Senators are considering a bill that would require utilities to buy more of their electricity from newer, local renewables — a proposal supported by environmental advocates and solar developers.
But the state Department of Public Service has cost concerns. They think if utilities have to buy more renewables, including from out-of-state, they should have to reduce the amount of power they have to get from small, in-state projects, which can be more expensive.
The proposal discussed Friday by the Senate Finance Committee, S. 267, would require utilities to buy 100% renewable electricity by 2030. And 20% of that would have to come from smaller, in-state sources — double the amount currently required by law.
Lawmakers who support the bill and solar developers say it would boost clean energy jobs and increase Vermonters’ energy independence. The Department of Public Service and some utility representatives, however, feel the in-state requirement has the potential to raise rates, which could discourage Vermonters from switching to electric cars or using heat pumps as a way to reduce greenhouse gas emissions.
Sen. Chris Pearson, P/D-Chittenden, who sponsored the bill and sits on Senate Finance, said in an interview Monday that the bill was a priority for the Climate Solutions Caucus as lawmakers look to move people off fossil fuels.
“If you charge your (electric vehicle) with electricity made from natural gas, you haven’t really improved the scene very much,” he said, referring to negative environmental impacts linked to that source of energy.
Vermont electric utilities are already required by the state’s renewable energy standard to have 75% renewable power by 2032. The standard also includes a provision, called “Tier II”, that 10% of sales by that date must come from smaller, in-state renewable generation built in 2015 or later.
However, critics say allowing large hydro projects like Hydro-Quebec to count as renewable, has crowded out the need for other renewables. Critics say the large hydro projects have a significant environmental impact — something that other New England states do not allow.
“It’s our position and has been for over three decades that large hydro is a harmful source of power,” Steve Crowley, Vermont chapter lead for the Sierra Club, told senators last month.
Solar developers and other proponents of the bill say it could help stimulate local energy development and its associated economic benefits.
“Every time we import electricity, we are essentially exporting the economic opportunity,” Olivia Campbell Andersen, director of trade group Renewable Energy Vermont, told the committee during testimony last month.
The Green Mountain State has the highest clean energy employment rate in the nation, with over 14,500 Vermonters employed full-time in that sector, according to a 2019 state Department of Public Service Report.
While Vermont has seen a significant increase in net-metered solar in the past decade, the number of new installations per year has started to shrink due to a decline in compensation and other factors. Utilities and the PSD contend, however, that Vermont has so much net metered solar that it is leading to an unfair cost-shift to other ratepayers due to high compensation rates compared to other forms of electricity.
“I actually think that it is well worth it considering the economic benefits that you get out of that investment…where they don’t show up in rates,” James Moore, head of SunCommon, said. “They show up in tax base and show up in local economic activity.”
But utilities and the Department of Public painted a different picture for committee members during testimony Friday.
“Doubling Tier II sounds neutral, but it’s not,” Ed McNamara, director of planning for the Department of Public Service, told committee members Friday. “In reality, it’s solar.” That’s because solar is now significantly cheaper to build than biodigesters and wind turbines, and new hydro dams are unlikely to be approved with stricter water quality regulations, he said.
Representatives from Green Mountain Power told lawmakers that doubling the in-state requirement as currently written would cost ratepayers an additional $15-25 million a year over the next 12 years, or roughly a 2.5-4% rate increase. On sunny days, the utility already has to sell excess solar power at a loss, said Doug Smith, power supply director for GMP, who also stressed the importance of the utility having a diverse mix of renewables in its electricity supply.
McNamara said in an email Monday that the Department does support requiring utilities to buy more of their power from new renewables, but feels requiring that it come from in-state, distributed sources is a “very expensive and inefficient” way to do that.
“Increasing the solar requirement by doubling Tier II provides benefits to a relatively small number of companies, but will increase costs for electric customers and make it more difficult” for them to switch off fossil fuels, he said. DPS feels that if lawmakers are going to mandate that utilities purchase 20% of their power from newer renewables, they should only have to buy 5% of that from in-state sources. McNamara stressed that the 5% would be a “floor,” not a cap.
“To the extent that these resources can compete with other new renewables, they could be used to meet a larger portion of the new renewable requirement,” he said.
Pearson said he was surprised by the department’s proposal to lower how much power utilities have to purchase from in-state renewables.
“They could have advocated for bigger developments, which they tell us can be more cost efficient,” he said, adding that “it’s amazing to me that this administration is interested in reducing jobs.”
Three of the state’s utilities — Burlington Electric Department, Swanton Electric Department and Washington Electric Co-op — already have 100% renewable portfolios. And the state’s largest utility, Green Mountain Power, has committed to doing so by 2030.
The Senate Finance Committee will continue to work on the bill next week.
“I’m confident that we’ll be able to find a middle ground where we do have more of our energy produced in-state but also find a way to protect ratepayers,” said Pearson.