Rules meant to boost renewable energy could backfire, some say
MONTPELIER >> A popular subsidy program for renewable energy is undergoing rule changes overseen by the Public Service Board, and the public comment period for that effort is nearly over.
The board is taking comments until Thursday on the rule changes, which advocates of renewable energy warn could stymie its development.
Much of the opposition to the proposed rules concerns what are called renewable energy credits, which are legal instruments that convey title to the renewable attributes of energy from sources such as solar and wind.
The widespread sale of these credits, which are produced every time a renewable energy source creates a megawatt-hour of electricity, means that almost none of the energy consumed in Vermont qualifies as solar- or wind-generated. Most of the credits currently get sold to Massachusetts and Connecticut utilities, which use them to meet minimum requirements on the amount of renewable energy they must purchase.
Academics and industry professionals say this results in Vermont's renewable energy development satisfying other states' energy goals, while leaving Vermont to power itself mostly from the nuclear and fossil-fuel energy supplying much of New England's electric grid.
To reverse this, the Public Service Board's new rules would require that net-metered power generators — who get a credit for excess production beyond what they use — give their renewable energy credits to Vermont utilities or else pay what critics say amounts to a 6-cent penalty per kilowatt-hour.
These credits would go toward a goal established in Act 56 last year of supplying 10 percent of the state's electricity from in-state renewable sources.
But utilities won't buy any more renewable energy credits, or RECs, once they've met their 10 percent goal, and individuals and businesses that want to rely purely on solar power will still need to pay an additional 6 cents per kilowatt-hour even after that, said Kevin Jones, a professor of energy technology and policy at Vermont Law School.
That would hurt renewable energy companies, Jones said.
"It's going to put installers in a bad place, because the renewable energy standard (established in Act 56) has a 10 percent carve-out, and all the RECs go to that, so essentially you're putting a 10 percent cap on distributed resources," Jones said.
However, Gov. Peter Shumlin's deputy chief of staff, Scott Coriell, said the Legislature could always set that goal higher should the scenario Jones envisions come about.
The Legislature, the Public Service Board and the Department of Public Service have all committed to procuring 90 percent of the state's energy from renewable sources by 2050, "but if we penalize people who try to do additional toward that goal, they ought to get rid of the goal," Jones said.
Businesses that have solar arrays often wish to hang on to their renewable credits so they can claim they're powered by solar energy, but if the proposed net metering rules are adopted, no Vermont business will be able to make that claim without it costing an extra 6 cents per kilowatt-hour, Jones said.
Coriell argued that the penalty is appropriate because net metering customers who give their credits to utilities are providing something valuable to Vermonters, which those who retain their RECs are not.
"Ratepayers should not be forced to subsidize a project for a business who wants to claim they are renewable at the same rate as a project that is helping the utility meet Vermont's renewable goals," Coriell said.
The Vermont attorney general's office last year issued a memo saying energy consumers can't claim to use renewable energy unless they're in possession of the renewable energy credits.
Many solar installers say they don't like the rule.
"We definitely dislike the aspect that penalizes net metering customers when they want to legally go solar or (use) another renewable energy, by keeping and retaining and retiring the RECs, which will help Vermont achieve its energy and climate goals just as well as if the RECs go to the utility," said Jonathan Teller-Elsberg of Norwich-based Solaflect Energy.
Solaflect, unlike some of its competitors, does not sell RECs from its projects. Representatives of solar installers that don't sell RECs have said in the past that they're at a competitive disadvantage but are willing to accept that in order to assure customers they're actually buying solar energy.
Aside from businesses wanting to market themselves as powered by solar energy, many individuals want to know they're not powering their homes from nuclear energy or fossil fuel, environmental advocates say. The proposed net metering rules make it harder for people to do that, Teller-Elsberg said.
Department of Public Service representatives weren't immediately available for comment, but in the past they've said that what some call a 6-cent penalty is actually just a slight reduction in a significant subsidy.
Net metering customers get reimbursed for the energy they sell to utilities at a particularly high rate to encourage development of renewable energy projects of less than 500 kilowatts.
Currently net metering 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 that under some circumstances, they could still pay up to 20 cents per kilowatt-hour for some projects. Most net metering customers, however, would get a reduced rate under the proposed rules.
The proposed rules also subsidize renewable energy development in "preferred sites," which include brownfields, parking lots, gravel pits, quarries and other such disturbed or developed locations.
The proposed rules also create categories of energy production. 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 hangs on to the renewable energy credits.
For example, projects of less than 15 kilowatts would bring an additional 3 cents per kilowatt-hour above the standard price.
Those producing 15 to 150 kilowatts on a preferred site would earn an additional penny above the standard rate. Projects the same size but located off a preferred site would earn 2 cents less than the standard rate, and those making 150 to 500 kilowatts would earn 3 cents less.
There are more than 6,000 net metering installations in Vermont, according to Jon Copans, the deputy commissioner of the Department of Public Service. Most of them are rooftop or backyard solar arrays.
The Legislature had directed the Public Service Board last year to complete its draft of net metering rules by Jan. 1, in time for legislators to review it, but the board didn't release this draft until March 7. The board has been holding public workshops and taking public comment on the rules since last spring.
The text of the rule, instructions on how to comment, and links to comments already submitted can be found at http://psb.vermont.gov/statutesrulesandguidelines/proposedrules/rule5100
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