You know, there aren't many pieces of energy legislation that generate this much public interest, but H. 520 has grabbed the people and set them squarely on one side or the other of the issue.

Heard from a couple people today who don't think much of Al Gore, or of him weighing in on Vermont business. Gore will do that on the energy bill, from a seat in New York City, later today.

The governor, of course, vetoed that bill last night. He says he will "implement" some of the unobjectionable measures from the bill by executive order. "Implement" might be overstating it. In several instances, he's going to have the Public Service Board or Department or the Agency of Natural Resources review the issue.

Want to read all seven pages of his veto letter? Here it is:

JAMES H. DOUGLAS
GOVERNOR
State of Vermont
OFFICE OF THE GOVERNOR
June 6, 2007
The Honorable Donald G. Milne
Clerk of the House of Representatives
State House
Montpelier, VT 05633-5401
Dear Mr. Milne:
Pursuant to Chapter II, Section 11 of the Vermont Constitution, I am returning H.520, An
Act Relating to the Conservation of Energy and Increasing the Generation of Electricity
within the State by use of Renewable Resources without my signature because of my
objections described herein.
There is no question that doing our share to reduce carbon emissions is important. At the
beginning of the session, I was hopeful that the Legislature - having joined me in
identifying this issue as a priority - would put Vermonters first and work with me to pass
bipartisan legislation that builds on the progress we have already made. Unfortunately,
that was not the case.
H.520 as it passed the House was a good bill - a positive step forward for Vermont's
energy future - and a bill that I would have signed into law. Unfortunately, despite my
frequently voiced concerns, both public and private, an unnecessary and shortsighted tax
was added to the bill. That tax is not in the best interest of Vermonters or the long-term
economic and environmental security of our state.

Our small state is doing its part to combat climate change. Long before this Legislature
began working on this bill my Administration had established climate change as a top
priority. Joining the Regional Greenhouse Gas Initiative (RGGI); establishing new state
energy and environmental purchasing policies; introducing hybrid technology and
biodiesel into our vehicle fleet; pursuing clean air enforcement and strict automobile
emissions standards in federal courts; expanding Vermont's renewable energy portfolio
through grant programs and tax incentives; implementing green power pricing structures;
and the work of my Commission on Climate Change are just a few examples of the steps
we've taken.

In total, the work of my Administration to address climate change and promote
environmentally responsible economic growth is more aggressive and far reaching than
any previous Administration. It's about who we are - a clean, green, pro-business, pro-growth
state. But I know there's more to do.

The vast majority of Vermont' s carbon emissions come from heating our homes and
businesses and driving our cars and I began this session by introducing an agenda
targeted at reducing these emissions.
Specifically, I offered an affordable and commonsense set of solutions to advance the use
of biofuels in homes and businesses with a fuel rebate program and direct consumer
incentives to purchase more fuel-efficient vehicles. Here we would have had a triple
play: a kick-start to the bio-fuel industry, a reduction of carbon emissions and a reduction
in our reliance on foreign oil. Unfortunately, and inexplicably, these proposals
languished in the Legislature. Instead legislative leaders focused on creating a new,
undefined government bureaucracy and levying an arbitrary tax to fund it.
The Affordability Agenda and my Administration's focus on fostering a favorable
economic environment - one that embraces innovation, new investment and job creation in environmentally preferable industries - is central to securing our economic future. A
major component of this bill -the tax proposal -is entirely inconsistent with these
objectives.
A tax on the Vermont Yankee Nuclear Power Station in Vernon sends a chilling message
to our current and prospective employers at the same time we are seeking to support and
strengthen job creation. In addition, policymakers have an obligation to honor the
commitments of previous Legislatures and treat all businesses fairly and honestly.
It is simply puzzling that the Legislature is proposing to tax a non-carbon emitting
resource to pay for carbon producing efficiencies.
The Legislature has proposed that we risk increasing electric rates, undermining our
power supply and damaging our business climate in the name of reducing carbon
emissions. I reject the notion that environmental protection comes at the expense of
economic development.
1 According to an analysis conducted by the Governor's Climate Change Commission, fuel use in homes and businesses in 2005 accounted for 30% of greenhouse gas emissions in Vermont, transportation accounted for 44% and electricity consumption account for 7%.
Our clean air and water and our commitment to environmental protection are integral to
our economy - reasons many people want to live, work and raise their families in
Vermont and why many people visit us each year. As I've said before, the choice we
face today is not between jobs or the environment. It's a choice between both or neither.
There has to be a better alternative to this tax-and I'm committed to finding it.

