The Word in the House 2/18/2015 - Vermont's New Renewable Energy Policy

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:

1. 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.
2. 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.
3. 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)

Geothermal Energy for Vermont

I took the opportunity to attend the Geothermal Energy Roundtable sponsored by U.S. Senator Bernie Sanders yesterday, April 17th, at Contois Auditorium in Burlington. The place was packed upstairs as well as downstairs with folks from across Vermont. Cathy Zoi, Assistant Secretary for Energy Efficiency and Renewable Energy at the United States Department of Energy, was a guest of Senator Sanders along with a panel of homeowners, academics and business representatives, who were involved in using, researching or installing geothermal energy systems.

The message that came out of this conference is that geothermal energy source systems for both heating and cooling are not just feasible in the north country, but they have been proven to work as well . I spoke with a man from Highgate who had a chart of his electric and heating fuel consumption that showed a reduction in cost of around 60%. This type of energy resource is most efficient if integrated into the design of new construction, but it is also adaptable to existing construction. Key to the latter is an energy efficient envelope, i.e. a well insulated building.

State Representative Tim Jerman of Essex Junction was also at the roundtable. Tim is a member of the House Committee on Natural Resources and Energy. We chatted about the incentives provided by the state for alternative energy generation. Although there is a tax incentive for wind and solar systems, it is restricted to businesses that adopt them. Homeowners are entitled only to federal tax credits. (Those credits, by the way, are substantial, amounting to 30% of the cost of materials and installation.) However, there is no state incentive for business or residential installation of geothermal systems.

A priority in the next legislative session should be to include geothermal systems in the incentives provided for wind and solar energy production. We should also find a way to extend those incentives to homeowners as well as business. While the current budget crisis makes this a non-starter, block grants may be available as part of the federal Jobs Bill. Providing these credits would have the added benefits of creating jobs throughout Vermont, distributing energy production to reduce the peak demand on our electric grid, and helping to replace the production that we will inevitably lose with the closure of Vermont Yankee.