A state program allowing residents to generate their own electricity ran into unexpected roadblocks last year. But now lawmakers have a plan to open up the state’s so-called “net metering” program to match the growing demand for residential renewable energy generation.
A bill, approved by the House Natural Resources and Energy Committee on Friday, offers a fast-track solution ahead of larger changes expected when a federal solar tax credit expires, likely in 2017.
Several utilities in Vermont reached the current statutory limit for net metering capacity on their systems last year. Net metering allows residential and commercial customers who generate their own electricity from solar power to feed electricity they do not use back into the grid.
As a result of reaching the cap, some electric utilities decided to continue beyond the cap while others decided to stop accepting applications altogether, bringing some backyard and rooftop solar projects to a halt.
Vermont Electric Cooperative’s net metering program has been on hold since July when the utility reached the 4 percent cap established by the Vermont Legislature. The Legislature requires utilities to allow net metering systems in their service territory for up to 4 percent of the utility’s peak demand.
The bill backed Friday raises the cap on a utility’s total percent of installed net metering wattage during peak demand from 4 percent to 15 percent. It also allows utilities to go beyond the cap for smaller solar installations without prior approval of the Vermont Public Service Board.
The plan was sketched out by the Vermont Department of Public Service, which represents consumers, and vetted throughout two weeks of testimony from the program’s chief stakeholders. The bill has broad general support as a temporary solution, said Rep. Tony Klein, D-East Montpelier.
“It ensures that folks who want to install solar net metering can still do that, but it also maintains the momentum of the program for at least two and a half more years with everything in place,” said Klein, who chairs the House committee.
With millions of private capital investment dollars on the line and private homeowners wanting to add renewable energy systems, the bill gives renewable energy investors the certainty and time they need to prepare for larger changes down the road, he said.
“That certainly gives the industry some predictability and certainty. And they also know that they have to start planning for what their future looks like post-2017,” Klein said, “because there’s no guarantee that the federal solar tax credits will still be in place.”
Rep. Bill Canfield, R/D-Fair Haven, the committee’s ranking member, and Rep. Mike Hebert, R-Vernon, introduced an amendment asking the Public Service Board to consider the effects of the program on non-net metering ratepayers.
“When we first started talking about net metering a few years ago, they (non-net metering ratepayers) were going out of their minds thinking that this is the worst thing that could ever happen,” Hebert said. “And as it’s rolling out, it’s not a total disaster, but they still have a level of discomfort that ‘I’m paying for this guy’s solar.’”
The bill takes up the issue of the so-called cost shift from net metering, which stems from a concern that the cost of maintaining utility infrastructure – the grid’s wires and poles – is picked up by ratepayers who do not have renewable energy, critics of the program say. This is because net metering customers that zero out their bill do not pay the customer service and transmission charge embedded in the utility’s rate structure.
“I look at this as being fairly benign, but it gives a level of comfort to the public,” Hebert said, in reference to the amendment.
Under Vermont’s net-metering law, electric utilities are required to credit customers 20 cents for every kilowatt hour of electricity they generate from renewable energy and supply to the electric grid. For larger projects, the credit is set at 19 cents per kilowatt hour under the bill. That is considerably more than utilities can charge for the power they sell, which caps out in Vermont at around 15 cents per kilowatt hour.
Klein said the net-metering rates offer good financing plans for rooftop and backyard solar installations.
“That created an opportunity to create financing packages that made these systems available to all Vermonters of all walks of life because you can get these systems with no money down and a monthly payment that is either at or below your monthly electric bill,” Klein said.
He said investors would need more time to prepare for any big changes in the program, which could include a future customer service charge for use of the basic infrastructure, preventing customers from zeroing out their bill.
“If you were to just change the rule right now, and say, ‘You can’t do what you’ve been doing for the past few years,’ I’m pretty sure those financing plans would crumble,” Klein said.
Klein said the Public Service Board will consider all cost equity issues when it draws up a new program before the expected expiration of the federal solar tax credit.
Some utilities whose usage peaks in the summer support the added amount paid to solar energy providers. Green Mountain Power, the state’s largest power company, says the program saves them money by offsetting the cost of expensive fossil fuels used during peak power demands.
But other utilities, such as Washington Electric Cooperative based in East Montpelier, have winter peaks and say the program is not sustainable in its current design. WEC pays 21 cents per kWh for net-metered power under its residential rate structure. The utility, which supports the program, says net metering has not increased the rates for non-net metering members at this point.
WEC will be quick to design a new program for its service area if the bill is signed into law. The bill allows utilities to propose a new program if their portfolio is at least 90 percent renewable and 10 percent net-metered.
The bill will be taken up by the full House as soon as next Thursday, Klein said.
