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ENERGY

A S PECI A L S U PPL E M E N T TO T H E B RI D G E | AU G US T 16, 2012

THE RISE

of of

QUEBEC C
PAGES 58
ILLUSTRATION BY KEN RUSSELL

INSIDE:
Is there enough biomass? 2 Harvesting sunlight 3 Energy in Montpelier 3 Climate change: what we know, what we don't know 4 The great merger 58 VELCO and the merger 8 Wood pellets versus weatherization 9 Energy consumption in Vermont: the big picture 9 Vermont Yankee: love it or hate it? 10

eorge Aiken, the Vermont governor and senator, was an advocate for farmers. He saw the great potential of

electric energy to ease the workload of animals and humans on the farm. He also worked hard to build a ruggedly independent Vermont public power system, independent of the private utility companies. In the 30s and 40s there was a great deal of anger toward alleged gouging by private utilities and the big-city speculators that set them up in the 20s. Aiken pushed hard for public power and control over the generation and distribution of electric power. His efforts were followed to varying degrees by later governors. He resented big interests from out of state coming in and damming Vermont rivers, flooding Vermont farmland, and sending the power and profits elsewhere. Were in a new era now. Our private utilities are now owned by Quebec interests, through a buyout of Green Mountain Power (GMP) in 2007 and a merger of GMP with Central Vermont Public Service. The two private in-state utilities with whom governors sparred for decades are now owned by out-of-state, out-of-country companies. GMP CEO and President Mary Powell seeks to forge a new geo-political relationship with the Province of Quebec, as well as Hydro-Quebec in order to leverage Vermonts unique geographic location with respect to this long-term energy provider. We will explore a bit of what is being forged in this particular crucible. It could be said that arguments for economies of scale have prevailed. We are now to some degree part of one physical system that extends from the massive hydro projects in northern Quebec to the population centers to our south. Perhaps globalization is, as the Vermont Public Service Board states, inevitable, or perhaps weve lost a piece of our Vermont character. Power, in Aikens time, was about freeing ourselves from the hard labor of wresting a living from the earth and about standing up to the private utility companies. The conversation today is about financial stability, globalism and carbon. Energy is sometimes defined as an indirectly observed quantity often understood as the ability of a physical system to do work on other physical systems. Since work is defined as a force acting through a distance, energy is always equivalent to the ability to exert pulls or pushes against the basic forces of nature along a path of a certain length. We wonder if this definition might not help us understand power politics. Something to think about, thanks to Wikipedia. Ken Russell

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Biomass Supply: Is There Enough?

by Bob Nuner

hether its thermal energy to warm us, electrical energy for light or an industrial complex, or transportation energy to move asparagus or the latest gizmo from continent to continent, the question is, Will there be enough? At the end of a wood-chipsupply information video on forestbusinesnetwork.com, chip supplier Ken Gagnon said that now, People are getting their heat, their electricity, from their own backyard. If we consume too much of those products, theyre going to be able to see it. If youre burning oil to do these things, that oils coming from some place you dont see, and you really dont have a real context for whats going on. I think if were using our own energy from our own backyards, were going to have to be much more in touch. Sustainability can be in the eyes of the beholder. Take forest sustainability: Recent decades have seen a decline in pulpwood cut from our forests for use in paper manufacturing, according to Karl Bissex, a Plainfield mechanical engineer who has worked in wood energy for 40 years. That means that more wood may be available for biomass. Pulpwood harvests help clear the forest, Bissex said, using the analogy of weeding a garden: The woods need culling of weak and low-market-value trees, to allow more nutrients and sunlight for better trees. According to the Biomass Energy Resource Center (BERC), Vermont is 78 percent forested, and 86 percent of those lands are privately held. Some are managed for yield; some arent. These are also a potential source of biomass material. In a presentation at BERCs wood energy conference last January [see story January 19], Tim Makers of Community Biomass Systems in Montpelier described a proposed central heat project for Goddard College, pointing out: The supply of low-grade, unused wood in a 35-mile radius from Goddard is, according to BERC estimates, 500,000 tons annually, of which the Goddard plant would use 885 tons a year. Makers presentation projected Goddards fuel savings at 73 percent compared to oil at $3.50/gallon, or $143,000

Eight trees' worth of wood, about three cords, in the author's yard. Photo by Bob Nuner.

a year. As another example from that January conference, National Lifes conversion to chips saves them hauling No. 4 heating oil from New Hampshire, at an annual cost of $600,000, and their annual chip usage is projected at 3,000 tons annually, for which they spend $200,000 in the local economy. Those savings are tantalizing, but there are complications. William Keeton, associate professor of forest ecology and forestry of the Rubenstein School of Environment and Natural Resources at UVM, pointed out that while there are significant and meaningful benefits to converting from oil-fired thermal heat to woodfired, there are concerns. He noted that whole-tree harvesting practices, using large, heavy, mechanized equipment, such as grapple skidders and feller-bunchers, tend to damage remaining trees more and

SOLIDLY REJECTED THE IDEA THAT BIOMASS ENERGY IS CARBON NEUTRAL.

also tend to result in less remaining forest forest after you cut it. Hes concerned that duffle, dropped limbs and sources for re- sufficient matter should be left to regenerate the next cycle of forest growth. (A survey of whole-tree harvest sites in the Northeast found that only 30 percent met or exceeded a suggested threshold of retaining at least 25 percent of slash, tops and limbs. Researchers also are studying how much carbon is bound up in forestscarbon that is prevented from going into the atmosphere. Its very complex study that looks at both biomass (carbon) volume and time (of regeneration, for example), among other factors. In an e-mail, asked if its fair to William Keeton, associate professor of say theres controversy among forforest ecology and forestry at UVM est researchers about the effect on forests from the use of biomass for generation of the forest and its soil. Keeton energy, Keeton wrote, Yes, that would be and colleagues call this structural retention, which means, some live trees, snags, fair. But my read is that the most rigorous, slash and downed logs [left] behind in the peer-reviewed science had solidly rejected the idea that biomass energy is carbon neutral, though it clearly has other benefits (local, renewable, provides economic incentives for working forests, etc). While we can cut oil costs and localize energy supplies by moving to wood, were KEN RUSSELL supplement editor cautioned that we must leave enough in the RICKA MCNAUGHTON assistant editor forest to feed biodiversity and the next generation of trees, and that substituting wood for BOB NUNER general manager fossil fuels is not as obvious a fix as it appears MARISA KELLER to the problem of adding more combustioncopy editor & proofreader induced carbon dioxide to the atmosphere. Keeton suggests that it is not only the man-YARDLEY DANA DWINELL ner in which trees are harvested that will have layout & design an effect on what kind of impact bioenergy CARL CAMPBELL & use has on the atmosphere. Additionally, the CAROLYN GRODINSKY sales efficiency with which we use that biomass matters. For example, conversion of biomass Published by The Bridge, P0 Box 1143, Montpelier VT 05601. Copyright 2012. to thermal energy, in the vicinity of 80 percent efficiency, is much more efficient than conversion to electrical energy, which has Another form of energy: Percheron and conversion efficiency factors from 20 to 40 Suffolk draft horses plowing at Howevale percent, since heat generates steam, which Farm. Photo courtesy Carl Russell. in turn must drive a turbine generator, with

