I. Introduction

Energy planning for a sustainable future is important for every state, though it is particularly important for a state with a fragile environment such as Vermont. Vermont already suffers from serious air emissions from states up-wind of it, particularly from the Mid-West. In addition, due to the mountainous geography of much of the state, it is difficult to site new natural gas pipelines and new electric transmission lines. In fact, given the importance of tourism to the state's economy, siting new electric transmission lines in the state might be almost impossible, given their negative visual impact.

Already Vermont has a plan in place as prepared by the Vermont Department of Public Service in 1998 which seeks to substantially increase the amount of renewable energy available to its citizens. This plan is titled Comprehensive Energy Plan and Greenhouse Gas Action Plan. Vermont also has a new statewide energy conservation organization that is designed to continue aggressive levels of implementation of energy conservation measures, particularly as affect natural gas and electricity consumption. All this is good, of course. However, Vermont is still projected to rely on more and more fossil fuel consumption over the next 20 years. Clearly, such increases in fossil fuel consumption are not sustainable in the long run given that many have claimed that continued consumption of fossil fuels at today's levels is itself unsustainable.

Modern energy consuming and generating technology does offer Vermont some real options for cutting back on fossil fuel consumption, and for increasing the state's production of renewable supplies of energy. However, the normal market-driven rates of penetration of new technology alone are not sufficient to usher Vermont into a sustainable energy future. Strong, new state, regional, and federal policies will also have to be agreed to and implemented. Market mechanisms may often be appropriate to help implement some policies, but reliance on markets alone as a substitute for sustainable energy policies will simply not work.

One thing that new technologies often offer is the ability to efficiently generate and use energy on a local level more efficiently than in the past. Local generation of electricity can often help in preventing the need for new and unsightly electric transmission lines. For example, more efficient micro-turbines for converting natural gas or other fuels to electricity on the site of an industrial facility offer small industrial and commercial facilities the option of self-generating electricity and bypassing the utility grid either altogether, or to a large extent. Perhaps, soon, it will even be socially cost-effective for large residential customers to self-generate electricity, if air emissions can be kept within reasonable bounds. Thus, several key ingredients of a sustainable energy future in Vermont are to provide strong incentives the purchase and use super-efficient energy consuming equipment, generate the electricity needed to run electric equipment as locally and as efficiently as possible, using renewable resources as often as possible, and allocate scarce environmental emissions permits or constraints to as many high value added economic projects as possible. With regard to this last point, people often forget, and this is where market mechanisms can sometimes play a role, that the cost of a pound of emissions of a particular pollutant from one particular source is not necessarily equivalent to the cost of a pound of the same pollutant from another source. The impact of a pound of pollution in one place may be greater than if emitted somewhere else. One should prioritize the potential new and old sources of such emissions very carefully, and select the most economically valuable sources of emissions as those to cut back on last. Thus, sometimes establishing a market value for emissions can help policy makers do this more quickly and efficiently.

The specific issues that we will address in this report all relate more or less directly to the general issues of sustainability raised above. This report will address some of the pros and cons of the proposed natural gas pipeline and the two natural gas combined cycle power plants in Southwestern Vermont.

To perhaps over-simplify the issues at first, one of the positive aspects of the pipeline could be the more general availability of natural gas to homes and businesses in Vermont. This could have the potential benefit of superior price stability for this fuel relative to oil or bottled propane, and less air emissions, especially carbon dioxide emissions, which causes the greenhouse effect. Also, some special types of manufacturing plants that require natural gas for certain processes might be more inclined to locate in Vermont. However, in order to allow more customers to directly benefit from the increased availability of natural gas, additional gas distribution systems would have to be constructed in addition to the gas pipeline itself, with their incumbent environmental damage. In addition, some additional electric generation within Vermont could be useful to reduce the need for electric transmission lines to bring electric power in from out of state, as electric demand in Vermont grows. Also, Vermont currently buys some of its electricity from a coal-fired power plant in New Hampshire, and this purchase could be replaced by cleaner natural gas-fired power from the proposed plant. Finally, the plant might make significant local tax payments, and might add somewhat to local employment opportunities for Vermonters.

In contrast, however, even a first look will make it clear that there are many significant potential problems with the projects actually being proposed. First of all, they clearly seem to be far too big given Vermont's potential need for new sources of natural gas and electricity. The power plants would generate far more power than the entire state of Vermont consumes. In fact, they may be so big as to require new electric transmission lines to be built just to get the excess power that Vermont does not need out of the state, given its current electric supply resources. Another way in which these proposed projects seem to be clearly too big is the impact that they would have on air pollution in the Rutland region, and on air quality in the southern portion of the Green Mountains. They might also be so big as to severely restrict Vermont's future options to build other point sources of emissions in the future that might have much greater benefits for the economy. In addition, valid questions have been raised as to the impact that these plants might have, if built, on the likelihood of further renewable electricity supplies being developed in the state of Vermont, or on the degree to which the state would pursue more aggressive approaches to the conservation of electricity. Thus, the proposed projects raise many valid questions as to whether or not they would be compatible with Vermont's stated goal of trying to embark on a more environmentally sustainable future.

At a very practical level, it is now well known that the projects' owners have recently withdrawn their application to the New England Independent System Operator for the proper transmission interconnect studies to be performed. One reason for withdrawing this specific application may have been the realization on the part of the projects' owners that significant new amounts of electric transmission capacity might have to be constructed in Vermont to dispose of the excess power from the projects, and that this would likely not be politically feasible. It might also mean that performing the transmission interconnect studies might be quite expensive. Even if this particular project is close to its demise, the issues that it raises are fairly generic, and, therefore, are worth further analysis in any regard. Sooner or later another similar proposal will likely be proposed for somewhere in Vermont.

Another major purpose of this report is to try to reveal and dispel some of the overly simplistic statements that have been made publicly about the proposed projects. Thus, much of this report will be presented in the form of answers to simple questions that many people have asked about the proposed projects such as "will they reduce the price of electricity in Vermont?" or "will they reduce air pollution in the region?" In fact, the major theme of this report with regard to the two proposed combined cycle electric generating plants, aside from the large size of the Rutland plant (1080 MW), is that they seem to be completely average or typical for generating units of this type. The relatively large scale of the proposed Rutland plant may be determined by the economics of the natural gas pipeline. A smaller plant might not be economical given the cost of building the extension to the gas pipeline. However, such cost analysis is beyond the scope of this report. There is nothing that we know about the proposed plants as of now that would indicate that there is anything significantly different about these units than would be typical of many other such new generating facilities that will be constructed elsewhere in New England. Again, aside from their location, this is true from an economic as well as from an environmental perspective. Thus, the most fundamental question that Vermonters could and should ask about these proposed power plants is "What benefits will they have for the state of Vermont?" if they were built where proposed.