MONTPELIER – The Shumlin administration and a key lawmaker are pledging action to update the state’s net metering program next month, which will likely result in raising caps now in place that prevent new, small-scale renewable energy projects from going online.
The state launched its net metering program in 1998, allowing residents to generate their own power through renewable sources like solar, wind, anaerobic digestion of agricultural products, biomass and fuel cells.
The program requires utilities to allow individual customers or a group of customers, known as group net metering, who obtain a certificate of public good from the Public Service Board, to generate power for their homes or businesses. Excess power generated but not used can be fed back to the grid, essentially rolling meters backward and providing customers with credit from their utility.
The program launched with a cap of 1 percent of peak demand for each utility in the state. That cap was subsequently raised to 2 percent and then the current 4 percent as demand grew.
Now, all Vermont utilities except the largest, Green Mountain Power, have reached the 4 percent cap on energy generated through net metering projects.
Darren Springer, deputy commissioner of the Department of Public Service, said the program had a total generating capacity of 12 megawatts when Gov. Peter Shumlin took office in 2011. That has since jumped to more than 38 megawatts from installed or pending systems, he said.
“We’ve had really tremendous success over the past few years. I think a lot of people would be surprised that we’re back at this issue just a few years later,” Springer said.
Officials met over the summer with lawmakers, utilities and stakeholders to craft a proposal to determine how to move the program forward and address the cap issue.
He said the administration has nothing “firm and final to announce yet,” but will present a plan to lawmakers in early January.
“We’ve been trying to synthesize that into a proposal the Legislature can consider right when they come back,” he said. “We’re going to bring forward our ideas on what to do with the program and how to move forward, how to move forward the caps so that people can continue to participate.”
The conversations have produced consensus that a continued expansion of the program is good for the state and ratepayers, Springer said.
“All the conversations that we’ve had with legislators and with a variety of stakeholders that are interested in this have been productive. I think there’s a path forward that brings, if not unanimity, then very strong consensus as to how to move forward,” he said.
Advocates, including the Vermont Natural Resources Council, are looking for significant changes. Johanna Miller, the group’s energy program director, said the current caps are “discriminatory and random based on where you live.”
Residents in Green Mountain Power’s service area can continue to launch net metering projects, while customers of other utilities cannot, she said.
VNRC supports raising the 4 percent cap. Miller said she is also hoping to see exemptions for the 500-kilowatt cap on individual projects when they utilize landfills or are launched by schools or hospitals.
Additionally, the state only allows streamlined permitting for projects of 150 kilowatts or less, Miller said. That cap is limiting some projects because of the more expensive permitting process.
“Anything above 150 (kilowatts) is a more onerous process through the Public Service Board for a (certificate of public good),” she said.
Rep. Tony Klein, the Montpelier Democrat who chairs the House Committee on Natural Resources and Energy, said lawmakers put caps in place to allow for incremental changes in the program. They provided comfort to utilities, he said, and “provided a reason to come back and evaluate the program.”
But as the cost of installing net-metering systems has dropped, and a legislative change two years ago allowed people to “zero out” electric bills, the program has “exploded,” he said.
“We find ourselves today where we have everybody but Green Mountain Power bumping up against it,” Klein said.
As a result, Klein said he asked the administration to craft a proposal for his committee and his Senate colleagues to review. Klein is pledging immediate action on the administration’s proposal.
“It’s the first thing we’re going to take up in my committee. I’ve got it scheduled for three weeks already,” he said.
The proposal from the administration will likely propose eliminating the cap altogether for small projects under 15 kilowatts through 2017, according to Klein. Larger systems above 15 kilowatts would be capped between 10 and 15 percent of peak demand, he said.
Federal solar tax credits are set to expire in 2017, Klein said, and there is no indication yet if they will be renewed. However, any projects in the pipeline before they expire will be grandfathered in.
Lawmakers will have to revisit the net metering program again in 2017 to determine if any more changes are required, he said. The Public Service Board has the authority to raise the cap on its own, but Klein said he will look to codify it in law anyway to ensure swift action.
“The PSB can change the caps on their own if they want to,” he said. “The PSB doesn’t like to make those kinds of decisions. They like to know what their box is and say, ‘Oh, we have to do this,’” he said. “We will push forward legislation that will absolutely keep … the reality of net metering. That ain’t going away.”
Some of the state’s smaller utilities have expressed concerns about the price of power generated by net metering projects and the general trajectory of the program, according to Springer.
Solar generation systems are most common and account for about 88 percent of all projects, Springer said. But solar projects receive a premium payment, known as the “solar adder,” which is 6 cents above standard rates.
Still, despite more Vermonters generating their own power, utilities seem to recognize the value of net metering, he said.
“Nobody we’ve talked to has said, ‘Stop the program in its tracks,’” he said.
A main reason for support among utilities is the savings they are seeing in transmission because of local generation and distribution.
“The solar we’re putting on the grid, combined with the efficiency efforts that we’ve been making for a number of years, are having a major and tangible impact on avoiding what would otherwise be hundreds of millions of dollars in transmission projects,” Springer said.
“So we’ve had tangible outcomes in some of these distributive renewable projects helping to save ratepayers a lot of money by not having to build transmission where we otherwise would have,” he said.
Dorothy Schnure, a spokeswoman for Green Mountain Power, said the utility introduced the solar adder idea in 2008 because it allowed the utility to meet demand at a cheaper cost. Because power is most expensive during the summer, when solar power is at its peak production, the utility saves by using locally produced power over purchasing on the New England market.
“We might have to pay $1 for kilowatt hours that we then turn around and sell for 15 cents,” she said. “That really generated a lot of solar net metering in our service territory.”
GMP supports net metering because customers want local, renewable energy, Schnure said. The utility is also seeing a reduction in transmission costs.
“We’ve already avoided hundreds of thousands (of dollars) in transmission by solar,” she said.
Utility executives have yet to see details of the administration’s plan, but the summer meetings were productive, Schnure said.
“They’ve been talking with all the utilities and it feels like they’re moving in a good direction,” she said. “We’re hoping that customers will be able to continue taking advantage of net metering and adding renewables.”
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