State Under Pressure To Revise Renewable Energy Policy, Avoid Hit To Ratepayers
An energy proposal from the Shumlin administration could become one of the biggest pocketbook issues of the 2015 legislative session as lawmakers look for a renewable energy policy that will stave off a significant rate increase.
If Vermont does nothing this year with its renewable energy policy, ratepayers are going to notice. That’s because the clock is running out on a unique – and some say flawed – program that has allowed utilities like Green Mountain Power to sell tens of millions of dollars’ worth of renewable energy credits to states like Connecticut and Massachusetts.
The revenue has helped keep electricity rates down in Vermont. But the deal is going to go sour for the state soon, since the value of those renewable energy credits is starting to be questioned by the states that are paying so much for them.
Vermont is among the minority of states that doesn’t require its utilities to get a certain percentage of their energy portfolio from renewable sources. Regulators in other states seem poised to decide that, since Vermont isn’t pulling its weight, from a carbon-emission reduction standpoint, they should stop recognizing the value of our renewable energy credits.
“If we were to completely lose our ability to sell into the regional market … that would be roughly a 6 percent rate impact. For some utilities, it would be more like a 20-percent impact,” says Darren Springer, deputy commissioner of the Vermont Department of Public Service.
Loss of that revenue could equate to increases in energy bills for homeowners and businesses.
Springer has spent the past few months working with utilities, businesses and renewable energy advocates on a solution to the problem. And he says the “renewable portfolio standard” unveiled by the Shumlin administration this week would deliver the renewable energy mandate other states are looking for, without any significant impact on rates in Vermont.
“The goal is how do we make the most progress towards the comprehensive energy goal of 90 percent renewables by 2050? how do we do that cost effectively? How do we do it in a way that saves Vermonters money, that supports jobs?” Springer says.
The proposal would require utilities to get 55 percent of their energy from renewable sources by 2017, and 75 percent by 2032. The mandate would be sufficient, Springer says, to retain the value of the renewable-energy credits utilities are selling out of state.
The bill also looks to promote a certain kind of generation, known as distributed generation. These involve small and medium-size renewable energy projects, designed to satisfy the energy needs of homes and businesses near the area the power is being produced.
The bill would require utilities to derive 1 percent of sales from distributed energy projects by 2017, and 10 percent by 2032.
"The whole industry is moving away from building huge base-load generation plants hundreds or thousands of miles away ... We're going to be going towards micro-grids, smaller size energy projects called distributed generation." - Rep. Tony Klein, chairman House committee on energy and natural resources
East Montpelier Rep. Tony Klein, the Democratic chairman of the House Committee on Natural Resources and Energy, says the proposal would put Vermont ahead of the curve in a nationwide energy evolution.
“The whole industry is moving away from building huge base-load generation plants hundreds or thousands of miles away and having to build huge transmission lines to support that,” Klein says. “We’re going to be going towards micro-grids, smaller size energy projects called distributed generation.”
The proposal would also force utilities to adopt stronger roles in the heating sector. By getting homeowners to convert to electric-powered heat pumps, for example, instead of oil or gas, Springer and Klein say Vermont can save money, and generate jobs, by using locally sourced renewable energy instead of imported fossil fuels.
“(The utilities) will provide the ability for a homeowner to weatherize their house, install a highly efficient, electric-driven heat air-source pump system, which is heating and air conditioning, and that will be partially powered by a solar installation array that’s put on your roof,” Klein says, offering an example of how he hopes the new model will pan out.
The administration’s plan would require utilities to derive 2 percent of sales from these kinds of thermal “energy innovation projects” by 2017, and 12 percent in 2032.
Kristin Carlson, spokeswoman for Green Mountain Power, says the utility generally supports the proposal. Neale Lunderville, head of the Burlington Electric Department, says he’s confident the proposal would allow his utility to continue selling renewable-energy credits its generates from the hydro and wood-burning facilities it owns.
Loss of the ability to sell those RECs out of state would have the most dramatic impact on residents of Burlington, who would see their rates go up by an estimated 20 percent.
Dylan Zwicky, a clean energy advocate for the Vermont Public Interest Research Group, says it’s long past time Vermont joined the majority of states that have renewable energy mandates for utilities. But he says the administration’s proposal could go further.
“It doesn’t appear to be at first glance terribly more aggressive than what we’re seeing out of the state’s current clean energy programs, whether that’s net metering, or standard offer,” Zwicky says.
Some of the most vocal critics of the state’s existing renewable energy program, a 10-year-old policy known as the Sustainably Priced Energy Development program, say the administration’s latest proposal could be improved upon.
Kevin Jones, deputy director for the Institute for Energy and the Environment at the Vermont Law School, says he’s concerned, for example, about a provision in the proposal that would give renewable-energy credits from community-scale solar arrays to utilities, instead of the people that built them.
But Jones says that on the whole at least, the introduction of a renewable energy mandate is a vast improvement on what he now says is a “fundamentally flawed” energy policy that has resulted in the state having a larger carbon footprint than most Vermonters are aware of.
“And I think there are some things in the legislation that are steps forward that will result in real emission reductions in the future and benefit for the climate,” Jones says. “And I think there are some things in the proposal that need to be improved and fine-tuned for us to have a real leading renewable energy policy for the state.”
Gabrielle Stebbins, head of the business trade group, Renewable Energy Vermont, says the state has all the developers, manufacturers, scientists and other professional capacities utilities will need to achieve the goals.
“Certainly the industry could do more,” then the goals laid out in the bill, Stebbins says. “But there’s an understanding that it’s a balancing act between growth and rates.”