 So, welcome, John. Thank you. Thank you for joining us. We're kind of wandering in here just because we didn't have a formal start time for this other than ten minutes after the floor, so I'm going to call it ten minutes. So that's good. Just for folks in the room this morning, we have three different guests. So I thought, you know, if we kind of divide up the time, you know, roughly half an hour a piece, I'm not sure if that will accommodate you. That works. That works. Okay, perfect. So, again, thank you for joining us. Yes. I'm just going to turn it over to you and let you take us through, you know, Velco. We're kind of getting to the end of our kind of week introduction, WEEK. WEEK. Of kind of energy industry and kind of regulate entities in Vermont. So today is our last day of that and an important part of it. Well, thank you. Thank you, Mr. Chairman. I appreciate the opportunity to be here. Thanks to all of you. My plan is not, there's a lot of slides here, so feel free to keep them. Actually, I culled this down from a hundred and some odd page. Okay. My numbing package to what's here, about 30 issues. Surprisingly hard to do. But what I want to do today, more than anything else is, and I know there's probably varying levels of knowledge on the committee about some of the specific issues. So I'm glad to speed it up, slow it down, go wherever folks would like. But knowing how much you've been drinking from the firehose this week on energy issues, I want to try to keep it fairly concise and have you take away a few things about Velco recognizing we've got the whole session to work together as events dictate. So what I thought I would do, again, I'm not going to metronomically walk through the slides, but I thought I would try to leave you, give you a sense of what Velco is all about. Where did Velco come from? What has our history been? So that's kind of the context setting. Give you a sense of who we are today. What do we stand for? Actually, I've been in this industry for over 30 years. Velco is a very unique animal. And I think really ideally positioned to do a lot of good for the state of Vermont. And we certainly hope that we can. And we'll talk a little bit about why we are positioned that way. Talk about, as I'm sure you've heard from Mary and Rebecca and others this week, some of the emerging issues in Vermont, some of the complex emerging issues in Vermont. And what we see as Velco's role in helping to solve some of those issues. So I think if we could accomplish that today, that would be a win from my perspective. So a little bit about Velco. And I ground and I stopped at the mission, vision and values for a really important reason. And every company that I've ever been part of has a mission, vision and values, but I'm not sure I could have told you what they were at most of the companies I was at. But at Velco, this really is our ethos. This is who we are. And to summarize it very quickly, it's fundamentally the act as a trusted partner to help create a sustainable Vermont. And that sustainability is economic, environmental, reliability, society. And it's important, and I'll talk a little bit more in detail a little bit later about the way that the kind of Velco finance works. But it's really important as we think about this trusted partner to help create a sustainable Vermont to understand how Velco dollars flow. We are, as you probably know, owned by the distribution companies in Vermont, as well as a small piece being owned by V-Lite, and Vermont will then come trust for electricity. But every dollar we make goes back to those distribution utilities through dividends. And they use those dollars to basically reduce rates to customers. So if you cut out the middleman, fundamentally every dollar Velco makes goes back to Vermont consumers. And so as we think about how we conduct ourselves as a business and what types of things we want to do, it's very easy because we have that kind of north star, if you will, on the wall every time we think about what we're going to do and how we're going to operate our business. That's an important backdrop as we think about why I believe Velco is so ideally positioned to do things that can truly benefit the state of Vermont. How unique is the Velco model if you look across the country? There are two, and I've worked for both of them. The other entity that's set up very much like Velco is American Transmission Company, which is based in Wisconsin. It's about four times the size of Velco, and it's actually used Velco's corporate structure and founding charter as its genesis. ATC is probably 15 or 20 years old, if that, where Velco is 60-some-odd years old. The fundamental difference there is that not all of the distribution companies that benefit from dividends from ATC refund them to customers, use them to reduce customer rates. But really that's it. There are only two companies like Velco in the country. Just a kind of a rudimentary just to give folks, in the traditional sense, where do we fit in the electricity value chain and electric system, if you will. And this is a traditional view, and we'll have a couple more views of this as we go through the slides. But the fundamental structure is there's generation. That's where the electricity is produced. There's high voltage transmission that carries electricity from the generating facilities, whether they're central station generation or in the case of Vermont, much more so emergingly renewable generation that's located all over the state, to the distribution, to distribution voltage, to our distribution owners, and they distribute it to customers. So we fit squarely in the center of the value chain, if you will, and that is the role that we play. Just some quick facts. We were founded in 1956. We currently have 148 employees based in, mostly in Rutland, although we do have an office here in Montpelier as well. We build, own, and operate all of the high voltage electric transmission in the state of Vermont, roughly 738 miles of high voltage transmission. Importantly for some of the work that we've already started to do with this committee and others is we also have 1500 miles of fiber, of cutting edge technology fiber. So twice as many miles of fiber as we have of transmission. That fiber was mostly installed to support the Velco system and the Velco assets. It gives us the ability to look into our system in real time. It also gives us the ability to have a very robust communication channel in the event of outages that threatened some of the more rural areas of Vermont. We have a radio system based on that fiber that is very effective for us. But again, we believe that fiber can be utilized to help solve some of Vermont's broadband problems. It is not the answer in and of itself, but as you all know, it certainly can play a significant role in helping to connect. And in fact, we'll talk a little bit later, we've already begun to leverage the availability of that fiber to do things like to connect it to the Northern Vermont University system. Lyndon and Johnson are connected. They have a redundant connection using Vermont's Velco fiber that provides them a redundant backhaul for their systems, connecting the two campuses. As I talked about, our ownership is all of the distribution companies in Vermont, most notably Green Mountain Power, as well as the Vermont Low Income Trust for Electricity. The Vermont Low Income Trust for Electricity for those who may not know was a creature of the merger between CVPS and GMP a number of years ago. And that fund basically gets an allocation of Velco's earnings every year and manages them and invests them in ideally low income, whether it's weatherization, lighting, et cetera. Is that a percentage? It's very small. I think I have a slide here later on. I won't try to flip to it, but it's a very small percentage. About a percent, I believe. I think it's around a million dollars. A little over a million dollars a year if it gets allocated to be like that. The governance which also changed as a result of the merger between CVPS and GMP pre-merger, the governance was very heavily dominated by GMP and CVPS. They had most of the board seats. As part of the conditions that were put on that merger is now a much bigger board with independence, public power as represented, Green Mountain Power as represented. I have a slide in a couple of slides so I won't go into the total detail. The evolution of that board was directly influenced by the merger between the two large distribution utilities. We are a for-profit corporation, but as I mentioned, our structure effectively means we operate like a cooperative in the sense that all of our dollars go back to consumers. And we are in our sixth year. Tom is very proud of this. We are in our sixth year of a flat budget, so we haven't increased our budget in over six years. This map, which I won't dwell on, just gives you a little bit of a sense of since 1956 some of the things that we have done down the right-hand side in that right-hand box. The map on the left is the high-voltage portion of our system, the regional portion of our system. It gives you a sense of a number of the projects that we have done over the years. And this next slide basically gives you a sense of the growth of Velco since 2000 from roughly an $84 million company to a $1.3 billion company in terms of gross rate base over that period of time. And not surprisingly, that growth occurred beginning in the late 90s and early 2000s when New England moved from an integrated structure to a market-based structure. And transmission was forced to play a very different role than it played historically. Historically, transmission was basically to connect generating stations to load. And after New England and many other regions of the country moved towards competitive markets, transmission basically became the highway across which electricity moves to enable those markets. And so we've seen growth not only in Vermont, but elsewhere in New England as well in the transmission system. Do I have a question? Shoot. And it couldn't be more fundamental. Your last slide and as well as this slide, so it's kind of indifferent where you keep the slide up there. The 738 miles of transmission line that you have, is that map, is that a pretty good proxy for kind of the major assets? That is a good proxy for the major, the 345, 345,000 volt lines. There's a portion of that, of your assets. Is that half? It's over half. Including basically in New England, there is a delineation between what's considered a regional asset and what's considered a local asset. Roughly our revenue requirements are roughly 75 to 80% of regional assets and the rest is local. And this might not all be an appropriate analogy, but it's kind of how my mind is working thinking about this, you know, kind of the blood vessels of the body and kind of the major pipes, if you will, going to kind of smaller and smaller pipes as they get to somebody flipping their light switch on. Is it, Velco owns the major pipes? We have the arteries in the larger veins and the distribution company operates the capillaries, I guess, so I would put it in that part. Okay. And then finally on the asset growth, is that growth a function of added assets? Yes. So added physical assets? Physically added assets, constructed lines, constructed transmissions, substations, et cetera. Correct. Thank you. Well, so my question is on the asset growth, also very basic because I don't know anything about this, why did it grow, did your assets grow so much and how is that related to the competitive markets for the transmission? Basically, as I said, if you think about the old model in Vermont, Vermont Yankee was built and the transmission would connect Vermont Yankee to major loads of centers. So there would be, if Vermont were a standalone state, there would be a line built into the Burlington-Chittenden area, the Chittenden County area to serve that area. And so the transmission played a fairly rudimentary function which was a simple one-way power delivery. When industry restructuring occurred in the late 90s and it occurred in first in Connecticut, then in Massachusetts, Rhode Island, ultimately to some degree in Vermont, although not quite as much, and to an even lesser degree in New Hampshire. The basic premise was that competitive generation would ultimately drive innovation and would drive cost down, much like a commodity, if you will, moving grain on a highway system from the Midwest to wherever it was going to be used. If you think about electricity as a commodity. Not for that commodity to move effectively, there needed to be policies that had sent at high voltage transmission to be built. The market premise or the economic premise, which has been supported in a number of studies, is that even though there was an enormous amount of transmission built and money spent on transmission, there was a much more demonstrative reduction in electricity prices compared to what they would have been had that transmission not existed, i.e. the free fall of electricity, the ability of those electrons to move freely wherever they were ultimately used far outweighed the cost of the transmission that was built to serve it, to basically serve that purpose. So this is new transmission built, or is this upgraded transmission? It's a combination. There were a number of new lines built in Vermont as well as in the rest of New England, but there were also, for example, some of the Velco lines were re-conductors so they could operate at higher voltages or there were substations put into, other asset infrastructure put into relief, for example, relief congestion and allow power to flow freely. Speaking of congestion, I'm sure you've heard about Shiai, so we'll talk about that in a little bit, but fundamentally, that was the premise. So it's a combination of re-conductoring, rebuilding, and building new assets, new infrastructure. Thank you. Sure. Again, just a quick overview of our distribution company ownership structure, mostly as you see GMP, but obviously BED is a significant over. They have a board seat. Vermont Electric Beck has a board seat as well, and those other public entities that do not have specific seats on the board, and we'll talk about that in a minute, are represented by public power representatives on our board. I want to dwell on the corporate structure. Really not a lot of critical messages to take away there. Again, this is a visual of our current board structure, again, driven to a grade degree by the CBPS GMP merger. So GMP has four seats on the board. VEPSA has a seat, VEC and BED, and then there are three seats for V-Lite, and two seats for public power, and those are elected annually by the representative group of public power entities that own parts of Delphi. What is V-Lite? So V-Lite is that low-income trust that was a creature of the GMP CBPS merger. Just to give you a quick overview of the differences in terms of the way transmission is regulated compared to distribution. Transmission is considered interstate commerce versus intrastate commerce, and therefore is regulated to federal level. So from a rate regulatory perspective, we are primarily regulated by the Federal Energy Regulatory Commission, FERC, in Washington, D.C. So they establish for all of New England and all of the transmission industry in the U.S., they establish the rates in tariffs and rates of returns and other items in terms of how we're regulated and how we can price what we charge our customers. They also, since the blackout of 2003 that affected New England significantly and the Atlantic Coast significantly have been very focused on reliability and compliance standards and created an entity called NERC, and we'll see that in a minute. NERC is a creature of FERC, so they oversee not only the regulatory ratemaking, they also oversee reliability, and all of the ISOs and RTOs in the U.S. New England ISO and New York ISO are fundamentally creatures of FERC as well, so. Of the transmission, how much is foreuse in state and how much is passed through? About 20% is foreuse in state and the rest is passed through, but we'll talk a little bit about the way New England rates work. Vermont is a net beneficiary of being part of the regional system from a financial perspective. I'll show those statistics in a little bit. So this is the New England, the North American Electric Reliability Corporation again founded after the blackout of 2003 created by the U.S. government in the blackout of 2003 and their fundamental purpose is to develop and enforce reliability standards to ensure high reliability for the electric transmission system, which as we talked about in a market type of economy, the availability of that transmission system both from a reliability perspective but also from a cost perspective is so critical. NERC's emerging focus, not surprisingly over the past few years, has been around cyber attacks and ensuring reliability from what is becoming an ever more sophisticated foreign state threat to reliability. We don't have to pick up the Wall Street Journal more than once a week to read about the threats coming from a cyber perspective for the country electric system. We talked about Isano-England. I think Molly is here in a little bit to talk about Isano-England's role and we as Velco are a member of the Isano-England. And Isano-England basically plans the transmission system and operates the markets of energy and capacity markets in New England. And they also are the primary transmission operator for New England. Velco is actually a local control center so we do have the ability to control and operate the transmission system in Vermont as well. And have a control center in our facility in Rutland as well as a backup center that we're going to build in New Haven, Vermont. And then this is just a representative of kind of the concentric circles or relationships between Velco and the DUs and the various regulatory agencies. The Vermont Public Utility Commission jurisdiction over in terms of Velco, in terms of its purview over Velco was fundamentally focused on citing and complicating the significance of public good and public need. Questions before I move on? That was pretty quick. Okay, well let me know if you'd like to stop some more and talk about it. I'm trying to get through a fair bit knowing we have a half an hour. I can ask a question. Velco and Isano-England two separate entities. I've been to the Isano-England distribution control center Is that the same one that you're talking about that Velco operates? We have a separate control center that looks