My read is that the most rigorous, peerreviewed science had

ENERGY SUPPLEMENT STAFF

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Moving Toward Energy Efficiency with MEAC

by Dan Jones

hat should each of us singly, and together as a city, be doing to adapt ourselves to a new, more challenging future of conscientious energy supply and demand? Thats the new, broader focus of the Montpelier Energy Advisory Committee (MEAC), which came into being about five years ago when towns around the state were forming energy committees to find ways to reduce their energy consumption. Most towns concentrated on governmental energy savings and recognized the tax benefits of lower heat and lighting costs in schools and municipal buildings. The original committee in Montpelier grew out of a public meeting of over 300 people in 2007. This led to the creation of a number of energy teams. Among them were the energy generation and district energy teams that became, eventually, MEAC. Montpelier had already cut energy consumption in its municipal buildings, which were operating at the best levels of efficiency for the technology in use. The answer for further savings depended on heating with dependable local sources, and the city decided that the best option was to build a district heat plant fueled with locally supplied wood chips. The plant would provide a central heat source for the municipal buildings and schools, as well as some downtown buildings. Such a municipal service would provide landlords and merchants the security of predictable future heating costs. In 2010, when the Montpelier planning office acquired an $8 million grant from the U.S. Department of Energy, the district heat

plan moved into top gear. The city council appointed the citizen-run MEAC to help the city council develop the biomass district heat plant. MEAC reviewed estimates of cost savings that might be achieved by eliminating a dependency on notoriously unstable oil markets. The committee also looked at multiple approaches to burner design and system architecture and conducted a couple of rounds of bidding and engineering analysis to get a firm handle on the costs involved. That phase of the committees work has ended. MEAC gave unanimous support for building the district energy system with a recommendationsince approved by two-thirds of votersto go forward with a bond issue to cover building the citys portion of the system. To help make the project viable, Montpelier decided to partner with the state to upgrade the existing state office heating plant so that it might serve the whole community. However, negotiations with the Vermont Department of Buildings and General Services have been difficult, and a number of the city councilors now have doubts concerning the heating plants viability. The council will be taking up this issue at their August 22 meeting. Those interested in this project and Montpeliers future sustainability are encouraged to attend. For MEAC, it is time to turn attention from district-heat matters to a broader mission of helping all Montpeliers citizens figure out how they, too, can save on their heating and energy costs, while also helping to reduce carbon dioxide in the atmosphere. To start that process, MEAC created subcommittees to focus on different parts of the

problem. One of these is the citizen activation group, which will help coordinate the Montpelier Energy Challenge (see sidebar). There is also a transportation group that will help recognize and promote transportation alternatives such as car sharing. This is key because cars are the citys single largest source of greenhouse gases. Finally, MEAC is also discussing the creation of an energy generation group, which will look at promoting carbon-neutral energy-generation resources such as solar panels and hydro power and,

of course, help the district heat plant live up to its original goal of being a cogeneration facility. MEAC is committed to providing Montpelier citizens with the guidance and resources needed to help make a difference in its energy future. Much depends on breaking the addiction to fossil fuels and creating locally sustainable energy resources. Join in this mission. The committee can be reached through the planning office in City Hall at 223-9506.

The Montpelier Energy Challenge

ore than 700 people flocked to the State House lawn for the opening day of the Montpelier Energy Challenge on June 30. Many came for the free ice cream, but they learned about saving energy at the same time. The event was held because team Montpelier had managed to triumph in the first round of Vermontivate, a Vermont-wide online game designed to engage people in the challenges of energy savings and the challenges of making such an energy focus both fun and rewarding. The game was the brainchild of climate activists, including Kathy Blume and Nick Lang. Participants played for points, and the points all accrued to their towns team. Montpelier beat out Brattleboro in the first round for the grand prize; a free ice cream social provided by Ben & Jerrys. The ambitious goal of the energy challenge is to get 200 homes a year in Montpelier to weatherize and another 200 homes per year to adopt carbon-neutral fuels like solar or wood pellets. Another goal is to prompt changes in our consumption of petroleum for home heat. A major target is that by 2015, 1,000 Montpelier homes will be weatherized and 1,000 Montpelier homes switch to a carbon-neutral fuel source. But it is already 2012, and only 55 homes have been weatherized. The Montpelier Energy Advisory Committee (MEAC) wants to make it easy for Montpelier residents to make the investment necessary to save energy and money. An informational meeting on August 14 shared information with homeowners about processes and programs for energy upgrades. As a next step, this fall the MEAC will be partnering with the Capitol Area Neighborhoods (CAN) to do a house-to-house outreach campaign.

Montpelier Couple Is in Plenty of Hot Water


ho They Are: Montpelier couple Wayne Fawbush and Robbie Harold. She: A published author of historical fiction, an actor and a part-time consultant who got religion working in the (then-named) Vermont State Energy Office. He: Works for the Ford Foundation promoting economic development in impoverished areas of the U.S. Was a former legislator in Oregon at a time when the state was leading the country in home energy conservation. Also does fine art photography. About a year ago, the couple installed a Sunward brand direct solar hot water system. The Motivation: To use the sun to make hot water, to manage overall living expenses as economically as possible and to avoid oil dependency. He: Its like generating earned income. She: And as my Scottish mum says [think pitch-perfect brogue], Its better than shipping body bags back from Iraq. The Technology (Nutshell Version): RaRobbie Harold and Wayne Fawbush are nothing but pleased with their decision to install a solar diant heat is absorbed by and then extracted hot-water heating system, part of which you can see on the roof. Photo by Ricka McNaughton. from liquid glycol piped from the roof unit.

Energy-wise, Thats a Good Thing


by Ricka McNaughton
A small companion photovoltaic grid produces electricity needed to operate the pump mechanism. Takes four hours of sunlight to charge the system. Performs well even on their leafy, close-quartered residential street. Works even when the power is out. The Economics (Financial and Social): The couple combined a $2,000 promotional discount from Sunward with a 30 percent federal tax credit and a $900 tax rebate, lowering a $10,200 price tag to about $5,000. So far, the system has decreased oil use for their two-person household by about 24 percent. The payback: Seven-10 years on a 25-year system. A larger household with more water use would see greater savings. Installation was aided by young trainees from a program called YouthBuild, who learned useful skills in a growing technical field. The Long View: He: Its a great longterm financial investment, plus an opportunity for long-term community benefits. She: The furnace hasnt gone on all summer [to heat the water]. City meter limits aside, we could be taking long showers with reckless abandon."

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'Warmists' vs. 'Denialists'


The Debate Rages On

by Bill Holland

he biggest forest fires in Colorado history. A Midwest drought, unprecedented since the 1930s, that will shrink this years corn crop by 23 percent from normal levels. Last summers drought in Texas that killed half a billion trees. The 2003 heat wave that killed 50,000 Europeans. And much closer to home, the ravages of Tropical Storm Irene. The planet is warming. On that issue, at long last, there appears to be near-universal agreement. But is the increased rate and severity of extreme weather anthropogenic (produced by humans) or the result of complex, little-understood natural processes? Are weor, more specifically, our release of carbon into the atmosphere through burning fossil fuelsthe culprit? A ferocious media battle for public opinion is currently focused on that single issue. To many climate experts, nothing less than the survival of our speciesor, at the very least, some semblance of civilizationis at stake. To global-warming skeptics, losing that battle would result in a vast increase in government regulation, a disastrous intrusion into an economic system thats been responsible for raising the living standards of billions, albeit at a huge environmental price. The most recent flare-up in this decadeslong battle occurred after the July 21 publication in the New York Times of an article, The Conversion of a Climate-Change Skeptic, by Richard Muller, who heads the Berkeley Earth Surface Temperature Project. Mullers criticism of the famed hockey stick graph, which showed global warming and increasing levels of carbon dioxide (CO2) in the atmosphere marching upward in lock-step, brought him to the attention of the Koch brothers, who, according to Greenpeace, have funneled $61 million to anti-global-warming researchers. But Muller proceeded to bite the hand that fed him. His conclusion? Our results show that the average temperature of the earths land has risen by two and a half degrees over the past 250 years, including an increase of one and a half degrees over the most recent 50 years. Moreover, it appears that essentially all of this increase results from the human emission of greenhouse gases. I contacted three Vermonters who are heavily invested in the climate-change debate: meteorologist Roger Hill, climatologist Alan Betts and John McClaughry of the conservative-leaning Ethan Allen Institute. (McClaughry, who has an AB in physics and an MS in nuclear engineering, freely admits he is no expert on climate change, but he has read widely on the topic and directed me to a number of warming skeptic websites.) Hills reaction to Mullers article was one of contempt: Arent you [Muller] a little late for the party? Youre finally confirming things people have been saying since the 1990s. Were talking about the fate of the next 500 generations here. You shouldve converted 20 years ago! In his darker moments, Hill says, he questions whether the human species is capable of addressing slow-moving disasters like global

