Net Metering in Vermont APPA Business and Finance Conference Austin, TX September, 2007

Net Metering in Vermont

APPABusiness and Finance ConferenceAustin, TX September, 2007

Net Metering in Vermont

Overview History Structure Issues Future

Humorous interlude

Ancient Rome declined because it had a Senate, now what's going to happen to us with both a House and a Senate? – Will Rogers

Overview of Net Metering

Net metering in Vermont is a statutory construction

Program was designed by committee and has political overtones

Changes are carried out in the political process

Goals and results are mixed

History of Net Metering

Act 136 was passed by the Legislature and became law in Vermont April 21, 1998

Title 30 §219a Self-generation and net metering is born

Legislative findings in the Act:– (1) Encourage private investment in renewable energy

resources;– (2) Stimulate the economic growth of this state; and– (3) Enhance the continued diversification of the energy

resources used in this state.

History of Net Metering (cont.)

Act 136:– General net metering system of 15kW– Farm net metering system of 100kW– Pricing at retail energy rates through the meter– Banking of excess monthly generation; reverts to

utility at end of year– Simplified development review process– Capped at 1% of distribution system’s peak in

1996


“By March 1, 1999 the board shall establish by rule or order standards and procedures governing application for, and issuance or revocation of a certificate of public good for net metering systems under the provisions of section 248 of this title.”

Vermont Public Service Board established Rule 5.100 governing net metering


1999/2000 Legislative Session– S.230:

Proposed group net metering Expanded definition of farm methane to include off-site

projects and waste Allowed up to 5 systems per year to exceed 15 kW size

cap for each utility Passed Senate; not House


2001/2002 Legislative Session– S.85

Re-introduced group net metering Restricted net metering systems to renewable energy

only Changed 15kW size cap to 15kW per group participant Stayed in committee


2003/2004 Legislative Session– No legislation pertaining to net metering was

introduced during the biennium


2005/2006 Legislative Session– H.698

Boosted cap on project size to 1,500kW Required the PSB to act within 8 months on a Certificate

of Public Good or it was deemed approved Accumulated credits had to be used within 12 months

instead of by year’s end Re-introduced group net metering Stayed in committee


2005/2006 Legislative Session (cont.)– S.169

Removed notice to adjoining landowners if abutting property line is more than 1,000ft from farm system

Allowed projects to divide output and assign to net metering and wholesale or renewable portfolio

Stayed in committee



Proposed elimination of kWh banking Stayed in committee



Proposed elimination of kWh banking Stayed in committee



Re-introduced group net metering Extended size cap on net metering projects to 250kW Extended project cap to 3% of system’s peak Added new small-scale hydro projects to approved list Proposed changing banking period to 12 months and

required utility to purchase balance at 95% of LMP for previous year

Allowed costs of upgrading from single to 3-phase power to farms to be allocated to all ratepayers

Stayed in committee


2005/2006 Legislative Session (cont.)– Act 208

Proposed 12 month banking of energy and revision to the electric utility

Expanded farm project capacity, provided no more that 150kW participated in net metering

Added §219b to statute– Expanded facilities capacity– Required PSB to consider group net metering based on

Physically contiguous Municipal accounts


2005/2006 Legislative Session (cont.)– Act 208

Added §219b to statute (cont.)– Provided compensation for unused kWh in bank– Required PSB to develop a system for capturing REC’s

from net metering projects– Allowed net metering projects to be considered for

Sustainably Priced Energy Enterprise Development (SPEED) Program

– Effective May 31, 2006



Established inclining block rates Expanded net metering system capacity to 250kW Allowed group net metering for customers within same

service territory Stayed in committee



Allowed group net metering for customers within same service territory, including municipal accounts and non-contiguous (upon PSB approval)

Expanded net metering to 150kW per project Allowed micro-CHP projects to quality as net metering Extended system cap of net metering projects to 2%

and gave PSB authority to increase the cap Returned REC’s to farm net metering systems Vetoed by Governor

Structure of Net Metering

"Net metering" means measuring the difference between the electricity supplied to a customer and the electricity fed back by a net metering system during the customer's billing period, using a single, non-demand meter or such other meter that would otherwise be applicable to the customer's usage but for the use of net metering.