only at Vermont. How did the two control centers operate together? They can operate together or separately depending on the event that dictates fundamentally Isano-England is the primary operator of the New England transmission system but Velco as a local control center and that term has meaning in FERC and NERC space, in operation space has primary day-to-day responsibility for operating the system but everything we do is seen and overseen by Isano-England so they have control of the entire New England system but we actually do most of the switching and physical operation of the Vermont system. The 1200 plus miles fiber that you operate how much of the bandwidth on that fiber do you use for your operations? And how much might be handled? It changes over time. I am not a fiber expert but we have fiber experts who basically tell me it's not so much the physical fiber itself it's the equipment at either end that's allowing capacity to actually increase over time without actually changing out the fiber. Mark do you happen to know is there a given number? Well it depends but we use somewhere around 20 to 40 percent of the fiber capacity for our own internal controls. As John was saying, I think we first installed it was a little tighter than that but the electronics on either end of the fiber are where it increased the capacity and technology seems to be growing every year and increasing that capacity so we are at a place I think where we have significant access capacity over the fiber system. So that capacity will increase? If the electronics increase if we Yes. What we would refer to as middle-mile fiber it's not fiber that's there for that last mile but it's really kind of the backbone middle-mile fiber that would be available and that we're looking for opportunities to leverage. Yes sir. Going back to cyber security and so I imagine you have pretty robust system. Yes. Do you work with the distribution utilities? We do. There is a group as referenced later in here called the Operating Committee and basically the Operating Committee is representatives from Velco and all the distribution utilities. At the Operating Committee there's effectively a subcommittee that focuses on cyber issues. Cyber issues are obviously much more acute at the transmission level than they are at the distribution level and so we are that we lead that subcommittee and we are very active both from Tom Dunn down through our ops folks are very active through the transmission industry and also utilizing some existing resources in the U.S. that have some very cool code names that are basically looking at threats and running algorithms to understand how behavior can influence what we see coming at us and we share all that information when the distribution comes through this subcommittee of the Operating Committee. Is it 1200 route miles or fiber miles? Route miles. I'm sorry, 15 is 15. 15, 1500 route miles? Route miles. Thank you. Yes. We have much more than that mostly in fiber optic models most of our systems 72 in our places we have 144 screens. It serves a tremendous reliability role for example we had there's a cable that runs from the Vermont side of Lake Champlain to the New York side of Lake Champlain called the PB20 line it's a co-owned asset between New York Power Authority and Velco tragically a couple of months ago there was a helicopter impact on the New York side of the fiber on the New York side and the helicopter caught the line and because of the equipment the fiber that we have on our system that fault was recognized and the system was re-switched in less than four electric cycles which is phenomenal and that's the value of having that fiber on one of the values of having that fiber on the system. Just to clarify in case anybody doesn't know a route mile could be a mile of fiber with a sixth strand that's six fiber miles but one route mile. When folks say they've got 100,000 fiber miles that doesn't necessarily mean anything until you know how many route miles. Could be 100,000 cables for 100,000 fibers for one mile. Exactly. Very good point. A little bit about Velco finance and again because we're not blessed with too much time I won't go into too much detail but the first slide is really the key the key thing I want you to take away beyond what I talked about earlier when I talked about the mission vision and values which is all the dollars that we as Velco are and go back to Vermont consumers on a one-for-one basis the second is the importance of being part of the New England system and the value to Vermont of being part of the New England system all of the transmission companies in New England National Grid, Eversource Central Maine, Velco for the assets that are considered regional assets those assets that serve regional reliability or economic purpose the revenue requirements for those assets are billed across the region they're aggregated by Iso-Knowingland and Iso-Knowingland builds those to the distribution companies, to the load-serving entities across New England that billing is done based on each state's peak load each utilities peak load as a percentage of the overall New England peak load Vermont is 4% so we pay 4% of the cost of the regional transmission facilities in the state of Vermont our revenue requirement, the amount of cost from Velco that are billed to New England makes up 7% of New England Iso total cost so under current state we are actually Vermont is a net beneficiary by being a member of New England Iso we ship more costs out than we bring costs in and I'll talk about that and I'll give you a sense of the dollars associated with that in just a second this just gives you a sense of the overall cost for Velco, the overall revenue requirement and revenue requirement in utility terms for those who don't know and many probably don't very well is basically your return on and of investment so your depreciation and investment over its life the carrying cost of that investment, both debt and equity and then your operating costs including taxes and salaries and everything else so the revenue requirements for Velco are paid 80% are allocated to the region so that's the percentage of our assets fundamentally that are regional assets and 20% remains in Vermont so what that looks like from a Vermont's perspective in this title this slide is a little bit deceiving but Vermont consumers pay roughly $88.5 million of the regional cost of the regional transmission system they pay $41 million of cost associated with the local Vermont system i.e. cost that can't be allocated across the region but Velco as an entity earns $93.9 million that all goes back to Vermont consumers so the net cost of transmission and this is based on 2019 budget the net cost of transmission to Vermont consumers is $35.7 million so again a net beneficiary by being part of the regional the regional part of the New England ISO and i don't know that we'll get to it but another we do have a slide later on which you're obviously free to peruse as you as you see fit which shows that Vermont has traditionally been an importer a net importer of power that became much more acute after the closure of Vermont Yankee and so we are what we right now import power 100% of the time we are a net importer of power so the physical reliance on that regional system is real as well so what are we seeing about this if the week has gone on what are we seeing in terms of the issues that are that we're facing as a state and as a region as we look at the next as we look at what's going on right now and even more so as we look at the at the next several years obviously continued penetration of renewable resources in New England Vermont rather obviously that's affecting the Shia region have folks seen the PUC decision from yesterday PUC yesterday denied the Derby solar application for which was in the Shia region and so I would encourage you to read that that I haven't had a chance to fully synthesize it but fundamentally they they denied it on the premise that it makes the constraint issues in Shia more acute more significant so that's obviously and there are a number of proposed projects next era has two 20 megawatt projects proposed up there and there are a number of other projects proposed in the Shia that's obviously an issue that we need to address and figure out how to solve and we're seeing in Vermont a lot of the solar generation from our perspective that is more distributed IE behind the meter it's either on rooftops or it's fairly small scale there is a tremendous amount of it around 300 megawatts in total solar just over 300 megawatts in total solar capacity in Vermont some expectation we may climb as high as a thousand over the next few years a lot of that solar for us as Velco is invisible to us we can't see it because it's behind the meter and so we don't know how it's operating we don't know whether those solar panels have snow on them or not whether they have icing on them or not so our ability to see the resources and thus balance the system and operate at that local control center is getting more and more complex it's not a problem it's a challenge and we're actually doing very well our operating folks are doing very well dealing with it but it's going to be an increasing challenge for us and against as storage begins to develop that's another that's another distributed asset that will create an ever more dynamic system for us to be able to operate in balance an issue that's not a Vermont issue but it has Vermont tentacles to it is the increasing reliance you're probably hearing from Molly I don't know a little bit later when she comes but is the dependence of New England from a generation perspective on natural gas as a lot of the older coal and oil fired plants have retired some of the nuclear units have retired the portfolio of New England generation has gravitated towards natural gas I think it's 50 plus percent of New England generation is now natural gas fired which during normal operating conditions is fine from a physical perspective but there's been no new additional gas capacity in New England in a number of years and generators don't sign up for firm gas they don't have the ability to recover that cost through the markets so they sign up for interruptable gas so they are the first customer to be interrupted on a cold peak day and we just actually saw gas customers in Massachusetts and Rhode Island getting cut off this week because there wasn't sufficient gas supply across the Algonquin pipeline into New England so what is happening on a very cold day in the polar vortex winter of 23, 2013, 2014 some of the estimates are that because of the unavailability of gas into the region New England consumers paid between 3 and 4 billion dollars more for electricity than they would have if there was ample gas supply in New England so we have no increasing gas supply we have increasing gas generation in our generation portfolio and there are obvious impacts to Vermont one is cost so the cost comes in two different ways the simple cost of that peak day power when the gas isn't available for those units to run and the second is ISO is wrestling with resource adequacy and you'll definitely hear about this from the ISO folks and what we call fuel security and that is some of these plants that announced that they want to retire oil plants or even some of the gas plants they want to retire simply can't be allowed to retire because they're too important to the system from a reliability perspective and so they're fundamentally given cost to service contracts which are expensive and Vermont consumers pay a portion of those costs and so from Vermont's perspective I think as we as Velco think about our advocacy at New England ISO a lot of is around fuel security we also get very concerned we actually did an emergency response exercise at Velco where we looked at what would happen if we were in a scenario where we had an extended cold snap one to two weeks 10 to 14 day cold snap where the gas fundamentally became unavailable to those generating units the units that run on oil and other fuels where there's limited onsite regulatory actually are unable to run and you might lose a major transmission line the Hydro-Quebec power doesn't flow typically well in the winter it either stays in Quebec or it's frozen so that's not a huge resource in the winter as it is in the summer and it could be reasonably dire if we don't address fuel security and that's a huge issue that ISO is wrestling with and again I'm sure you'll hear a lot more and much more adept at that issue than I am I don't know how we're doing for time Mr. Chairman we have seven minutes okay thank you I mentioned earlier that the second column on this in the box shows 2014 we had 625 megawatts of nuclear power available to us that's now gone and so we've gone from in 2014 importing we exported power 73% of the time we now import power 100% of the time and that given the scale of the generation shutdown the Vermont Yankees shutdown is likely to persist for the foreseeable future so we will be a net importer of power when you say that Vermont exported power 73% of the time and that was because of the Vermont Yankees importing power 100% of the time that that just means that at any given time energy is flowing into Vermont we have less generation available than the load a lot of the electricity being consumed is generated in Vermont correct there is a difference between the physical delivery and the contractual delivery of power that is correct a lot of the larger renewable projects that are proposed in Vermont are being proposed under contracts that are bid into either Connecticut or Massachusetts RFPs those are contractually committed to those states but the physical flow of electricity follows physics so that power is not physically delivered to those states I just want to make sure I understand the solar line which is we are sending much more solar maybe I don't just exporting much more solar than we are using that's just an approximate I just had to expand it for my aging eyes so we had 100 megawatts of solar in 2014 and we have 325 now you don't go hard well thank God I can actually expand that this is just a quick snapshot of the sources of Vermont's energy on a peak day on the left in the winter and on the right in the summer and so it shows you that fundamentally those ties imports of power are by far the larger source of our power and then the other pieces of wind hydro solar biomass and methane are other sources of in-state power those are basically the transmission ties so the ties from New York and the rest of New England are the take-away the previous slide so in the summer you show zero solar is that because it's invisible to you on the right hand side it's during the peak peak power so I called a number of slides but one of the things that's happening we talked about the system operational challenges of the solar is that typically you know on hot summer day you would expect the peak to be around four or five o'clock two, three, four or five o'clock in the afternoon industry is still running people are coming home turning on air conditioners you would expect that would be the peak you would see the peak demand on the system for us actually that's when the curve slides down because all of that solar is available and so the demand on the which is all behind the meter so the demand on the system is actually down once the sun sets that comes snapping back up and so what we've seen for years is our peak in Vermont has been around eight or nine o'clock at night in the summer when none of that solar is available peak consumption may be mid-afternoon but peak transmission demand is as fast as after dark that's correct so the the net takeaway which I'm sure you've been hearing from others all week long and you will hear from Iso is that the grid operation is becoming ever more complex and those are challenges that we believe we as Velco can play a helpful role in helping to solve and are playing a helpful role in helping to solve integrating more renewables in a thoughtful way contemplating whether storage can be deployed alongside a number of those renewable resources to provide a more firm product and help relieve some of the constraints I think is something that we are looking at very closely and working with a number of folks around the industry if you look at the way the recent we take at RFP and a number of the RFPs for renewable energy around the rest of the country they're no longer going out simply seeking renewable energy they're going out seeking renewable energy partnered with storage so that the product is a firm deliverable product all the time and I think from a Vermont's perspective that's the implementation of storage we're economically and reliability viability wise feasible is something that we are looking very closely at and obviously continuing to work with knowing on Iso on the fuel security issues I think I'm down to about one minute so I guess what I would this is the Sheffield high gate export interface what you've heard around about is Shia and fundamentally obviously it's a part of the system in Vermont where there's very little load the demographics are fairly are fairly sparse on that part of the state the Hydro Quebec lines comes through the high gate high gate converter converter and there's a significant amount of renewable generation in that area that's looking to get out especially at peak times in the day when renewable generation is running and it is currently constrained and so along with the distribution companies we are actively looking at aggressively and actively looking at solutions to help Shia help solve Shia but also you may have heard this week from others about to help Shia to keep Shia from sliding south from growing and making sure that part that constrained part of the state doesn't become bigger and more acute and so from the perspective again I think it's a combination of finding additional load and additional demand maybe some transmission upgrades probably not new build but potentially upgrading some existing lines as cost effectiveness dictates storage and again thoughtful and development of renewable resources in the Shia are all probably part of the answer we kind of reground on the strategic or on the mission vision values. I talked a little bit about the work that we did to interconnect the Vermont State Colleges, the Northern, the Lyndon and Johnson campuses and we are looking at other ways to leverage our existing personnel and our existing resources and assets and capabilities to generate additional revenues