Green Mountain Power: Green energy having a negative ‘tangible rate impact’

Michael Bielawski/TNR

TOO MUCH COST FOR POWER: Robert Dostis, GMP vice president of Stakeholder Relations, takes questions from the House Energy and Technology Committee on why power rates went up 5 percent.

MONTPELIER, Vt. — Green Mountain Power’s consumer rates are going up 5 percent and the House Energy and Technology Committee met late last week to find out why. It has a lot to do with green energy.

On Thursday, spokespersons from the utility and the Department of Public Service took the hot seat to explain while state reps peppered them with questions.

Renewable energy projects, and in particular net metering projects, are confirmed to be driving up costs. So far the impact is said to be minimal, but with the state’s lofty green energy goals still looming, there could be more price-hikes to come.

First up was Jim Porter, director for public advocacy at the department.

“[The rate hike] came up right at 5 percent and I guess the first thing I will say is, in my job, whenever we see a utility come up for a rate case, we would always like to see a rate decrease,” Porter said. “It was a little disappointing, and I think, frankly, Green Mountain Power was a little disappointed too.”

He broke down the 5 percent increase into three categories. He said 2 percent was transmission costs and 2 percent was capacity.

“So that’s about 4 percent, and both of those things affect all utilities in New England — we’re all part of ISO New England, the independent system operator,” he said. “Most of those costs are beyond the control of the utility.”

Specifically, Porter referenced that limitations in grid transmission capacity may be driving up costs.

“I think we also are seeing some costs with some constrained areas of transmission,” he said.

He did not elaborate, although transmission upgrade proposals have been in the news recently, indicating a demand for new infrastructure exists.

He said roughly 1 percent of the increase was attributed to net metering. Net metering is when a homeowner or business will purchase and install a new energy source, usually solar, and any excess energy they don’t use is sold back to the utility. The concern with this system has been that the utility must buy it, and for a premium price.

“The power costs which are most problematic are the costs where they have to buy this capacity and from more expensive sources,” Porter said.

The price, currently around 20 cents per kilowatt-hour, compares to around 6 cents for general market electricity off the grid.

With Vermont’s Renewable Energy Standard, the state has set requirements for utilities, including a mandate for 75 percent of electricity sold to be from renewables by 2032. Rep. Warren Van Wyck, R-Ferrisburgh, asked how the state intends to work towards these goals without overburdening the ratepayers.

“As a public advocate, is that something that you bring before the administration and legislators and say we have increasing demands for net metering, but that’s going to be increasing the cost drivers because we have this RPS [Renewable Portfolio Standard] that says we have to use an increasing number of renewables?” he asked.

Porter responded that net metering “is now having a tangible rate impact” for consumers.

“There are contracts in place with the utilities under various previous programs that, as you say, we are paying more than perhaps you could buy the energy for elsewhere,” he said. “But as the advocate, I can kind of tell you, here is the effect this is having with the utility, and you know it’s all a balance. We are beginning to see, certainly, some impact from this.”

The high cost burden is the main reason why caps on net metering installations per community are set by lawmakers, and the pressure to build more means there is often still debate on net metering rules.

Robert Dostis, Green Mountain Power vice president of stakeholder relations also spoke to the committee. He talked about a new trend called group-net metering.

This is when solar developers will build usually a 500-kilowatt system and they set up power-purchase agreements with mostly large commercial customers. The initial purchaser usually gets a discount but not everyone else.

“All of the other customers are actually paying that developer the net metering rate,” Dostis said. “Now it’s lower, but the majority of those projects, which represent now about 50 percent of all the capacity of net metering under just 500-kilowatt systems, all of those projects are getting 19 cents per kilowatt-hour.

“So our customers are clearly paying a very significant amount of money for these projects to be developed, and the true beneficiaries are the solar developer and then the entity taking the power.”

In addition to net metering, conventional industrial-scale renewable energy projects may also be driving up costs. Wyck observed that industrial-scale projects cost ratepayers almost two-fold the market price.

“So right now your power costs are around 6 cents [per kilowatt hour], and ongoing, to ramp this up, you are going to be adding in facilities that are going to be at 10 cents. So, there’s going to be overall upward pressure?” Wyck said.

Dostis responded that every energy source plays a role in the overall grid.

“There are different value propositions for all the generation types, so there was a time when solar was valued much higher because it had the ability to shave peaks [peak load demand],” he said.

