much cost. It would be a relatively straightforward inclusion in the RFP that goes out to that potential study is to essentially have that have that GWSA be one of the key outcomes. And I believe the clean energy plan did something very similar in its, and it's multiple iterations of potential. The report gave us and again I'm not going to be able to call it up right now very specific numbers about the number of heat pumps we might need a number of homes that we need to weatherize in order to meet the 2030 goals. And so, how can a potential study help us think about those numbers and our goals. A potential study will develop numbers of heat measures that are installed in all of those categories of technical potential market achievable and program achievable. Okay, and so you will get very specific numbers about heat pumps homes weatherize MMB to you saved would make estimates about would heat installed oil switched over to electric. All of those things would be part of the potential study. So if our statutory goal and the pathways report says, I'm going to now make a number up. We need to install 50,000 heat pumps by 2030 pathways report to the goal potential study will come in and say well here's actually. This is what I think is going to happen. Here's actually the potential to hit that 50,000 goal here's with your workforce your budget. Compliance willingness out amongst the people. Yeah, those types of things. Here's what you have the potential to hit the post to the 50,000. Yeah, there could be there could be a gap between the beat now as opposed as a gap right there could be a gap between those those numbers which is why we think it's appropriate to have the 36 month waiver. We want to look off on the table for the PUC to take a look at that number, and say this is what the market can reasonably bear we want, we want to direct the, the, the DDA to invest in workforce invest in whatever that potential study says is the limiting factor, really. Yeah, I think that there is a potential for a gap there and that's what this would hopefully rectify is that we could get things back on track, in a relatively short order, rather than just permanently living with that sort of lower performance. Let's just understand what the slope is and achieve that. Right. Thank you. Yeah. Representative Tory. Good question. Thank you, Dave. Oh, well, do we know how old. I would say with a with a with a fair level of understanding. The department does do market characterization studies. And so we do have a pretty good sense of what's out there. And so that's what a potential study would very much start with is they would take a look at those existing reports that have been done. They would largely just be evaluators that have sort of come and gone through homes doing inventories of like what's there. Now granted a lot of that has actually been for the new construction sector. And so we don't have a lot of detail about say a hundred how many hundred year old farmhouses are still burning oil. That would be a guess. So essentially, if that is necessary after sort of evaluation of the current materials that are available, you could add that as a, you know, to a potential study to say you want a market evaluation to be part of that if in development of say a technical achievable number. Great questions. Okay, so I proceed. The, the other point that I wanted to raise my third recommendation is that the portable heat act should recognize through cleaning credits, all of the market activities that support clean heat measures, and not just in sense and and what I'm referring to there is actually a very sort of relevant point to what we were just talking about is that should the potential study come back and say, you need twice as much workforce in order to meet the gws a goals. That means we need to invest in the workforce that means we need to spend money on apprenticeship programs training programs and business development courses for folks who are running weatherization type businesses. And all of that is work that efficiency Vermont currently does in the electric sector and to a lesser degree in the weatherization space. We have an efficiency excellence network of over 100 contractors across the state who work with us go to our trainings receive certifications and essentially build their technical potential. And if you need to do that for weatherization and incentivize 75 to 90% of the cost of the project on top of all of that training and work. There are costs there that are totally invisible to the homeowner or the clean heat market, and our recommendation is that the technical advisory group. So those costs and take those expenses and efforts into account in assigning or identifying a methodology for how credits ought to be allocated. And that is a very new thing that the tag has never done before and so that's why I'm bringing it to you as a legislative recommendation is that normally the tag will just say this is how much a measure will save an energy thank you very much. Please don't ask us anything more on that. Here we're actually saying, well there's a huge market out there that led to the installation of that measure and costs that were assigned to it. And so if you don't recognize those investments, you're potentially undermining the full value of that. And so you can just put 75 90% project cost incentives on the table and achieve all of those goals you need to train people how to install it, and you need to train people how to do it properly. And so that is, and you need to hire new people potentially. And so all of that requires effort. It's one answer. On the one hand I understand that. On the other hand, I don't know why we should be treating it differently. When we go through a tag process right now. You're looking at what the savings potential is from a heat pump if it's used a certain number of hours certain proportion of the season. It's still a heat pump. I guess I'm kind of trying to figure out why the technology isn't necessarily different so why why you're making this recommendation. Yeah, this is about assignment of credits and there's a lot of existing entities in the field and in the space right now existing programs for example, efficiency Vermont's thermal efficiency programs will still be in place. We are still receiving revenue from Reggie auctions and for capacity market auctions to implement thermal programs. Those incentives will still be in the field. And those credits will be redeemable under these rules as essentially revenue to grow further services. And so, and then there are also tier three incentives in the field. For Washington