which again all flows back to Vermont consumers so the revenue that we earn from that Vermont State College contract goes back to our owners and ultimately goes back to Vermont consumers and so we are actively looking to do things outside of our immediate core business adjacent to that core business that can add additional value to the state of Vermont and with that I would close. That was a great presentation and I can find it's fine. I feel like it's FedEx, man. And you fended off quite a great deal because we're having a hearing next week on Shia to dig a little more deeply into that and it's definitely something that's come up a number of times this week and we may be inviting you back to Happy to come back Yeah, no, happy to do so and bring a real technical expert if you would like who has a really good understanding of the issues in Shia. Absolutely. Thank you very much. Thank you. Thank you. Um Monday or Tuesday? Yeah. Excuse me, Tuesday or Wednesday? You still don't know which week we're in. Thank you. Quick question on net metering. Is net metering in front of or behind the meter? Um Let's talk about it in a minute. It's net. So when your energy consumption is shown for the real world. So the production is behind the meter but some of it goes through reverse. That's very good. Just wanted to make sure. What about community solar? Community solar is here. You're getting on my side. As a net meter I understand your question but I'm not sure what you're going to do. Community solar is not consuming at all. It's just producing and then it wouldn't be a net. No, but I mean it's connected to the grid on the grid side of the meter. Right. So it's not going to be a net grid. Right. So what does that mean? Thank you. Thank you. Thank you. Thank you. Thank you. Hello? No, run. Okay. You have a laser. I do but you just landed in somebody's face. I didn't. I'm so sorry. Thank you. I saw a green dot, but I don't think it's their eye. OK. Go ahead. It's not for the light. It's not. America. Seth. My brother's Seth. Some countries would be married, though. We get along most days. So thank you for joining us. Your Edward? Eric. Eric. Yes. Eric. You're not Molly. No. OK. No. No. Those are bigger shoes. I'm Tim Briglin, chair of the committee. And thank you for joining us today. And I'm happy that we have you kind of on the heels of Elko. I think this actually is a good deal for quite a while in terms of our committee's understanding. So I'm going to let you guys run with it. We have, we have to talk about 11.30. OK. Just to give you a sense of what our time frame is. OK. That was great. For the record, my name is Eric Johnson. I'm the director of External Affairs at ISO New England. We are located just down 91 in Holyoke, Massachusetts. With me today is my colleague, Molly. Good morning. Molly Connors, ISO New England. Great. You're welcome. We are also represented here in Montpelier by John Holler, who I think you know. So as a follow-up, if there's anything I can do, Molly can do from the ISO's perspective for John, please feel free to use us as a resource. And so, Mr. Chairman and Vice Chair, thank you for having us down. We put together a presentation which gives you kind of a broad look at the organization, some of the resources that are tied into the system, how that mix is changing. And we're happy to take questions along the way. We'd also love to have you come down and see the control center in Holyoke at a firsthand view of the operations. I'm very eager to do that. Mike was saying he'd tend to it. So let's make that happen, if we can, and we'll be happy to accommodate you. Molly also brought a map of the power system just as a resource for you. This is public information. It's on our website, but maybe a point of reference if you're looking at the transmission system in the future from the grid perspective. So I think I'm going to scroll here. We'll talk about the organization itself, the grid at a glance. We'll talk about some of the strategic planning issues that we've dealt with. I'm not sure how much of that has come up in the conversation, but we can discuss that, spend some time talking about resources on the grid and how the transmission system is evolving. So our organization celebrated its 20th anniversary after the formation in 1997. So we came about at the same time that Congress was opening up the competitive wholesale markets to new power generators across the country. And many of the New England states were opening up retail access for competition. So the ISOs formed to oversee the competitive wholesale markets in New England. I understand, obviously, Ramon's in a different place, not having gone down that path, but still are part of a regional transmission system in a wholesale market. We are the reliability coordinator for most of the New England region. The one exception to that is the northern part of Maine, which is really not connected to the New England grid. It's actually connected to the system in New Brunswick. But we take care of reliability coordination for essentially the six states in the region. And unlike all of the companies that own transmission, own power plants, maybe taking financial interest positions in the market, we are independent of all of those market participants. We have a code of conduct that we abide by as employees. Our senior team abides by that. And we have an independent board of directors also. So when Molly and I join the organization, we don't own any stock or financial interest in Velco or CLMP or any of those companies that are participating in the market. We're also neutral when it comes to technology. So sometimes that works out the way people like. And sometimes people want us to be more of an advocate for certain resources, whether it's a renewable technology, gas technology, hydropower, or nuclear power. We say we administer the wholesale markets and we select the least cost resources. We don't pick which technologies should be developed in the region. Is your agnostic, except for cost and reliability? Yeah, it's really reliability is the primary objective and the costs really reflect the physical constraints or resources that are operating in the system. So if you step back from sort of the governance of the organization and think about our three major roles, it's grid operations. In that area, you can imagine that we are like the air traffic controller for the bulk power system. Air traffic control is making sure that planes take off and land safely. Our job is to make sure that we balance supply and demand instantaneously 24 seven every day of the year for the new income power system. And we're operating the high voltage transmission network. And this is unlike the poles and wires you would see moving down local streets and local communities. If there's a local outage, somebody hits a pole and the power goes down in the community, that's not gonna register in the transmission system that we operate. So we're looking at the lines that typically you would see crossing the highways, usually on the larger wood or steel lattice structures. So that's the grid operation. The market administration function. We administer the wholesale market platform for the region, bring together buyers and sellers. The buyers are typically the load serving entities. In some cases, that's utilities. In some cases, it's a competitive supplier. And the sellers would be people who own power plants in the region who wanna sell that or people who have contracts with generator owners or even contracts outside of the region and they use the transmission system to import that power. So we administer that market and it's a little bit like the New York Stock Exchange. We're not buying and selling directly. We provide that platform for buyers and sellers to do that. And a couple of questions. That was my question that you just answered. You don't own any transmission facility. That's correct. Do you own infrastructure other than the headquarters in Holyoke? No, well, yes, we own headquarters in Holyoke and then we have a backup facility in Connecticut which we use for business continuity planning purposes. Competitive supplier. Yeah, so in my state, I have the option to take my power supply as a retail customer from Eversource and they would buy that power on my behalf or I could choose a competitive supplier who's licensed by the Public Utility Commission in Connecticut to sell to retail customers. And every state except Vermont has some form of retail competition. So those customers can do that. I had to buy, I didn't know. Yeah, no, that's okay. And then power system planning, we have responsibility to look five to 10 years into the future, look at what the demand for power is expected to be, look at the resources that we have available, look at the resources that are committed to coming online through our market and we make sure that the transmission system can serve that anticipated demand and that we have enough resources to do it. We do that really in two ways. We plan the transmission network and if there's upgrades that are needed, we work with the utility companies to make sure that we have a reliable system in the future and then we run the four capacity auction to make sure that we have enough resources moving on those wires to serve the demand. A really busy diagram, it might be tough to see on the screen but anybody who's highlighted in red is an entity that oversees the work that we do as an organization. So we're kind of in the middle, sometimes people will say, well, the ISO is responsible for a lot of things. So we are, but we report to, as I mentioned, independent board of directors. Our board's profiles and information are posted on our website so people can see who they are. Ultimately, we report to FERC, the Federal Energy Regulatory Commission. FERC delegated responsibility after the blackout 2003 to an organization called the North American Electric Reliability Corporation, or NERC. They set reliability standards for most of the United States and then within different regions of the country as the systems might be different, there are regional reliability standards and we're part of the Northeast Power Coordinating Council. So lots of folks setting reliability standards that we are responsible for implementing in the region. And then as you look on the center and the right, there's really two groups of what we call our stakeholders. There would be the Nipu market participants. They are the folks who actually own resources in the wholesale market. They have a number of sectors. The newest of those sectors is the alternative resources sector that's been in place since 2005 when FERC sort of anticipated lots of smaller, renewable alternative technologies coming into the market, making sure that they have a voice in the stakeholder process. And they have a lot of technical and stakeholder meetings that take place throughout the month. We're very much a part of that. And in Vermont, the Public Utilities Commission is very active in engaging in that Nipu stakeholder process. And then on the right side of the chart, you have two questions on that. Just a very quick one. On the top here, we look at FERC and the North American. Can you just explain the difference in who they're accountable to? Right, so FERC is an independent federal agency and they are subject to congressional oversight. So their commissioners would appear before the House Energy and Commerce Committee as an example to talk about how they are managing reliability for the nation. And NERC is an entity that existed before the blackout. It was sort of a voluntary association among all of the utility companies. But it was given more formal authority after the blackout. They actually set reliability standards that are mandatory. So as a very simplified example, if you own a power plant and you commit to an ISO that I'll be able to run the next day or for the next week and we commit you, there are now financial penalties if they can't perform. If they took the risk that the machines are not operational and they make a commitment to the ISO, there's some very significant financial penalties that they would have to pay. So NERC would report to FERC. So you can kind of think of Congress, FERC, NERC, NPCC, and then the ISO. And then on the far side, we have a lot of state public officials who are involved, both public officials directly and then many of their staff. I'm happy to meet with the legislators and talk about the work we do. Our primary interaction is with the Public Utility Commissions or the Consumer Advocates or state regulators in the state. So we work with the department pretty closely in Vermont. We work with environmental regulators. And then in some states, they have the Energy Board or Commission. But the PUC is really day-to-day most involved with the ISO. So this is just a quick look at what you would see if you came down to the control room picture a large billboard, 60 feet wide, 20 feet tall, fully digital. And it's showing the full transmission system for New England. And we can see what's happening in the Maritimes. We can do a wide area of U.C. the entire country. You can see the direction of power flows. You can see if there's overloads on the system. You can see all the alarm bells that go off if bad things happen on the system. And it's a great real-time snapshot. I mentioned planning. So NERC sets reliability standards. We want to make sure that the transmission system can handle the loads that we forecast, how much demand there's going to be. If transmission lines get overloaded, they actually heat up beyond their capability. We look at thermal issues around that. We want to make sure that the lines aren't going to overload, sag, and potentially make contact with the ground. So they're a reliability standard set for that. Lots of other technical aspects that we can explore if you want to come down and talk with the team that administers those standards. And then anybody who wants to interconnect to the bulk transmission system, they come to the ISO. We do an engineering assessment of the project. We want to make sure that it can connect reliably to the system without upsetting the reliability of anybody else who's tied in to the network. We don't look at the benefits of those interconnections. We don't say, well, it would be a really good idea if this project went forward because we're administering a competitive market so that people who are developing projects take the risk that it makes sense to build a project in this area, whether that's a power plant, a solar farm, gas-fired unit, or even transmission to interconnect to another part of the transmission network. And each year, we do a planning process with our stakeholders. In 2019, that will culminate in a public meeting in Boston. And we'd be happy to have representatives from Vermont participate. We'll have the regional system plan, which will be discussed. It'll be in a draft form much earlier than that. But it's a way for New England and all the stakeholders that we talked about in the previous slide to come together and talk about the vision for the future of the system. Do you see demand growing over the next 10 years or staying level? We're going to get to that specifically. But we've seen it slowed pretty substantially and, in fact, it's dip negative. And we'll talk about why. If we think about the grid, we think New England's six states, 14 million people. That's a pretty big region. If you think about the fact, we're tied into a transmission network that spans from the Rocky Mountains to the East Coast and as far south as Florida. You can see that we're one part of a very large system. Why does this matter? And if you recall, in August when we had the Blackout in 2003, the system around the Cleveland area became a problem. The operators lost control of that system. They were not communicating with other regions in this interconnection. And by the time they lost control, it took about nine seconds for that outage to Cascade to the East Coast. New York City went black. Parts of Southwest Connecticut went black. Most of the rest of New England was unaffected by that. But that really ushered in NERC's authority for setting those reliability standards to make sure if you're managing a system and you're having reliability problems, you're communicating with your neighbors because they can be impacted by that. We are connected to Quebec. So you'll see that Quebec is in gray. Everything in orange is part of the alternating current, or AC network. So power flows based on what the demand is in the system. Our interconnections with Quebec are direct current, or DC ties. So the power is scheduled to flow in one direction at a time over that cable. It can go either direction, but it's typically scheduled as an import into New England. I asked just a quick question about advantages to one or the other. The DC is typically used for transmitting power over long distances. Less loss. Yeah, I think that's part of the consideration. It's also used to interconnect neighboring regions that may have different reliability requirements. The last transmission line that was interconnected to the New England system crossed Long Island Sound from New York into Connecticut, that's a DC cable. So when there's communication between control areas like ISO and New England, they're often DC lines. And anything that's been proposed between New England and Quebec going forward would also be direct current transmission. And the advantage to AC lines within the Eastern interconnection? Yeah, the power is able to flow wherever the demand is. One of the challenges for the DC is you have to have a converter at each end. Those tend to be pretty costly capital investments. So you usually figure out where that power has come from. In New England's case, we get power from the James Bay region up in Quebec, about 1,000 miles north of where we are today. And so you have a converter station on both ends. If you were to try and drop that power off along the way, there would be more cost to convert that from DC to AC. They're typically an express bus. So you don't have those types of converter requirements on an AC system. So we think of the transmission system as the interstate highway for electricity. This is the map that we've left behind. So what you're looking at is not the highway routes. These are the lines that form the backbone of our system. Everything that's shown here in blue is the 345,000 or 345 KV network. And this really spans throughout the system in each of the states. Some of the green is showing 230 KV