Q.
What would lead to a 6% increase in Vermont's electric utility rates?
A. Doing nothing.
For
the last 10 years, Vermont has grown its renewable energy industry
under a program called SPEED (Sustainably Priced Energy Enterprise
Development). Under that program Vermont became a leader not only of
utility based Renewable Energy (RE) development, but of distributed
generation with net metering. Distributed generation means that the
energy is generated close to where it is consumed. Set to expire in
2017, the SPEED program is in need of retirement now, however. As
our neighboring states in the New England regional grid have set
their own renewable energy standards, Vermont's SPEED program has
come under criticism because we allow the Renewable Energy Credits
(RECs) to be sold to utilities outside of Vermont while the energy
that is produced is counted toward our in-state RE requirements.
This “double-dipping” has become unacceptable to Connecticut and
Massachusetts who claim that selling VT RECs to their utilities
suppresses RE development in their states.
The
REC market operates much like a stock market with RECs associated
with different types of RE generation having different values. Thus,
a utility generating power with high-value RECs can sell those and
buy back lower value RECs as long as that type of energy is
considered renewable in the state the utility operates in. Utilities
with excess RECs can sell them to reduce their operating costs.
If
CT and MA stop buying Vermont RECs, a significant revenue stream for
our utilities that has helped to keep our rates among the lowest in
New England will disappear. The immediate impact would be a 6%
increase in our average electric rates. To prevent this the House
Natural Resources and Energy Committee with the help of the
Department of Public Service has written legislation to replace the
SPEED program with what is known as a Renewable Portfolio Standard.
It would set the goals for RE generation for our utilities and
require the RECs to be retained, thereby bringing our policies in
line with those of our neighbors. Already the potential for passage
of this legislation has led CT to hold off on legislation preventing
its utilities from buying VT RECs.
Our
bill, H.40, establishes the Renewable Energy Standard and Energy
Transformation (RESET) Progam. It is designed to grow the share of
Vermont's electricity consumption that comes from RE sources, to
support new community-scale distributed generation, and to promote
innovative projects that reduce fossil fuel use and save Vermonters
money. There are three tiers:
- Total Renewable Electric Requirement – 55% of sales by an electric utility in 2017 rising to 75% by 2032 will be from renewable sources. These goals are already in law, but will now require REC retention. Utilities may still sell RECs in excess of the mandated requirement.
- Distributed Generation – 1% of sales in 2017, rising to 10% in 2032, will come from distributed generation including net metered solar, wind, hydro, and bio-fuels as long as the RECs attributed to that generation are retired by the utilities benefiting from them.
- Energy Innovation Projects – 2% of sales in 2017 rising to 12% in 2032 would come from energy transformation projects. This tier sets targets for utility-led or partnered projects that save fossil fuels for heating or transportation and save money for consumers. Measured in BTU-equivalents (thermal units of energy), projects which save fossil fuels by either conservation or transformation can be counted toward this RE requirement. Examples include weatherization, cold-climate heat pumps, geothermal heat pumps, electric vehicles, and biomass heating. These projects would count only if they are in addition to those already happening through existing regulatory programs or state funding.
By
proactively adopting the RESET Program, rate increases are projected
to rise by less than 0.5% by 2017, more than 1000 new jobs will be
created in the industry, more than 400 megawatts of new distributed
generation will be added, and by 2032 about 15 million metric tons of
greenhouse gases emissions will be avoided and $275M will be saved on
Vermonters' energy bills.
I
continue to welcome your thoughts and questions and can be reached by
phone (802-233-5238) or by email (myantachka.dfa@gmail.com)