warming. He notes that we respond well to immediate crises but seldom to gradual, creeping oneslike frogs who will jump out of hot water but passively adjust to water in a gradually warming pot until theyre boiled to death. According to Hill, the greatest single threat on the horizon is the climatic mayhem that would be unleashed should the North Pole become ice-free. Noting the galloping rate at which the permanent ice that caps the North Pole during the summer is shrinking (12 percent per decade), his concern is that the permafrost in surrounding areas could melt as well. (Climate expert and popular science blogger Joe Romm claims the Arctic is in a death spiral and will be ice-free within two decades.) The resulting positive feedback loop could trigger a release of ancient carbon and of methane, a global-warming gas 30 times more powerful than carbon dioxide, thereby drastically accelerating both the pace and magnitude of global warming. The Argument for Humans' Innocence McClaughry considers concerns of this kind alarmist. He challenges Mullers assertion that the carbon dioxide curve gives a better match [to the rise in global temperatures] than anything else weve tried. McClaughry points out that the average global temperature actually decreased from the mid-1940s until 1975, while CO2 increased monotonically, i.e., at a steady rate. He summarized his perspective in an e-mail: Planet earth warms and cools in many cycles, influenced by variations in the earths orbit, the tilting and precession of the axis, solar irradiance, cosmic ray flux, solar magnetic fluctuations, oceanic decadal oscillations, cloud-cover variations and terrestrial emissions of water vapor, carbon dioxide, methane, volcanic ash and other gases. From 1850 to 1940, long before anthropogenic carbon dioxide emissions became significant, the planet warmed significantly as it emerged from the Little Ice Age. Again, since 1977, earth has experienced a slight global warming trend in the lower troposphere, where the greenhouse-gas effect is greatest. There is no scientific evidence for detectable anthropogenic global climate forcing that produces these recurring effects; and there is little or no prospect that human intervention, even at enormous economic and social cost, can detectably alter the result of these natural processes. Instead of trying to get our government to suppress carbon emissions, he wants it to encourage innovation and points to a couple of possibilities that seem worth supporting: integral fast reactors, which use 99.5 percent of the energy in uranium and could burn the waste stream of past and present generation of thermal reactors; and liquid fluoride thorium reactors, which use a mineral common as lead and with less than one-hundredth the long-lived radioactive waste of todays nuclear power plants. In 1994, the U.S. Congress shut down research into the first; in 1976, thenpresident Gerald Ford, under intense political campaign pressure, effectively pulled the

Vermonter Bill McKibben, leading climate-change activist. Photo by Ken Russell.

plug on the thorium alternative. The only political will we need, McClaughry writes in a recent e-mail, is to stop government from protecting and subsidizing the dinosaurs.

Don't Despair; Act Climatologist Alan Betts, who has sparred with McClaughry both in public forums and in the pages of the Rutland Herald, had this e-mail response to these reservations: The trouble is that those who dont believe the climate is changing then label the scientists doing the analysis as alarmists and warmists rather than ask what is really happening to the climate. In another e-mail, he explained the lag between CO2 and temperature that occurred between 1940 and 1975 as being because post-war industrialization put so much aerosol [fine solid particles] into the atmosphere, and there is decadal variability in oceans. And what reduced the aerosol? Roger Hill points to the Clean Air Act, passed in 1970 and expanded in 1977, as significantly reducing the soot layer that was blocking incoming sunlight. In the end, laymen like me may well wonder which set of experts to believe. Its certainly tempting simply to side with the 97 percent of working climate scientists who say the temperature is rising and that human activity is a significant contributing factor, according to Open Source Systems Foundation website. If theres even a 50 percent chance An avid cross-country racer, Bill Holland has theyre right, we cant afford, as planetary been a close observer of winter weather trends caretakers, to sit in the pot until irrefutable for over 40 years. He lives with his wife and data of the kind that would convince Mc- their two daughters in Montpelier.

Claughry and his fellow skeptics becomes available. The consequences of delay and inaction could be utterly catastrophicseven billion passengers on a planetary Titanic with no prospect of a timely change in course. But Betts, who often talks to church groups, insists that sliding into despair would be a mistake. Small, personal actionsproperly insulating ones home, composting, riding a bike instead of using a car, growing some portion of ones foodcan show that youve recognized the problem, and that awareness can spread through the community. [Through such measures] we could halve our global footprint CO2 emissions. He points to a strong correlation between the political leaning of a state and the carbon footprint of its citizens. (For example, per capita electric use in Vermont is one-half what it is in Louisiana.) Hes heartened by Farm-to-Table programs and sees wind turbines as symbols of hope, though only if set up according to tough rural standards like those used in Germany. We need never despair, he insists. If you succumb to despair, youre completely closed to a realistic assessment of whats possible. You cant work with people if youre in despair. I like the motto of Frances Moore Lappe: bold humility. We have no idea of whats possible until we try.

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Big Quebec and Power in the Green Mountains


Examining the Consequences

by Ken Russell

ritics of the recent merger of Green Mountain Power (GMP) and Central Vermont Public Service (CVPS) say that Vermont has just lost something big. They say we have given away a bedrock chunk of a critical state asset and needlessly surrendered critical leverage over our own financial and political destiny, to some degree forfeiting our strength and independence as a state. The deal joined the states two largest electric utilities under the umbrella of a large Canadian family of companies. After decades of attempts by advocates for public power, including by governors George Aiken, Ernest Gibson, Phil Hoff and Tom Salmon, and of dogged bargaining by governors such as Richard Snelling and Madeleine Kuninnot to mention by State Senator Vince Illuzzi and others over control of the Connecticut River dams a few years agothe battle for Vermont public control over the generation and distribution

of electricity may finally have been lost. Some worry that the absorption of Vermonts smaller utilities will only be a matter of time. Proponents of the $700 million merger, including Vermont Governor Peter Shumlin, argue that this merger is the deal of a lifetime for Vermont, a longanticipated marriage of two compatible partners with adjoining territories, offering increasing service and reliability and guaranteeing ratepayers a savings of $144 million. They say that GMP will emerge stronger from the deal and that it is a major player in

THE BIGGEST CHANGE


IN VERMONTS UTILTY LANDSCAPE
since rural electrification in the 30s.

