Vermont Legislative Update 02-28-2020 - An analysis from DRM's Government & Public Affairs Team

Downs Rachlin Martin PLLC[co-author: Danielle Bradtmiller]

Vermont Legislative Update Quick Links

Renewable bill would raise rates by up to 10 percent per year

Against the odds, Act 250 revisions pass the House

House overrides minimum wage veto

Bill to renew Ryegate contract at above-market rates nears approval

Commerce Committee likely to rewrite VEGI disclosure bill

House, Senate consider TIF bills

Senate committee considers capital incentive bill

Legislature continues to wrangle with universal pre-K program

Legislature considers PFAS regulation

Renewable bill would raise rates by up to 10 percent per year

The Senate Finance and Natural Resources and Energy committees took testimony this week on S.267, a bill to increase to 100 percent the renewable energy standard for utilities. Utilities have testified that they can meet the 100 percent standard with little impact on rates. The bill, however, includes new requirements for the purchase of significant amounts of high-priced small renewable power. Utilities testified that those provisions would raise rates by 6-10 percent per year over 10 years. This is in addition to an estimated $400 million in new costs over ten years due to the net metering program.

The Finance Committee appeared to reject those concerns and is likely to vote on the bill as currently drafted when legislators return from the Town Meeting break.

The committee rejected a proposal from utilities to mitigate the bill’s rate impact by allowing more flexibility in the so-called Tier 2 standards, which would require a doubling of the amount of small, renewable power that utilities buy. The committee also rejected an amendment proposed by Vermont Electric Coop to reduce the allowable size of net metered projects, which are estimated to cost electric customers about $40 million per year over the next 10 years.

The committee partially acknowledged the bill’s impact on electric rates by agreeing to study the issue. But the study would occur after the bill goes into effect.

The committee’s decision to study the costs after the fact brought objections from Senators Brock, R-Franklin and Sirotkin, D-Chittenden. Representatives of the Department of Public Service and the Public Utility Commission also argued that it put the cart before the horse. As a staff member for the Department asked, “Has there ever been a program passed that has then been taken away?”

Against the odds, Act 250 revisions pass the House

After a demanding 24 hours of floor activity, the House voted 88-52 to pass H.926, a bill to modernize Act 250.

On Thursday, the House stayed in session late into the evening as members of the committees on Natural Resources, Fish and Wildlife, Ways and Means and Appropriations reported on action their committees took on the bill. Members of the Natural Resources Committee bore the brunt of what was largely party-line grilling as Republican members sought clarity on changes to Act 250 jurisdiction, definitions and criteria.

The questioning, speeches and floor motions continued on Friday. A motion by Rep. Patrick Brennan, R-Colchester, recommitting the bill to House Natural Resources for more work failed, as did a motion by Rep. Thomas Bock, D-Chester, to postpone action one legislative day. The move would have delayed the vote until after Town Meeting day, giving legislators opportunity to bring the myriad changes to Act 250 to constituents during town meeting week, argued Bock.

Several amendments did make it into the bill: Exemptions for the construction of certain trails, eligibility for village centers to receive enhanced designations, authority for the Agency of Natural Resources to “bill back” costs related to Act 250, and a definition of “greenhouse gases” in sync with current statute. A highly controversial provision that would have lowered the elevation threshold was struck. The bill would have subjected development above 2,000 feet to review, rather than the current trigger of 2500 feet.

House overrides minimum wage veto

On a vote of 100-49, the House voted to override Gov. Phil Scott’s veto of the minimum wage bill. The bill will raise the state’s minimum wage to $11.75 in 2021, and $12.55 in 2022, and ties minimum wage increases to inflation after those years. The current minimum wage is $10.78 and would have increased based on inflation next January 1.

The governor reinforced his opposition to the bill in a statement following the override. “My concerns for this bill – based on fiscal analysis from the Legislature’s Joint Fiscal Office – have been that the negative impacts on Vermont’s economy, workers’ hours and jobs will outweigh the positive benefits, especially in our more rural areas,” Scott said in a separate press release. “These concerns were shared by legislators of both parties.”

Bill to renew Ryegate contract at above-market rates nears approval

The Senate Finance Committee took testimony on Wednesday on S.190, legislation to extend the standard offer contract for the Ryegate power plant for another ten years, and is likely to approve the bill upon return from the Town Meeting break.

The Department of Public Service proposed a revised version of the bill (the document includes an explanation of the changes). The DPS amendments would allow the PUC to consider additional factors in determining the guaranteed rate that Ryegate receives. These factors are intended in part to encourage the plant to shut down at times when wholesale prices are low. It is unclear what the rate impact would be of those changes, but based on the DPS testimony it appears as if they would be minimal.

Ed McNamara of the DPS said the contract price paid to Ryegate is $5-6 million above the market prices, or about .5 percent on electric rates. The plant is an insurance policy against price spikes in wintertime, he said, although in warmer winters it is an expensive resource.

Commerce Committee likely to rewrite VEGI disclosure bill

The House Commerce Committee discussed this week a bill, H.640, that would require companies to disclose confidential information to the legislature as a condition of receiving grants under the Vermont Economic Growth Incentive program. The legislature currently receives aggregated information; the bill would require disclosure on a business-specific level.

