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Bill boosting in-state renewable power worries utilities, regulators

A bill that would make utilities buy more electricity from local, renewable sources has strong backing from Vermont’s solar industry. But some utilities and the Scott administration are concerned that the new requirements will lead to rate hikes, especially in the state’s poorest regions.

Vermont already requires utilities to get 75% of their electricity from renewables by 2032. A bill moving through the Senate says utilities must have a 100% renewable portfolio in 10 years. And it doubles the amount – from 10 to 20% – that must come from local sources.

The bill’s lead sponsor, Chittenden Progressive-Democrat Sen. Chris Pearson, said the goal is to put Vermont on a greener, more climate-friendly path. He said the bill supports an industry that’s created good-paying jobs.

“This is a good sector of our economy. We need these solar jobs,” he said. “We need to control some of our energy, not export all of those dollars.”

But critics argue the new renewable requirement would have both high costs and unintended consequences.

The Vermont Electric Cooperative, a Johnson-based utility that serves 32,000 members, testified about the potential impact on the cost of electricity.

“Our big concern is that these new requirements would really put upward pressure on rates, increase rates, on people who can least afford to pay for it,” said Andrea Cohen, VEC’s government relations manager.

“And we’re not seeing the value-add in terms of really busting carbon, or making a positive environmental impact,” she said.

Craig Kieney manages the co-op’s power supply. He estimated the new requirements would lead to a 4 to 11% rate increase because of the higher cost of the local renewable power.

“We’re serving eight of the 10 towns with the highest poverty levels,” he said. “And we have a lot of people trying to live month-to-month already.”

The Vermont Department of Public Service, which represents ratepayers in utility issues, is also concerned about rates.

“This is a bill that has potential for very significant costs. And we’re trying to do the cost-benefit analysis on the fly,” said Ed McNamara, the department’s director of planning.

The electrons that light Vermonters’ homes and power their electric cars are already pretty green, or at least carbon-free. The state calculates that electricity accounts for just 2% of Vermont’s greenhouse gas emissions. That’s because of power from Hydro Quebec, a lot of in-state renewable generation, and the nuclear power that’s in the mix.

McNamara said lawmakers should be wary of the unintended consequences of doubling the in-state renewable requirement. If rates go up because of the higher cost of local renewables, then it may no longer be cheaper for people to switch to electric cars or electric heat.

“To decarbonize the economy, we need to move to heat pumps, we need to move to electric vehicles. There’s a large number of people who will make that transition, whether it’s cost effective or not,” McNamara said. “But most people need to look at the economics. So they’re not going to install a heat pump if the heat pump costs more than staying on fuel oil or propane.”

Vermont already has a lot of solar generation: The state is second only to sunny Hawaii, with solar as a percentage of peak electric demand, according to Green Mountain Power. And GMP, the state’s largest utility, has seen a huge surge of solar development in its territory.

Josh Castonguay, the company’s chief innovation officer, said GMP wants to double its use of renewables by 2032, just as the bill requires. But the utility is looking for some flexibility, such as lifting the current five megawatt cap on projects and buying electricity from elsewhere in New England.

“What we’re focused on is, ‘Hey, if we double it, let’s do it in a way that will help drive some other resources to help complement it,’” he said. “So some diversity in the technology is just a good way to make sure we do it in a way that keeps us able to manage the grid.”

GMP is concerned the new mandate will both increase power costs and require expensive upgrades to the grid, which customers also pay for. The utility filed testimony that said doubling the local renewable mandate would add between $350 to $750 million in additional costs for customers over 10 years.

Castonguay said the rate impact would be significant.

“It would be north of what VEC had put out. So yeah, it would be probably on the range of where they’re at, maybe 8 [to] plus 12%,” he said.

Olivia Campbell Andersen, the executive director of Renewable Vermont, the trade group for solar and other renewable companies, said the solar build-out has benefited the state by reducing the state’s peak demand during hot summer days.

“We have lowered the peaks, and so we have saved every ratepayer, whether they’ve gone solar or not, a lot of money on lowering peaks,” she said. “And that’s been a great success story. What we need to do now is focusing on resiliency and energy storage.”

Andersen said the grid issues caused by solar and the intermittent nature of the power can be addressed through battery storage, grid upgrades and siting the projects in the right place.

She added solar costs are declining as the photovoltaic technology gets less expensive. She said that should offset much of the estimated rate increases.

“Those estimates are not based on anticipated lowered costs. The costs continue to go down,” she said. “Every single year, we see costs going down.”

The renewables bill is winding through Senate committees before it reaches the Senate floor, probably later this week. The Scott administration wants to change the bill so the impacts could be studied before the new requirements takes effect.