The merger is

helping the state reduce its carbon footprint, the most pressing environmental issue facing us. They say its a smart move, plain and simple. Whatever the verdict, the merger is a big deal. Richard Saudek, a respected former Vermont Public Service Board chair who has also represented regional energy giant Hydro-Quebec, called this the biggest change in Vermonts utility landscape since rural electrification in the 30s: bigger than Vermont Yankee, bigger than the Hydro-Quebec contracts, bigger than various rumored large transmission projects. CVPS is folding into GMP and thus into the Gaz Mtro corporate family. As of October 1, the combined company will control 72 percent of the utility service area in the state. The New Corporate Family When Mary Powell began her tenure as CEO of GMP in 2008, she announced her vision for the company and a broad plan to drive the development of renewable-energy sources, to combat climate change, to spur a green energy economy in Vermont and to maintain our competitive electricity pricing advantage in the region. She also described the view north, to forge a new geopolitical relationship with the Province of Quebec as well as Hydro-Quebec in order to leverage Vermonts unique geographic location with respect to this long-term energy provider. Vermonts public utilities loss has been the gain for a much larger corporate entity, one that is firmly rooted in someone elses public, the Province of Quebec. Above GMP stretches a chain of parent companies, leading through majority ownership stakes, first to the Northern New England Energy Corporation, then to Gaz Mtro Limited Partnership, to Gaz Mtro Inc., to Noverco, Trencap and finally to the Caisse de dpt et placement du Qubec, aka the Caisse. The Caisse, is deemed to be the property of the Province of Quebec. The Province of Quebec also owns Hydro-Quebec. The Caisse is the pension fund for the Province of Quebec and one of the top 10 real-estate management companies in the world, with assets of $151 billion Canadian. It owns or has financial partnerships with nearly 500 companies. During the 2008 Quebec elections, there were allegations of political influence in the management of the Caisse. Other companies with minority interests in the ownership chain include Valenar, which has no employees and a credit line of $200 million dollars, and Enbridge, which operates the worlds longest oil pipeline system. Enbridge has proposed bringing Alberta tar sands to Montreal and, environmentalists say, possibly through Vermont. The owner of the pipeline has applied for permit for a pumping station on the Vermont-Quebec border that would only be needed in order to move tar sands, reversing the flow of the current pipeline. Any such pipeline would not require public service board approval; it could get a new permit from the agency of natural resources, or it could simply use the existing permit, according to knowledgeable observers. The Chain of Command Robert Dostis, GMP spokesperson and former state representative from Waterbury, emphasizes the distinction between ownership and management when it comes to influencing GMPs actions. For instance, the law forbids the Province of Quebec from influencing management decisions of the Caisse. Closer to home, The management ethos of Gaz Mtro is hands-off; their main role is to invest capital. As an example, Dostis points out the benefit of Gaz Mtro providing investment in the Lowell Mountain wind project, and explains that Gaz Mtro leaves it to the managers and boards of directors to run their companies. According to former public service board chair Saudek, however, Its not a stretch to follow the ownership up the food chain, including provincial ownership. Its certainly worth noting. There will be dialogues between the State of Vermont and the Province of Quebec that will influence future plans between the utilities and Hydro-Quebec. As a practical matter, thats how it works. He spoke of broad
see MERGER, page 6

Protestors in Burlington Harbor follow the New England Governors and Eastern Canadian Premiers Conference cruise on July 29. Photo courtesy of Will Bennington.

People Protest Big Energy


O
utside the New England Governors and Eastern Canadian Premiers Conference in Burlington on July 29, hundreds of people from throughout the region were protesting the impact of corporate industrial energy on the regions lands and peoples. Abenaki tribe member Charles Megeso attended in solidarity with indigenous allies from the north fighting large-scale hydropower. The Vermont legislature calls it renewable? he said. You destroyed a peoples homeland; thats not renewable. The Vermont legislature called it green; whats that green, money? He said that his Innu allies feel that we dont want to be your socket, your spigot, for power. Other protestors opposed the Northern Pass, the highpower transmission lines that are proposed in northern New England to bring eastern Canadian power to population centers farther south. Pete Martin, a representative of a large group from New Hampshire protesting the Northern Pass, decried what he saw as New Hampshire and Maine becoming industrial power corridors. He points to studies that show links between high-voltage power lines and leukemia, and to a history of utilities suppressing such research. Also at the demonstration, residents of the Northeast Kingdom, Rutland and Northfield areas protested industrial wind development on Vermont ridgelines. Prominent climate-change prophet Bill McKibben organized a human oil slick to raise awareness about the impacts of tar sands. Do We Care About the Effects of Hydro? Despite the protests, some question whether Vermonters are all that concerned about whats going on up north. People just dont care. They want to be able to turn on their lights, their TV, relax and have a drink. They want to be able to get their kids to school, said Kevin Ellis of Kimbell, Sherman, and Elllis, a lobbying firm that has represented GMP, Hydro-Quebec and the Shumlin for Governor campaign, among others. Its remarkable to me how the attitudes have changed on [Hydro-Quebec], Ellis added. Twenty years ago, you used to hear about the mercury, the methane, the indigenous people. People would be up in arms. Its a 180-degree turnaround. He commented on how easy it was for East Montpelier state representative Tony Klein to push the renewable label for large-scale hydro-power through the legislature. The Larger Sphere of Concern Alexis Lathem, a freelance writer from Richmond who was at the protest, feels we have a solemn responsibility to be aware of the impacts of our own power use on others. If they were flooding our valleys, wed be up in arms, she said. Lathem was at the protest with Elyse Vollant, a member of the Malletenam Innu community, who made the trip to Burlington to share her experience of the effects of massivescale hydropower and of the broader Plan Nord, Charests economic development plan of resource extraction for the sector north of the 49th parallel, which includes strategies in forestry, mining and energy. The Innu community faces further upheaval from the imminent and enormous hydropower development on La Romaine River, which supports nine species of whales, including the endangered Humpback Whale, puffins, caribou, peregrine falcon and Atlantic salmon. Environmentalists claim these populations will be damaged by the dam. Theres significant cultural destruction, Lathem said. These people are swallowed up by the dominant culture and wage economy. . . . Hydro-Quebec is throwing money at them. Its hard to refuse, and its easy to get cynical. People get complacent. Yes, theyre signing those agreements [to open up native lands to development]. The band council gets all the money and then gets to make the decision about who gets money. Its a corrupt system. Ken Russell

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The Public Service Board


V
ermonts public service board is a quasi-judicial regulatory body that often has final say in utility regulation in Vermont. A good number of people, like former GMP vice president Steve Terry, express great confidence in the diligence and integrity of the board, indicating the professionalism and competence of board members and what they view as the integrity of chair Jim Volz. Elizabeth Bankowski, a veteran of Vermont politics and a member of the GMP board, pointed out the extensive public process the board undergoes before making a decision. Terry, who has watched the board since the 1960s, said that to question the integrity or diligence of the public service board is totally unfair and that any reasonable analysis of their work would show them to be incredibly tough. He goes on to assert that this is probably the most transparent, process-driven regulatory process that Im aware of in the country. State Senator Peter Galbraith has a different view: Everyone in the utility business knows that the regulators and the regulated are one and the same, he said. State Representative Cynthia Browning pointed to a tenet of political science that regulated industries ultimately coopt the bodies regulating them, a tendency called regulatory capture. According to Lee Webb, historian of utility regulation in Vermont, the body that became the public service board was strongly supported by the private Vermont utilities, including GMP, who felt that they had a much greater chance of dominating that body over the legislature. Senator Vince Illuzzi, a prominent critic of the merger, said, Look at [the board order authorizing the merger]; it could have been written by Gaz Mtro. Opponents of GMPs Lowell Mountain wind project, including the towns of Albany and Craftsbury, emphasize that their critiques of the public service board are not just due to them being on the losing side. Attorney Jared Margolis, who represented the towns, has expressed frustration with the boards disregarding evidence demonstrating problems with noise modeling and standards, acknowledged by GMPs own experts to be in a range that was potentially harmful to human health for several homes near the turbines. The towns have appealed to the Vermont Supreme Court, arguing that the public service board failed in its requirement to account for all evidence. Alleged Conflicts of Interest Merger opponents become particularly inflamed when they discuss what they view as both perceived and actual conflicts of interest involved. Illuzzi and a group of 46 ratepayers requested that the public service board appoint an independent counsel, because board commissioner Millers husband was a partner in a law firm representing GMP. Miller denied any actual conflict, saying, While I understand the concerns that were raised, I disagree that either a conflict or a reasonable appearance of a conflict exists. Merger opponents, including lawyer Stephanie Kaplan, were irate: How can she possible say this with a straight face? She has both an actual and a perceived conflict. Much to the anger and dismay of the 46 ratepayers group, the public service board refused the request. Several have suggested that this move alone demonstrates the problem with the process. Others describe what they perceive as an overly friendly relationship between the governor and GMP, that the governor was the main cheerleader for the deal, coming out, according to Illuzzi, ahead of the public service board and expressing enthusiasm for the merger and that Bankowski was hired by then-newly-elected Shumlin to lead his transition team and make hiring decisions. In response, Bankowski explained that she set up a Chinese wall, to guard between her interests at GMP and in the governors office, and that she did not participate in any conversations regarding the merger. She emphasized that in a small state such as Vermont, such close connections are inevitable and that the solution is for full disclosure of the relationships and appropriate protective measures to be taken. She also suggested that it was out of bounds for critics to make an issue of Millers alleged, real or perceived conflict of interest. She went on to describe a long history of Vermont political leaders grappling with the problems of size and economies of scale in all sectors. She said she cochaired a commission under then-governor Dean that recommended such a merger. Ken Russell

