February 17, 2011 – Week 7

Following on the heels of a draft released late last week, a new proposal to create a renewable portfolio standard in Vermont was released early this week. While last week's draft relaxed the goals of H.468 as introduced, this week's draft includes more ambitious goals for use of renewable energy in Vermont. Specifically, the new version of the bill would expand the standard offer program for 250 MW by 2023. Vermont's standard offer, or feed-in tariff program requires Vermont electric utilities to purchase electricity from approved renewable energy projects for a price established by the Public Service Board. The current limit of 50 MW has had an upward pressure on rates. Expanding the program by a factor of five could require Vermont's electric utilities to purchase power at far above market rates.

The Senate Finance Committee took lengthy testimony on S. 172. Under consideration is the requirement of a study as to whether the state could and should purchase a share of up to 51% of the Vermont Electric Power Company (VELCO). VELCO is the state's distribution utility responsible for maintaining Vermont's electric grid. State Treasurer Beth Pearce testified with concerns about how purchasing a share of the company could affect Vermont's bond rating. She also explained that in order to repay the bond, Vermont would likely have to use a portion of VELCO's profits which currently flow back to ratepayers. The Chamber and GBIC testified with concerns about any proposal that would raise electric rates. The measure was introduced due to concerns about Gaz Metro (which owns Green Mountain Power) holding a controlling interest in VELCO once their purchase of Central Vermont Public Service is complete.

At the invitation of the Governor, our Government Affairs team attended the bill signing for H.258, http://www.leg.state.vt.us/docs/2012/bills/Passed/H-258.pdf a bill designed to increase citizen participation and notification in environmental enforcement actions. This bill was required by the federal Environmental Protection Agency, to meet the standard of the Clean Water Act, which requires public notice and an opportunity for citizens to comment on pending enforcement actions by the Agency of Natural Resources. Governor Shumlin and Speaker Shap Smith spoke to the increased public transparency that will result from the bill, while Chamber President Tom Torti echoed their remarks and praised the “ability of business and environmental interests to come together, put aside their differences and work together for the common good.”

The House Health Care Committee voted out H.559, this year's health care reform bill. As a result of the announcement last week from Governor Shumlin and legislative leaders, the Committee decided to include language allowing bronze level health insurance plans to be sold in the health insurance exchange. The change will allow many small businesses who purchase their health insurance in the Exchange, starting in 2014, access to plans similar to those they currently provide. High deductible plans will likely be considered bronze plans.

The House Commerce Committee took up a draft labor bill this week. The Chamber has been working with the Department of Labor, labor union representatives and other business associations on a resolution to the problem many of our members have encountered with regard to the Department's treatment of independent contractors. Under the agreement being considered, independent contractors would register with the state as such. If the individual met a number of requirements and was certified as an independent contractor, an employer using their services would not be deemed their employer for the purposes of workers' compensation and unemployment insurance. Currently, the Department is auditing many employers and ruling that their independent contractors/freelance workers are employees because the work they do is related to the nature of the employer's business. Once these independent contractors are found to be employees, employers are required to cover them on workers' compensation and unemployment insurance and, often, pay fines. The expansive nature of the law makes it difficult for many businesses to prove that an independent contractors' work is not within the nature of their business. We are hopeful that a resolution to this issue will move forward this session.

Lawmakers heard from a variety of witnesses that it will take many years for the water quality in Lake Champlain to improve. Several House and Senate Committees received an update from the State Department of Environmental Conservation (DEC) and federal Environmental Protection Agency (EPA) about their work on new phosphorous limits for the lake. DEC Commissioner David Mears noted that it will probably take “decades” to make progress. Sen. Lyons (D-Chittenden Co.) inquired of an EPA representative about the likelihood of federal funding to assist with cleanup and was not provided with a very optimistic answer. It is estimated that a new phosphorous reduction plan, (the Total Maximum Daily Load (TMDL)) will be available for public notice in 2013.

The House Fish and Wildlife Committee started taking testimony on a bill designed to clean up Lake Champlain (H.529). If enacted, the Natural Resources Board (NRB) would establish a water resources preservation program. This program would provide funding and technical assistance to prioritized projects designed to improve water quality and prevent flooding as well as fund implementation measures to reduce phosphorous pollution. The NRB would establish a fee on all developed property and farmsteads in proportion to the area of impervious surface. All uncollected deposits on redeemable bottles would also be deposited to this fund. Our Chamber testified against the fee, but indicated a willingness to assist with research on what other areas of the country are doing to fund water clean up. We also expressed frustration with the lake being “studied to death,” and the lack of resources for implementation and best management practices.

The history and use of Vermont’s fishing access areas were also topics of discussion in the House Fish and Wildlife Committee. Conflicts among the priority uses of fishing and launching motorboats with non-paying and non-motorized uses such as ice boats and kayaks/canoes are increasing and the Department of Fish and Wildlife has to respond to numerous complaints of competing users with limited resources. H.644, a bill introduced by Rep. Michelle Kupersmith (D-So. Burlington) attempts to allow ice boats or snow kites to use fishing access areas.

Last week, we reported that Tim Donovan, Chancellor for the Vermont State Colleges had noted there had been a 60 percent decline in state funding of higher education (adjusted for inflation). The Vermont State Colleges provided us with the following clarification: Adjusted for inflation, the state’s appropriation for higher education, per full-time enrolled Vermont student, has declined 49% since 1990. This decline is a product of two factors: modest appropriations and the growth of enrollment over the same period of time (82% in full-time equivalents), while the actual appropriation increase over the same time period was 53%.

Quick Hits

No recent action or consideration of clarifying the taxation of cloud computing or software as a service has been taken, despite the Shumlin Administration’s indication of their opposition to such taxation. H.757 imposes a moratorium on taxation; however, it would be preferable if the State were to explicitly rule that the sales tax does not apply to remotely accessed software as a competitive strategy to attract and retain technology based sectors and jobs in Vermont.

The House General, Housing and Military Affairs Committee took up a couple of bills related to the sale and distribution of wine. H. 506 would increase the amount of wine a producer can ship and allow a producer to serve beverages made by another manufacturer on its premises. H. 593 would allow jewelry stores to serve malt or vinous beverages on their premises.

The Senate Economic Development Committee has been reviewing housing issues, including how best to encourage mobile home ownership and H.59, a bill designed to encourage affordable housing by prohibiting discrimination in land use decisions or the permitting of developments because a proposed project contains affordable housing units.

University of Vermont Interim President John Bramley provided an overview of UVM’s contributions to the state and economy this week. Meanwhile, Domenico Grasso, Dean of the Graduate College and Vice President for Research outlined the details of the University’s Innovation and Investment initiative including strategies to increase the numbers of students enrolling in STEM (Science, Technology, Engineering and Math) majors.