Electric Co, VC, Vipsa, they all have incentives for things like heat pumps. Right. And so, in the awarding of those credits, it ought to be a sort of fair allocation of costs, and so if the, if the for example, if the heat pump is all using contractors trained under the efficiency excellence network, there's costs to that training that led to the installation and proper installation of that measure. And so that is what we're asking for consideration and how these credits get allocated in a single project because these projects are going to have to get split up among all of the existing entities. Okay. That's helpful. Thank you, Representative Logan. So, I just want to get clarity on this point because I think I support it. You're asking that we consider the effort required to train up the workforce to accomplish. What are the goals as part of the overall population of a clean and heat credit or what, what could count as the retirement of a clean heat credit. A credit will be generated based on energy savings and greenhouse gas reductions, but a single project may involve multiple parties. And if clean heat credits are essentially the market based mechanism for getting revenue back into the organization that made the investment to then encourage hopefully more projects moving forward. Then if, if the allocation of credits in that project do not fairly allocate or are not fairly sort of representational of the full cost of the project and that full cost includes that training and the apprenticeship programs, then you're essentially undervaluing the entity who wants to or has been directed to invest in the workforce development. I mean, so I absolutely agree the people who are actually installing the heat pumps are the people who are responsible for reducing emissions. And so we need to train people and we've heard about the workforce that we're going to need to develop in order to meet these goals in the long term. What I think is interesting about that, though, is that training right now is not specifically training is nowhere named in S5 as part of the cost of implementation. Correct. I'm figuring out how to raise that. Yes. I think so, so we did identify. We didn't identify one section section 8127 that we would be happy to provide some, some language around but I think getting. As you just said, some language representing those services workforce training, market development specifically would be very helpful in thinking about that. So we'd be happy to provide that. And so representatives really already asked, but just to make sure when you do submit your testimony that you're going to provide suggested language. Yes. Now, what I was referring, what in terms of the allocation of credits, that's kind of thinking about efficiency for months role and our progress of TDPF, the default delivery agent would be assigned credits to then transfer over to the to the obligated parties. So for them, they would need to also sort of be reflected in that. One point is that the default delivery agent would be assigned for getting those projects early. And so one of the things that we've identified and it's not addressed in the legislation is, how would those projects actually get paid for in fall, based on the lifetime valuation of those credits. And so that's something that we're thinking about and we're going to, we don't have an answer to, but I'd be happy to continue working with the committee on making sure that if the projects are expected to be completed and paid for up front, that there's money in the pool for the DDA to actually access and complete those projects. And right now that's kind of that's something that we'll be working through. I think that's a good point, Senator Bongards. Thinking about the training for workforce, and actually also mentioned training for business owners to help them make the version. Is there any way to jumpstart that before, because the built income really go into full effect for two years and then we start then with more time. There's two years in between when, if we know this is going to have to happen. Yes, any suggestions on how we can jumpstart that process so by the time we get there, we've already done a lot of this work. And I think one of the things that's really important is that efficiency Vermont is very much anticipating and working on workforce development activities right now, and last year the legislature approved $2 million in workforce development work. We have a $1 million grant right now with NeighborWorks of Western Vermont, and we have up to three different grants on a total of about $1 million for workforce development to focus on training and gaining new entrants into the workforce. And so the short answer is, and those are all ARPA dollars, I should preface that, those are ARPA dollars that we are being granted by the Department of Public Service and have an agreement in place with. We anticipate that as and we're about to sign and work with the department on another $35 million grant for weatherization services. So we very much see workforce development as being part of the rollout of those ARPA dollars, which in our mind is a very good ramp to the level of activity that would be required under S5. What about the training for business owners about how to make this, how to make the switch and how to get there, about that portion of it. Yes, and actually the FDA, I think I'm not, I hope I'm not, but we're working with the FDA on one of those grants. And they're talking about that. Exactly. Okay, great. Now, one last recommendation, which is, I think, I think I've been pretty consistent in identifying that our priority here is, is weatherization services. But we just really want to point out that there is a deep interrelationship between the energy used in a home, the greenhouse gas reductions, and the opportunity for energy security and comfort and health and wellness through weatherization. This is widely understood in the energy and energy efficiency sector as being one of the more expensive measures, but most important for achieving multiple value streams and those value streams are all of the things I just mentioned. Cost savings for the resident, health benefits, comfort, but it is rather expensive and on a greenhouse gas reduction basis. And one of the opportunities that was pursued in, say, the Tier 3 program was that if you were doing weatherization at the same time as you were installing a heat pump, you got bonus credits, essentially additional Tier 3 credits for compliance if you were, if you were doing a project at the same time. And so I would encourage as the legislature considers