MERGER, from page 5

agreements and understandings being worked out by governments and of utility companies implementing these. One influential figure who concerns some is Caisse CEO Robert Tessier, who also sits on the board of GMP, Northern New England Energy and Gaz Mtro. Tessier was the former chair of Gaz Mtro and the deputy energy minister of Quebec. Gaz Mtro has said it values Tessier because of his knowledge of the Vermont marketplace. GMP spokeswoman Dorothy Schnure explained that Tessier is only one of three Quebecers on the nine-member GMP boardfive are Vermontersand that when Gaz Mtro bought GMP, no management positions were changed. That, she asserted, Governor P demonstrates a hands-off approach. She affirmed that the entity is locally managed, stand-alone entity and that it is regulated by the State of Vermont. She dismissed any suggestions that Quebec was somehow pulling the strings at GMP. Steve Terry, veteran political insider and former GMP vice president, added that Tessiers one focus is what is in the best interest of [GMP]. Terry says that the fact that the ownership chain of both Gaz Mtro and Hydro-Quebec goes to the Province of Quebec means nothing other than that they are great competitors who go after each other hammer and tong, in the energy delivery market. He emphasizes that the relationships between these and other companies in the ownership chain are shareholder relationships, nothing more. However, on the electric side, GMP and Hydro-Quebec are in business with each other, and Vermont State House observers have raised questions about the influence of Hydro-Quebec on GMP. To concerns raised by Vermonters about lack of Vermont control over utilities, the public service board has said that the fact that the utilities have been owned by stockholders means that they havent been predominantly under Vermont control for decades, anyway, and that, these days, foreign ownership is simply a fact of life. Terry adds that it doesnt matter where the locus of control is for these companies, because they are subject to total regulation, by Vermonts public service board (see sidebar).

I SEE NO D

between large- and between large- and between large- an

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AU G US T 16 , 20 12 PAG E 7

DIFFERENCE

d small-scale hydro, d small-scale wind, nd small-scale coal.

Conferencing with Governors and Premiers At the New England Governors and Eastern Canadian Premiers Conference in Burlington on July 29, dignitaries discussed a proposed regional procurement arrangement that included renewable power. Vermont governor Shumlin addressed Premier Jean Charest of Quebec, Youre generating that green, renewable, cheap power. We want that green, renewable cheap power to back up our renewables. Charest thanked Vermont for being the only state not to discriminate against largescale hydro. (In 2010 the Vermont legislature agreed to remove the size limitation on what could be considered renewable. According to State Representative Tony Klein and others, this was the price of a favorable contract with Hydro-Quebec and for acceptance, by the Peter Shumlin governor, of the Democrats energy bill.) The renewable label can lead to the sale of renewable energy credits, or RECs, to those states seeking to fill part of their energy portfolio with renewable energy. It is thus a potential windfall to the utilities. The designation also, according to environmental advocates, lends Vermonts favorable green brand to Hydro-Quebec energy. Shumlin said, I see no difference between large- and small-scale hydro, between large- and small-scale wind, between large- and small-scale coal. . . . As a region, were about to enter the price conversation, and [we] have renewable large hydro as part of the conversation. The governor has embraced Hydro-Quebec power, along with other renewable-energy sources such as wind, as the far better alternative to other sources that can provide base load-power to Vermont, like coal or nuclear from Vermont Yankee. Sandra Levine of the Conservation Law Foundation confirmed that, despite the release of methane, with its potent concentration of carbon, that occurs when boreal forests are flooded for hydropower projects in Quebec, the carbon impact is still far lower than that of fossil fuels. She added, however, that there are other very real impacts of large-scale hydro, including on the land and the people living there. (See sidebar on page 5.)

COURTESY GREEN MOUNTAIN POWER

Rewarding the Ratepayers (or Not) Howard Dean promoted a deal with Hydro-Quebec in haste just after he took office on the death of Richard Snelling in 1991. This came to be regarded by the public service board as the imprudent deal, because it locked Vermont into rate increases of up to 8 percent a year while fossil-fuel prices plummeted. Since the public service board is does not allow utilities to collect from ratepayers on imprudent contracts, CVPS and GMP both found themselves on the brink of bankruptcy. An emergency ratepayer bailout was arranged and approved by the public service board. Repayment of this $21 million bailout was required under the deal in the event that CVPS was ever bought out. That $21 million loan was a great issue during the 2012 legislative session, as many legislators and others alleged that CVPS had reneged on their

end of the deal. The Shumlin administration and Gaz Mtro proposed that a far smaller sum, $12 million, be instead diverted into weatherization programs, a deal that the governor and others claimed was to result in over $21 million in value for ratepayers going forward. The public service board, in the merger order, cited concern about the whole deal falling apart if the $21 million were returned to ratepayers as a direct cash payment, stating, Thus a Board Order that effectively increases the up-front cost of the transaction to Gaz-Metro by $20.9 million risks the possibility that Gaz Mtro could claim this was a material adverse effect and seek to terminate the acquisition. State representative Browning said, If Im paying attention, I just got screwed three times! First, she explained, besee MERGER, page 8

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Shape-Shifting Ownership at VELCO