lines. We have some of that coming through the Quebec corridor down into New Hampshire and Massachusetts. And then the red is the 115. That's essentially the lowest voltage that we operate. Most of our imports come from Quebec. And last year, about 17% of the energy that New England used came from imports. So we tend to see power flowing from north to south and then from New England into New York. You asked about what's happening with demand. We have seen the summer peak in New England back in 2006. And we haven't seen it since then, not at the levels that we saw back then. So 28,130 megawatts, that was during a heat wave. But in the interim, we've seen a lot of investment in energy efficiency, a lot of investment in solar PV, in addition to a lot of changes in the economy after 2008. So the demand has dropped down and really has not got back to those levels. And then in the winter time, we see a peak as well, but that's much slower than the summer peak. And if you look at peak as a measure, peak demand for a number of years was growing one to 2% annually. So that requires a lot of infrastructure to be built to support that growth. With the energy efficiency in PV, we've seen peak demand slow and it's actually dipped negative as a region. We're seeing that same phenomenon here in Vermont as well. And then if you look at all 8,760 hours in a year, the energy that we use as a region, we've seen that flatten and in some cases go negative as well. So that's a system without heavy penetration of electric vehicles. And if we see a big deployment of those technologies, then we could see the demand increasing in the future. We have about eight 350 generators that we can dispatch or monitor from our control center in New England. The largest of those are the nuclear stations. The second largest would typically be the natural gas fired resources. We have a lot of resources that are proposing to interconnect to the system. And again, those are the projects that we study through our Q process. Most of that is wind and gas. We'll give you some numbers on that shortly. We've also seen a lot of resources retire. So when you think about what we've called the fuel security or any energy security challenges, some resources that have provided round the clock power supply with onsite fuel storage, nuclear, coal resources, those are retiring. They're being replaced with technologies that are very much dependent on the weather, whether it's solar, offshore wind. So are the resources that are coming in gonna come on fast enough and on a scale to replace the resources that we know we can count on when we call them for dispatch? Yes? You're a proposed generation. Is that wind is offshore these days? It's both, both. And we'll show a breakout of where that appears. And is this generation that has permits in place? It depends. And I can talk a little bit about that when we show the split of those resources. In New England, from the design of our markets in the early 2000 timeframe, driven largely by the interests of the states, we've said we wanna make sure there are opportunities for energy efficiency to participate in the wholesale markets, specifically through the capacity market. So we have lots of what we would think of as demand resources. It's something on the customer side of the meter that has the ability to either curtail or shift their operation. And to a grid operator, a megawatt that would come from a demand resources just as good as a megawatt that would come from a power plant if you're ramping up. So we have seen a lot of active demand response where somebody's throttling the switch or turning something on and off and passive demand resources, which would be energy efficiency. Once you install the energy efficient lighting or more efficient heating system, it's providing reductions in the demand continuously. So we're seeing a lot of that in the region as well. Clarification. So the forward capacity market is future savings. Sort of like a futures market in savings or something like that. Yes, so it's on a three year forward basis. So we're actually gonna run an auction in the beginning of February and it's looking three years into the future. What are the needs in that timeframe? And is it a rolling three years you do that every year? Yes, every year. And so we buy the full requirements for what it will be in the June one through May 31st timeframe that spans the three years in that timeframe. So when you have a utility bid in to that, say you have a legislative committee like this one that then seeks to impact their bid two years down the road. They bid in for three years but it's rolling so they come in every year, right? So if we try to change their, if we took an action that impacted their ability to meet that obligation, how would you handle that? Well, they need to think about what the risks are for their ability to perform if they participate in the auction period. There's lots of things that could happen. Their ability to complete construction on their project and we've seen issues there. Their ability to procure fuel three years into the future. If they are committed to our auction, if they're one of the lower price resources that gets selected, they have what we call a capacity supply obligation. There's probably nothing that you could do directly that would unwind their obligation but they would need to think about what might be happening in the policy framework in the state where I have a resource that might affect my ability to participate in the market, so. Can you ask me about savings in particular about for the passive market or just the general market? So that's really a risk that they would have to think about and I'm not sure the particular resource they have in there. You do that framing is just. So when we think about the markets we administer, the energy market right now, we're drawing energy from the grid and that's by far the largest of the markets in the sort of the timeframe when prices were higher in 2008. This was a $12 billion market for the New England region. In years like 2012 when fuel prices really dropped after the economy slowed down and after the fuel started coming out of the Marcellus shale basin, we saw the value of the wholesale energy market contract pretty significantly. And then if you look year to year, why is there volatility here? At some years we have a really cold winter. The demand for fuel goes up, the price of fuel goes up and the price of electricity at the wholesale level goes up as well. If you look at 2016, you might say, well, what was going on there? Well, it was really warm wintertime and I don't have to tell a community that relies on skiing and tourism. If it's a tough year for the tourism industry in Vermont, it's probably a year when you're going to see lower prices in the wholesale market and there's just that correlation. It's all driven by the weather. Yes. I'm looking at the first two, 2008, 2009, I would assume that a lot of that is driven by economic recession that's supposed to weather. So year to year, the weather is a factor. We're seeing it more in the recent timeframe with constraints on the gas pipeline. But if you look at 2008 to 2009, our team would say that was a direct correlation to the slowdown in the economy. And actually I think we have another chart that shows that a little bit more closely. So the second market we administer, the Ford Capacity Market, this is influenced by who is committing to stay in the market, who's retiring and who wants to develop or build new resources. That market has been around a billion to two billion dollars for most of its history. And in recent years, we've seen some pretty large retirements of resources around the system, Vermont Yankee system, plant retired, the Salem Harbor Station, North of Boston retired, Pilgrim Station in Massachusetts will be retired. And these tend to be really large assets. So they have an impact on the balance between the supply and the demand. So we've seen higher prices in our capacity market in the years when we've seen those big retirements. Okay, so that increase that we're seeing in value of the Ford Capacity Market is really an expression of concern about what's gonna be in the market. That's right, right. And to Representative Campbell's point, as a forward market, these prices for 2018 were really related to the auction we held several years ago when we saw the retirements. So it's not related to the instant activity, it's depending on when they come in for retirement. So we're running an auction in February and I expect these prices will likely be much lower because we're not seeing a large scale retirements in this auction, but those results will be available in public. So what we're seeing there is an expression of concern by our possibly, could be construed as an expression of concern about how much energy is gonna be available in the future by our utilities. And is that? From 2015. Right. We're looking at the increase in the Ford Capacity in 2018, but those bids were made in 2015. Right. So what's coming next? Right, we have lots of resources that wanna participate in this auction, so I wouldn't frame it as we're concerned there won't be enough resources. More participants enter the auction every year than we need. Some of them are priced really high and they never get selected. The ones that are priced lower are the ones that come out of the auction with an obligation. Is it an expression of constrained supply? It sounds like something I may need to take off. Yeah, I would say it's related to the amount of retirements. It's directly related to the amount of retirements over the same time. But generating capacity. That's correct, yeah. I would phrase it, the supply has become smaller so the prices is higher. It's where supply and demand need in the auctions. Yeah, right, yeah. So if they're retiring, that chunk of supply is gone. Which makes savings more valuable. More expensive. Okay, if we think about the resource mix, was that a comment on the question? I don't know, I was just trying to understand. That's all. Okay, I'm mindful of the time. So the system has evolved pretty significantly in the timeframe we've administered the markets. If you look back to 2000, which is the blue, you can see that oil and coal provided about 40% of the energy in the region. That's essentially fallen off the map in the 2018 timeframe. That shift has gone towards natural gas. So as a region, we built lots of gas-fired power plants. That's what is serving most of the load. On an annual basis, it's about half. If you look at our website in real time, in the summer and spring, you might see that that is 60% or more. So the region has really shifted to gas and it's largely because the price of that fuel most of the year is cheaper than anything else that they can use to produce electricity. We're not developing a lot of hydro in the region. We are seeing an escalation in renewables. It's not really dramatic on this chart, but we also know that the standards that the states have set through renewable energy standard, renewable portfolio standards, those numbers are gonna go up and we expect the renewables to track that. This looks also at where we get our energy mix from but also shows the imports as a part of it. So last year, 40% from gas, 17% from imports. Nuclear is at about a quarter. We know that's only gonna shrink. Nobody's proposing to build more in the region and we're only gonna lose what we have on the system. This chart shows the volatility that we see at the wholesale level for natural gas fuel prices and the electricity prices. So anytime there's a physical constraint on the system, gas prices go up. We saw this as far back as the 2015 when the hurricanes hit the Gulf, lots of infrastructure got wiped out, a lot of price volatility. As soon as that infrastructure came back, prices settled down. Those are pretty volatile prices for New England but we've seen in recent years that the physical constraints and the pipelines in the winter time have driven lots of volatility and you saw that to some extent in the annual numbers but you can see on this chart, the three years around 2012 through 2015, we had really cold winters, lots of volatility in the wholesale market for price. Warm winter period, things settled down and then last year we saw really cold temperatures in this timeframe and that drove up prices which really influenced the wholesale price for the retail price for the next round of bidding. We talked about some retirement so this is an illustration that we're moving really toward a hybrid grid away from building a conventional generation to more renewable generation. Some of that renewable is offshore, very large wind farms that are proposed but a lot of it is distributed tight into the distribution system and largely with solar PV. So that shift is happening now and pretty rapidly. I mentioned the retirements. We've seen about 5,000 megawatts of resources retire and we have another 5,000 that we would say are at risk for retirement. If you think about a coal or an oil plant that only produces about 1% of the region's electricity, their utilization rate is so low on the grid it's just hard for them to keep operational. Think about a manufacturer that's only producing 1% of the system's demand for energy. It's kind of hard for them to stay in business. With this transition from resources burning coal and oil to natural gas, we've seen a big shift in the emissions so by a couple of measures, NOx, SOX and CO2 emissions have dropped pretty dramatically. That's looking at a calendar year basis for SOX, it's 98% reduction since 2001 and that's really because we're not burning as much coal in the region. The emissions do tend to spike in the winter when there's a lot of cold weather so those coal and oil plants that are still around, they haven't retired yet, they tend to run during a cold snap and the emissions profile for the region does change but most of the rest of the year, they're not operating. Another thing that's driving the change in the resource mix, each state in New England in some form has adopted a goal to reduce greenhouse gas emissions and the targets are in the 80% range that's below the 1990 levels and the timeframe for that is the year 2050. The Northern New England states have adopted goals that we would say are aspirational, the Southern New England states have adopted goals that are backed up by the legislative mandate and there's a strategy in place to get to that so this is just reporting what we see for the region but obviously legislators are directly in control of this level of policy making for Vermont and the other states. There's a question about the interconnection queue so this on the left-hand side shows the resource mix, wind over 13,000 megawatts proposed for the region that's overtaken natural gas which used to be the primary resource but a lot of the activity by Connecticut, Massachusetts and Rhode Island to procure offshore wind is driving developers to apply to connect to the system. We're seeing solar on a grid scale show up, we're seeing battery storage. If the last time we're up here maybe two years ago I think we talked about 50 to 100 megawatts of battery storage connecting to the grid now that number is over a thousand and it's out of date every time we print it. There's lots of activity for energy storage. Fuel cells have shown up as well, that's a technology that's we're seeing in Connecticut specifically. So then you can see for Vermont about 200 megawatts of what's proposed for the system. Battery storage is that literally batteries or is that other forms of storage? It's typically electric storage in the form of a battery, yeah. So not, I know pump hydro does not, there's no little pump hydro happening but would that be included in battery storage? That would probably, we would probably treat that in a different category. We've seen some upgrades to the existing pump storage hydro facilities, they can wring out some more efficiency and get a few more megawatts. That would show up in the queue but we haven't seen any proposals for many years to develop more pump storage hydro. Renewables are clearly on the rise. Each of the states as we mentioned has some for target for renewable energy. This chart shows Vermont is sort of embedded because it blows the scale. Vermont, you think of a large scale hydro as a renewable resource, doesn't really match up with the other states version of renewable portfolio standards but directionally all the states are seeking more renewable energy in time and if you think back 2018 the numbers didn't look a lot different from the year 2000 but as you move forward to 2025, 30, 40 weeks but our system's gonna be a lot more renewable in terms of the makeup of the grid. Trending-wise, energy efficiency of the states as a region are spending over a billion dollars a year and that's all collected through retail charges and supporting energy efficiency measures for residents, consumers, business, commercial and industrial. Solar PV which was about 40 megawatts a couple years ago through the end of last year is over 2000 and we're expecting almost 6000 megawatts of solar PV on the grid by the end of the next decade. So very fast growing resource in the region and wind, about 1000 megawatts has developed big shift in the thinking around wind that used to be the expectation it would be in Northern Maine but the states have looked at offshore as well and that really has sort of overtaken the development. You've got these slides so I'm just gonna cruise a little bit deeper into the presentation when we think about what's happening with solar as it affects the grid much of the solar that's interconnected is not tied into the transmission network. So the grid operator can't see it unless there's a really large solar farm that isn't serving a customer those would connect to the transmission system. We're starting to see some of that but most of it is rooftop solar or smaller arrays. So the challenge for us is figuring out okay what's the load gonna do in the region when there's all these resources on the other side of the meter that are not visible to us. So we've developed a lot of forecasting capability and this is a pretty dramatic example real world from last April and the dotted line at the top is what the demand would have been if it was served at the grid level but you add in lots of solar and the demand in the afternoon which is typically the peak period fell below the overnight hours. So we expected that would be coming at some point and it's a pretty significant change