Advocates And Developers Say Proposed Rules Could Stymie Vermont's Solar Power Industry

Jul 8, 2016

A state regulatory body is about to recalibrate electricity prices for many renewable energy projects in Vermont, and advocates for solar power say the proposed changes could dismantle a critical industry.

It’s difficult to overstate the role of Vermont’s net-metering program on the growth of the state’s solar industry.

The program has encouraged homeowners, businesses and communities to build thousands of small, medium and large-scale solar projects. It does so by requiring utilities to pay a preferred price for electricity generated that’s above and beyond what the project owner uses.

“Vermont has the strongest solar industry in the country,” says Ben Walsh, climate and energy program director at the Vermont Public Interest Research Group.

If the Public Service Board moves ahead with the proposed changes to the net-metering program, Walsh says it won’t take long for the state to lose that distinction.

“To put it more bluntly, these proposed changes really dismantle a lot of the success that we’ve seen in the solar industry,” Walsh says.

Those concerns are shared by renewable energy developers. An industry trade group says it has “grave concerns” about the changes. Those changes include lowering prices for some categories of net-metering projects, imposing an annual cap on allowable net-metering development, and subjecting existing project owners to new fees.

“We’re going to see a situation where a number of types of customers have a much more difficult time taking advantage of renewable energy in Vermont,” Walsh says.

"Vermont has the strongest solar industry in the country ... these proposed changes really dismantle a lot of the success that we've seen in the solar industry." — Ben Walsh, Vermont Public Interest Research Group

Margaret Cheney is a member of the Public Service Board, the quasi-judicial board drafting the new rules. Cheney says the three-person board wants to retain a robust net-metering program, but one that “also balances over time the pace of deployment and the cost of the program’s impact on rates.” The more utilities have to pay for net-metered solar power, the likelier it is the program is going to put upward pressure on electricity rates for people who aren’t taking advantage of the program. Cheney says that requires the board to strike a careful balance.

Cheney says many projects on rooftops, parking lots, brownfields and other non-pristine sites won’t see any drop in prices.

“We attempt to encourage siting in so-called preferred locations,” Cheney says.

She says the proposed cap on annual growth of the program shouldn’t pose undue harm on the industry. And she notes that the cap resets annually.

“Let’s put this into context — A 4-percent annual cap is a whole lot of electricity. That’s more than 40 megawatts of power,” Cheney says.

"Let's put this into context — A 4-percent annual cap is a whole lot of electricity. That's more than 40 megawatts of power." — Margaret Cheney, Public Service Board

Jon Copans, deputy commissioner of the Vermont Public Service Department, says he appreciates the Public Service Board’s work in striking the right balance for Vermont. But he says the department worries the cap may lead to jarring market disruptions.

Copans says the department is also worried about a plan that would subject existing net-metering customers to a monthly customer-service fee from utilities. Under existing regulations, those customers can negate that fee by virtue of their electricity production.

“And it just changes the deal that those customers have,” Copans says.

Copans says the department is also concerned about the fact that the proposed rules do away with an entire category of net metering that dealt with larger, community-scale projects in “non-preferred” locations.

“Let’s get the price right for those projects rather than just prohibit them altogether,” Copans says. 

"If people are using the infrastructure, we want them to contribute their fair share to use that infrastructure." — Andrea Cohen, Vermont Electric Co-op

Andrea Cohen is director of government relations for the Vermont Electric Cooperative, one of the utilities pushing for changes that would prevent net-metering customers from zeroing out their utility bills entirely.

“If people are using the infrastructure, we want them to contribute their fair share to use that infrastructure,” Cohen says.

Cohen says VEC is also supportive of the annual cap and some of the pricing changes, which could see 40-percent reductions in some categories of net-metering projects on “non-preferred” locations.

Cohen says VEC supports the net-metering program, but wants to see it administered in a way that mitigates financial impacts on the rest of ratepayers. She says the latest draft of the rules “does help limit the financial exposure that we might see.”

Cheney says the proposal is still under review, and that the board may change it based on input from its critics. She also says the board will be able to tweak the rules as problems arise, even after they’re finalized.

“Built into the rule are these periodic check-ins where we recalibrate, so that’s the safety net,” Cheney says.

The rules are supposed to take effect at the beginning of next year.