I cannot ignore the likely negative reaction by financial credit rating agencies that this
arbitrary tax would trigger. All rating agencies use regulatory uncertainty as one of the
metrics in evaluations.
The new and unanticipated predatory tax on a single company sends a chilling message
not only to Vermont businesses but any company that might be interested in locating or
even doing business here. Businesspeople are smart, they expect that government
policies will change in a macro sense over time but they cannot tolerate the
unpredictability of a legislative body selecting an individual business, or even an entire
industry cluster, and assessing a punitive tax against them. Business leaders cannot take
a risk with a government partner they cannot trust; Wall Street cannot either.

I am also rejecting this bill because it creates an entirely new bureaucracy without
sufficient deliberation or planning. Before rushing into the creation of a massive new
bureaucratic entity - that might itself be inefficient and wasteful - analysis is necessary to
determine its structure, costs and benefits.
Asking Vermont taxpayers to expend what could be an additional $15 million a year on
an unknown and hastily planned bureaucracy is not sensible public policy. That is why
my Administration offered during legislative deliberations to produce detailed
recommendations on how best to achieve improved fuel efficiency. These
recommendations would be based on a thoughtful methodology and involve stakeholders
over the summer and fall. The unwillingness of the Legislature to engage in this process
is startling. Nevertheless, my Administration will carry out this review. This is a far
more responsible approach.