Will It Be Enough? Public-Interest Advocates Wonder


by Will Lindner
ties (IOUs)usually the dominant IOU in modifications made it into the public service VELCO reorganization must be seen as a the areaown and control the high-voltage boards final order. GMP spokesman Robert compromise, carefully crafted by the public transmission assets. Dostis said, We were fine with the end result service board. He added that it establishes Now Vermont is even more different: of the boards order. VELCOs board structure as a matter of law, There is a new seat at the VELCO table, and For some, however, they fall short. Long- whereas before it had been a matter of tradiits not even an electric utility. Per order of the time State Senator Vince Illuzzi, of Derby, tion and unwritten agreement, potentially public service board, the Vermont susceptible to violation. Low-Income Trust for Electricity And it has another virtue and (VLITE) owns 38 percent of the intent. It allows rating agencompany. At the moment, VLITE cies, the regulatory community is embryonic. It was incorporated, and people worried about the and its first slate of seven directors operational stability of VELCO appointed by the Vermont Deassurance that there will be partment of Public Service (DPS), consistency with past practice, in July. It has neither bylaws nor Mullett said. Richard Rubin, director of Washington Electric Cooperative officers, and, according to CenTo VELCOs Johnson, that tral Vermont Community Action hits the nail on the head. The Council Executive Director Hal Cohen, one a Republican candidate for auditor of ac- transmission companys asset infrastrucof the new directors, We dont know if were counts, believes the political and economic ture has grown tremendouslylargely the clout of the now-larger GMP company will result of federal legislation and regulation going to hire staff. Still, VLITE has two pressing responsi- overwhelm any regulatory hurdles before it. that followed the northeastern blackout of bilities before it: to appoint three directors to Illuzzi worries most about Vermonts trans- 2003and the company relies (and thereVELCOs 13-seat board, which it hopes to mission infrastructure becoming, first and fore, Vermonts utilities and ratepayers rely) do by December, and to devise a process for foremost, a conduit for Canadian power to on its good credit relationships. The meausing the projected $1 million VLITE will lucrative markets to our south. sured reorganization now under way will not I dont think theres going to be much disrupt those connections. receive annually in dividend earnings from its VELCO ownership position. The dividend public input, he concludes. Negotiations Institutionally, Washington Electric Coexpenditures are to support energy-related will take place between Gaz Mtro [GMPs operative, in East Montpelier, has been programs beneficial to low-income Vermont- parent company in Quebec] and the gover- among the strongest advocates of increasers and be harmonious with the states com- nor, and everything else will fall into place. ing the public aspect of VELCOs ownerPlainfield attorney and Washington Electric ship, whether through the state purchasing prehensive energy plan. The VELCO directors that VLITE appoints (VLITE directors Cooperative Director Richard Rubin, one of a majority interest or turning VELCO into themselves are not eligible) must meet criteria the seven DPS appointees to VLITEs pio- a co-op. Neither happened. Yet the co-ops that virtually assure they have no prior con- neering board, explains that the intent of the president, Barry Bernstein, is optimistic. nection to VELCO or to GMP and offer [public service board] order was to create subThe public service boards final order expertise and board-level experience (read: stantially more independent, and more public, presents an opportunity, the potential to they wont be pushovers for GMP and other input. But, he points out, the three VELCO bring a broader public perspective, Bernstein directors appointed by VLITE, plus two di- said. This will be important to the dialogue utility-savvy directors). VLITE was first proposed by GMP and rectors to be selected by public power entities and debate within the VELCO board on treCVPS early in the public-service-board review (municipal utilities and co-ops), will total just mendously important issues that are going to process. The companies obviously knew that five of VELCOs 13 board members. come up over the next decade. It represents the public, Rubin says, but GMP getting 78 percent control of VELCO Thats the opportunity thats there, he wasnt going to fly, so they offered to divest not enough, I think, to make a substantial added. Whether its fulfilled or not will dethe merged utility of enough shares to reduce difference. Still, Im confident we will pick pend on whether they make use of it. its ownership to 49 percent and give them to people who will be independent and contriba new entity, VLITE. In later negotiations, ute a public point of view. Will Lindner is a freelance writer and the David Mullett is a member of the VELCO editor of Co-op Currents, the monthly publicathe public service departmentwhich makes recommendations in cases before the pub- board representing the Vermont Public Power tion of the Washington Electric Cooperative. He lic service boardexpanded the idea. Those Supply Authority. Mullett suggested that the lives in Montpelier.

ts a matter of record and a matter of fact: The Vermont Electric Power Company (VELCO)the entity that owns the states entire high-voltage electric transmission systemhas, for the first time in its 56-year history, a new ownership structure. This results from the recent approval by the Vermont Public Service Board of the acquisition by Green Mountain Power (GMP) of what had been Vermonts largest electric utility, Central Vermont Public Service (CVPS). The public service board glued an alteration of VELCOs ownershipeven though VELCO was not a party to the historic mergeronto its June order permitting the GMP acquisition. During the high-profile, nine-month-long public-service-board proceedings, much was made of the fact that the new GMP utility would serve fully 70 percent of Vermonts electricity customers. In a different way, however, VELCO serves 100 percent of them. Regardless which utility brings the power directly to peoples homes and businesses, it is VELCOwith 732 miles of in-state transmission lines and 53 substationsthat has provided the wholesale power, whether it was generated afar by Hydro Quebec or some nuclear- or gas-fired facility, or produced by wind farms, wood-chip and landfill-methaneburning generators, or small hydro dams within Vermont. So its notable that VELCO has a new ownership structure. But is it significant? The answer, from most quarters, seems to be, We hope so. Had VELCOs ownership structure continued unchanged, GMP would have owned 78 percent of its assetsCVPSs 48.5 percent plus GMPs 29.5 percentwith corresponding influence on the board. VELCO was founded in 1956 as a private company owned by all the states utilities, with ownership divided proportionally according to market share. That was unique in the U.S., explains VELCO spokesman Kerrick Johnson, because elsewhere, investor-owned utili-

NOT ENOUGH, I THINK,


to make a substantial difference.

It represents the public, but

MERGER, from page 7

cause the bailout is not paid directly to ratepayers in cash, but rather by an investment process; second, because the entire $21 million is not in question in all, but rather a far smaller amount that is deemed to be a higher value for the ratepayer; and third, because the bailout payback is structured as a GMP investment, for which the utilty may receive a return of 8 to 11 percent a year. She questioned whether the merged entity can be counted on to pay back the $144 million if, as many believe, CVPS ratepayers were deprived of promised savings before. GMPs Schnure affirmed that the $144 million would be returned in lower rates; yes, thats cash. She said that rates would be $144 million dollars lower than they otherwise would have been. The public service board order leaves a provision that, if the combined entity fails to pay back the full $144 million, that the board will work with the utility to come up with a proposed methodology and schedule for implementation, for repaying the ratepayers. Skeptics describe this as a large loophole. Board Commissioner Elizabeth Miller responded, [It] is not a loophole; it says that if $144 million is not delivered to customers within 10 years, GMP will have to make good on its guarantee by providing bill credits. Miller confirmed, however, that the $144 million is in nominal dollars. Its one thing to have $144 million in cash right now, but, over time, those nominal dollars will likely diminish in value. If the utility fails to make up the difference to ratepayers quickly and ends up repaying them over a much longer time span, by how much will that amount of promised savings be diminished in real dollars? In addition, in the first three years of the merger, the utili-

ties will be able to pocket 100 percent of savings beyond the payouts to ratepayers, a relatively unprecedented arrangement in Vermont history. A knowledgeable observer pointed out that rate projections are notoriously unreliable and that the public service board, which will set the rates, will do so based on what information is provided them by the utilities. Part of the appeal of public power, for the advocates, back in the day, was that public power rates could provide a yardstick, against which rates proposed by the private utilities could be compared. State

I JUST GOT SCREWED

If Im paying attention,

THREE TIMES!
State Representative Elizabeth Browning

joining our two companies, you are in a better position than ever before. We will deliver on all of our merger-related promisesincluding $144 million in guaranteed savings over the next 10 years, enhancing our storm response and continuing to add new power-supply contracts that help us to meet our pledge of providing low-cost, low-carbon electricity. Others look beyond the savings to concerns about the future. We all know what they want, stated one veteran utility observer, They want to ship their excess power capacity through our area. Senator Illuzzi questioned a map distributed by Vermont Electric Power Company (VELCO), the owner of the Vermont grid, that showed such a line. VELCO officials suggested that this map was speculative and far from an actual plan. The public service board dismissed such concerns, saying, We are persuaded that there is no factual foundation for this concern. Looking Forward Proponents of the merger argue that, in a global economy, the new, merged entity is still small, and the financial backing of the parent and grandparent companies will make for a stronger utility that will be able to cut better deals on the power market and bring customers greater reliability and service. They say were actually in a better position to negotiate with Hydro-Quebec. Lee Webb, a utility regulation historian, cautions,: Its not about short-term economic gains; its about control and the ability to have leverage in other markets. It is still uncertain if the total regulation that Terry describes is such, or if the fact of an ownership chain going up to large Canadian companies leaves Vermonts tradition of fighting for some sort of local control over electric utilities in the dust. Or, as Browning asks, When push comes to shove, whos going to be calling the shots?

