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New law could energize solar power

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Posted on June 2, 2011 |
By Andrew Stein



VERMONT — Renewable energy advocates hope that a new law signed last week by Gov. Peter Shumlin will lead to a surge of solar power in the state’s energy grid. The Vermont Energy Act of 2011, which will take effect on July 1, mandates that all utility companies provide residential customers who use solar power with a 20-cent credit for every kilowatt-hour (kWh) of energy they generate.

That’s a big increase for certain utility customers, who currently aren't receiving any incentive for the solar power they're pumping. But for others, the law will have little effect.

Rep. Tony Klein, an East Montpelier Democrat and chairman of the House Natural Resources Energy Committee, thinks the bill will help beef up the state's renewable energy portfolio.

“It’s a pretty powerful bill — it touches on a lot of bases,” he said. “It absolutely does not allow us to fall backwards or get stuck in neutral when it comes to moving forward on in-state renewables.”

More than just solar

The 2011 energy act addresses more than just solar. Learn about how its other measures will affect homeowners and businesses by clicking here.

The new incentive for residential solar power producers will find a lot of support among many Addison County homeowners, like Dennis Hysko.

As a Starksboro resident and member of the Robinson Elementary School board, Hysko was enthusiastic about solar power last year when his town decided to install 25 solar tracking arrays to help power Robinson Elementary and the town offices. But he was frustrated when he discovered that the school’s energy provider, Green Mountain Power (GMP), voluntarily offered customers a 6-cent premium for every kWh generated by solar panels while his utility, Central Vermont Public Service (CVPS), did not provide such an incentive.

Without fiscal encouragement from his utility, Hysko still decided to install solar panels at his home. Now, he is looking forward to the incentive CVPS is required to offer under the new law.

“Anything is better than what we had,” said Hysko.

Vermont Public Service Board Deputy Clerk Judith Whitney said that prior to the new law, CVPS — which provides power to 13,470 Addison County customers — was free to offer whatever solar incentives it wanted. CVPS spokesman Steve Costello previously explained that the difference in premiums existed because the utility was focusing on the renewable alternative “Cow Power," producing electricity from cow manure captured methane, instead of solar.

Hysko and other county residents were insistent that all utilities should provide strong solar incentives, and last year they took their complaints to Rep. Michael Fisher, D-Lincoln.

Fisher quickly saw the need for a law to level the playing field for residential solar producers, and he was a leading sponsor of H.56, the bill that Shumlin signed into law on May 25.

“When you drive across the utility service area line from CVPS into GMP, you can see a difference,” said Fisher. “Panels have been popping up all over the place in GMP land, but not so much in CVPS land. I think the bill gives the rest of us in the CVPS service area that same incentive, tipping the economy to make solar a more reasonable step for households in Addison County.”

DETAILS OF THE NEW LAW

The degree to which Vermont homeowners, who produce solar power, will be credited may still vary considerably.

The term used to track the amount of energy that a solar panel or a group of solar panels generates is called “net metering.”

“What we’ve done is put a monetized value on net metering,” Klein said. “We put a value on (production) at 20 cents.”

What this means is that for every kWh generated by a resident’s solar unit, the utility company must provide a 20-cent credit. Although the energy produced is quantified in monetary terms, it is traded from the solar user to the utility company as a credit — not sold on the open market. The law stipulates that residential solar power producers taking advantage of this law must be charged at the utility’s highest residential power rate. The net total incentive that a resident receives for producing solar power is 20 cents minus the cost of their bill, which is totaled at that high residential rate.

GMP spokeswoman Dorothy Schnure provided the following example.

“Our current residential rate is 14.271 cents per kWh,” she said. “That means the incentive (for solar power consumed) will become 5.7 cents per kWh,” which is approximately 20 cents minus 14.271 cents.

Officials at CVPS, which this week announced it was in the process of possibly striking a deal with Canadian company Fortis Inc., said they are still figuring out exactly how the solar power incentive will be applied to their customers.

“We’re still looking at the language and the most likely rate that we will identify is (residential service) rate one,” said CVPS Vice President Brian Keefe

The per-kWh cost for CVPS rate one comes out to 13.9 cents. If CVPS does indeed go with this rate for solar customers, then CVPS solar users would be credited a net 6.1 cents for every kWh consumed.

Utility companies have until the end of June to submit their residential rates to the state. The energy law mandates that the residential rate for solar users will be fixed for two years and the 20-cent credit will stay in effect for 10 years.

According to Klein, all excess energy produced by a solar unit will be credited to the customer at a full 20 cents. All credits can be used to pay for power and usage charges. The credits, however, are only valid for one year after the date that they’ve been credited.

“Any accumulated (kWh) credits shall be used within 12 months, or shall revert to the electric company, without any compensation to the customer,” reads page 74 of H.56. Utility companies are still exploring the legislation and some have indicated that they might voluntarily carry credits over or provide other incentives if a customer’s credits were to expire.

