Utilities, State Look At How Best To Boost Solar

Jul 29, 2013

Solar energy projects are blossoming across Vermont, spurred by a state law that allows customers to zero out their electric bill by sending power back to the grid.

But there’s some concern that the solar boom has a downside as it shifts some of a utility’s costs to other customers.

Vermont law allows “net metering.” That means a utility must credit a customer at least 20 cents for every kilowatt hour of renewable electricity they produce.

For solar customers, it’s possible to eliminate bills entirely by getting a credit with the utility in the sun-drenched summer months and using that credit in the winter. Ben Walsh is a clean energy advocate for the Vermont Public Interest Research Group. He said the proliferation of solar photovoltaic systems helps all Vermonters by reducing demand statewide when electricity prices are high.

“Even setting aside the incredible environmental benefits, solar is very valuable,” Walsh said. “The hot summer days we’ve been having recently, that’s when solar is at its peak, and that’s when electricity is at its most expensive.”

There’s another side to the solar story, however, and that has to do with the potential for one group of customers to subsidize another.

David Hallquist, the CEO of the Vermont Electric Cooperative, said some of the fixed costs of providing poles and wires to people with solar projects are being shifted to other members of the co-op.

He said the cost-shift will amount to about $200,000 this year. That’s not a huge amount, but Hallquist said there’s an important principle at stake, called the “cross-subsidy.” Hallquist gave an example.

“We’ve got a huge house (in VEC territory) with 20 kilowatts of solar. They’re using 2,700 kilowatt hours a month which is about five times normal usage, and that’s being subsidized partially by someone living in a trailer,” he said. “So it really is a principle issue. And we believe let’s deal with the issue now, rather than kick the can down the road.”

Hallquist said the cross-subsidy policy question needs to be addressed by the Legislature. “There’s no question that there are environmental attributes, there are economic attributes, there are societal attributes and societal benefits (of solar),” he said. “We don’t argue that at all. It’s just a question of making that decision in the right forum, and the right forum, we believe, is the Legislature.”

The Department of Public Service has held a series of meetings with utilities, solar developers and renewable energy advocates to figure out how to encourage solar and protect ratepayers.

Deputy Public Service Commissioner Darren Springer said the solar boom is good but that it comes with some growing pains.

“If we were to have exponential growth in solar, it would be probably be necessary to look at those fixed costs that every utility is incurring to be connected to the grid, to maintain transmission and distribution capabilities, and making sure customers are contributing to that regardless of whether they net meter or not,” he said.

The solar build-out has affected Vermont utilities in different ways. Green Mountain Power offers additional incentives for solar because it says solar helps lower peak demand in the summer. But three smaller utilities – Vermont Electric, Washington Electric Co-op, and Hardwick Electric – have hit the cap for funding net metering projects. The cap is 4 percent of the utilities’ peak demand.

Ben Walsh of VPIRG said the 4 percent cap should be lifted.

“Right now we have a situation brewing where one Vermonter, who’s in, say Green Mountain Power territory, is going to be to able to install solar, and somebody across the street from them who’s in Vermont Electric Co-op territory, isn’t,” he said.

It’s likely the issue will reach the Statehouse next year. Lawmakers say they may address the subsidy issue by making all customers pay their share of a utility’s fixed costs.