The Public Service Board is taking public comment on proposed rules that would lower the reimbursement rate utilities pay for net-metered power.
The scheme also incentivizes development in preferred locations, and subsidizes projects that keep renewable energy credits in-state.
Utilities and state officials say the new rules will tie net-metered power prices closer to the market rate.
Many Vermont residents have taken advantage of federal rebate programs and the state's generous reimbursement rates for net-metered power. Most of the installations are rooftop or backyard solar arrays.
There are more than 6,000 net metering installations in Vermont, according to Jon Copans, the deputy commissioner of the Department of Public Service.
Copans said the program has proven "a huge success." The new rules, he said, "need to build on that success."
Net metering customers who sell energy to utilities get reimbursed at a particularly high rate, in order to subsidize development of small-scale (fewer than 500 kilowatts) renewable-energy projects.
Currently, net-metered customers get paid 19 cents per kilowatt-hour for whatever they produce in excess of what they use. The wholesale market rate for power purchased by utilities runs as low as 6 cents per kilowatt hour.
Utilities say "under ideal circumstances," power companies could still pay up to 20 cents per kilowatt-hour for some projects.
Most net-metering customers, however, would get a significantly reduced rate under the proposed rules.
The proposed rules also subsidize development in "preferred sites," which include brownfields, parking lots, gravel pits, quarries, and other such disturbed or developed locations.
The regulations would also address the controversial sale of renewable energy credits out of state.
The credits constitute legal title to the renewable energy. Vermont has made a commitment in state statute to obtain 90 percent of its energy from renewable sources by 2050, but effectively has no renewable energy credits of its own because developers and utilities have been selling the credits to nearby states.
Massachusetts and Connecticut have similar statutory renewable energy requirements and are using Vermont renewable energy credits to meet their targets.
The new net metering rules would give renewable-energy developers no compensation for renewable energy credits and would reduce the kilowatt-hour price for net-metered power.
The pricing scheme could penalize net metering customers who want to retain the renewable energy credits, critics say. Businesses often wish to hang on to their renewable credits in order to claim they're powered by solar energy, Kevin Jones, a Vermont Law School professor, has said.
The Vermont attorney general's office last year issued a memo saying that energy consumers can't claim to use renewable energy unless they're in possession of the renewable energy credits. That means even a business owner who installs a full complement of solar panels on her roof can't advertise her business as being solar-powered if she relinquishes her renewable energy credits to a utility.
The proposed rules also create categories of energy production, ranging from very small (fewer than 15 kilowatts) projects in which the utility keeps the renewable energy credits, to very large (150 kilowatts to 500 kilowatts) projects in which the developer or eventual owner keeps the renewable credits.
Customers in each of the five categories would get paid different amounts for net-metered power. The prices would be further modified by whether the owner or developer elects to hang on to the renewable energy credits.
Renewable-energy project owners who keep the renewable credits get reimbursed 6 cents less per kilowatt-hour than those who give the credits to utilities, under the proposed new rules.
Projects producing fewer than 15 kilowatts are defined in the new rules as Category I, and these facilities would bring an additional 3 cents per kilowatt-hour above the standard price known as the "blended residential rate."
Projects producing between 15 kilowatts and 150 kilowatts on a preferred site would earn an additional penny above the standard rate. Projects putting out between 150 kilowatts and 500 kilowatts would get a blended residential rate.
Solar arrays generating between 15 kilowatts and 150 kilowatts located off a preferred site would earn 2 cents less than the standard rate, and those making 150 kilowatts to 500 kilowatts would earn 3 cents less.
The rules include a monthly fee for net-metering customers to cover the cost of maintaining poles and wires and other infrastructure.
The grid service fee would distribute infrastructure costs among net-metering and regular customers, according to Vermont Electric Cooperative spokeswoman Andrea Cohen.
"Our goal really is to create a net metering program that's sustainable financially for both the co-op and for customers," Cohen said.
The Public Service Board is taking public comment until May 12. The board will convene public meetings May 4 and 5.
After the public comment period ends, the board will make final revisions before submitting them to the Legislative Committee on Administrative Rules for approval.