The Vermont Public Utility Commission has issued a report on the State’s net-metering program, calling for a small reduction in rates paid to owners of net-metered renewal power systems. Upon review of recent market penetration and pricing statistics, the commission determined that program adjustments are necessary to ensure that the net-metering program remains financially sustainable, with a balance between the pace of net-metering development and the program’s impact on electric rates.
The net metering update indicates that net-metering projects continue to be installed in Vermont at a rapid pace since the current program went into effect on January 1, 2017. In calendar year 2017, the commission approved permits for a total of 42.6 megawatts (“MW”) of capacity. According to the report, the amount of net-metering commissioned in 2016 and 2017, if continued, would exceed the levels necessary to meet Vermont’s Renewable Energy Standard (RES), which imposes a requirement for each utility to acquire a certain portion of its power supply from small, in-state renewable energy. (Customers transferring their renewable energy credits [RECs] to Vermont utilities count toward the State’s renewable energy requirements.)
While noting the historic nature of the pace of investment in net-metered renewable projects and resultant improvements in system efficiencies allowing the avoidance of regional capacity charges, the commission found that more cost-effective sources of solar and other types of local renewable power are available to meet the RES. It said that a number of Vermont utilities expressed concern about the effect on rates of continued high net-metering prices. As an example, it noted that Green Mountain Power Corporation, one of the state’s major electric utilities, had estimated that a single year of net-metered deployment at the current pace and current prices, will add roughly $2.3 million per year of upward rate pressure for GMP customers.
Emphasizing its finding that net-metered solar power is the most costly of all options available to utilities to meet system needs, the commission ordered phased and measured reductions in the incentives paid to future net-metering systems. Currently, solar net-metering receive up to 18.9 cents per kilowatt-hour as compared to solar power prices under the State’s standard offer program of 10-13 cents and roughly similar prices for power purchase agreements and utility-built facilities.
As a result of the commission’s action, there will be a gradual reduction in the incentive payment for customers who transfer their RECs to their utility by 1 cent per kWh in each of the next two years. In addition, there will a 1-cent reduction in the price paid to the very largest net-metering systems—systems over 150 to 500 kW. For most customers, these reductions will be partially offset by a simultaneous increase in the statewide blended residential electric rate, resulting in a net reduction of one-half cent for all residential systems next year and 1.5 cents for the biggest systems. Re Biennial update of the Net-Metering Program, Case No. 18-0086-INV, May 1, 2018 (Vt.P.U.C.).