Senator Anthony Pollina said, Sure they float these great numbers for the ratepayers, but we know that theyre making far more money themselves. The bulk of the savings will come from the combining of service territories and the elimination of highly paid executive positions at CVPS. These executives will earn $17 million dollars in total benefits from the merger, with one person, Bob Young, former executive chair of CVPS, garnering $8 million of that, mostly in stock options. An insert in the August GMP electric bill reflects the optimism the company expresses about the deal: As a result of

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For Vermonts Energy Future, Lets Keep Our Eyes on the Prize

OPINIONS
elementary and middle schools to hosting an annual energy fair that draws hundreds of people and much more, LEAP has become an important force for change in the Irene-ravaged community. In one yearApril 2012 to April 2013LEAP has a goal of doubling the number of solar photovoltaic or solar hotwater installations in Waterbury and Duxbury. They provide information to residents about the costs and benefits of going solar and, in July, organized the towns first LEAP Solar Fest, which drew about 120 people interested in learning how to harness energy from the sun. Dozens of committees like those in Thetford and Waterbury have been in the trenches for a while, working closely with VNRC and other organizations. And new groups continue to form. Royalton just started a new committee in early July, and the city of St. Albans is exploring starting one, too. Vermont, and the world, face massive energy and climate challenges in the coming years. The growth of energy committees across the state is just one example of the growing appetite to tackle the challenges head on. As we search for solutions in Vermont, there will continue to be strong differences of opinion as to how we go about making the broad and fundamental shifts so many Vermonters agree must be made. Our hope is that all of us, ultimately, can pull together, keeping an eye on our long-term objectives and, with clear heads and with a can-do spirit, meet and exceed our energy and climate goals.

by Jake Brown

s Vermonters continue to wrestle with a new and challenging energy future, its important to keep an eye on the facts and remain focused on our collective objective. The world and Vermont must act swiftly to cut greenhouse-gas emissions and get off nonrenewable fuels, like petroleum. These are twin objectives that the state of Vermont itself has embraced. That is why it is unfortunate that, in recent years, the vast bulk of the consternation and controversy on energy has seemed to center on electricity. While we know that Vermont will continue to need renewable electrical power, it is the largely fossil-fuel energy that we use to heat our homes and drive our cars that offers the greatest opportunity to meet our energy and climate objectives. In Vermont, about 78 percent of the states greenhouse-gas emissions come from energy used for heating and transportation. In 2010, for example, heating buildings accounted for

47 percent of Vermonts greenhouse-gas emissions and transportation accounted for 31.6 percent. The vast bulk of these emissions are produced from burning nonrenewable fuels. Heating and transportation are areas that Vermont policy makers will have to focus on sharply if we are to reach the states goals of cutting our greenhouse-gas emissions by 50 percent in 2028 and meeting 90 percent of all of our energy needsnot just electricity generationfrom renewable sources by 2050. Transportation, Land Use, Heating The Vermont National Resources Council (VNRC) has been pushing for decades and will continue to work to protect and improve strong state policies, including the current-use program, to assure our agricultural and forestlands are economically viable and arent chopped up into car-dependent subdivisions. We support policy that directs development into towns and village centers partly to discourage global-warming machines like suburban sprawl. We support transportation policies that give people more options than

just driving alone, so we can reduce transportation greenhouse-gas emissions. We are also serving on the states thermalenergy task force, designed to develop policies and programs to help Vermonters make needed whole-building energy-efficiency investments to save them money and reduce heating-related greenhouse-gas emissions. For years we have pushed for a far greater state focus on developing the energy-efficiency programs and finding the funding needed to adequately address this energy challenge. VNRC has also put tremendous effort into encouraging and fostering the growth in the number of Vermonts town energy committeesnow numbering over 100as one of the most powerful, people-driven mechanisms to successfully address energy issues.

A Snapshot of Our Current Energy Usage

ermont currently obtains nearly a quarter of the energy it uses from renewable sources, due in large part to the fact that nearly half of our electricity is generated from renewable sources. Robust electric efficiency efforts in the past decade have also helped significantlywe are keeping our electric demand down and using many renewable sources to meet our need. However, we have made comparatively little progress on improving our energy use in transportation and heating. We drive more than we did a generation ago, using fossil fuels to power our vehicles. Although biomass and solar thermal systems have made a dent in our fossil-fuel heating usage, Vermont continues to be heavily reliant upon heating oil. We have not made enough progress in improving the comfort and affordability of our homes by reducing their energy usage. Vermonts Comprehensive Energy Plan 2011, Overview, page 1

Local Energy At the local level, its abundantly clear that people are deeply motivated to do something about climate change as they witness damaging, record-setting, weather-related catastrophes afflicting not only the globe, but also their own communities. Tropical Storm Irene is just one example. Thetfords energy committee, for instance, together with the Sustainable Energy Resource Group (SERG), launched an ambitious door-to-door campaign last year to triple the number of homes that undertake home energy-efficiency retrofits. Mobilizing 50 volunteers to visit 650 homes, this Thetford HEAT initiative is well on its way to meeting that goal. The Waterbury Local Energy Action Partnership, or LEAP, continues to pursue its ambitious mission of helping Waterbury become the greenest community in Vermont Jake Brown is communications director for by 2020. From helping to get solar on the the Vermont Natural Resources Council.

What is the Best Home-Heating Energy Investment?


Wood-Pellet Furnace Versus Weatherization Upgrade

by Andrew Boutin and Jeff Rubin

ith colder weather just around the corner, thoughts turn again to oil prices and thermal-energy-upgrade costs. Thermal is the industrys word for a structures ability to stay warm in winter. There are two basic approaches. You can either improve the structures ability to retain heat through insulation and weather sealing (buttoning up), or you can upgrade the buildings heating systemin this example, with a wood-pellet central heating system. Which alternative will yield the greater savings depends on the particular building. Lets take the example of a typical house that has a questionable efficiency envelope and burns 1,000 gallons of oil per year. In this example, the homeowner has about $5,000 (plus incentives) to invest in thermal-

energy savingsa significant investment that had better lead to some savings! It is important to note that there are two ways to look at your investment. The first way is annually. With either investment, you will save money against the price of oil every year. Most people look at the year they decided to invest in a thermal upgrade as a benchmark. That is the year they hit their pain-point for their heating budget. It sounds good if youre saving 20 percent every year, right? However, your heating bills will still increase as the price of oil increases. Lets say the homeowner who hired an insulation and weather-sealing contractor in 2006 reduced their fuel-oil consumption by 25 percent. That is a very significant amount. Yet when we look at the at the 25 percent savings level, they only saved money for four of the six years compared to their baseline. In the other two years they actually paid more

than before they buttoned up. The problem is that it is tough to keep up with the pace of fossil-fuel price increases. Instead, the homeowner who switched their oil central heating system to wood pellets in 2006 left behind the volatility of the oil market. They saved money every year for about $5,300 in cumulative savings since the switch. They could look at that savings as completely paying back their investment in the upgrade, or they could put that savings into insulation and weather sealing to further reduce their bills. The takeaway is that we need to do both. But if you do the wood-pellet upgrade first, the savings will also pay for the weatherization upgrades. The numbers dont work the other way around. What about pellet price increases? It is true that pellets (like all commodities) rise in price over time. However, the gap between wood

pellets and oil/propane increases over time, so your relative savings also increase. Actually, your savings will accelerate over time. What about emissions? Looking at biomass emissions as a whole is like the three blind men trying to describe an elephant. The one with the trunk thinks it is like a snake, the one with the leg thinks it is like a tree, and the one with the tail thinks it is like a broom. But we are not talking about cow power, cordwood outdoor smokers, or even wood-pellet stovesjust wood-pellet central heating systems. The EPA classifies this new generation of clean, high-tech appliances as carbon neutral, so the homeowner who switched from oil to pellets back in 2006 actually saved over 66 tons of carbon emissions . . . so far. Andy Boutin is operations manager at Pellergy. Jeff Rubin is creative director at APM Advertising.

