By Guy Page
Implementing the Clean Heat Standard could increase the cost of heating by more than $4/gallon, data in a new study released by the State of Vermont shows.
$1000 more to fill up the average residential oil tank – An average home heating oil fuel tank has a capacity of about 250 gallons. Using the $4.01 estimated in the study, filling up a tank will cost more than $1,000. It remains to be seen if the implementation of the Clean Heat Standard (CHS) would place all of that added burden on the homeowner, or shifts some costs to taxpayers or some other source of funding.
$9.6 billion total cost – The $1000 per fill-up is the the micro view – what the CHS will cost the average homeowner. Here’s the macro view. The study projects the total cost of Clean Heat Standard implementation at $9.6 billion. It also projects ‘societal benefits’ of $11.7 billion – with a net benefit of $2.1 billion. But the makeup of the benefits, including “avoided social economic and environmental damages,” are unclear.
NV5 prepared the study, titled ‘Clean Heat Standard Assessment,’ for the Vermont Department of Public Service, which released it on September 1.
The future of the Clean Heat Standard depends on a ‘checkback’ vote of Legislature. An affirmative vote is required before any CHS plan to transition from fossil fuel heat to alternatives can be implemented.
Getting to $4.01 gallon – In Graph One, the typed figures signify CHS impacts on fuel prices per million BTUs ( (British Thermal Units, a measurement of heat). The figures in red ink signify the added price per gallon, based on the per million BTU price. Generating a million BTUs requires burning 7.22 gallons of home heating oil.
Total cost of filling tank could top $2,000 – Graph Two adds the August price per gallon of Vermont’s three major fossil-based heating fuels with the study’s low and high estimates of the Clean Heat Fee. At $8.18 – the top estimate, based on current per/gallon cost of heating oil – filling up a tank would cost $2,045.
State officials advise caution in interpreting data
That stark data of projected per gallon price increases and billion-dollar overall costs comes with caveats and qualifiers, state energy officials advised Vermont Daily Chronicle today. Most of all, it remains to be seen just who will be paying how much for the $4/gallon increase.
“The cost values described in the table below are generated from the perspective of ‘society’ and are meant to assess relative cost effectiveness of an investment made by ‘society’. The plan does not assess the costs of various pathways – or specifically the pathway that may be reasonably taken by the Clean Heat Standard – available to capture credits from the market, nor does it consider how the costs will be shared by obligated parties, liquid fuels customers, tax payers, and other stakeholders,” T.J. Poor, Vermont Public Service Dept. Director of Regulated Utility Planning, and Alek Antczak, PSD Director of Efficiency & Energy Resources, told VDC today.
“NV5 described the reported Act 18 scenario as “an upper-bound of program cost assumptions”, noting current programs, lower incentive levels and potential implementation savings could lower costs,” the state energy officials said.
The study isn’t an implementation plan, but rather an explanation of the potential costs and benefits, Poor said.
NV5 projects a $9.6 billion cost but a $2.1 billion net benefit due to avoided fossil fuel cost savings, and ‘avoided social economic and environmental damages.’
What are the ‘avoided social economic and environmental damages? The NV5 study does not dwell much on the avoided SEE damages. In comments to VDC, Poor alluded to information in another state study, the Pathways report, which sets “the total value of social, economic, and environmental damages avoided by the mitigation pathway” at $7.4 billion. For example, the report cites cumulative health care savings of $161 to $362 million between 2025 and 2050. The monetized benefits accrue because of the prevention of 13 to 29 premature deaths between 2025 and 2050 and a reduction in hospitalizations and emergency room visits.”
The larger number of $7.4 billion is determined by a set SEE cost estimate per unit of carbon emissions avoided, as determined by the Stockholm Institute. The U.S. government has used widely diverging per-unit estimates on carbon emissions cost reduction avoidance.
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