Legislative Counsel David Hall asked the committee to articulate the approach it wants, and it was clear from committee discussion that no consensus exists. Hall also pointed out significant concerns with the drafting of the underlying law.

Bill sponsor Rep. Emilie Kornheiser, D-Brattleboro, said the bill is intended to ensure that companies comply with the conditions of grant awards. Hall pointed out that the Joint Fiscal Office and some committees already have access to the information.

Megan Sullivan, Executive Director of the Vermont Economic Progress Council, which administers VEGI, said Vermont already ranks #5 in transparency.

Fred Kenney, Executive Director of the Addison County Economic Development Authority, told the committee that the VEGI program is one of the few economic development programs in the state’s toolbox. Every year a new wrench gets thrown in the works, he said, and H.640 would put Vermont businesses at a disadvantage.

The committee may consider changes to the bill that would allow some legislators to view the confidential data in executive sessions.

House, Senate consider TIF bills

The Senate Finance Committee neared approval this week of a bill, S.191, that would allow municipalities to use tax increment financing debt proceeds to make bond payments. The committee rejected by a vote of 5-2 an amendment that would have allowed extensions to TIF districts after they have been approved.

Graham Campbell of the Joint Fiscal Office suggested that the impact of the bill on the state’s education fund would be relatively small. Municipalities would be able to borrow more money, and the interest costs would mean less revenue to the education fund. But in St. Albans, the increased borrowing costs would mean a loss of about $300,000 over 20 years.

The committee is expected to pass the bill when legislators return from the Town Meeting break.

In the meantime, the House Commerce Committee is considering a bill, H.642, that would allow municipalities to use TIFs to develop individual projects. This proposal would encourage smaller-scale private development and would require fewer criteria to be met for these projects. The objective is to revitalize small towns and village centers.

Adam Grinold, President of the Regional Development Corporations of Vermont, submitted testimony supporting the bill, highlighting the fact that it enables rural communities to access gap funding for projects scaled to municipality size. Large districts get benefits from the current TIF structure that aren’t available to rural areas.

The committee will take more testimony on this bill when the legislature returns from the Town Meeting week break.

Senate committee considers capital incentive bill

The Senate Committee on Economic Development, Housing and General Affairs continued its review this week of H.641, a bill that includes economic incentives for large employers that make capital investments of more than $20 million.

Megan Sullivan, Executive Director of the Vermont Economic Progress Council, said the new incentive would help Vermont retain large businesses, maintain significant payroll and economic value and encourage capital improvements in the predominantly rural reaches of the state.

Sullivan said the largest firms in most of Vermont’s counties would be eligible. These are the anchor businesses in Vermont’s rural towns – providing integral economic and workforce support. The program is intended to incentivize the corporate headquarters of these firms to continue to make investments in Vermont.

Sullivan also briefed the committee on an alternative to the standard VEGI program, a new convertible loan program for businesses with less than 100 employees. Businesses would apply for and receive a loan for facility and machinery/equipment investments, with the mandatory obligation of increasing their base payroll. If payroll and timeline targets are met, the loan would convert into a grant.

Legislature continues to wrangle with universal pre-K program

Ever since the inception of Act 166 of 2014, establishing a system of universal prekindergarten, there have also been attempts to improve it. There was hope in January that the House Education Committee could simplify oversight of the public-private program that is regulated by two state agencies.

A goal of universal prekindergarten is to give parents access to both public and private providers. The existing dual regulatory structure, however, presents a major challenge. Currently, public school and private care centers are both under the jurisdiction of the Agency of Education and the Agency of Human Services, resulting in repetitive and burdensome requirements on pre-K providers.

A new bill, H.935, proposes to place public pre-K programs solely under AOE’s domain and private pre-K under the jurisdiction of both AOE and AHS. Private provider advocates may not support this change as children will now be on separate tracks, and they see value in AHS’ oversight of public programs. Public school officials want to increase requirements for private providers to hire licensed teachers to teach10 hours a week in their centers. This raises concerns given the associated costs and workforce challenges.

The bill has moved to the House Human Services Committee for further consideration.

Legislature considers PFAS regulation

The Senate Committee on Health and Welfare continued to hear from witnesses on S.295, a bill to regulate perfluoroalkyl and polyfluoroalkyl substances in certain consumer products.

Patrick MacRoy, Deputy Director of the Environmental Health Strategy Center, based in Portland, Maine, and Samuel Nicolai, P.E., VP Engineering and Compliance, Casella Waste Management testified before the committee on the ubiquitous presence of PFAS in the environment.

Both witnesses pointed to numerous consumer products containing PFAS that contribute to environmental pollution, primarily textiles and bulky items such as furniture and carpet. Nicolai told the committee of a recent PFAS testing report of various solid wastes generated by Vermont businesses and residences delivered to Casella solid waste management facilities. Approximately 95% of the tested waste materials contained PFAS.

MacRoy told the committee that the only way to keep PFAS out of the environment is to eliminate the use of this class of chemicals from food packaging, consumer products, firefighting foam, and all other uses that are not critically essential. He directed the committee to a procurement guide to help consumers avoid products containing PFAS.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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