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Net Metering In Vermont: A Brief Summary Of Its Evolution

In 1978, Congress adopted the Public Utility Regulatory Policies Act (PURPA) in response to the fossil fuel shortages of 1973 and 1978.  PURPA represented a significant break from the idea that electric service was a “natural monopoly” that needed to be fully controlled by a single entity within a geographic area.  PURPA created a general obligation of electric utilities to purchase power from renewable generation facilities at what’s called “avoided cost,” which can be loosely understood as the cost that utilities would incur in providing that power themselves.  Implementation of PURPA was left largely to the individual states.

Following a simplified initial implementation of PURPA, the Vermont Public Service Board (now the Public Utility Commission, or “PUC”) in 1983 adopted what is known as Rule 4.100.  Vermont’s implementation through this Rule was unique in that it treated the state’s many utilities as essentially one for the purposes of the purchase of renewable power and the allocation of its cost.  This “composite system” approach remains partially in effect today under a limited program known as the Standard Offer Program, but is separate from Vermont’s net metering rule discussed below.

Vermont’s first net metering rule, PUC Rule 5.100, took effect in early 2001.  The early rule and net metering under it tended to be pretty simple, with mechanical electric meters yielding a net calculation of the extent to which a small scale renewable solar or other renewable project offset the customer’s electric usage.  There were some modifications to Rule 5.100 in the ensuing six years, some in response to legislative changes.  Among the most significant of these changes were 2005 statutory amendments that resulted in the allowance of group net metering systems.

In 2008, Green Mountain Power (GMP) created a voluntary program in which it offered a six cent “adder” to the GMP residential rate for purposes of crediting net metering project owners for the power produced by their projects.  This adder was to last for a total of ten years, and it was offered through a GMP tariff.  The existence of this program was a strong factor in stimulating the installation of net metering projects and the creation of renewable energy enterprises.  AllEarth Renewables, with its unique and efficient dual axis solar trackers, was among those businesses.

In 2011, the Vermont Legislature decided that many of the concepts of the GMP program should be required on a state wide basis, so that the specific and societal benefits of net metering would be available to customers irrespective of where they lived.  Through detailed revisions to the net metering statutes, utilities were required to add a net metering incentive equal to twenty cents minus their residential rate.  (The twenty cents was later lowered to nineteen cents for larger projects.)  This net metering program went into effect in October of 2011, with each utility filing tariffs containing its “adder” as calculated under the legislatively mandated formula.  Registration for small systems was also introduced at this time for systems of 5 kW or less, later raised to 10 and then 15  kW systems.

The next significant revision to Vermont’s net metering program occurred in 2017, with a substantial revised version of Rule 5.100 adopted in response to more legislative changes.  Rather than being calculated based on individual utility rates, the core compensation for net metering customers is now set at the lower of their utility’s residential rate or what’s called the “blended rate,” which is basically a weighted average of the residential rates of all Vermont utilities.  Additionally, several other changes have diminished the net metering program and the benefits it has brought historically:

  • A customer must now pay the utility’s customer change and some other charges every month, no matter how much power the customer’s net metering system produces
  • Larger customers have seen their ability to be fully powered by renewable energy greatly compromised do to limitations on the total amount of power they can take from different net metering systems
  • The concept of “adders” contained in the 2008 GMP program and carried forward by the Legislature in 2011 has been replaced by Renewable Energy Credit (REC) and site adjustors that can be negative, and that are determined by the three person PUC in even number years.  This is not an abstract hypothetical, as the PUC has just determined that REC and preferred site adjustors are worth nothing for most of 2021 and are worth less than nothing (minus one cent) from September of 2021 at least though June of 2022.

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