Vermont's Energy Credits Questioned, Renewable Program Likely To Change
Vermont policy to promote renewable energy is at a turning point. The Legislature will soon debate whether the state should join other New England states and many around the country in adopting a set standard for the amount of renewable energy utilities here must use.
At stake in the debate is how - and how much - Vermonters will pay for renewable energy.
There's a robust market for renewable power produced here in Vermont, and it's not just the megawatts generated by solar, wind or hydro facilities. Vermont utilities sell renewable energy credits -- called RECs -- that are essentially the environmental attributes of the green power. These credits are bought by out of state companies to meet their states goals for reducing greenhouse gas emissions. Those sales amount to about $50 million a year, and have helped reduce electric rates in Vermont by around 5 percent.
But a case in Connecticut has cast doubt on the market for Vermont's renewable energy credits. Connecticut regulators have questioned whether credits from Vermont projects built under a law here that promotes renewable projects should also be sold to utilities in Connecticut to count toward that state's green power goals. Connecticut has also passed a law banning double counting of renewable credits. Ken Nolan, manager of power resources for the Burlington Electric Department, says the action in Connecticut has made the regional renewable market nervous.
"Whenever you see a regulatory action taken, whether it's new legislation passed or a docket opened by a regulatory agency, the market tends to react. In this case, when Connecticut opened its docket it was very difficult to transact, at least for the first month or so," he said.
"Folks in other state really are starting to devalue the Vermont RECs [renewable energy credits] in their trading. When they talk to you they're asking more and more questions. And I think the longer this issue goes on, the more risk we have of that happening." - Ken Nolan, Burlington Electric Department
Nolan says the market has since opened back up. But he thinks Vermont should make its renewable program conform to how other states track and mandate renewable energy development.
"Folks in other state really are starting to devalue the Vermont RECs in their trading. When they talk to you they're asking more and more questions. And I think the longer this issue goes on, the more risk we have of that happening," he said.
There's another concern for Vermont rate-payers. If Connecticut decides to reject Vermont RECs, and other states like Massachusetts follow suit, customers here could pay the price. The $50 million in lost revenue from the sales of the credits could end up being passed through in a rate increase.
Utilities and state officials say that's unlikely. They point out that Vermont RECs are still being sold. Still, there is some anxiety about the future of the market. Patty Richards is general manager of the Washington Electric Cooperative, which sells RECs from its landfill gas generator in Coventry. The money helps keep rates down.
"It's certainly significant, and obviously the number changes based on what you assume for the price of RECs," she said. "But if for some reason tomorrow we were not allowed to sell our RECs it would have a substantial, double-digit rate impact to us."
Vermont's current law set up the SPEED program – short for “Sustainably Priced Energy Enterprise Development.” It's a voluntary program now that allows credits from renewable projects here to be sold out of state. The law also sets a target of 20 percent renewable energy in Vermont by 2017.
Green Mountain Power says the law has worked well for Vermont, both by saving rate-payers money and accelerating renewable development. But spokesman Kristin Carlson says Vermont should ultimately adopt the type of renewable portfolio standards used by other states.
"In concept, absolutely it makes sense to transition. We just need to see a proposal,” she said.
That proposal should come out this week, when the Shumlin administration releases its recommendations on whether Vermont should conform with other states in how renewable energy is counted, and traded.
Darren Springer, the deputy director of the Department of Public Service, says the challenge is two-fold: "what is the most cost effective way Vermont can pursue renewable energy and other policies and programs?" he said. "And how to do that in a way that maximizes rate-payer benefit, how do we do that in a way that maximizes economic benefit for Vermont."