The Mafia-Style Corruption in the Clean Heat Standard

Lawmakers to give cronies literal license to steal

More dysfunctionality in the Clean Heat Standard was on display during the Public Utility Commission’s (PUC) Technical Advisory Group (TAG) meeting on January 25. This example of how the law is unworkably corrupt has to do with the role of the Default Delivery Agent (DDA) – a private non- or for-profit entity(s) that will be assigned by the PUC to retire, for a price, all the clean heat credits fuel dealers are obligated to fund.

(I’m sure already, dear reader, you can tell by the number of alphabet group designations that this is going to be a bureaucratic mess of gargantuan proportions. You will not be disappointed! Stick with me here….)

Under the Clean Heat Standard (S.5/Act 18), Vermont fuel dealers are required to generate “clean heat credits” by installing heat pumps, weatherizing homes, etc. Since many dealers are not capable of performing such services – they just deliver fuel – the law sets up an entity called the Default Delivery Agent that will assume responsibility for doing the work to generate those credits – at a price set by the PUC and paid for by the dealers. If a dealer wants to retire credits on their own and not pay the DDA, they have to get special permission from the PUC. (Kiss the boss’ ring.)

So, whoever gets the nod to be a DDA has a guaranteed profitable business model – their “customers” are obligated by law to pay up front for services at a price level set by the government guaranteed to make them money. Cha-ching! If that sounds like quite the scam, it is!

Now remember, the cost of those “credits” will be passed along to you and me, the consumer, in the form of higher home heating fuel prices. So, wherever you see the fuel dealer getting screwed in this process, don’t forget it’s really you who are getting screwed when you buy oil, propane, natural gas, or kerosene to the tune of an estimated additional 70 cents per gallon.

And here’s the really ugly part. If for some reason a fuel dealer fails to account for their share of clean heat credits, the fuel dealer then has to pay a penalty amounting to twice the cost of the original credit to the DDA. But, if the DDA, having assumed the obligation and taken payment to do the work for the dealer doesn’t, in fact, do that work the penalty is zip, zero, nada. So, what happens to all those checks the DDA cashed from the dealers for work not done? According to way the law is currently written, the DDA just gets to keep the money! It is a literal license to steal.

Is this little wrinkle just a negligent oversight by the Democrat/Progressive majority that wrote and passed this law? Or is it a feature? A calculated way to pay off political cronies with a lucrative no-risk, big reward appointment as a DDA?

Here’s why I highly suspect the latter. Nine months ago, I sent the following email to every member of the House Energy & Technology Committee pointing out this suspicious and potentially corrupt dynamic.

April 6, 2023

Dear House Energy & Environment Committee,

Your recent conversations regarding the 4x penalty for fuel dealers who fail to meet their credit obligations raises another question: What happens if the Default Delivery Agent, having assumed the responsibility for those credits, then fails to retire them? What penalty does the DDA face in such a circumstance?

For example, the PUC says Fuel Dealer A is obligated to retire 100 credits at $10 each. Fuel Dealer A pays the DDA $1000 to assume that obligation. But the DDA only retires 50 of those credits in the timeframe allotted to do the work. What happens? 

• Does the DDA pay a penalty of 4x the value of the credits [the final law changed it to 2x]? If so to whom? Not itself presumably. 

• Does the DDA return the money to Fuel Dealer A? If so, where does that leave Fuel Dealer A?

• Does the DDA get to say, oh well, and just pocket the money? If so, that is a significant incentive for the DDA to not engage in Clean Heat Measures. 

Obviously, if all the credits assigned by the PUC aren’t retired then the state isn’t meeting its mandates under the GWSA.

Given that the non-compliance penalty for fuel dealers is spelled out in S.5, it would make sense that the non-compliance penalty for the DDA is given equal weight in the law. Or is it your committee’s intention that the DDA face no penalty for non-compliance?

Thanks for your attention and clarification. 

Robert Roper

Well, they paid no attention, and I got no clarification. Not one of the so-called public servants on the committee responded to my email.  Nor did they address the issue. They passed the law with the DDA as a paid, mafia-style no-show gig knowing full well how it was set up to work, and giving no indication that they had a problem with it.

When the issue of a DDA penalty came up again on January 25 of this year, Matt Cota, representing the fuel dealers, asked, “If the DDA doesn’t deliver -- say they fail, say the abscond with the money -- we still have the mandate in the Global Warming Solutions Act. And the amount of money the obligated parties will have to pay to cover for the DDA failing will have a great impact on consumers who still need an essential commodity to stay warm. The DDA should absolutely be penalized if through fraud or other means, they fail to meet their obligations when they gained the contract to provide these services.”

T.J. Poor of the Public Service Department responded, “I do think that they should be penalized. I also think the obligation then still falls on the providers. Whether it’s right or wrong I think that’s how the Clean Heat Standard is set up. [Note to reader: It’s wrong.] If the DDA absconded with the money, there’s a legal action to go after the money – maybe get it, or not, or whatever – but then fuel providers—The PUC is still required to set obligations so that GWSA requirements are met. In that extreme scenario, fuel providers are on the hook, and it’s got to be priced in [to YOUR fuel bill]. It’s part of the impact of the Clean Heat Standard.”

To summarize: You the fuel customer will be forced by this law to pay higher heating fuel prices in order to fund the “businesses” belonging to the political cronies of our political elites. If those cronies steal that money, you the fuel customer are even further on the hook to cover the cost impact of that theft.

So yes, this is how our lawmakers intended the Clean Heat Standard to work. But Poor is wrong that DDAs failing to do the work will be an extreme scenario. Even advocates for these programs acknowledge that the workforce necessary to do what the GWSA and the CHS require does not exist. In fact, it is at estimated at only 14% of what is necessary. Which means a big chunk, likely a large majority, of the work the PUC is going to mandate the fuel dealers (aka YOU) pay the DDA to do is not going to get done. We the consumers are going to get stuck with the tab – twice! And the DDAs are going to throw one hell of a Christmas Party for their Democrat/Progressive benefactors.

• Rob Roper is a freelance writer with 20 years of experience in Vermont politics including three years service as chair of the Vermont Republican Party and nine years as President of the Ethan Allen Institute, Vermont’s free market think tank.

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