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PSB OKs rate increases for renewables

BRATTLEBORO – Some projects that are part of the Vermont Sustainably Priced Energy Development Program received a boost from the Public Service Board last month when it increased the price-per-kilowatt hour from 24 to 27 cents. The price of small-wind power was raised from 21 to 25 cents.

But the solar photo-voltaic projects that qualify for the price increase are still in development, said John Beling, the director of public advocacy for the Vermont Department of Public Service.

“It will be a long time before anybody gets paid under these prices,” he said.

“A relatively small portion have been constructed to date,” said John Spencer, SPEED facilitator. “But the PSB standard offer contract allows for three years and we are just now in the third year.”

Some of the projects will be coming on line soon, but other projects may drop out off the list on March 23, he said.

Whether or not projects stay on the list is immaterial to SPEED, said Beling.

“If projects drop out of the existing queue, there are projects waiting in line that could get the 27 cents,” he said.

The goal of SPEED is to promote renewable energy production in Vermont. Under the SPEED program, up to 50 megawatts of power capacity from in-state energy sources of up to 2.2 megawatts which use renewable fuels qualify for “standard offer” contracts and “feed in tariffs.”

Projects that qualify for SPEED credits include solar, Cow Power,
hydroelectric, wind and biomass.

Of the 31 megawatts of solar power, 9 mw have been commissioned, said Spencer. For wind power, 9.9 mw have been commissioned but none have been built. Farm projects produce 3.2 mw, hydro produces 4.9, biomass produces 1.2 and landfill methane produces .56 mw.

The Windham Solid Waste Management District landfill on Ferry Road in Brattleboro is at this time the sole producer of landfill methane.

Fifty megawatts is a small amount compared to Vermont’s total energy usage, about 700 megawatts.

“But you’ve got to start somewhere,” said Spencer. “And the Legislature wanted to put a foot in the water gently. Now we’re at the point that it is considering expanding the program.”

Spencer said even though the contracts are well above the current market rate of electricity, around 5 cents per kilowatt hour, there are many “back end” benefits to these projects.

“There are many jobs associated with these projects,” he said. “And some of them are pretty good paying jobs.”

Utilities such as Central Vermont Public Service pay more for power supplied by SPEED projects, said Brian Keefe, CVPS’ vice president of government and public affairs, and they have been quick to point out that the costs are passed down to ratepayers.

“At the end of the day, it’s a legislative mandate to promote the rapid development of solar,” said Keefe. “The Legislature has made it a high priority and we follow the statutes.”

Even so, he said, CVPS did not oppose the most recent rate increase.

“We are not opposed to SPEED, but we must consider the cost implications for our customers,” said Keefe.

He said while he has heard some discussion about the back end benefits of the program, “We would like the Legislature to commission a formal study that would quantify the tangential benefits of the SPEED program. They are difficult to quantify and people disagree over how to score them.”

Willem Post, a critic of Vermont’s energy plan with a Masters degree in mechanical engineering from Rennselaer Polytechnic Institute and a Masters in business administrator from the University of Connecticut, called the SPEED program a “boondoggle” that only benefits special interests.

“These are basically tax shelters,” he said. “They could achieve so much more with energy efficiency. It doesn’t involve the kind of incentives that are available for wind and solar. The best path is energy efficiency, which is by far the lowest-cost path.”

Weatherizing older homes in Vermont can result in a 50-percent reduction in energy consumption, said Post.

“It doesn’t require any technology to be developed and it doesn’t make any noise like wind turbines,” he said.

“The state should be setting up a building code that is strict and efficient,” said Post, and offering to pay up to 50 percent of the costs for energy efficiencies with low-cost loans to help pay for the rest. “You can pay that loan off with your energy savings.”

Despite criticism such as Post, state legislators are pushing ahead with proposed expansions of SPEED, and that’s because the 50 mw cap mandated by the Legislature has been met, said Spencer.

There are two bills pending in the Statehouse: One would raise the cap to 100mw and the other would eliminate the cap altogether.

A bill introduced by Rep. Tony Klein, D- Montpelier, chairman of the House Natural Resources and Energy Committee, would eliminate the 50-megawatt cap, but he said he did so “Just to stimulate conversation.”

“This is a process that’s just begun,” he said, which wasn’t made any easier by the recent court decision in favor of Vermont Yankee’s continued operation.

“All eyes are on these expensive renewables when we could have cheap power from Yankee,” said Klein. “Even though I don’t believe they have any inclination to sell to the state.”

Nuclear power may look cheap, said Klein, but when you add in all the unseen costs, such as federal subsidies and guarantees, the cost of cleanup and the storage of waste, “It’s the most expensive power on Earth.”

Klein admitted that other states and the Federal Energy Regulation Commission have questioned SPEED, calling it “double-dipping,” said Klein, because the state utilities can sell what are called renewable energy certificates, which are used to authenticate that a source of power is renewable and the buying and selling of RECs is an expanding market.

“What Vermont did in 2005 is we came up with this program that gives you your cake and lets you eat it too,” said Klein. “Under the SPEED program you can sell RECs. What that means for utilities is they can build these projects and they can lower the price to ratepayers by selling the RECs on the market of 3 to 4 cents a kilowatt hour.”

According to the Environmental Protection Energy, a renewable generator feeds the physical electricity onto the electricity grid, where it mixes with electricity from other generation sources: “Since electrons from all generation sources are indistinguishable, it is impossible to track the physical electrons from a specific point of generation to a specific point of use.”

The REC product is what conveys the attributes and benefits of the renewable electricity, not the electricity itself. RECs serve the role of laying claim to and accounting for the associated attributes of renewable-based generation.

A REC is an environmental commodity that represents the added value, environmental benefits and cost of renewable energy above conventional methods of producing electricity, namely burning coal and natural gas.

Klein also said that it’s important to discuss the impact of SPEED on ratepayers, though a study by the PSB determined there would be no effective rate impact until 2022.

“This is a very small amount of power and it takes years to get this stuff on line,” said Klein. “That’s why we are designing these programs and in 10 years most of the capital costs are going to be paid for.”

A bill introduced by Sen. Virginia Lyons, D-Williston, chairwoman of the Senate Natural Resources and Energy Committee, would increase the cap to 100 mw.

“What precludes us from doing more is being able to afford it and making sure when we make this kind of decision it doesn’t jeopardize ratepayers or the utilities,” said Lyons.