in how our operators have to respond to what the weather's gonna be like. Does that factor into the forward capacity prices? Well this is looking at a real time operations but certainly there are opportunities for all resources to participate in the forward capacity market. I guess what I was thinking of was you don't see anything that's happening behind the mirror. Right. So as more behind the mirror renewable energy is installed it's not taking into consideration the forward capacity prices. Let me think about that one. Maybe we can talk about that off on I don't have a specific answer on that. Probably just don't understand forward capacity enough. Okay. Within Vermont we do a PV forecast, solar PV for New England and you can see how Vermont sort of stacks up within the forecast that we do and I know there's lots of solar development in the southern New England states but also in Vermont and then you can see geographically where it shows up the highest concentrations for Massachusetts primarily. Tends to sit on top of a lot of the load but we see that in Vermont as well and we've mentioned batteries, lots of battery storage technology coming in. This is not a new chart, we've talked about this in the past. In addition to power plants that wanna get developed in the region lots of interest in developing resources in Eastern Canada with transmission to deliver that into the New England market. So these are not specific projects but directionally we have lots of interest in doing this. We have more than a dozen projects competing to do that through some type of transmission into the region and most of those projects are tied in to some form of an RFP with the southern New England states and I'll just wrap up with a couple of ways that folks in Vermont can and are engaged. We have a consumer liaison group which was established about almost a decade ago and it's opportunity to provide a non-technical forum for discussion about regional issues. The consumer advocates in the region, the PUCs are all involved in that. The topics for those meetings are set by the coordinating committee for the CLG so it's a very active stakeholder group and Dina, I don't know if Dina's in the room, Dina Frankel, she's the newest member of the CLG coordinating committee so she's at all these meetings. We have a report coming out for the CLG and then I mentioned the regional system plan meeting in Boston, that's gonna be September 12th and Molly is a regular participant at the Vermont system planning committee meeting sharing updates on what's happening in the region and then taking back what Vermont is putting forward as priority so our team back in Holyoke can kind of build that into our planning as well. So we've also got some profiles which are a snapshot of the New England system and then I didn't tell you about this at the beginning because you would stop listening to me and download it on your phone but we have an app which gives you the real-time pricing for the New England region, for each state in the region you can see what the fuel mix is and so I'll leave you with the app, that's usually more popular than just about anything except the control room tour. So I think I'm about a minute over. You nailed it, you nailed it, thank you. Yeah, thank you, thank you Molly. We need to have one more quick question. I'm probably just gonna ask you this, okay, no, I'll be in the hallway. Thank you very much. Thank you. Thank you. So I'll jump in, thank you very much for having me. My name is Patty Richards, I'm from Washington Electric Co-op. I don't have an app today so I'm just gonna take over technology. So it's a very interesting contrast to hear from the Icelandic England and then hear from Washington Electric Co-op because we're one of the smaller utilities in the state who just talked about a 28,000 megawatt regional system and now I'm gonna talk about a 16 megawatt distribution, local electric utility system here in Vermont. So again, I'm Patty Richards, I'm the general manager at Washington Electric Co-op. Say hi to Avram, who formerly worked with Avram. Avram used to be the general manager at WAC. We're gonna also recognize Steve Bolton, did he scoot out on me? He was one of my board of directors, but he's scooted out so I'll just jump in. So again, Washington Electric Co-op will give you a little bit of information about us, some talking points, and this really is an overview of who we are and I can try to answer some of the questions that you may have on some of the market issues. I'm also a power supply planner by trade, I've been doing powers of planning for about 30 years in Vermont in consulting capacity so I can maybe answer some of the forward capacity market questions that came up from a utility standpoint and how that affects ratepayers. I can hopefully flesh that out. If you wanna layer that into your discussion if you can correct me. Okay, I'll try to jump in. So what I've got up here on the screen is a map of the state and in yellow is Washington Electric Co-op service territory. We are small electrically, we serve about 11,000 customers, we call them members because our customers actually own the co-op, we're not for profit, but electrically we're very small, we're about 1% electrically of the state. The state is about 1,000 megawatts, to put it in scale, we're 16 megawatts, we're tiny, but land area geographically, we're 17% of the state. We're 41 towns and what that means is we're really rural. We have eight customers per mile that contrast with a GMP, that's around 20 customers per mile, Burlington Electric Department is around just under 90. So we're the least dense, most rural utility, electric utility in the state and our biggest cost drivers are actually wires and poles, transmission or electric distribution infrastructure. Our power supply is fairly inexpensive, we're about nine cents a kilowatt hour before we sell renewable energy credits. The rest of our cost is around 12 cents a kilowatt hour, is the wires and poles, the infrastructure to get to our eight customers per mile. I've jumped around, I've done this presentation a few times so I'm gonna leap around a little bit. One of the things you heard from the ice in New England was they're talking about generation bidding into the market, forward capacity market is really a generators market where the generator bids in in this three year forward look from the utility standpoint, load also pays in that market. So think about the ice in New England as a pass-through of money. They take money from load and they transfer it over to generation. They sit in the middle and they make sure it's done on a fair basis. So as an electric utility here in the state, we both serve load and we also own generation. So WEC participates in the forward capacity market because we own generationally on the Coventry-Lanfield plant which burns methane at the Coventry-Lanfield. We have a purchase power agreement where we take energy from the Sheffield-Winn project. We have New York power authority power. So we're fully immersed in the ice in New England's market rules but we sit and represent both load and generation and that makes us in the state of Vermont what's called a vertically integrated utility structure. We did not deregulate. We're allowed to own both generation and serve load together. Whereas all the other New England states made a ruling, the state said, okay, we're gonna break those two things apart. In the state of Vermont, we own both. So what that allows us to do is we serve load and then we go and either own generation or we buy contracts to hedge that what's happening in the ice in the New England marketplace. And that was a whole lot of words. But basically we sit on both sides of that equation, generation and load. I have a quick question for you. I should know that after the presentations we've had this week, but how unique is that in Vermont? There are a number of obviously electric utilities. So I'm pretty sure all the Vermont utilities have some generation ownership and they certainly hedged through power supply contracts. The vast majority have some, they're not, basically you could choose as an electric utility to completely take the wholesale market price and just let the market be your price point. And that's what the rest of New England has said that's what they're doing. They just, whatever the market price is that's what they charge their consumers. We in the state have said, okay, we're gonna buy insurance, we're gonna pre-buy like our oil or our propane, we're gonna pre-buy for the year. And we do that through contracts owning generation to basically insulate us from the volatility of the market. So when I say hedge and basically I wanna get away from that volatility that's in the wholesale market and own enough resources that I have some general sense of what my costs are gonna be. Say on that slide, what percentage of your load you produce relative to purchase? Yeah, and I'll get to that in a couple slides. So the co-op was established just to give you a little bit of background about how we came to fruition. We were established about 80 years ago in 1939 and the co-op was the rural, the hills, the outer reaches. When I got to watching electric co-op I finally realized after about a year if it's on pavement, we don't serve it. We're the most rural area you can possibly find at some of the places where people live. I'm like, wow. But we bring electricity out there. And the reason I bring that up is the co-op was established because the investor owned utilities at the time said that's too expensive to go get. So the co-ops came to be by federal act to say, okay, we wanna get electricity out to these rural areas. Let's lend them low interest money and get electricity out to the rural areas. So that's how we came into to be. Patty, there's a telephone mandate to serve a customer. Is there an electrical mandate to offer electrical service to every resident? Yes, yes. Anybody that locates in our service territory we are required to offer electricity to them. It's part of the monopoly, the trade-off to being a monopoly is we have a chunk of customers that we get to serve, but also if somebody locates, we have to serve them. We can't say, oh, exactly. You're too far up that hill, we're not gonna serve you. It's an obligation, we have to serve. It's a nice trade-off. So I summarized how we are electrically sized, very small, we're 1% of the state, but towns were 17% of the state's land mass. In our profile, we're very different than many of the other utilities. Our profile of customers is 96% residential. So we're very homogeneous. We don't have a commercial industrial load that we can kind of bank on and like shift rates and costs to. We're very much focused on the residential profile. You know, does that make sense? There's very much residential bedroom communities, people driving out of our 41 towns and driving somewhere else to go to work. We are run by a nine-member board of directors, and the board of directors are all customers, members of the co-op, so they not only take electric service, they have to take electric service from us to be one of our board of directors. We hold annual meetings, and we're very much proactive in reaching out to our constituents to get their issues, their wishes, and basically we are there to serve our membership and our customers, and what they want us to do is generally what we do. So we take our direction from our constituents, from our members. Talked a little bit about this already, about our rural characteristics, eight customers per mile. We are definitely the most rural utility in the state, and why that really matters is especially during power outages that are driven by weather events. Because we have so many lines, our reliability issues, it's a big issue for us in terms of keeping the lights on. We serve through the woods, through the pucker brush, so to speak, half of our lines are off-roads, so we have to specialize the equipment to get to them, and weather events really affect us. A lot of trees out there that are bringing down power lines. Our customer profile is made up of some very low users. Our average member uses 490 kilowatt hours per month, which is 12% lower than the rest of the state. And we've been working with our constituents and our members on this for several years through energy efficiency incentives and energy efficiency philosophy and strategy. So slowly over time, our electric base has used less and less energy over time. Again, through weatherization, energy efficiency and those kind of programs. Little bit about WECK in terms of the power supply side. So WECK is 100% renewable. We've been 100% renewable for several years. And our biggest asset is the Coventry landfill plant, which produces about 2 thirds of our energy mix, and I'll show you a chart on that in a second. Coventry burns methane gas that is a gentle vacuum that's taken off the landfill at Coventry to extract the methane gas. And we burn it in caterpillar engines. There's five caterpillar engines up there for about eight megawatts, nameplate rating. And that plant is projected to run for the next 20, 30, potentially 40 years. There's significant gas up there that this is a long-term asset. We also have a small one megawatt hydro plant called Wrightsville, which is just north of here, Montpelier, and that produces about 2 to 3% of our energy. We have a purchase power agreement in Sheffield Wind, and we have power that we take from the small Vermont independent power producers. They're generally hydro plants. But the reason I call these particular resources out is you'll see the density of our power supply and how local it is, meaning it's in Vermont. The vast majority of our energy is not only renewable, but it's also Vermont-based. And the beauty of that is the dollars that we're spending trickle through the economy with the multiplier effect and really give a boost to the Vermont economy. In terms of net metering, WAC early on was a significant leader in net metering. Back in 2014, when net metering was just starting to really pick up pace, WAC was at 11% of its peak in 2014. We far exceeded statutory mandates, but since then, the cap has been lifted. We are now at 3.5 megawatts of solar installed in our system, and that is 22% of our peak. And to put that in context of energy, I just did some math over here on the side. It is, I want to say it's 6%. So about 4,000 megawatt hours, which equates to about 6% of our retail load. So it's significant. So 3.5 megawatts to Washington Electric Co-op relative to a 16 megawatt scale, that's starting to really show up. WAC has given our rural nature, people have the ability to put solar because there's many fields, many open spaces in solar. The impact of solar in our service territory has been very robust for the pace, I should say. Washington Electric Co-op is also an early adopter of energy efficiency, and we continue to emphasize that today in all of our programs. And in fact, in the tier three program, which is part of Act 56, which is a renewable energy standard that was passed in 2015, WECS, Washington Electric Co-op's emphasis in that program is weatherization. Many of the other utilities are doing slightly different things. Our primary focus is to encourage people to weatherize their house and make it as tight as possible and then look at your field of use to make sure that you're minimizing that, how you're using it, whether it's electricity, heating oil, propane, you want to minimize that carbon footprint. So our real focus in tier three is weatherization. And in terms of what our power supply mix looks like, this is a long-term chart for 20 years showing you where our power comes from and also where our load level is. Black line at the top represents Washington Electric Co-op's energy load for all the constituents, 11,000 members that we serve electricity. So the black line is our target of what we have to serve. And all the colors are the resources, the generation, power supply contracts that we have secured, purchased, owned to serve that load. So instead of being open in the wholesale market and exposed to the volatility, we're essentially hedged based on this resource mix. And the reason I put 20 years out in terms of a chart is to show you that we're 100% renewable today, but we're also 100% renewable for 20 years looking forward. So WEC is unusual in that we don't have a yawning gap. We don't have a supply mix that we have to replace. We've made investments, long-term investments, for the foreseeable future for all the customers that use electricity at Washington Electric Co-op. And I'll pause there. Is it typical for utility to have more, you're planning for more resources than load? I don't understand where you want to be around the black line of what your load is. Generally, from a power planning position, I want to be slightly less. I don't mind buying a little bit from the market, but our purchase decisions in the past have us essentially full up for the foreseeable future. And we're actually, even though this looks like we have a lot of excess, it's actually some months we're short, some months we're long over the course of the year, we have a little bit more than what we have for load. So we're just slightly more hedged. And a lot of it is we can't necessarily say exactly how much our resources are gonna produce because it depends on the wind, it depends on the hydromix at the time, or the hydro flows at the time in Coventry. The Coventry plan is increasing production, so we're seeing some more electricity being produced there. On your purchases from the Sheffield Wind Project, are they projected to be producing out 25 years? So the Sheffield Wind Project will, as long as there's wind, the turbines will be spinning. And the turbine life is, I haven't been in the space for a while, I've been building a wind project, but the turbine life is anywhere from 25 to 30 years, so long term Sheffield will be there. In the event there's blade degradation, they will replace components, it's my assumption of the owners of the Sheffield Wind Facility. We buy a power contract from the owners, we don't own the facility. But they very likely would replace components to continue the operation of the facility. The large group in the party, there's a chart. Is that Coventry? That's Coventry. Oh, that's Coventry, not GMP. Yeah, no, it's all, we don't purchase power from GMP. So let me give you a one year drill in as to where the power comes from. So that shows you over 20 years, we're full up, we've got our resources, we've made our