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State Energy Efficiency Policy Database

Vermont

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Summary

Vermont is and has been among the leading states for utility energy efficiency for many years and was the first to create a statewide "energy efficiency utility". Under Vermont’s 12-year "Order of Appointment" model, Efficiency Vermont and Burlington Electric Department deliver both electric and unregulated heating-and-process-fuel energy efficiency services to residential and business consumers throughout the state. The State EEU fiscal agent receives energy efficiency charge monies collected by the electric distribution companies and disburses the funds to the EEUs.

Vermont law requires program administrators to set budgets at a level that would realize "all reasonably available, cost-effective energy efficiency."

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables on the left.

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November 8, 2013


Customer Energy Efficiency Programs

Vermont pioneered the model of a statewide "energy efficiency utility" (EEU) after enacting legislation in 1999 authorizing Vermont Public Service Board (PSB) to collect a volumetric (per kWh) charge on all electric utility customers’ bills to support energy efficiency programs, called the Energy Efficiency Charge (EEC). PSB created the EEU designation that Efficiency Vermont (EVT) and Burlington Electric Department (BED) currently operate under to invest in programs and services that save money and conserve energy. Vermont Gas Systems offers natural gas efficiency service within its territory. Natural gas efficiency programs are supported by legislation and regulation (30 V.S.A. Section 235(d); Docket No. 5270 VGS-1, 2) and began in 1993.  The Public Service Department has recently recommended that it also be designated an EEU by the PSB.

The Vermont Energy Act of 2009 directs the Vermont Public Service Department (PSD) to create a self-managed energy efficiency pilot program for select transmission and industrial utility customers whose individual contributions to the public benefits fund exceeded $1.5 million in 2008. Program guidelines were released late 2009 by the PSB. Large energy consumers may self-administer their energy efficiency programs through two programs. The first allows customers who pay an average annual EEC of at least $5,000 to apply to self-administer their programs through an Energy Savings Account (ESA). Customers in the program still pay their EEC but may transfer up to 70% of it to their ESA to fund efficiency projects at their facilities. The second program allows eligible customers to be exempt from their EEC provided they commit to spending an annual average of at least $3 million over a three-year period on energy efficiency investments. Additionally customers must demonstrate that they have a comprehensive energy management program with annual objectives.

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables on the left.

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November 8, 2013


Energy Efficiency Program Funding

Efficiency Vermont is funded by a non-bypassable "energy efficiency charge" (EEC) that is included in electric rates. This charge resulted from passage of S. 137 by the Vermont Legislature in 1999. In September 1999, the PSB issued a memorandum of understanding that set the initial five-year budgets and set a maximum funding level of about $17.5 million. An August 2006 order by the PSB greatly increased program funding (Order Re: Energy Efficiency Utility Budget for Calendar Years 2006, 2007, 2008. Aug. 2, 2006).  In total, Vermont's electric utilities spent $27.1 million on energy efficiency in 2009. The Consortium for Energy Efficiency reports 2010 electric utility energy efficiency program budgets totaling $34 million. Vermont Public Service has tentatively approved a 2012-2014 budget for Efficiency Vermont, which will achieve approximately 2.2% annual savings (VT Public Service Board Docket EEU-2010-06, Order Entered 8/1/2011). 

Natural gas efficiency program expenses, excluding payroll, are deferred between rate proceedings. In the next base rate proceeding, the deferred expenses are embedded in rates and collected over a three-year period. Energy efficiency payroll expenses are embedded in rates. Natural gas programs were funded at $1.51 million in 2007 and $1.88 million in 2008. Budgets for natural gas programs in 2010 totaled $2.1 million.

Reported budgets for energy efficiency programs for 2011 are in the State Spending and Savings Tables


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October 5, 2012


Energy Efficiency Resource Standards

Summary: ~6.6% cumulative savings from 2012 to 2014

Vermont does not have traditional EERS legislation with a set schedule of energy-savings percentages for each year.  Instead, Vermont law requires EEU budgets to be set at a level that would realize "all reasonably available, cost-effective energy efficiency." Compensation and specific energy-savings levels—not “soft” goals or targets—are then negotiated with EEU contractor Vermont Energy Investment Corporation (VEIC). There is not an explicit penalty for non-performance. However, a portion of the compensation Vermont pays the administrator is contingent on meeting stated goals, subject to a monitoring and verification process. If the administrator does not meet stated goals, the state will withhold compensation, and the administrator potentially will be replaced at the end of the three-year period (DSIRE 2011).

