Renewable Energy Advocates Oppose Proposed Net Metering Rules

metering-rulesRenewable-energy advocates worry that new rules proposed last week by the Public Service Board will penalize owners of solar systems.

Renewable Energy Vermont, VPIRG, Vermont Natural Resources Council and other groups say the board is imposing new costs that could discourage future small-scale solar development.

The rules govern what’s known as net metering, a program that credits solar-array owners for electricity they generate in excess of what they use.

For example, customers of Green Mountain Power — Vermont’s largest utility — pay a $13 per month customer service charge in addition to a separate monthly charge that reflects how much electricity a customer consumes. Net metering customers now use solar credits to pay off electricity bills and service charges.

Net metering credits will apply only to charges for electricity a customer uses, under the new rules. Customers will need to pay the customer service charge — the $13 monthly fee, in the case of Green Mountain Power — separately.

The rule will apply to existing solar developments, a stipulation that clean-energy advocates, the Department of Public Service and even utilities oppose.

Jon Copans, deputy commissioner of the Department of Public Service, says many existing net-metered installations were built to pay for the entirety of residents’ electric bills. The new rule will force solar system owners to pay the customer service charge out of pocket, Copans said.

“Many people sized their projects to come as close as they could to wiping out their bill entirely, including those customer service charges,” Copans said. “People sized their systems, and made investments in their systems, with the assumption that rules like this wouldn’t change.”

Solar array owners who generate enough electricity to pay the entirety of their bill currently may receive nothing for what may soon be excess energy, if the rules go into effect as they’re written, Copans said.

Net-metering customers don’t have the option of receiving cash for excess electricity, and instead receive credits for every kilowatt-hour they produce. The credits may be applied only toward electricity bills. The credits expire after 12 months, Copans said.

Green Mountain Power spokeswoman Kristin Carlson said her company opposes provisions in the rules that would put this rule into effect for existing solar installations, but said for future projects it’s only fair that users pay the customer service charge.

Utilities pay a premium for electricity net-metered solar arrays produce, and it makes sense to limit that premium to the value of electricity consumers use, she said. As a matter of fairness to other customers who aren’t using net-metered solar, Carlson said, her company doesn’t support monetizing any additional net-metered power to pay customer service charges. The charges pay for poles, wires, other grid infrastructure and services that all ratepayers use, including net-metering customers, she said.

The rule change could mean a 10 percent to 15 percent cost increase for a typical net-metering customer, said Vermont Public Interest Group’s climate and energy program director, Ben Walsh.

Many Vermont residents have taken advantage of federal rebate programs and the state’s generous reimbursement rates for net-metered power. Most of the installations are rooftop or backyard solar arrays.

There are more than 6,000 net metering installations in Vermont, Copans said.

Copans said the program has proven “a huge success.” The new rules, he said, “need to build on that success.”

Net metering customers who sell energy to utilities get reimbursed at a particularly high rate, in order to subsidize development of small-scale (fewer than 500 kilowatts) renewable-energy projects.

Proponents say small-scale energy projects bring more security to Vermont’s energy grid, since thousands of generators are less likely to fail than a few large generators.

Currently, net-metered customers get paid 19 cents per kilowatt-hour for whatever they produce in excess of what they use. The wholesale market rate for power purchased by utilities runs as low as 6 cents per kilowatt hour.

Utilities say that under ideal circumstances, power companies could still pay up to 20 cents per kilowatt-hour for some projects.

The proposed rules also subsidizes solar development in “preferred sites,” which include brownfields, parking lots, gravel pits, quarries, and other such disturbed or developed locations. Solar arrays in these areas can make an extra 3 cents per kilowatt-hour.

The regulations would, in addition, address the controversial sale of renewable energy credits out of state.

The credits constitute legal title to the renewable energy. Vermont has committed to obtaining 90 percent of its energy from renewable sources by 2050, but effectively has no renewable energy credits of its own because developers and utilities have been selling the credits to nearby states.

Massachusetts and Connecticut have similar statutory renewable energy requirements and are in part using Vermont renewable energy credits to meet their targets.

The new net metering rules would give renewable-energy developers 3 cents per kilowatt-hour if they retire the RECs to a Vermont utility, and would reduce the amount of net metering credits by 3 cents per kilowatt-hour for customers and developers who don’t do so.

Businesses often wish to hang on to their renewable credits in order to claim they’re powered by solar energy, Kevin Jones, a Vermont Law School professor, has said. Those who would do so would need to pay extra for the privilege, under the new rules.

The Vermont Attorney General’s office last year issued a memo saying that energy consumers can’t claim to use renewable energy unless they own the renewable energy credits. That means even a business owner who installs a full complement of solar panels on a roof can’t advertise the business as solar-powered if the renewable energy credits are relinquished to an out-of-state utility.