investments, we've incurred debt, we've built projects, we're good for the foreseeable future. This pie chart gives you a snapshot of where that power comes from on an annual basis. And the big maroon section, that's the Coventry methane burning plant up in Coventry, Vermont, that extracts the methane off the landfill. Two thirds of our power max, that's by far the big elephant in the room for us. The next biggest resource is from Sheffield Wind. We get about roughly 11% of our energy in the past year came from Sheffield Wind. We get some power that comes from New York Power Authority, it's called NIPA Power. It's a very low cost energy block for us, it's really cheap, we want to make sure that power continues to flow for us. And again, that's hydro-based. And all the other resources are smaller hydro, in-state hydro from the independent power producers, which I call VEPI. We have the Ryegate facility, it's a wood burning plant in Ryegate, Vermont. We get a small chunk of that, it's about 2% of our max. And then in 2017, we had 2% market purchases, a very nominal amount. Good question on the commentary. The plans to expand the landfill or something with the landfill, is that affecting your planning yet, or is that? So a gas that's at the landfill now would be sufficient to carry us for the 20 plus years. So the models that we're looking at for the content of the methane, there's sufficient methane for us to continue to operate. The expansion will help us operate the plant and maximize the generation. So from a standpoint of Washington Electric Co-op, we're definitely tied with the expansion and we wanna see the landfill operate in a responsible manner. We're concerned about the environment. We're at being 100% renewable utility is very conscious about that. So we've had a great partnership with Cassella who owns the landfill and encouraging them to do the right thing and make sure that the landfills run responsibly. Your 2% market purchase, are you buying the grid mix or can you specify you want specific renewable? So when we went out to do that purchase, and this was a winter hedge for January and February because that's when it's most expensive and that's when it's really crazy right now in the wholesale market. So we did a small purchase a couple of years ago from a counterparty. That's a private counterparty where they would sell just like they would sell to a GMP, a VC or anybody else. We purchased a small amount of power just to hedge against what's happening in New England. So where they get that power is generally from their portfolio of generating plants if they have them or if they're just speculating and buying it off the market. So I can't specify when I do a purchase power deal on the market, I can't specify that it's from a particular resource unless I've negotiated directly with that generating plant. So I'm wondering what kind of impact that has on the 100% renewable plant because we were exempted from the standard offer. So we bought renewable energy credits to make to green that piece up. So we purchased from the market but then we bought renewability to cover our greenness on that. So I assume like Coventry's baseline basis. Yes. And but Sheffield is a pretty large chunk that's intermittent. Is your, like, NYPA purchases or those two also intermittent or is that baseline? So NYPA has a nice flow to it. So NYPA is large like HydroCoback, so they schedule it. So it's really more of a scheduled hydro plant. It does have a fairly solid flow. But if I look at it, I look at it this in a portfolio basis if I take a little bit of a resource that's intermittent like Sheffield. But Sheffield actually has a really nice profile for us where it matches our residential load profiles. I really like the wind. And I married that with some Coventry. I married that with some Hydro. We get a really nice mix of coverage. We've got a little bit sticking out in the wintertime during the peak periods. And I can manage that by doing some market purchases. But in general, so again, the message I want to send is WEC has made significant investments, power supply procurements, bill generation. You know, we're looking at our load we're managing that, you know, how all of our consumers use electricity. We're basically an aggregator buying power to serve this mix of 11,000 customers. And we do it with 100% renewable resources. Our message is this is what our consumers or constituents have asked for. They've elected nine board of directors. The board of directors are elected in a democratic annual meeting or a voting process every three years. They have terms of three years. If people did not like our direction, they would vote the board off and replace them with civilians. So we're following what our constituents want based on this democratic process. One of the things I want to mention is relative to our resource mix. Some of the things that we're grappling with right now are location of new generators coming into Vermont. What that's doing to our existing portfolio mix. So the northern part of the state has a lot of generation and very little load. And it doesn't have enough transmission capacity to move stuff around in a really efficient basis. And I don't know if you've heard from Belko with this thing called Shi'ai. It's a Sheffield high gate external interface problem. Washington Electric Co-op, the Coventry plant and the Sheffield wind plant, about 75 to 80% of our portfolio is in the Shi'ai area. So we're seeing the Sheffield plant. We're seeing financial impacts from new generators building in this area, impacting existing generators that have already made financial decisions and have already constructed. So we're definitely squarely in that space with the Shi'ai issues. We would really like to see that solved. To me, it does not make sense to go build something today, and then two years down the road, build something new, and then turn off the thing that you just constructed. You just wasted that asset. So we're really looking for solutions to maximize renewable generation in the state and not cannibalize existing resources. And what do you think the solution is? So solutions are. Definitely there's a transmission component to this where we need to build infrastructure in the region to move power in and out so that we can get juice to flow. At the same time, it's important for you all as lawmakers to understand it's great to pass new laws and new legislation to incentivize solar being developed, renewables being developed, but there can be consequences that, you know, I sat through many meetings where people said, oh, this is gonna lower transmission costs. This is gonna help reduce losses. We're gonna see, you know, infrastructure is gonna be able to handle all this. I kept thinking, oh no, we're gonna have a capacity issue. At some point, we're gonna exceed the system's capability. And here's where we are at today. And that's caused WAC to increase its rates by a little over a percent just because of the Shia issue. So it's having an impact. So we've got to build infrastructure now to fix this. And that can be. Increasing line capacity. That can be transmission lines. That can be, they call these synchronous condensers, variable speed drives at particular locations. So fancy equipment needs to get sprinkled around, but we also need to be conscious about where the next generator is constructed. Because if we fix it today for the current problem, then we've plopped on another 30 megawatt solar project or, you know, even if it was a 50 megawatt natural gas plan or something, it's gonna eat up that capacity. So one of the things we talked about was forward capacity market. I'm gonna try to answer the question that was raised earlier. So on the load side, load pays. So we pay for all that, those billions of dollars to be transferred over to generators. So I'm concerned about the forward capacity market price that's set three years forward because the load side pays. I get credited on my generation. So I get, if the Coventry plant gets paid, so it's almost like I'm taking money from this pocket and I'm putting it in the other. But if I have enough capacity resources in generators, I can cover my load obligation. But what's happening right now, so for Washington Electric Co-op, we're short a little bit on the capacity side. So the price point when it pops like that, it translates into rate pressure for Washington Electric Co-op because we're a little bit short on the capacity side. So if I'm a generator and I see a high price point that sends to the market, it's a price signal to say, build generation. We want you to build generation. So three years in advance, they say you're going to get paid $9 a kilowatt month that tells the marketplace to go build generation. And then once you build that generation, then the price generally comes back down and floats down and kind of settles down. Is it over correct? I mean, is there volatility because the capacity comes online in chunks? It doesn't come out in small streams. So I would imagine that would drive volatility. It's very lumpy. And the capacity market was set up to give a revenue stream to the generator so that they could stay in business. So they weren't closing up, taking the keys and sending the keys to the bank. It was an intentional market to assure that we have enough generating plants out across New England to keep the lights on. But it's very, like you said, building chunks. You don't build really granular. So it is a clunky market, in my opinion. It's an expensive market. We've had rate increases just due to the poor capacity market. The other question? Yeah. To increase transmission capacity, what kind of line has to go in? Do you have to have one thing and what did you line go in? Are you going from two phase to three phase? So I'm not an electrical engineer, but the story and the solution around the Shiai deals with voltage issues and thermal issues. So thermal being the lines get too hot and they burn up. So the fix is not as simple. You just expand, you put a higher voltage line up there because you have these thermal, there's a playoff of both sides. And this is where the engineers get really technical and get into the weeds on this. But there's several things that need to happen on the transmission system to fix this with reactive power, bigger capacity lines to move power, and funky equipment that variable AVR, equipment and synchronous condensers. There's a set of tools in the toolbox to throw at this. And it's not as simple as running a new power line. It is complicated. Thank you. Thank you very much. I appreciate your time. Appreciate it. So we're going to start at number one. And I think go until two. So just an hour, if we can start on our presentations. There's the energy action network presentation and under the prepared testimony I'm doing for presentation. Yes. I'm going to start us up here just to keep you guys on time and us as well. Welcome. And my understanding is that you're going to take about 40 minutes of your presentation. That would be great. Mr. Muse will take another 20 minutes or so to that. So I'm just going to turn it over to you and thank you for joining us. Thank you, Mr. Chairman and members of the committee. Very glad to be with you today. I serve as the executive director of the energy action network, which I'll speak more about briefly. I know some of you and folks around the room from my previous role working for the agency of commerce and community development where I served as economic development director responsible for business support and workforce development in our green economy and working lands sectors around the state. But I have served with energy action network for the last two years and I want to tell you a little bit more about that our network and our model. But mostly I want to focus on Vermont's energy and emissions commitments and our goals for our economy and where we currently stand and the scale and pace of progress that would be necessary to meet those energy and emissions commitments in a way that would improve the Vermont economy. So if you don't mind, I will stand up. First, the energy action network is a diverse network of over 200 members across Vermont, nonprofit organizations, businesses, educational institutions, finance institutions, really a wide variety politically, business wise, everyone from the Lake Champlain Chamber of Commerce to Green Mountain Power to Born's Energy to Vermont Technical College. And we all share one common mission which is the same as the state of Vermont which is to meet the state's 90% renewal by 2050 goals, total energy goals and also to significantly reduce emissions. It's important to state up front that energy action, as a network, we have a small backbone organization that supports those 200 plus members in multiple ways. One thing we commit to do is we do not do any lobbying or policy advocacy. We serve as a trusted, objective tracker of state progress. We work with state partners like the Department of Public Service, Agency of Natural Resources, VTRANS, to gather total energy and emissions data to share that with the network and across Vermont. So that benefits our networks but it also benefits the state. So if there's ever any way that I can be helpful beyond this presentation as a resource, please do not hesitate to let me know. So the main story in terms of our energy goals that you are all familiar with, 90% renewable by 2050 across all energy sectors is that as of last year, Vermont was about 20% renewable. The first milestone of the Comprehensive Energy Plan is 25% renewable and we have a chance to meet that. However, almost all of this progress to get to this point has come from the increasing renewability of our electric sector and policies the legislature has passed from net metering to standard offer to the renewable energy standard. What is holding us back from further progress and what will be necessary to bend this curve upward is to make our transportation and our thermal sectors more renewable which are by far the most fossil fuel dependent and high emitting. So these pie charts break down Vermont's total energy use by sector. So you can see that overall this is Vermont's energy use, 142 trillion BTUs, use a common energy unit. These numbers are actually as of last year so they're a little bit dated. Energy Action Network every year comes out with an annual progress report for Vermont that will be released in about a month. If any of you want to pencil or type some notes in I can give you the most updated numbers which are that transportation went up from being 35% of our total energy to 44% of our total energy. Some of this is an accounting change from the department based on switching over to the renewable energy standard and REC accounting which I can talk about. Thermal energy makes up 42% of our energy use. So together those two sectors are 86% of our energy use and electric is now 14% of our energy use. I should just quickly say we can get into it in more detail if folks want that the department previously had measured electricity and we follow their lead because we want to be tracking for the state and in full compliance with them. They had previously measured electricity as a source energy figure. So not just the energy that was consumed on site at the house or at the building but also all of the energy that went into bringing that electricity here the transmission and distribution. We felt that they felt that it was important to capture that energy that was used to bring that electricity to Vermont in the overall electric figure. The name we're using end use or site energy figures for thermal and transportation. My understanding is to be consistent across all and because of the requirements of REC accounting or renewable energy credit accounting compliance with the renewable energy standard they're using site energy across all three sectors now to be consistent. And so that's where you get the 44% of our energy from in transportation, 42% in thermal and only 14% in our electric sector. Is there any way to kind of backtrack and make an apples to apples comparison at least for one year if you see. Yeah, that's what we're doing in this year's report. So I'm sorry this slide doesn't have it but we'll have it momentarily. And I can also update you on the share of that energy use that's renewable as of now. So electricity is now 63% renewable. The first target of the renewable energy standard was 55% renewable. The utilities have exceeded that and our electricity is now 63% renewable post-REC accounting. Our thermal sector has gone down in its renewability because of increasing fossil fuel use. It's now 19% renewable and our transportation sector is still stuck at only 5% renewable. And even that figure is mostly ethanol which has dubious life cycle emissions problems. So that's energy but of course the energy conversation is also a climate conversation because over 80% of our emissions come from our energy use across these sectors. And you can see that this is data from the Agency of Natural Resources. Their emissions inventory, 43% of our emissions come from transportation, 28% from building thermal and only 10% from electric generation. So it's clear that both to meet 90% by 2050 our renewable energy goals and to meet any of the state's emissions goals and there are multiple. The governor is committed to the Paris Climate Agreement a 26 to 28% reduction below 2005 levels by 2025. The legislature has passed more ambitious statutory goals than that but we are nowhere near on track to meet any of those commitments at this point. As you can see from this slide which shows that since 1990 Vermont's emissions have increased 16%. Over the last year we have figures for is 2015. From 2013 to 2015 our emissions increased 10%. And again that was because of increasing use in the primarily the heating and the transportation sectors. Can I ask a quick question? Yes, sir. The two slides back. A portion of that one, either one of those. So as load shifting happens in thermal, does the electrification of thermal get shifted over to electric? That's a great question. So the thermal still stays dirty. It just drops to a lower percentage of the load. So what we have done is basically from the EIA data and the state data we've subtracted any electric use that is from cold climate heat pumps and from electric vehicles and from heat pump water heaters and put them in their relevant. So what we will see over time is, so this electricity is really just appliances, lighting, things like that but not vehicles and not heating