The Affordable Heat Act, passed in the spring of 2023, has become a controversial part of this year’s legislative campaigns. Opponents of the measure are suggesting Vermonters will be forced to pay huge increases in their fuel bills, while supporters explain it was passed to reduce long-term fuel costs, make fuel costs more predictable, and reduce carbon emissions.

To separate fact from fiction, what follows is a report by Reps. Kathleen James and Seth Bongartz (from the district surrounding Manchester) that explained the bill as it was being considered for passage in 2023, edited slightly for length. The Legislature did pass the bill, and then narrowly overrode Gov. Phil Scott’s veto.

Many Vermonters have been told that Act 18, the Affordable Heat Act, will result in much higher fuel prices, that it’s a “carbon tax,” that it involves mandates or requirements for how they heat their homes or the fuel they use, and that the unprecedented “check-back” mechanism the legislature added is somehow a sham.

None of this is true. And it’s keeping folks from understanding the stated intent of the bill. Here’s the background on Act 18.

During the winter of 2022-2023, the price of fuel oil rose by $2 a gallon. This hit Vermonters hard. It’s not the first time families have been hammered by rising fossil-fuel prices. In a global commodity market, these prices fluctuate based on factors our local and regional dealers can’t control.

Here are some things most of us agree on:

• People can’t afford rising, out-of-control fuel prices.

• Right now, there’s not much anyone can do to control or predict these prices.

• It would help everyone to find a better, more predictable and sustainable way to heat our homes.

The fact is that clean heat is cheaper and more sustainable. It’s the heat of the future.

So how do we adapt to the rapidly approaching clean-heat future in a way that helps Vermonters who can’t afford rising fuel bills, and who are least able to make the switch to cheaper, cleaner heat?

Vermonters who can afford to do so are already lowering their fuel bills — and saving a lot of money — by taking “clean heat” steps like weatherizing their homes, installing heat pumps, or making smaller changes like switching to solar-powered water heaters.

Vermonters who cannot afford to make these changes — the same folks who can least afford rising fuel prices — are the ones getting left behind as our economy shifts to clean heat.

Act 18 is designed, explicitly and clearly, to help Vermonters save money on fuel bills by switching to clean heat. It would accomplish this not through taxes or mandates on consumers, but by requiring fossil-fuel dealers to earn credits. Dealers would earn these credits by helping interested Vermonters to weatherize, to install clean heat systems, to switch to cleaner fuels at a more affordable price. The options for consumers would be based on incentives, not mandates.

A big percentage of the incentives would be aimed at low- and moderate-income Vermonters. The rest of the incentives are aimed at any residential homes (regardless of income), plus businesses and manufacturing companies.

For policy wonks, here’s the actual language in the bill:

“The Clean Heat Standard shall be designed and implemented to enhance social equity by prioritizing customers with low income, moderate income, those households with the highest energy burdens, residents of manufactured homes, and renter households with tenant-paid energy bills. The design shall ensure all customers have an equitable opportunity to participate in, and benefit from, clean heat measures regardless of heating fuel used, income level, geographic location, residential building type, or homeownership status.”

The two most inaccurate claims being circulated about the Affordable Heat Act are:

FALSE: It will raise the price of fuel by 70 cents or more.

FALSE: Once S.5 becomes law, it’s a done deal.

Both claims are inaccurate. Here’s why:

• TRUE: We won’t have to guess about impact on fuel prices. We’ll know ahead of time — and we can adjust the program in response.

Under the proposed Clean Heat Standard, fuel dealers would be required to earn credits. They’ll do this by delivering a wide range of “clean heat measures” to interested customers. Dealers could earn the credits themselves, by actually doing the work or partnering with other companies. Or fuel dealers could pay for their assigned number of credits. This revenue would help fund incentives through something like the Efficiency Vermont Marketplace.

For customers, this would equate to opportunities and incentives. For fuel dealers, this translates to an increased cost that they are, in fact, likely to pass along to customers in some way.

The question is: How much? There’s been a lot of speculation.

The good news is, we won’t have to guess. S.5 includes a series of mandatory reports back to the legislature. The detailed reports include:

• A “potential study” that takes a hard look at the actual logistics and implementation of the proposed program, including things like workforce capacity, supply chain constraints, and estimated uptake: How many Vermonters would be likely to install heat pumps, for example? How many would weatherize? And how would the program be designed or changed in light of this information? The study is due September 2024.

• Economic impact studies that analyze the cost of the program (including any impact on fuel prices), the estimated savings for customers and more. The report is due in January 2025.

• The bill also includes a “circuit breaker” mechanism that would allow the program to be slowed down or paused, for as long as 36 months, in response to market conditions (like a workforce shortage or financial impacts on customers).

• TRUE: The unprecedented check-back provision guarantees that the entire proposal will come back to the legislature in 2025, and that it can’t go into effect until and unless we vote to move it forward.

At the Governor’s request, the legislature inserted a “check-back” provision to make crystal clear our intent. Under the check-back, the Public Utility Commission will spend the next two years “writing the rules” that would regulate the Clean Heat Standard program.

Usually, these proposed rules come back to a committee called LCAR (the Legislative Committee on Rules). These legislators review and approve the rules to make sure they’re what the legislature intended. If LCAR approves, the rules are filed with the Secretary of State and the program gets underway.

In this case, we’ve adopted an unprecedented extra step, in addition to LCAR review: A full legislative check-back. In January 2025, all of the studies and the full proposed rules will come back to the legislature. S.5 clearly states that the real “guts” of S.5 — the requirements for fuel dealers to earn credits — cannot move forward unless the legislature enacts them. Enact means we’ll introduce a bill, take testimony, and change or revise the rules in any way that makes sense — to respond, for example, to what we learn about impact on fuel prices or capacity of Vermont’s workforce to handle an uptick in weatherization.

The Clean Heat Standard cannot become reality unless both the House and Senate vote “yes” on this new bill, and the Governor signs it (or if a veto is overruled). If all of that happens in 2025 or in the future, the program will start its gradual rollout, probably the following year.

If the proposed Clean Heat Standard passes the legislature during the 2025-2026 biennium and gets underway in the future, it will:

• Help more people make the switch to clean heat.

• Support fuel dealers during a time when their industry is changing rapidly. The fuel dealers of today can and should be the clean heat companies of the future.

• And help Vermont meet the carbon pollution requirements we’re required to meet by 2025, 2030 and 2050.

Climate action is a complex problem. And complex problems sometimes require complex solutions. We believe the Affordable Heat Act holds great promise — that it will help those Vermonters who are least able to afford rising fossil fuel prices — and for whom the investment required to switch to clean heat is currently out of reach.