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T H E B RI D GE EN ERG Y S U P P L EM EN T

Three Myths You May Believe About VY

by Nikolas Stein

orget all the Vermont Yankee buzzwords. Forget preemption, forget safety; in fact, go ahead and forget nuclear. Entergy v. Shumlin was never a case about nuclear power. This is a case about power, period. Myth number one: that Vermonts parttime, citizen legislature overreached. You know this one: Those well-intentioned products of Vermont direct democracy really did have radiological safety in mind when they passed all of it: Acts 74, 160 and 189. They got coached not to say safety on the record, but some of them got caught saying it anyway. According to this notion, most Vermonters dont mind, because we think our legislature should be allowed to close an old, dangerous plant; too bad the Vermont laws regulating the plant were unconstitutional. This myth is nothing more than a summary of Entergys theory of the case. The district court seemingly adopted this view in siding with Entergy, but that doesnt make it so. In fact, one of the issues before the appellate court is whether the district court should have speculated about Vermont legislators intent at all. Further, the trial record that the second circuit will look at, including the much-vaunted legislative history, contains much that supports an alternate theory of this case: That Vermont launched an energy-

policy and planning process about 40 years ago (around the same time Vermont issued VYs first certificate of public good) that was and remains rare in America for its emphasis on real transparency and meaningful public comment. The legislatures actions regarding VY have always lived in this seldom-remarked context, which is rich in public benefit but detestable to large corporate interests. Thats one way in which this case is really about power, not about uranium or electricity. Myth number two: that this preemption case is closely similar to other pending cases in other states on other issues, and that Vermont is on the wrong side of preemption. That is, if we dont want Arizona legislating itself into a show-me-your-papers state, then we have to put federal preemption on the same pedestal of universal goodness as spring, kittens and lasagna. The feds trump us on VY, and the plant stays open. In fact, comparing state-government regulation of electricity generation and stategovernment interference in national immigration policy is like comparing sensible apples that began to be codified in Vermont in the early 20th century with anti-immigrant oranges. For example, the district court never sought briefing on the implications for this case of the supreme courts first Arizona immigration opinion (Whiting, which was is-

sued in plenty of time to have been discussed in Entergy), because it doesnt matter. Its perfectly legally possible for Vermonts VYregulating apples to be constitutionally sweet and Arizonas oranges to be rotten. Here again, power is at stake. Its entirely possible that this or a future supreme court could uphold states rights to enact harsh laws targeting vulnerable people, but block states authority when it gets in the way of big, and we mean big, money. And that has nothing to do with high principles involving close parsing of concepts like federalism and cosovereignty. number Myth three: that this is the classic case of Kooks v. Common Sense. That the plants friends write and blog copiously about the jobs and tax revenue tied to the plant, while on the other side there is only tie-dye swag, patchouli and body odor. Contrary to this myth, serious contemplation of the jobs-and-taxes impacts of closing the plant has been going on in public for nearly 40 years, because thats how long the plants March 21, 2012, retirement date had been anticipated. In other words, the assumption was that VY would close and Vermont would carry on. If there are radicals in this scenario, they are the corporation, its lawyers and (so

OPINION

far) the court, because a stable and known situation was torn up by its roots. The reason for this overthrow of a longknown status quo has less to do with nuclear power than would seem obvious. Vermonts part-time, citizen legislature has done a lot more than get (according to the states pleadings, falsely) accused of regulating radiological safety. Vermonters have brought into being an unusual institution of government in which a weird view is widespread: That the police power of the state should be used for the benefit of the people. (Whether or not Vermonters feel like that actually happens is a separate argument.) In the face of this legislators-gone-wild emergency, not one but several enormous corporations hired not many but very many very expensive lawyers and used every amendment but the second to persuade the courts that Vermont is wrong: that the police power of the state is perfectly fine right where its always been. The takeaway: Whatever the second circuit does, somebodys power will be permitted and somebodys will be curtailed. Nikolas Stein worked on the VY case as a paralegal for the defendants trial team.

Vermont Still Needs Yankee, Not Cheap Politics

by William Driscoll

he debate over Vermont Yankee has always had significant implications for affordable and reliable electricity and for high-value employment. Although this debate has evolved, and there have been serious setbacks for Vermonts economic welfare, there is still much at stake. Vermont has relatively low electric rates within New England, but in reality Vermont businesses, especially the goods and services exporters that provide the best jobs and bring in the most wealth, compete for markets and investment against companies and sister facilities well beyond. According to the Energy Information Administration, average electric rates in Vermont have run 30 percent to 40 percent higher for commercial and industrial customers than the average across the other lower 48 states against which we truly compete. This is serious not only because Vermont also has other high business costs, but because of the importance of electricity to the highest-value employers like manufacturers and other technology companies. In manufacturing alone, Vermont has lost a third of our jobs since the turn of the century. The impact of this should not be underestimated. In Vermont, manufacturing

OPINION

wages and benefits combined are 70 percent higher than other nonfarm jobs, according to the Bureau of Labor Statistics. Wages alone are 36 percent higher than the average of all private-sector jobs. This is a big part of the reason why manufacturing provides the most support for other businesses. Until this past March, Vermont Yankee was our single largest affordable and reliable source of electricity. The safety and the quality of its operation have been repeatedly recognized by federal and industry authorities. It should have been the anchor in our portfolio for helping control costs and ensure reliability for the next 20 years. But rather than embracing Vermont Yankees importance, over the years legislative leaders and then the new administration attacked the reputation of the plant and its owners, pandered to and stoked illinformed fears of nuclear power, used legislative intervention to block regulatory approval of continued operation, and created a political environment that helped poison contract negotiations with utilities. Because of all of this, the plant no longer directly supplies Vermonters with affordable and reliable electricity, a fact that will hurt our economy in the years ahead. Nevertheless, Vermont Yankees victory in federal

court overturning state legislation that improperly blocked regulatory approval for its continued operation still provides opportunities for it to benefit Vermonters. These opportunities should be seized. Although Vermont missed its best chance for Vermont Yankee to be a direct supplier for the time being, the plants continued operation helps keep regional market power prices lower, and it can still be available for potential power contracts in the future. Indeed, the plants continued operation helps both the supply and the reliability of power and the power grid in New England. But arguably, the most immediate benefit for Vermont now is high-quality employment and multiplier benefits. Employing more than 620 workers with a payroll that exceeds $65 million, Vermont Yankee is one of the largest and best-paying employers in the state. The fact that base-load generators like Yankee are also resistant to economic downturns makes it especially valuable. As a manufacturer of a high-value product with a highly technically skilled and educated workforce, Vermont Yankee represents precisely the kind of businesses and jobs that Vermont has been losing and needs to hold onto and grow again. Between direct and indirect employment and spending multipliers, testimony by Northern Economic Consulting before the public service board in July indicated that Vermont Yankee supports more than 1,300 jobs and accounts for tens of

millions in disposable income and state and local taxes every year. If Vermont Yankee were any other company, it would be political suicide to force it to close, rather than just grossly irresponsible. And yet as a new public service board review is underway on granting state approval for the plants continued operation, the administration and legislative leaders continue to want to force the plant to close, and the attorney general is appealing the federal court decision that protected Vermont Yankee from improper state legislation. Based on the economic benefits of the plant and other factors, objectively, Vermont Yankee easily meets criteria for public good and should win state regulatory support. But political pressure on the board will be intense. When it comes to Vermont Yankee and beyond, Vermonters need our political leaders to put high-quality jobs, and the affordability and reliability of electricity that those jobs need, first and foremost. We do not need the easy politics of pandering to and stoking antinuclear fears that might keep some politicians in office but ultimately only serves to throw more and more Vermonters out of work. William Driscoll is vice president of Associated Industries of Vermont, the states leading association representing manufacturers and related businesses.

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