systems which would be captured in those two slides. So as I mentioned at the beginning the EIA does not advocate for one particular policy solution over another but we do provide analysis that to give a sense of if we're serious about meeting these commitments as a state what is the scale and pace of action that would be required and we don't look at policies but we look at known improving technologies and best practices. And so what are the technologies proven and available on the market today and what are the emissions reduction benefits we could get from further adoption of those? This is not meant to be prescriptive we're not saying this is the way that Vermont has to do it this is meant to be illustrative of what it would take. So, and we break it down by sector so that would be, we're currently at about 2,800 electric vehicles in Vermont. For EVs we count both full electric vehicles and partial hybrid electric vehicles, PH EVs. We would need in the next six years to have 90,000 additional electric vehicles purchased instead of new internal combustion fossil fuel cars. Of the remaining fleet that's still internal combustion we need to see an increase in that fuel efficiency by 5% and we would need to double transit which is an all-inclusive figure including commuter patterns, bus, carpool, et cetera. On the, so the single biggest driver we've identified is in electric vehicles the single largest sector, sectoral opportunity is in thermal and that's because there are so many options for how to move away from fossil fuel heating to renewable heating from heat pump systems to advanced wood heat systems through further weatherization and heat pump water heaters. And so if you add all those together that becomes significant. And there's additional gains that we can make in terms of emissions reduction from the electric sector as well. And then of course, because energy is only 80% of our emissions we reserve 20% to come from other sectors this may be from agriculture, digesters, soil sequestration and the like. So for context I mentioned we have 2800 electric vehicles in Vermont in six years. We need 90,000, an additional 90,000. We have a little over 10,000 heat pump systems in Vermont. Similarly 90,000. We need an additional, we basically double the amount of wood heating although we would primarily, this modeling is focused on the efficient systems like new efficient EPA certified pellet stoves and the automated pellet boilers. And 90,000 additional home energy retrofits beyond the 25,000 that there are currently. Altogether, that would get us to Paris and if you fall short in one you'd have to, over the US climate alliance target it's also known as you'd have to increase in another. While these numbers may seem large especially to relative to where we are today they're certainly technologically possible and I can just provide a little bit more context. There are 335,000 housing units in Vermont as per the US census. So these goals would require just one third of Vermont housing units to be converted to renewable heating. Either cold climate heat pumps and or advanced wood heat over the next six years. Likewise there are approximately 44,000 new vehicles purchased in Vermont every year. The source for that is the auto alliance. And if that rate stays stable over the next six years then we'd see 264,000 new vehicles sold in that time period. So again if about one out of every three Vermonters making a new vehicle purchase in the next six years opts for an electric vehicle then we could meet that goal as well. While there are certainly actions that all of us can take and roles for all of us to play including renters and used vehicle owners. In this example the main responsibility for achieving emissions reductions would be on those Vermonters who are owners of housing units and purchasers of new vehicles. Those with the opportunity and more often than not more of the means to make these purchasing decisions. And I wanna pivot now to what I'm most familiar with given my background working with the state of the Agency of Commerce which is the economic impacts of all of this. The status quo over fossil fuel dependence is causing really significant harm to our economy. We have about a 33 billion dollar state economy. Because of our spending on fossil fuels we see about a billion and a half dollars drain out of the state every year. And that's because we have of course 100% imported fossil fuels, roughly 78 to 80 cents on every dollar we spend on fossil fuels leaves the state. Not only that but the prices for those fossil fuels are incredibly volatile and they're generally higher than their renewable counterparts. The purple line here is propane. The blue line here is fuel oil. Whereas you can see in comparison wood pellets both climate heat pumps, wood chips are much flatter and more stable and lower year to year price costs than the fossil fuel alternatives. Which makes a big difference for family budgets in the middle of winter getting a big fuel oil bill. Can we interject a question? Yes. So I'm sorry and this is just kind of occurring to me but maybe something to talk about afterwards. So we're hearing a lot about how much natural gas is on the grid. And so just thinking about that, this is just two people's homes, not to be renewed. And natural gas is not on this, oh no it is on this chart, it's the gray line. So yes, it's certainly less volatile at a lower cost than the fuel oil or propane. But this is two people's homes, it's not the gray line. This is not just for the life of it. So that was the heating sector. It's a similar story on the electric side. This slide is a year old. I think the average price per gallon in Vermont now is something like 242 a gallon. But again, this is dated. We said drive electric Vermont has calculated that it's a dollar 50 gallon equivalent to charge an electric vehicle. But we just saw earlier this week, Burlington Electric Department come out with a residential EV charging rate that's the equivalent of 60 cents a gallon. So these continue to fluctuate, these continue to go down. But of course there's the comparison around the maintenance costs, which are far lower for EVs, in emissions benefits. And when you've got 78 to 80 cents on every dollar leaving Vermont that we spend on fossil fuels, it depends what renewable alternative you do instead in what your electric utility territory is. But in general, at least twice the amount of money is state of your energy dollars are staying in state when you're using renewable, when you're using electricity to run an EV as your transportation option as opposed to gas. So very good in terms of recirculating dollars locally and contributing to more local jobs. Here we see the growth in clean energy jobs in Vermont since 2013. We're now right around 19,000. Vermont holds the distinction of having a higher share of its workforce employed in clean energy than any state in the country, 6% of our employees. Most of that is in weatherization and efficiency. And the economic conversation is incredibly important because there's been a lot of misinformation about what taking steps to cap carbon or price carbon does to state economies. And we've done a comprehensive review of other states and provinces that have implemented such policies and we've found no evidence, and we've pulled from other people's analysis as well, that implementing such policies causes any economic negative benefit. So you can see here, California is the only state in the US that has capped carbon economy-wide, implemented the Western Climate Initiative in 2012. They've been able to drive their emissions below 1990 levels. Again, in comparison to Vermont, we're 16% above 1990 levels. Meanwhile, they've had some of the fastest economic growth in the country. This is not to imply causation or that Vermont's economy is anything similar to California's, but it is to say that there's not evidence out there that capping emissions are pricing carbon harms of state economy. You can see the same story in Quebec. They joined the Western Climate Initiative in 2012. Their emissions are back below 1990 levels and they've had one of the strongest performing economies in Canada. British Columbia took a different approach instead of cap and invest. They did a carbon tax, similar story on emissions, and increasing GDP. We call these decoupling graphics. For so long, our economic growth was moved in tandem with our energy use, sorry, with our fossil fuel and emissions, but now we're seeing through efficiency and through substitution of renewable alternatives that we are able to achieve economic growth while reducing greenhouse gas emissions. So I should reiterate here that EA is not, I'm not endorsing any one of these policies. We have members who support expanding the Reggie model to cover transportation emissions through the Transportation and Climate Initiative. Some support not joining California and Quebec in the Western Climate Initiative. Some support a revenue neutral carbon feed that would reduce the sales tax. Others support the Essex Plan or another policy. But what I do need to say is that it's clear that unless we do one of those policies or they're equivalent, we will not be, it's almost impossible to meet the state's energy and emissions goals. And the reason for that is because if you look at this chart, it's also worth a reminder that Vermont already participates in a carbon pricing program, a cap and invest program, which is the Regional Greenhouse Gas Initiative. And we do that to cover our electric emissions. However, our electricity makes up 10% of our emissions. Other states have benefited more from Reggie because their electricity generates more emissions. But we can only hope to make so much progress when our policy only covers this small sliver of our total energy use. Whereas the places that are making the most progress in terms of reducing emissions and growing their economy have done an economy-wide or total energy approach to capping emissions. You see, in California, they cover transportation. They cover thermal, same in Quebec and in British Columbia. And I think that a helpful reference point in terms of why we've been able to see all of this progress on the electric side but far less so on the transportation and heating side is because we have policy and regulation and requirements and penalties and incentives on the electric side, through the Regional Greenhouse Gas Initiative, through the Renewable Energy Standard. But in terms of those other sectors, we're working with vaguer, less legally binding goals and commitments. The Vermont Blue Pass, the statutory goal of its emissions reduction target in what was the year a few years ago. And even though Governor Scott strongly committed to staying in the Paris Agreement and joining the U.S. Climate Alliance when the President pulled it out, we're nowhere near on a path to actually meet that commitment. So the clear evidence from across the country and across North America is that if you want to meet these goals, if you want to improve your economy, then you need to apply the policy and regulatory tools, including incentives and legally binding requirements to those other two sectors of our energy economy. That's all I have prepared but I am happy that if we have time I don't even know where we're at. I'm happy to take additional questions. I just have a bit. I just have a general question and this is going back to your one slide before. And as a precursor to this question, we had a presentation this morning from the folks at ISO New England. And there was something that they presented that I hadn't actually, I hadn't even realized that of the states that are in ISO New England, there are three states that have mandated greenhouse gas emission targets relative to Maine, New Hampshire, and Vermont which have aspirational. So I'm curious, I'm throwing this into the ether but maybe you have an answer to it. I'm curious what Connecticut, Massachusetts, and Rhode Island are specifically doing to what are the penalties that they don't meet them? What are the very specific policy things that a mandated state does relative to an aspirational state and that what none of those states have? A carbon tax and transportation fuel, for example. And that kind of leads back to this slide which is California clearly is looking at mandated constraints on greenhouse gas emissions in particular sectors. We only have it on electricity. And what is California doing in a mandated context to get to those mandated reductions? Yeah, so for the California example, they have set up a cap and invest system where they set a target of what their overall emissions they wanna be and then they set a certain number of allowances to basically pollute greenhouse gas emissions and then they auction those off. I think the current price per ton is something like $19 in the Western Climate Initiative. And so then they have that auction and that market-based mechanism for those rights to emit but it's covered it where all of that energy is entering the state in each of those sectors. I'm less familiar with, I know Massachusetts has the Global Warming Solutions Act which has a legally binding requirement that they meet their emissions reduction targets. I think this has been less of an issue for Vermont because our electricity sector was always so low-carbon intensive and we've never had a challenge meeting the Reggie target. So it's really just been a net boon to us. I think $18.7 million has gone to Efficiency Vermont alone to enable them to help Vermonters from Reggie. But I think probably Tom in the next presentation may have more information about what some of the other states are doing. Great, yeah. I've got a question, that 6% figure that you're talking about that it's employed in the renewable sector. Yes. Does that include specifically people that are designated in that category or can it be any plumber that installs heat pumps? Can it be any contractor that does a home project but not associated? So that number comes from the Clean Energy Industry Report which is done annually by the Clean Energy Development Fund in the Department of Public Service and it counts both full-time jobs and a share of overall employment. So it's counting, if you're doing clean energy work for part of your, like so it's measured in FTEs or full-time equivalents. So that is captured, is my understanding and actually one of the experts behind that study is in the room of us at Dalhigan from the department if there's further questions on that. Thank you. So not to try to get you to give a advocate for one policy over another but putting on your economist hat, which... I only have a master's degree, not a PhD. Yeah, you're a master's ahead of me. What non-pricing solutions give the best spring for the buck? Weatherization, electrification? I think that it can be problematic to distinguish between pricing and non-pricing policies. So for instance, with the Resources for the Future study that I believe presented to you this week, the non-pricing policies they looked at were the ones that were recommended by the Vermont Climate Action Commission and it's basically a series of incentive programs, rebate programs that require additional revenue. I think 80% of them are incentive programs that require additional revenue to meet those emissions reduction targets and if you don't implement carbon pricing or carbon invest of some measure then the question becomes, where does that revenue come from? So it's theoretically possible that you could just go with those non-pricing options in terms of incentives and rebates, but you would need an additional or new revenue source that's not carbon pricing and the question then becomes, where does that come from? Yeah, and I should be asking you and this is them rather than you, but they, I believe that they talked in pricing options, they talked about in terms of driving behavior, a tax being more effective than a gross receipts tax or an excess tax or something that's invisible. Yeah, they were saying tax actually instead of price. So if the price goes up because the commodity price goes up then that's one that everybody kind of, kind of adjusts to that. But if the tax goes up, people react. Well, if an excess tax causes the price to go up, you don't know why it's... Oh, it's behind the scenes. Yeah, yeah. I do think that there is a common misperception that is frankly based on the evidence intellectually dishonest around describing carbon pricing or cap and invest as inherently regressive, whether or not and how it affects a price and which quintiles of income or portions of the population come out ahead or held harmless or benefit depends entirely on how you design that policy and what you decide to do with the revenue. There's nothing inherently. You could design a carbon pricing policy that harmed the economy or that harmed low income for months or you could design one. So it's all about those design questions of the policy of how does it get implemented and then what do you do with the revenue. It's entirely possible to make sure that rural and low income for monitors come out ahead in a cap and investor carbon pricing situation just comes down to the policy design. So I have a concern that we are setting ourselves up for, we collectively are setting ourselves up for disappointment in the marketplace when we were talking about how much less expensive electric vehicles are to operate. You had to figure out there maybe it was something you mentioned about 60 cents a gallon equivalent or $1.58. And the only conversion factor that I have for miles to KWH is what we have should be bold. We have about 25,000 miles on it. So GM tells us we're using about 40 kilowatt hours per 100 miles. So at that rate, and this is a small hatchback kind of box kind of car. If that car got 40 miles a gallon with a gas motor and electricity costs 17 cents a kilowatt hour and multiplying all that through, it comes after around 270, 275 a gallon. And at, well, I just did a calculation for 60 cents a gallon equivalent and multiplying all that out. Electricity would have to cost three dollar or rather three and three quarters cents per kilowatt hour. So I just don't wanna be promising over promising savings. The savings will come on the maintenance side but it's not there on the operational side. I think it really depends how utilities design those charging rates in terms of that's really encouraging off-peak usage and then it becomes much less expensive to them charging overnight. That's a very important part. Whether or not a