Survival

Ask him what’s the biggest, most pressing industry issue he is dealing with in his position as executive director of the Vermont Fuel Dealers Association and Matt Cota answers with one word: “Survival.”

And then of course, being the head of a state association, he elaborates. The specific challenge for VFDA members, he says in a phone interview with Fuel Oil News Editor Stephen Bennett, is how to survive competition from electricity and cold-climate heat pumps. That’s a common denominator in the Northeast and mid-Atlantic, but in Vermont there is a wrinkle, about which more in a moment.

“We’re seeing a greater push throughout the Northeast to electrify,” Cota says, describing an effort to supply the grid entirely with renewable energy “and then make sure that renewable energy is used for transportation and heating.”  Policies provide incentives to customers to add electric cold-climate heat pumps to their homes, Cota notes. “We’re seeing that in every state. It’s the policy that environmentalists, the utilities, regulators and lawmakers, have adopted over the last five years.”

That effort will resume post-pandemic, Cota says. “I fully expect that when they stop dealing with [COVID-19], they’ll be dealing with the Global Warming Solutions Act, and other regulations to ensure that people stop using heating oil.” (Read Cota’s testimony to Vermont lawmakers on the GWSA here.)

Vermont and rural parts of other states face a different challenge from states where natural gas has deep market penetration. “In northern New Hampshire and northern Maine and most all of Vermont natural gas is present, but not a threat as it is in New Jersey or Connecticut or Massachusetts because [of] the cost of [building] pipelines in rural areas,” Cota says. In those areas, “there’s no return on investment for the pipeline company.”

But for an electric utility there is a return on investment even in rural areas. “Where there is an electric line, which there is everywhere, there’s an opportunity,” Cota says. Heating oil dealers that felt insulated from the penetration of a natural gas pipeline and a natural gas utility don’t have that same type of insulation from an electric utility competitor.

Many heating fuel companies are installing cold climate heat pumps “understanding that their customers want these because they provide air conditioning, and they take the chill off in the fall and the spring, but it’ll also have an impact on how many gallons they sell in the home,” Cota observes.

Some industry groups in some states point out that fossil fuels are used to generate electricity, adding to emissions levels. But that argument falls flat in Vermont. Hydroelectric from Canada is the state’s largest source, followed by wind, solar, “small hydro” and nuclear power, Cota says.

Instead, Vermont dealers must make the case that cold-climate heat pumps just aren’t sufficient, Cota says. “There’s an idea that’s been fomenting that this is a switch-out or swap technology, which it’s not. It’s a supplemental heat. And there’s no one that knows that better than the people that are responsible for responding to no-heat calls or freeze-ups. And that is our best point: You don’t put in a pair of heat pumps and dismantle your boiler in your basement.”

Homeowners need to have another source of heat, whether biomass, propane, heating oil or natural gas, Cota says, “because in Vermont it still gets in the single digits and below zero.” When temperatures plunge, heat pumps use a lot of electricity, Cota says, “but they don’t create a lot of heat.”

Explaining the thermodynamics is “not very compelling to people who think that all they have to do is pay twelve thousand, fifteen thousand dollars, and they’ll be carbon-free,” Cota concedes. He also notes that a few especially well-insulated, new homes are being built without central heat. But most homes in Vermont have multiple rooms that need some form of central heating, he says. “Cold-climate heat pumps are space heaters,” and once customers understand that, Cota says, “they make sure they have a full tank of oil going into the winter. You cannot rely on electricity alone to get you through a Vermont winter. It’s not prudent, it’s not safe, and no one should recommend it.”

Making that argument is critical to the industry’s survival, Cota says, “but you can’t just say it once.” The message bears repeating.

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