by Guy Page
Vermont needs more electricity, but the net-metered solar boom needs to slow down because it’s too expensive for Vermonters paying the bills to bear.
That’s the reasoning behind the May 30 Vermont Public Utilities Commission (PUC) decision to increase by 7.33% the credit that owners of current net-metered solar and wind power receive on their electric bills. However, the credit for new net-metered systems will decline slightly, in an effort to slow the pace of development that is costly to ratepayers who don’t have a net-metered generator on their property.
Vermont utilities are required to buy electricity, at rates set every two years by the PUC, from approved net-metering generators, including thousands of homeowners with solar panels installed on their roofs or in their yards.
On May 30, the Vermont Public Utility Commission (“Commission”) issued its required, biennial update of the State’s net-metering program, a PUC statement issued last week said.
As a result of the adjustments, future net-metering systems that apply for permits on or after August 1, 2024, will see a small net decrease in compensation – less than three-fourths of a cent – compared to what existing systems receive today. Most existing net-metering systems will see a 7.33% increase in their compensation because of concurrent increases in statewide electric rates.
Every two years, the Commission must recalculate the value of the bill credit that net metering customers receive for energy produced by their net-metering system to reflect changes in retail electric rates since the last biennial update. This is known as the “statewide blended residential rate,” which has increased by $0.01257 per kWh since 2022.
The Commission is also required to assess the incentives and overall compensation offered to new net-metering systems and decide whether they should be adjusted upward or downward. The purpose of this adjustment is to ensure that the pace of net-metering deployment is consistent with Vermont’s policy objectives while considering the program’s impacts on electric rates.
Considerations include the changing cost of installing net-metering systems, the pace of past net-metering deployment, and the impact of net-metering on all ratepayers. This year, these considerations led to a 2-cent decrease in overall compensation for new systems applied for on or after August 1, 2024, but the net effect because of the increase in retail electric rates discussed above is a decrease of only three-fourths of a cent.
The net-metering program, which was established in 1999, is only one of several programs available for developing solar and other types of renewable energy in Vermont. Customers who install net-metering systems, such as solar panels and small wind turbines, can offset their electric bills through financial incentives based on the amount of electricity generated by their net-metering systems. The Commission is required to reconsider the financial incentives offered to new net-metering systems every two years through its biennial review process to ensure that the program continues to provide value to all Vermonters, including those who do not directly participate in the net-metering program. Today’s order is a conclusion of that review process.
The information and data presented in this year’s biennial review proceeding show that the net-metering program – in particular, solar net-metering – continues to have robust participation, the PUC said. In addition, many of the best-sited net-metering systems (for example, roof mounted systems) benefit from streamlined permitting, by which a CPG is issued within 15 days.
In 2023 alone, 2,351 new net-metering systems, for a total of approximately 25 megawatts (MW) of new, renewable energy capacity, received certificates of public good (CPGs) from the Commission. However, the data presented in this biennial update proceeding also demonstrate that net-metering is the costliest of the State’s renewable energy programs, and that the pace of net-metering installations far exceeds the pace of other less costly renewable energy projects.
For example, 2023 saw the interconnection of more than 28 MW of net-metered projects, compared to 4.4 MW of standard-offer projects and 5 MW of utility-sourced solar power at a significantly lower price. This trend ultimately increases rates for Vermonters who do not or are unable to participate in the net-metering program.
Therefore, to better moderate the pace of new net-metering development, the Commission determined to reduce the compensation offered to new net-metering systems by 2 cents per kWh – resulting in a net decrease of $0.00743 per kWh, or less than three-fourths of one cent. However, because of other adjustments made in today’s order, most existing net-metering systems will benefit from an increase of $0.01257 per kWh, or approximately 7.33%, in their current compensation.
Commission Chair Ed McNamara stated, “Vermont’s efforts to address climate change will require a significant transition to electric vehicles and heat pumps powered by carbon-free electric generation. Even with the $0.00743 per kWh reduction in net-metering compensation for new systems, Vermonters continue to pay significantly more for net-metering compared to equivalent new renewable generation sources. Going forward, Vermont should be prioritizing least-cost renewable generation to meet our climate and renewable requirements.”
The adjustments announced through the biennial update will take effect on August 1, 2024.
Three-person board oversees Vermont energy and telecommunications regulations – According to its website, the Public Utility Commission is a three-member, quasi-judicial commission that supervises the rates, quality of service, and overall financial management of Vermont’s utilities: electric, natural gas, telecommunications, and private water companies. The Commission also supervises cable television companies, although federal law preempts most authority to regulate cable rates or programming. The Commission also reviews the environmental and economic impacts of proposals to purchase energy supply or build new energy facilities; monitors the safety of hydroelectric dams; evaluates the financial aspects of nuclear plant decommissioning and radioactive waste storage; reviews rates paid to independent power producers; and oversees the statewide Energy Efficiency Utility programs.
Edward McNamara was appointed Chair of the Public Utility Commission in January 2024. McNamara most recently served as general counsel for the Agency of Natural Resources, where he worked on a range of legal issues reflecting the significant regulatory diversity covered by the Agency. Prior to his work at ANR, McNamara worked on energy issues for 20 years, including at the Public Service Department where he performed numerous roles, including as planning director, assisting with emergency response activities, and representing Vermont’s interests before the Federal Energy Regulatory Commission. McNamara started his legal career as a hearing officer and staff attorney for the PUC.
Margaret Cheney was appointed to the Vermont Public Utility Commission in 2013 by Governor Peter Shumlin and was reappointed by Governor Phil Scott in 2020. Ms. Cheney has been a journalist, educator, and legislator. Prior to joining the Commission, she served seven years in the Vermont Legislature, where she was vice chair of the House Natural Resources and Energy Committee. She began her career as a newspaper reporter and editor in Menlo Park, California, before working as managing editor of The Washingtonian magazine in Washington, DC, for eleven years. In Vermont, she taught Spanish and energy-and-environment courses at Sharon Academy while continuing her journalism work as a freelance writer. Before her election to the Vermont Legislature in 2006, she served nine years as chair of the Norwich School Board and interstate Dresden School Board.
Cheney is currently co-president of the New England Council of Public Utility Commissioners (NECPUC) and a member of the board of directors for the New England Utility Cybersecurity Integration Collaborative (NEUCIC), which works with federal partners to provide utilities and other authorized stakeholders with tools to address cybersecurity issues. She is also a member of the Committee on Energy Resources and the Environment for the National Association of Regulatory Utility Commissioners (NARUC).
The daughter of a Foreign Service officer, Ms. Cheney grew up and was educated in Malaysia, the Netherlands, Nicaragua, India, and Peru. She received her B.A. with honors from Harvard University, where she was awarded the Bowdoin Prize for writing. She has three children and lives in Norwich with her husband, Peter Welch.
Riley Allen was appointed to the Public Utility Commission by Governor Phil Scott in May 2021. Mr. Allen has over 30 years of experience analyzing and advising on power sector and regulatory issues. For more than two decades, Mr. Allen has played an active role in major state-level policy investigations, acting as an economist, expert witness, and hearing examiner. Just prior to joining the Vermont Public Utility Commission, Mr. Allen served as Deputy Commissioner of the Vermont Department of Public Service. Mr. Allen has also spent many years working with regulators around the U.S. and overseas on telecommunications and power sector issues, largely associated with development agency-led initiatives. Mr. Allen also provided assistance to regulators around the world while working as the global research manager and as an independent consultant to the Regulatory Assistance Project.
Allen graduated from the University of Virginia with an MA in Economics and from the University of Florida with a BA in Economics.
Much of the content for this story was sourced directly from a PUC press release.