person has renewable energy generation outside when they're charging the car also makes a difference because if you're... It's the cost of electricity. What's the cost of electricity? So if the cost of electricity is less than 10 cents or something a kilowatt hour, yeah. Sure. Then it's a lot less expensive than a gallon of gas. Anyway, it's... I'm just concerned about that. Because having worked in energy efficiency in the 90s when everybody said, oh we're saving 20, 25, 30% of... And then when it didn't happen, people get all like, oh this is a waste of time. And it certainly, that was an average figure that was come to by Drive Electric, Vermont and they're the real experts in that space but it's also an average figure and it varies by utility and different... I'm just making a comment. No, that's the right answer, I guess. Sorry. Any other questions for Jerry? Thank you very much for having me. Thank you, Joe. Trade you. Thanks. Welcome, Tom. Thank you so much. Yeah, thanks for joining us. Thank you for the opportunity to be here today. My name's Tom Hughes. I represent Energy Independent Vermont which is a coalition of organizations working to strengthen the Vermont economy, prioritize low income and rural Vermonters in a transition to clean energy and to reduce carbon pollution. Some of the members of the coalition include Vermont Businesses for Social Responsibility, Capstone Community Action, Joey Miller's Vermont Natural Resources Council and many others. What I'd like to do today, what I've been asked to come in my understanding is to sort of book end the week. Earlier this week you had an opportunity to hear from resources for the future and their extensive analysis of carbon pricing and non-carbon pricing models and what they would do for the Vermont economy. And I'd just like to put that in perspective from the advocacy community that's working on some climate initiatives here in the state. So Future, a premier academic research firm located in Washington DC to conduct the work. Resources for the future or RFF has been studying the nexus between environmental and economic policy for seven decades now. They are experts in this field. The report itself provides data and analysis on a number of different policies including the Western Climate Initiative, which is the California and Quebec Carbon Pricing Program, the Transportation and Climate Initiative, which is the program that Governor Scott is participating in but is still in the design phase and very early in the design phase, which would cover transportation fuels only. And then the third policy, which they dove into is what's called the Economy Strengthening Strategic Energy Exchange or Essex Plan, which was a proposal developed by business leaders and low-end chem advocates in 2017 and was a policy that was in legislation last year but didn't move beyond the drafting phase. RFF offers data and analysis. They did not offer policy recommendations. At best you could look at this report as a roadmap. It does a pretty good job of saying where we are and where we need to go and then provides a bunch of different options for how we might get there and describe those options but doesn't make any recommendations. The report, one way to think about this report and it's a hefty 170 plus pages is to think about what the impacts of any policy would be on Vermont's economy, on equity for low income and rural Vermonters and for the environment. From the economic perspective, they looked at again these three carbon pricing models and found that the economic impacts would be very small, a 0.002 to 0.05 range of impacts on the Vermont economy. Just to put that in perspective, as Jared mentioned, we've got about a $32.2 billion GDP. 0.002% is about $6 million of that total gross state product. Of the policies that they modeled the Essex Plan was the one that modeled most favorably with a small net positive for the state economy. That's just on the economics side of things. When you factor in also the health benefits of reduced air pollutants that come with reduced carbon emissions, you can add in an additional seven to $19 million in health care benefits, avoided health care costs if you were to pursue one of these three strategies. In terms of equity, one of the key findings from this report is that using carbon pricing revenues and then providing them using the proceeds as rebates to Vermont households. Again, as Jared described, designing the program to benefit low income and rural Vermonters, a carbon pricing program can be highly progressive. Anywhere from 40 to 60% of Vermont households can come out ahead and those households are the ones at the lowest two to three tiers of the economic ladder. Again, while the differences aren't large between a Western climate initiative or a transportation climate initiative or an Essex plan, the Essex plan did model out slightly more progressive in terms of its economic impacts than the other two. The third dimension which this study looks at and which I encourage you to think about climate policy is on the environment and on the climate. And one of the stark things that we just have to find ourselves every day is that we're not anywhere close to hitting our goals and that without new policies, we're not gonna hit them. Those goals that the last three governors have established and that the legislature put into statute. What the researchers showed was that carbon pricing can play an integral role in a broad suite of policies to reduce carbon emissions. But there's no carbon pricing program on the table in Vermont or under consideration that could do it all. Now the price you would have to apply is politically untenable in the state. Again, however, the Essex plan would reduce carbon emissions slightly more than the other two policies that are under consideration. On the roadmap analogy, one of the hopeful things that this report does lay out is that we can get there from here, it's just gonna take more than carbon pricing to do it. We're gonna have to put carbon pricing together with a suite of other non-pricing initiatives in order to meet Vermont's climate emissions goals. What the report doesn't do, however, is it doesn't delve into what the economic and equity dimensions of those other policies would be. What does providing a $5,000 rebate or incentive for an electric vehicle, whether it's 100 electric vehicles or 1,000 or the 50,000 that the governor was mentioning in yesterday's budget address, where does that money come from and how do we get it in order to devote it to climate action. Last slide here, the top takeaways from this study. With the policies we currently have in place, Vermont's not going to get to our climate and clean energy goals. New policies are needed and necessary. The Trump administration isn't gonna help us and that means that we are on our own as states either individually or working in partnership with other states. However, there is a way to get from point A to point B and carbon pricing in combination with some of the other ideas that the Vermont Climate Action Commission has proposed and others could help us get there. The challenge to you all as this committee and the legislature and lawmakers in general is to reach that goal while also strengthening the economy and making sure that low income and rural remoders aren't left behind. Tom, as you said, the RFF reports us that carbon pricing alone won't get us there. Carbon pricing plus non-pricing incentives penalties will help us achieve those goals. But with the Essex plan or any other plan to office rebates, tumor monitors, if you give the money back in some form, then how do you achieve the non-pricing goals? So it means that you're gonna have to have a source of revenue in addition or take money from the someplace else in order to implement the non-pricing. That's true. And in that sense, carbon pricing is the low-hanging fruit of the next, it's the next step that we can take. Because all of the other proposals on the table are gonna require additional revenues. Carbon pricing is the revenue. The question is what do you do with those revenues to achieve the three goals that we think you should be working towards environment equity and economy? So with a cap-and-trade system or some other, you could use the revenues from the penalties in order to do the non-pricing things. But then you don't really, then you have the question of equity in terms of income levels. That's right. If you design a cap-and-trade program and you used all the money for rebates for electric vehicles, only those who take advantages of those incentives for electric vehicles come out ahead where as everybody who's paying the higher price might have a negative economic impact. I don't envy your position here, but there is, the report does lay out pretty clearly that there is a economic advantage, there's an environmental advantage, and there is a way to do climate carbon reductions equitably through a carbon pricing program, whether it's WCI, TCI, or the Essex plan. This probably is more of a question for the folks at RFF than you, but if you, I'm not sure whether there are analysis looked at using part of the revenues from a carbon price or a cap-and-trade system for non-pricing incentives, and what that would do to their numbers in terms of what quintiles benefit and which don't. Yeah, they did not, they discussed a little bit, I don't know if it was in your joint committee hearing or at a different hearing at some point later in the week, but they made clear one that they just looked at 100% rebates or return, but policies don't have to be 100% one way or 100% of the other way. You could certainly design a policy that was a mix between rebates and using the revenues for investments in clean energy. So the Scott administration has put their toe in the water transportation climate initiative and exploring that, so we'll see where that heads, and potentially that could make a meaningful move toward meeting the Paris commitments that we've made as a state. We actually have a witness coming in, I'm not here for an hour, coming in next week to talk about some of the things that maybe the administration's thinking about or some of the climate study work that was done, I guess completed about a year ago. Are there things, I'll just, since you're sitting in the witness chair, I'll ask you, are there things that you would highlight in addition to some of the things you've noted on carbon pricing? There's things that you would highlight that came out of that report that you would prioritize, or Jared, you feel free to chime in as well, that you would prioritize as places we should look. RFF was talking about pricing and non-pricing solutions. They would work better together, but there really weren't pricing solutions in that report. But are there things there that you would highlight as an advocate for getting our greenhouse gas emissions down for being more energy independent as the things that we should first look at? Sure, well, just to be clear, you're talking about the Vermont Climate Action Commission report from about a year ago. Okay. One of the recommendations, which I wish we had been in there, but I think that probably if they had an opportunity to sit down again, would be in there, is a 100% renewable energy standard. Currently we have a renewable energy standard, but we're driving towards 90% renewable instead of driving towards 100% renewable. And if we could put that 100% renewable into statute, make that the goalpost, the end zone, rather than just getting 90% of the way there, that's a no-cost way of making progress. You know, it's no cost, because you have to change the slope of the curve. Fair enough. And another option is to make whatever goals they are, whether they're the current RES goals or the more ambitious 100% goals mandatory rather than just nice goals that are statutory, but they're just goals, they're not requirements. So I'm wondering whether a better strategy might not be to prioritize non-pricing strategies first, probably with using money revenue raised by some sort of a fee on fossil fuels, but with the goal of being not to use carbon pricing to reduce energy usage in greenhouse gas, but to use that revenue to stimulate really more comprehensive non-pricing strategy, like increasing weatherization, making weatherization available to people above the current income threshold, maybe on a sliding scale, some other ideas I've been thinking about hiring people to enforce the energy codes that we have, which are completely unenforced now, and using that group of people to also basically coach and train contractors about the energy code and how to build better, and maybe also to incentivize contractors to get building performance training themselves, things like that that might have an impact on at least building energy. I mean, there's other things to be done about transportation, but I'm just wondering if that might not be a better strategy to look at this as more of a workforce problem, an economy problem, a cost savings problem rather than this nebulous to a lot of people, and some people even don't think that it's a problem, climate crisis. Well, that's why I encourage you to think about it under those three dimensions of the economy, equity, and the environment. What you're describing is essentially a fee and invests model, all of the additional building expectors, weatherization work that you described there, all necessary to meet the goals that Jared laid out expertly on the charts. Fund that through some sort of price on fossil fuels, whether it be a fee or a tax, what a fine, what have you, it is outside of this building, it is a distinction without a difference for most Vermonters. But it would have to be much less than a carbon tax, to raise significant amount of money from what I'm understanding, but maybe, I'm just learning all this, so I'm just throwing out the idea and for discussion, that's all. Do we have any info on what the economic impact of doing nothing at all is? It may have been mentioned earlier in the week, but we absorbed a lot of information on it. In fact, we're doing nothing. Well, to put that, put a number on it, again, Jared mentioned that we spend about one and a half billion dollars a year on imported fossil fuels. That's all money that leaves our economy. However, if we were generating that same energy through renewable sources that were located closer to home, those energy dollars would circulate in the local and regional economy rather than being shipped out of state. I don't have a particular study that I can point to on that, but at the household level, again, if we can move people to lower cost renewables instead of the higher cost fossil fuels, those households are gonna save money as Jared's charts were showing. Right, and a dollar spent in the state gets recirculated and creates more than a dollar worth of economic activity, so I guess I'm looking for the delta between not just that 1.5 billion, but between that 1.5 billion times, whatever additional GDP would be applied to the state or whatever. Jared, do you have a report that, you're nodding your head like you have a report. I'm nodding my head because it's a great and important question. I don't think it's been fully answered yet. I think you could fairly say if we do nothing, we'll continue to see 80% of our energy dollars used on fossil fuels and then 80 cents of all of those dollars leaving the states. We'll continue having this net economic drain that's hampering our economic growth and investing in local jobs. I don't know if it hasn't yet been fully calculated within that economic benefit would be. So, okay, go ahead. No, I've just got a point to make on Scott's proposal as far as just single family residential construction goes. As a contractor myself, over the years, I can't think of a house that I've built that the individuals don't buy their own materials. And a lot of them, I think I've built two houses basically that have been built through Craigslist materials. So again, I think it would be a huge increase in costs. I understand the benefits on the energy side of things if you built a certain code, but the costs out there are extreme as it is and to have that level and that residential category alone would be devastating to a lot of folks. So just in the context of committee discussion, I don't mean to ascribe this to your testimony time, but one of the ways I think about your questions is what's the cost of doing nothing? Because that's always the easiest path, let's do nothing. A question, the concern that I have is if we look out 20 years, some would say less, some would say more, that when our economy and our climate is at a point where we are truly in a daily crisis, a concern that I have is that a number of states and a number of countries at that point will genuflect to a solution, which will be very costly. In other words, they're gonna have to compress the amount of change that's gotta occur in the economy into a very small amount of time, whether it's immediately turning off the spigot for using certain types of fuels or in a very compressed amount of time requiring certain changes to occur. And I think it's from an economic standpoint those transitions are better made over a longer period of time. So the extent that we can, one could say we should have been focusing on these things 20 years ago and had a much longer ramp to these solutions, which would have been much less disruptive. But the context in that we give ourselves longer time to make these changes, I think is less economically disruptive. And so starting to look at those things with immediacy will ultimately, I think be less economically disruptive than when we wake up in 2030 and say, you gotta turn this off. That I think is really economically costly. And that's speculative in my part. That's one of the ways I think about this. And just thinking back on that, those solutions we're gonna have, we're turning those solutions over to our children and grandchildren. I don't like my kids very much. Okay, well, there you go. It's easy then. But you can also say it's putting on a credit card for future generations. I kind of equate it to studying for a test. You know the test is coming. You either start studying a month ahead of time, a week ahead of time, the night before, or you wake up that morning and say, oh crap. Right. I think that's the path we're on right now. Any other questions for Tom? Yeah. Thank you for the opportunity. Yeah, no, thank you for joining us. Thank you. So that's all that's ready. What we're gonna do today.