Structure of Net Metering (cont.)

"Net metering system" means a facility for generation of electricity that:

– (A) is of no more than 15 kilowatts (AC) capacity, or is a farm system;

– (B) operates in parallel with facilities of the electric distribution system;

– (C) is intended primarily to offset part or all of the customer's own electricity requirements;

– (D) is located on the customer's premises; and– (E) employs a renewable energy source and utilizes a

photovoltaic array, wind turbine or fuel cell electrical generating technology, or is a farm system.


"Farm system" means a facility of no more than 150 kilowatts (AC) capacity that generates electric energy from the anaerobic digestion of agricultural waste produced by farming, and which is located on the farm where substantially all of the waste used is produced.


Net Metering systems are required to have a Certificate of Public Good

Projects are deemed to promote public good PSB may waive application of criteria PSB may modify notice and hearing

requirements PSB may modify (simplify) application and

review process as appropriate


Accumulated kWh credits shall be used within 12 months or revert to the electric utility without any compensation to the customer

Farm net metering systems may credit on-site generation to all meters considered part of the farm

Net metering project acceptance is capped at 1% of electric system peak


PSB may, at its discretion, raise the 1% cap within a utility’s service territory

Utilities may charge reasonable fees for system improvements necessary to support interconnection

Utilities may require that all meters for a farm net metering system be read in the same billing cycle


If a farm net metering system is producing less than the farm’s annual energy requirement, the utility shall receive the REC certificates

Net metering systems must comply with electrical safety, power quality, and interconnection standards as established by the PSB


PSB may allow net metering for up to 10 non-farm systems per year that produce more than 15kW capacity, but not more than 150kW

Electric companies may contract to purchase farm system output under net metering provided the contract assigns the amount to be purchased and the amount does not exceed 150kW


PSB may expand the scope of the net metering program

– Expand the maximum kW capacity of participating facilities– Allow group net metering systems of physically contiguous

customers or municipal accounts– Provide compensation for unused kWh credits at end of 12

months– Develop a system that allows for capture and sale of REC’s– Allow net metering systems to be considered SPEED

resources


As of 12/31/2006, PSB has issued 300 Certificates of Public Good for net metered systems– 218 photo-voltaic systems– 64 wind systems– 17 combination wind and photo-voltaic systems– 1 anaerobic digester system


As of 12/31/2006, the size of systems breaks down as follows:– 291 general systems (<15kW)– 6 farm systems (<150kW)– 3 general systems between 15kW and 150kW

Approximately 90% of program potential under 1% cap remains available

Issues with Net Metering

Vermont is still well below the original 1% cap that was placed on projects within a system’s service territory; customers are not participating as expected

Net metering program is not based on financial analysis of costs and benefits in current market of renewable resources

Lack of appropriate financial incentives to encourage project development

Issues with Net Metering (cont.)

Sets aside several fundamentals principles of ratemaking and underlying agreements of the utility franchise

CPG issues– Cross subsidization: wheeling at retail– Exclusive franchise violation– Loss of facilities revenues and upward pressure

on rates


Raising scale caps for qualifying projects will encourage developers to skirt project review, especially with respect to project impacts

Raising project caps for utilities will put upward pressure on rates by shifting more costs to other ratepayers

Net metering resources are the most expensive resources available to utilities


Energy from some net metering projects (wind and hydro) is excess to customer’s needs and is banked with the utility during periods of low wholesale market prices and is not available and so is withdrawn during periods of high wholesale market prices

Future of Net Metering

Net metering program isn’t producing the incentives necessary to encourage development of renewable resources

Until a cost benefit analysis is completed, net metering will not be able to appropriately address the issue of overcoming barriers to participation and encouraging development of small-scale renewable resources

Future of Net Metering (cont.)

Cost components of net metering program, including permitting, interconnection, and system improvements need to be evaluated more extensively

Net metering program will continue to expand in ways that are not related to increasing participation in developing renewable resources

Future of Net Metering (cont.)

Alternative structures to costing and funding the existing net metering program need to be explored and developed (Gardens for All)

Net metering program impacts need to be more aggressively evaluated and reflected in cost of service studies

Documents

Net Metering in Vermont APPA Business and Finance Conference Austin, TX September, 2007