The Vermont Public Utility Commission (“PUC”) issued an order last week concluding its biennial review of rates and incentives that apply to “net-metered” renewable energy facilities. On balance, the order increases the base rate paid to all net-metering electric customers who return energy to the power grid, while decreasing over time the incentives (REC and siting adjustors) for new net-metering systems. This blog provides a brief background of the net-metering rule and the impacts of the proposed change.
In Vermont, net-metering is currently available for renewable energy power systems—typically solar—up to 500 kW. Net-metering customers are able to offset their electricity consumption and sell excess power back to the grid at the rates set by the PUC. Over the last decade, net-metering has been widely adopted in Vermont, and it continues to be the largest source of new renewable generation in the state.
The PUC’s current net-metering rule came into effect in 2017 along with a new incentive structure designed to encourage beneficial siting and balance the interests of electric ratepayers and net-metering system owners. Rather than a single fixed rate, net-metering system owners who return energy back to the grid receive bill credits based upon two components: the “statewide blended residential rate”, which is essentially the average rate paid for electricity by a utility customer in Vermont; and application of two “adjustors”, which historically had either a positive or negative impact on the overall rate received but following these changes now are either neutral or negative adjustors:
- The “REC adjustor,” favors transfer of renewable energy credits (“RECs”) to the interconnecting utility. These transfers keep RECs in state and support Vermont’s clean energy goals.
- The “siting adjustor” favor small installations and previously developed sites such as parking lots, rooftops, or quarries.
The rule also requires the PUC to revisit the value of these rates and adjustors every two years. The PUC’s initial review in 2018 resulted in a small decrease in incentives in 2018 and a one cent/kWh overall decrease in 2019, depending on project specifics—similar to the changes now announced. Despite these changes, the PUC observed in its recent order that interest in building new net-metering systems remained robust.
Summary of Changes
The PUC’s order adjusted the net-metering rate as follows:
| Statewide Blended Residential Rate: | On February 2, 2021, increases one cent to $0.16413/kWh (unless the interconnecting utility has a lower general residential rate, which is then applied) |
| REC Adjustor: | On February 2, 2021, decreases one cent to $0.00/kWh if RECs are transferred, negative $0.04/kWh if RECs are retained. |
| Siting Adjustor: | On February 2, 2021, decreases one cent for all categories of systems ($0.00/kWh to negative $0.04/kWh, depending on type and location of system). On September 1, 2021, decreases an additional one cent for all categories of systems (negative $0.01/kWh to negative $0.05/kWh, depending on type and location of system). |
The new blended residential rate will go into effect for all systems, new and existing, on February 2, 2021. The revised adjustors will only apply to newly-proposed systems, based upon the date of application with the PUC. Thus, existing systems will receive a one-cent increase in the overall incentive as would new applications filed prior to February 2, 2021. Applications for new systems filed after that date would receive a net one-cent decrease in the overall incentive; and those filed after September 1, 2021 would receive a net two-cent decrease.
The PUC order provides an illustration of the resulting overall incentives for a new net-metered project (note: values in table assume transfer of RECs; if retained, subtract four cents from these values):
Type of System Under PUC Rule |
Current Total Incentives |
Total Incentives for Applications filed between 2/2/21 and 8/31/21 |
Total Incentives for Applications filed on or after 9/1/21 |
Category I |
$0.17417 |
$0.16413/kWh |
$0.15413/kWh |
Category II (>15 to 150 kW on preferred site) |
$0.17417 |
$0.16413/kWh |
$0.15413/kWh |
Category III (>150 to 500 kW on preferred site) |
$0.14417 |
$0.13413/kWh |
$0.12413/kWh |
Category IV (>15 to 150 kW on non-preferred site) |
$0.13417 |
$0.12413/kWh |
$0.11413/kWh |
If you have any questions about net-metering or other renewable energy projects, please contact any of the attorneys in our Energy and Public Utilities Practice—Vic Westgate, Zoe Sajor, Andy Raubvogel, Geoff Hand, and Malachi Brennan.
