The state’s net-metering law makes it easier for electric customers to generate their own power by offering a financial incentive for small-scale solar installations that is higher than the retail electricity rate.
But proposed changes in the state’s renewable energy law could alter the incentive for customers who want to keep the renewable attributes of the electricity, known as renewable energy credits or RECs.
Some customers keep the credits to make so-called “green claims” about their power use, but utilities want the RECs because they need them to meet new requirements under the proposed renewable energy program. If the customer wants to own the credit, he would have to pay for it.
The proposed tweak comes as lawmakers draft a new renewable energy program, known as RESET. The RESET program requires utilities to sell renewable electricity, some of which must come from in-state energy generations projects, including net-metered systems.
By 2017, 55 percent of a utility’s retail electric sales must come from renewables, according to the bill. Of this amount, 1 percent must come from in-state power generation. These amounts are totaled based on the number of RECs a utility owns.
For net-metered projects proposed after July, utilities would own the credits — not the customer, according to the bill. Customers would need to purchase the credits from their utility at a price that will likely be decided next year when the Public Service Board makes scheduled changes to the net metering program.
Customers who want the credit should pay more for it, according to Darren Springer, deputy commissioner for the Department of Public Service.
“The REC has a value to the utility and its ratepayers, so if you’re providing it, you’re going to get additional compensation,” Springer said.
When projecting the cost of the program to ratepayers, he said the department assumes that utilities will retire most of the RECs from net-metered projects in their territory. The cost of the program to utilities would be greater if net-metered projects were not included.
Renewable energy groups support the RESET program on the whole, but the Vermont Public Interest Research Group and the Vermont Natural Resources Council take issue with the proposed changes to the net-metering program.
Dylan Zwicky of VPIRG said very few customers would be affected by the provision, but they should not receive a financial hit for making claims that their electricity is renewable. As a result, he said there might be a disincentive to install solar for certain customers.
“We want to make sure that communities that want to go above and beyond the 75 percent — to be 100 percent renewable — that they are not taking so much of a financial whack that those projects are not financeable,” Zwicky said.
He cited the example of Montpelier’s goal to become a “net-zero” city by 2030, meaning all of the capital city’s energy needs would be met by renewable supplies, including solar, which would cost more under the proposal.
Tim Shea, chair of the Montpelier Energy Advisory Committee, said he believes the city should retire the credits from the power it generates in Vermont if it wants to make the net-zero claim. He did not have an opinion on the bill, however.
“I think it’s important that we would retire those. I think it sends the right message,” Shea said.
He said the city is actively marketing the net-zero goal. He said he does not want to risk having the goal discredited if the city does not retire the RECs from energy generation projects. Rather than having to “dance on eggshells,” he said the city should have legally defensible accounting in place.
The Federal Trade Commission sent a letter to Green Mountain Power this week saying that if the utility wants to claim electricity generated from renewables like wind and solar, they must own the RECs.
Green Mountain Power, for example, has 42 megawatts of installed net-metered systems in its territory, with another 20 megawatts planned or in development, according to Robert Dostis, director of government affairs at Green Mountain Power.
He said the utility will count RECs from a combination of net-metered projects, bio-digesters, solar farms, hydroelectric plants and others toward the utility’s obligation.
Kevin Jones, a professor of energy policy at Vermont Law School, suggested that both utilities and the customer count the RECs. Under this scenario, he said the law would have to prohibit the customers from selling the RECs.
“Every net-metered customer is a customer of the utility. If an individual customer is 100 percent solar and is not allowed to sell the RECs out of state, it can be accurate to say that these customers can make the green claims and it counts toward the utility’s obligation,” he said.
But Springer said he wants “legally bulletproof clarity” in the bill. He said utilities must retire the credits if they count toward their compliance obligations. The purpose of the provision is to avoid the very “double-counting” that stalled the existing SPEED program.
The Public Service Board will begin overhauling the net-metering program next year for finalization in 2017. The redesign will determine how much the utility will credit net-metered customers.