I recognize this legislation contains opportunities to move toward greater conservation
and reduction of greenhouse gases. As I noted earlier, I support the House-passed version
of the bill. That is why I have decided to implement the following items contained in
H.520 administratively:
1 25 x '25 - The Vermont Steering Committee for this national initiative will report
Vermont's farm and forest capacity and work with the Administration to
formulate recommendations for action to achieve our goal of having 25 percent of
our energy produced from farms and forestland by 2025.
2. Smart metering- In April, the Department of Public Service( DPS) requested the
Public Service Board (PSB) to investigate opportunities for Vermont electric
utilities to cost-effectively install advanced smart metering equipment.
Workshops have been scheduled over the summer and deliberations before the
board are scheduled this fall.
3. Conservation rates- The Administration will review alternative rate designs
within the context of the smart metering workshops underway by the PSB.
4. Self Generation and Net Metering - The Administration will request that the PSB
consider the concepts of group net metering and size expansion in their current
rulemaking on net metering.
5. Temporary Siting of Met Towers- The Agency of Natural Resources will
review and report on its current practices in siting meteorological towers under
the Section 248 process.
6. SPEED- DPS will work with the utilities and other stakeholders to collaborate
with neighboring jurisdictions to help ensure that the Sustainably Priced Energy
Enterprise Development (SPEED) goals - a Vermont program run through the
Public Service Board designed to encourage contracts for electricity between
Vermont utilities and renewable project developers-are recognized as consistent
and complementary to the Renewable Portfolio Standard (RPS) goals of
neighboring states.
7. Technical Assistance- DPS will report on how best to assist those interested in
developing renewable energy projects in dealing with the regulatory process.
8. Wind Assessment - The Agency of Administration and DPS will formulate a
recommendation to meet the goal of creating a fair and predictable tax in lieu of
the non-residential property tax for wind facilities while ensuring that there will
be no negative impact on the Education Fund.
9. Business Energy Credit - The Agency of Administration and DPS will report on
the best way to allow Vermont businesses to take advantage of the business
energy credit component of the federal investment tax credit.
10. Permitting Small Hydro - DPS and ANR will provide a recommendation for a
simple, predictable, and environmentally sound process for issuing a certificate of
public good for mini-hydroelectric projects.
11. Water Quality Certification - DPS and ANR will provide a recommendation for a
simple, predictable, and environmentally sound process for completing a water
quality certification review for mini-hydroelectric projects.
12. Small Hydro Pilot - DPS and ANR will work with communities seeking to
develop small hydro projects to facilitate those projects through the existing
permit processes.
13. Report on SPEED- DPS will provide a status report on SPEED resources and the
likelihood of bringing them into service in time to meet the standards.
14. Solar System Specialist - The Department of Public Safety will work with the
Plumbers Examining Board to create a separate special category for people
working in the solar heat collection trade.
15. Weatherization Report - The Agency of Human Services will work with
stakeholders to create a five-year strategic plan with the purpose of improving the
comfort, safety, and affordability of low-income housing and to reduce fuel use
and greenhouse gas generation in that housing.
16. Electric Plan- DPS will take into consideration the environmental impacts,
including those involved in the generation of greenhouse gases, in Vermont's
existing Electrical Energy Plan.
17. State Energy Policy - Vermont's Energy Plan will consider environmental
impacts and continuing reductions in the generation of greenhouse gases in the
production or use of energy.
18. State Comprehensive Energy Plan- The plan will continue to include a
comprehensive analysis and projections regarding the use, cost, supply, and
environmental effect so all forms of energy resources used within Vermont and
regarding all pollution, including greenhouse gases generated within the state and
the state's progress in meeting greenhouseg as reduction goals. It will also
include strategies to increase the efficiency in new buildings, to facilitate
weatherization in multiple dwellings, and to encourage the disclosure of a
building's energy efficiency and weatherization needs prior to a sale.
19. Biodiesel Use - The Agency of Transportation, the Agency of
Administration and DPS will provide recommendations on how to increase the
use of biodiesel blends in state buildings and garages and in the state
transportation fleet.
20. Energy Efficiency Mortgages - DPS will work with the Vermont Housing
Finance Agency and the Vermont Economic Development Authority
to report on the feasibility of establishing programs to support energy
efficiency mortgages for residential and commercial buildings.
21. Study on Efficient Transportation- AOT will study ways to provide incentives
for more efficient transportation.
22. Right to Conserve- The Agency of Commerce and Community Development
(ACCD) will report on the extent to which private covenants within the state
restrict the use of solar collectors, clotheslines, or other energy-saving devices.
23. Workforce Development - The Department of Labor (DOL) will develop a green
building, energy efficiency, and renewable energy workforce development plan in
conjunction with current planning.

Additionally, I am committed to working with the Legislature next January to enact
legislation that contains the following:
1. An amendment to the definition of "farming" to include the on-site production
and sale of fuel or power from agricultural products or waste.
2. An expansion of the use of Agriculture Development funds to include wind and
solar.
3. The creation of fair liability standards for Commercial Building Energy Standards
for builders, architects and designers.

4. An addition of net metered systems to a list of alternative energy sources allowing
residents to seek municipal tax exemptions for alternate energy sources.
5. An amendment to the definition of "new renewables" to include capacity
expansion.
6. Language directing a retail electricity provider to pay the Vermont Clean Energy
Development Fund an amount per kilowatt-hour as established by the PSB in lieu
of purchasing renewable energy credits (REC's) to satisfy a RPS that would be
applicable if SPEED goals are not met.
7. Direction for all Vermont utilities to implement a renewable energy pricing
program or offer customers the option of making a voluntary contribution to the
Vermont Clean Energy Development Fund.

It is truly regrettable that H.520 was poisoned by an ill-defined bureaucracy and an
unnecessary tax that would undermine our economic security. There remain, however,
opportunities for the Legislature to join me in advancing the conservation and renewable
energy initiatives outlined above, as well as others.
There is also an opportunity to pursue improved fuel efficiency without creating a poorly
contemplated, cumbersome bureaucracy funded by an arbitrary tax. There has to be a
better way to achieve this shared goal and I am committed to finding it.
While we are already a national leader in energy conservation and efficiency and our
emissions are a tiny fraction of those emitted by other states, we will continue to do more
to combat climate change. That's the Vermont Way.
Sincerely.
James H. Douglas
Governor


- Terri Hallenbeck