CVPS’s Costello said the potential sale of his company to Fortis would not have a negative impact on the company’s support for solar power and could have a positive one because the new owner would have deeper pockets. Part of the proposed deal was a $21 million fund that could pay for renewable energy incentives or energy efficiency incentives, he said.

SOLAR ELEMENTS

Other major improvements for solar power included in the bill are:

•  The extension of a maximum net metering capacity from 250 kilowatts to 500 kW for a given net metering operation. This makes larger groups of solar panels — both shared among residents and used by private entities — eligible for these incentives.

•  Residents looking to install solar units with a capacity of less than 5 kW will be able to simply register the units, rather than obtain permits through an expensive and complex process. This step will streamline the solar application process for many residential users, reducing it to a 10-day period.

•  Utilities will be able to net meter up to 4 percent of their total energy load, which is twice as much as they could under the earlier law. “There are certain utilities, like GMP, that were up to that ceiling,” said Klein.

But even with an increased cap, many solar advocates feel that the new law still serves to constrain industry growth.

“Folks, especially utilities, are very resistant to change,” said David Blittersdorf, president and CEO of AllEarth Renewables, which makes solar trackers. “What are you afraid of? You’re afraid of solar being successful … eventually we’ll just get rid of the cap.”

Klein said he also opposes a cap on the amount of solar energy that a utility can purchase.

“We debated it, and I’m certainly a proponent of not having a cap,” said Klein. “We went to the cap because there was some discomfort with some of the municipal-owned utilities.”

Nonetheless, Fisher firmly believes that this bill presents a win-win situation to both the power companies and Vermont residents.

“Photovoltaic panels produce power at a time when our utilities are struggling to meet very high demand,” said Fisher, explaining that during summer peak hours solar panels provide crucial energy. “At those very high demand points — those peak times — (utilities) are paying exorbitant amounts of money for power.”

According to Fisher, the 20-cent credit provided by utilities to solar producers is a cheaper alternative than buying power on the market.

“Green Mountain Power didn’t (initially offer incentives) because they wanted to make a green statement,” Fisher said. “They did it because it made financial sense to them.”

While many renewable energy advocates agree that H.56, now the Vermont Energy Act of 2011, leaves a lot to be addressed by the under-development “State Comprehensive Energy Plan,” there was widespread support for this law.

Gov. Shumlin last week noted that the broad energy plan for the state is due Oct. 15. That plan, he said, will likely spark more aggressive legislation for the coming session to move Vermont off fossil fuels.

“I very much hope and expect that we’ll have another signing ceremony next May for a bold and forward-looking piece of legislation moving Vermont to a clean, sustainable and secure energy future in a way that keeps us regionally competitive,” he said.

Reporter Andrew Stein is at andrews@addisonindependent.com.

 



Law addresses more than solar         

VERMONT — The Vermont Energy Act of 2011, formerly known as bill H.56, set a state goal to provide one-third of Vermont’s energy from “in-state qualifying renewable energy plants” by Jan. 1, 2022.

In addition to the widely talked about solar incentives, the new law also includes provisions to encourage the use of other renewable energy sources, make one non-renewable source cleaner and further regulate non-renewables in Vermont. These provisions are:

•  Heating oil sold in Vermont will be required to contain less sulfur. The law initially sets the sulfur content at 500 parts per million or less and then lowers it to less than 15 parts per million by 2018.

•  Heating oil will also be required to contain at least 3 percent biodiesel by July 1, 2012; at least 5 percent by July 1, 2015; and at least 7 percent by 2016.

•  Funds for the Clean Energy Development Fund will be generated by providing solar energy businesses with an opportunity to exchange a state tax credit for 50 percent of that credit’s value in cash. According to interim executive director of the non-profit organization Renewable Energy Vermont Scott Merriam, many solar businesses find this cash alternative appealing. By returning 50 percent of the credit in cash to these businesses, the state will be able to use the remaining 50 percent in savings from the credit to fuel the CEDF. 

• Propane companies will no longer be permitted to require customers to purchase a minimum amount of propane. If a customer wishes to remove a propane storage tank or have excess propane pumped out and the customer has had the tank for more than one year, the propane company must remove the tank or pump out the excess propane at no added cost.

In order to set and achieve new state energy goals, the Department of Public Service is working on a Vermont Comprehensive Energy Plan — scheduled for completion by Oct. 15. As part of the plan’s developmental process, Gov. Shumlin announced a series of public forums this week.

The Addison County Regional Planning Commission in conjunction with several other planning commissions will hold a public forum to address the energy interests of Vermonters on June 16 at the Rutland Regional Medical Center from 6-9 p.m.

Corrections to the original version of this article, published on June 2, 2011, were made due to a discrepancy in state-provided information. Those corrections will be reflected in the Independent's June 6, 2011 paper. Reporter Andrew Stein is at andrews@addisonindependent.com

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