Vermont Public Service has tentatively approved a 2012-2014 budget for Efficiency Vermont, which will achieve approximately 2.2% annual savings (VT Public Service Board Docket EEU-2010-06, Order Entered 8/1/2011). 

Moving forward, the goal-setting process will change due to Vermont’s new “order of appointment” franchise-like structure. Every 3 years, a “demand resources plan” proceeding will be held. The proceeding will set budgets and goals for the next 20 years, coinciding with the long-range transmission plan to allow for integration of forecasting (EEU Structure (Docket 7466).

Vermont has no Natural Gas EERS.

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March 28, 2013


Alternative Business Models

The Board first approved an Alternative Regulation Plan for Green Mountain Power Corporation (GMP) on December 22, 2006.  This Plan establishes a framework for regular rate adjustments based on prescribed methodologies.  These adjustments are:  (1) quarterly rate adjustments to flow through to ratepayers increases or decreases in power costs (which make up the majority of GMP's total costs); (2) annual base rate filings to reflect changes in operating costs; and (3) annual earnings reconciliation adjustments based on whether GMP earned more or less than its allowed rate of return on equity in the prior year.  The term of this Plan extends through September 30, 2014; the Plan may be modified or extended with the approval of the Board (See Docket No. 7864 Order dated July 13, 2012).

On August 21, 2012, an Alternative Regulation Plan for Vermont Gas Systems, Inc. was approved. This Plan includes two different rate-setting mechanisms providing for quarterly rate adjustments to flow through to ratepayers increases or decreases in Vermont Gas' actual gas costs and providing annual adjustments to rates based on whether Vermont Gas earned more or less than its allowed rate of return on equity in the prior year. The term of this Plan is from October 1, 2012 through September 30, 2015. It may be extended for two successive, two-year terms.


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August 9, 2013


Reward Structures for Successful Energy Efficiency Programs

Efficiency Vermont (EVT) serves the majority of the state and is operated by Vermont Energy Investment Corporation (VEIC). VEIC is eligible to receive a performance incentive for meeting or exceeding performance goals established for three year performance cycles. For the period January 1, 2012 to December 31, 2014, VEIC can earn up to $2,930,000 in awards for meeting electric energy saving goals.


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August 21, 2013


Energy Efficiency as a Resource

Vermont statute (30 VSA Sec. 218c) directs all electric and natural gas utilities to prepare and implement least cost integrated plans  — plans "for meeting the public's need for energy services, after safety concerns are addressed, at the lowest present value life cycle cost, including environmental and economic costs, through a strategy combining investments and expenditures on energy supply, transmission and distribution capacity, transmission and distribution efficiency, and comprehensive energy efficiency programs."  In addition, Vermont has a well-established regulatory process to factor the Energy Efficiency Utility's energy savings into utility companies' load forecasts. Vermont law requires EEU budgets to be set at a level that would realize "all reasonably available, cost-effective energy efficiency."


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August 13, 2013


Evaluation, Measurement & Verification

The evaluation of ratepayer-funded energy efficiency programs in Vermont relies on both legislative mandates (30 V.S.A. §209) and regulatory orders (Process and Administration of an Order of Appointment). Evaluations are mainly administered by the Vermont Public Service Department. There are no specific legal requirements for these evaluations in Vermont. Statewide evaluations are conducted. Vermont uses three of the five classic benefit-cost tests identified in the California Standard Practice Manual. These are the Utility/Programs Administrator (UCT), Participant (PCT), and Social Cost (SCT). Vermont specifies the SCT to be its primary test for decision making. The benefit-cost tests are required for overall portfolio, total program, and customer project level screening, with some exceptions for low-income programs, pilots, and new technologies. The rules for benefit-cost tests are stated in 30 V.S.A. §203 and 218band Docket No. 5980. Vermont has a “non-resource acquisition” (NRA) category that designates funding for activities that are worthwhile but do not necessarily return quantifiable savings.


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August 21, 2013