this bill, are there additional opportunities like that here where if you do an electrification and weatherization project that that sort of creates compounding benefits. And I don't have any firm suggestions on what that would look like right now, but I would just say that the precedent has been set in that Tier 3 program and we would certainly be looking for similar type of considerations. Representative. If the PUC here would you be willing to respond to that recommendation. Is that something you'd be interested in responding to better. It's hard to say in abstract that's in any specific language, but I would agree with the concept. It's well known that heat pumps will be more effective in a weatherized house, rather than hitting the outside we're getting the inside. That's a very lot of the ball. Is that something that would be addressed in the rulemaking, does it need to be statute. It's perhaps at this point a something to think about in the, in the context of. I'm just rightfully said, and you know, if your home is not well weatherized, you can add a heat pump to a room and on paper. It might be displacing fossil fuel usage in the basement for your furnace, but in practical effect. It's just bleeding out of a different room, the heat that you're putting into it. And so in the technical advisory group. There was a, there was a consideration of the fact that you're saving more energy if you weatherized first, and so therefore reducing overall fuel use and so if you. You're going into too many technical details, but essentially the legislature could recommend could identify this through compounding benefits or consideration of multiple clean heat measures installed at the same time as creating multiple benefits. I understand your concept I'm just saying do we need to put it in. I just, I guess we could make it the clear policy priority, and then it would be addressed through the rulemaking. So what I'm hearing. Yes. Representative Pat. I understand the, the, some of the benefits of coupling on the on the other hand. My concern and this comes from a lot of constituents. I'm hearing from who were just to. This is almost the standard message. I'm an older person on fixed income I can't I am not going to change out my, my heating system. I'm concerned that we that we need to give. The message needs to be no matter what whether what weatherize first. If I mean if that hasn't been done in a home, because the message or the impression, a lot of people are getting is that they're that they need to change their heating system. And if that's not going to work for them or they're not going to do it. We want to make sure that the single most effective thing to do is, is, is weatherization regardless. I share that sentiment and one of the. We're actually running a pilot right now with some of our efficiency modernization act pilot funds to go to homes that had previously been weatherized and install pumps for low income residents at no cost to them. So, this is one of those examples where weatherization first, followed up with a heat pump and electrification can truly reduce energy costs for those fixed income individuals so I think conceptually we are 100% aligned with that idea that if you go in after weatherization, that's when you can really start saving the resident a significant amount of money. And you tell us who who's keeping track of the dollars that are being spent on weatherization already as a single entity or the regulated entity. There is statewide statewide there's no single entity. Assigned with tracking all weatherization expenses between OEO, the department, the department and PUCs oversight of VGS and efficiency. But we do coordinate and collaborate extensively and have done so even more since the ARPA funds have come into the state because that level of funding has really required an unprecedented but helpful level of coordination between OEO and the weatherization agencies and even the RPCs and the efficiency utilities like BGS and efficiency remote. Representative Sebelia in S5 enacted changes that track of weatherization. That's a good question for other stakeholders but I will offer my best opinion which is that. So we have done some of this through the comprehensive energy plan of the Department of Public Service. We have ourselves sort of looked at it and come up with back of the envelope type of models. You know between between the weatherization agencies efficiency Vermont BGS, you know, estimates can sort of be made, but, and then that would be used to inform obviously the potential study. So I think that right now I did not see anything in the bill that would require statewide tracking of specific weatherization activities, only the tracking and formation of those clean heat credits. And so what I interpret the S5 to include is that you would have tracking of different clean heat credits based on the type of measure that was installed. Like for example the 16% requirement for low income, 16% requirement for moderate income. And then half of that needs to be permanent installations. All of that sort of tells me that these clean heat credits will have and be tracked in different ways where potentially you've got a weatherization credit, you've got an application credit, and then you've got a shorter lived, essentially annual delivery of a, like a biofuel credit. Back to the central study. Does that include financing survey of different financing that's already on the ground or potential new financing that should be considered. I have not seen a survey be a specific call out in a potential study. It might be one of the sort of underlying assumptions that capital can be made available to bring high cost projects into the fold. But I have not seen that be a specific call out in a potential study. They tend to be very focused around how much your customer is willing to sort of do in a given year. And one of, so that's what I mean by it's an underlying assumption that some customers may have access to capital that are in addition to say like an incentive. Thank you for your testing. Thank you. And I will follow up with the committee on some of these recommendations. That would be great. Thank you. Thank you. Thank you for the morning's testimony. Oh, and then we're on the floor. Excuse me at one. Representative Stevens, please talk. Since there's been so much discussion on workforce today at noon room for 67. We have a bunch of folks showing up from the statewide workforce, climate workforce initiative. So a bunch of folks training people and sellers. Great. Thank you. And pizza pizza pizza. We will adjourn for the morning. Thank you.