Flemming: The ones who gave residential solar a price hike

By David Flemming

If you have solar panels connected to an electric grid in Vermont, you may have been caught off guard recently by a sizeable increase in a subtle change to the “Energy Efficiency Charge (EEC).”

While your first instinct may be to get angry at the electric utility that billed you, the charge is completely out of their hands. According to Vermont’s Public Utility Commission (which regulates Vermont electric utilities), ”EEC rates are based on customers’ consumption. For example, a customer’s total energy efficiency charge is based on the number of kWh used.” The money raised from EEC’s is given to Efficiency Vermont, which was created by the Legislature two decades ago.

In June, this utility customer “John Doe” (see statements below) generated 1202 kWh of electricity from solar that he was ‘sold’ to the Vermont Electric Cooperative utility. He also bought 54 kWh of electricity from Vermont electric in June, for when the sun wasn’t shining. By multiplying the EEC charge of $0.01188/kWh by the 54 kWh of electricity, we can see where the $0.64 EEC charge comes from.

In July, Doe generated 978 kWh of electricity from solar that he sold to Vermont Electric. He also bought 291 kWh of electricity from Vermont electric. By adding the 978 to 291, we get 1269 kWh of consumed electricity. Multiplied by $0.01188, that $15.08, as denoted Energy Efficiency Charge on the statement. This is more than 20 times the EEC charge from 1 month earlier. We can explain part of this difference by the amount of electricity Doe consumed each month: 54 kWh in June vs. 291 kWh, about 6 times as much.

But that clearly that doesn’t explain the entire difference. Simply put, the EEC is suddenly being applied to the amount of solar electricity generated, not just the non-solar electricity that was received from the grid. In effect, it becomes a “tax” on subsidized solar electricity. Read that again and see if it passes the “common sense” test.

So Doe will have to fall back on the credit for the solar electricity he sent to the grid, which is ‘matched’ by how much electricity he consumed. In the June statement (“Net Meter Credits Applied”), that amount was $4.87 (having consumed 54 kWh @ $0.09016). In July, that amount was $43.78 (the first 100 kWh is $0.09016/kWh and the next 191 kWh priced at $0.018199/kWh).

So how much extra did Doe pay in July due to the EEC calculation change? $11.62 ($15.08 – $3.46 if the formula was kept the same). If Doe’s yearlong energy generation and consumption is similar to what it was in June and July, he will spend over $130 more each year on electricity, due to the decision of unelected government bureaucrats. Efficiency Vermont is technically “keeping (EEC) rates the same for 2021” but by changing what the Energy Efficiency Charge actually is, Efficiency Vermont will take a great deal more from their customers through EEC’s than they did in 2020. Unsurprisingly, Efficiency Vermont proposed changing the EEC’s definition in the first place.

As noted in John McClaughry’s commentary earlier this month, the Vermont Public Utility Commission is fast gaining the independence to make major economic decisions absent any legislative decree. Of course, the pretense of public input exists, in the chance for “public comment.” But zero public comments were filed for this major change in EEC’s. This cannot be healthy for democracy.

If you keep hearing from your neighbors about how they were so excited to have solar panels installed on their roofs because they are getting “free electricity,” you may want to think twice before committing to solar. There is no one alive who can predict how the Vermont Public Utility Commission and Efficiency Vermont will alter residential solar’s arrangements in the coming years.

David Flemming is a policy analyst for the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.

Image courtesy of Wikimedia Commons/Public domain
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5 thoughts on “Flemming: The ones who gave residential solar a price hike

  1. Vermont’s legislatively mandated Boards and Councils have been designed to shift blame for bad policy away from the legislature- to give politicians a way out for their bad (but popular at the time) decisions. Efficiency Vermont is but one example. Legislatively mandated in 1999 and collecting a fee on every kWh of electrical energy since, Efficiency Vermont has taken the heat off the legislature for “green” goals ever since, albeit with really nice offices, lots of staff and fancy claims of all “they” have done to protect the environment and “save” Vermont ratepayers money.
    As the Vermont Climate Council spins up, EV will become an expensive tool for the VCC to use to extract yet more “fees” to protect us from ourselves. The increase in the “efficiency charge” is to be expected, it’s necessary to combat all the evil things Vermonters do to despoil the planet.
    It would be good that we remember- we did this to ourselves, by allowing an elitist legislature to continue to dictate by emotion and reaction to whatever the talking point of the day is.

  2. This month’s bill $54.82. Of that $16.81 was for EEC. We have 10.3KW of solar panels and generated 978KWH for the billing period . We consumed 1415 KWH with our 2000 sqrft home and rental ABNB.
    Last month we payed over $20 EEC .
    That’s a lot of money for EEC salaries and benefits which will only go up next year and the years after.
    Meanwhile , my solar credits end in five more years and the panels degrade 1.9% /yr.
    I’ve yet to crunch the #s but having my doubts as the fees mount up and the rates go up.

  3. David Flemming – If you actually can comprehend this, More POWER to you/

    This sounds like a Gordian Knot of bureaucratic complications.

    New neighbors bought a home with significant solar panels, and they don’t know how the billing “savings” are supposed to work.

    • Well, if they don’t like it can they just shut it off? I had SunRun come and do an evaluation for me for solar panels but then they said they did not think my roof could hold it. The joke was on them. I have 2 roofs and when I had a roofer doing the roof I told him what they said and he said they were nuts, that my roof would stand elephants standing on it. So glad now I did not get the panels. This summer I have been paying about 50-60 dollars a month just using a fan. So if those new neighbors want can they just shut the solar off?

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