Not all pressure is pointing upwards for the electricity rates. The new federal tax plan recently signed by President Donald Trump was enacted on Jan. 1, and it reduces the corporate tax rate from 35 percent to 21 percent. Porter said the savings should be passed on to ratepayers.

“That will have a demonstrable impact on Green Mountain Power and also Vermont gas,” he said. “In fact, in December we sent a letter to both of those companies asking what their intentions were.

“They have both responded, and all of those savings will go back to the ratepayers, and we’re in the process of doing it right now.”

Michael Bielawski is a reporter for True North Reports. Send him news tips at bielawski82@yahoo.com and follow him on Twitter @TrueNorthMikeB.

Image courtesy of Michael Bielawski/TNR
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22 thoughts on “Green Mountain Power: Green energy having a negative ‘tangible rate impact’

  1. I see the problem here, and I got my Green Mountain Power electric bill this week, but it didn’t appear to be 5% higher yet, or, because I was worried about it being higher, I am more careful about turning lights out, and I moved my computer table to the kitchen, took out the two back seats of my 1999 SUV and put them in the kitchen up on boards (because they have metal bottoms and could hurt my old linoleum), and my two dogs now sleep on the vehicle seats, nice and cozy and warm up off the kitchen floor, requiring less heat in the kitchen at night, and I sit all day in the same room with them, to avoid using an overhead light in the room the computer was previously in, and I moved the kitchen table to the porch where I store the recycling in buckets and boxes, the cans and plastic containers and glass jars and clean newspapers, and because that creates so much more room for storage on the porch, having the top of the big kitchen table and underneath the kitchen table to store the recycling items, then I have avoided using gas to drive 9 miles to the Springfield Recylcing, because I have more storage space now, so I saved on gas. I’ll get around to going to Recycling when I run out of room.
    Cris Ericson http://indyVT.com

  2. I recently heard that the six monster wind turbines in Searsburg are sending their power to Connecticut.
    Nasty scapling of the ridge lines in VT. A friend who lives too close is being compensated because of the noise and vibrations. Who pays for that?

    • GMP contracted to buy the Deerfield Wind power. The RECs might be going to Ct. How much did your friend accept, and does it come with a gag order?

  3. I suspect that every state will have a problem with transmission of power due to not building any new infrastructure for the last forty years or more. Of course we all know who will pay for that upgraded infrastructure…the rate payer!

  4. Whatever it takes to keep teacher layoffs from happening.I say let as many immigrants in as possible.

  5. This is a quote from a paper by Kevin Jones, Mark James and Heather Huebner published in the Fordham Environmental Law Review about how Vermont is now meeting the Tier 1 75% portion of Act 56, our state’s Renewable Energy Standard: “In 2015, Vermont passed legislation that ended the double counting controversy while simultaneously creating new challenges for renewable energy transparency. The Vermont legislature enacted Act 56, which replaced the SPEED goals with a new renewable energy standard that set a goal of 55% renewable energy in 2017 and increasing to 75% in 2032. This shift addressed the concerns raised by Connecticut; however, it opened an alternative compliance pathway that has been portrayed as either a clever or deceptive practice. The Vermont Renewable Energy Standard defined qualified renewable energy much more broadly than other New England states, allowing utilities to practice REC arbitrage as discussed in Section II.A. Act 56 allowed much older vintage renewable resources to qualify for the Vermont renewable energy standard than was permitted in the other New England States that participate in the GIS. Moreover, Vermont also became the first New England State to allow its utilities to count RECs from large scale hydro, such as that from Hydro Quebec, toward their compliance obligations. As a result, while RECs eligible for other states’ RPS programs were trading in the range of $20/MWhr to $60/MWhr in recent years, Act 56 only set a penalty for noncompliance of $0.01/KWhr01K for its total renewable energy requirement. Premium renewables in Vermont, including wind, solar projects of at least 5 MW, and biomass, would continue to be sold into the Massachusetts and Connecticut RPS programs. Existing RECs for old or large hydro and other resources that did not count toward the other New England States programs would be purchased at a substantial discount to meet Vermont’s RES Tier 1 goal of 45% in 2017. Given the difference in structure of Vermont’s Renewable Energy Standard compared to all its northeastern neighbors, serious questions remain unanswered as to whether this was renewable energy leadership or perhaps just a clever means for creating false perceptions while avoiding the higher ratepayer cost of true climate policy leadership.”

    • If the Purist Vermont Law School has its way we will all be in the poorhouse, while
      VLS will be pontificating from their ivory towers.

  6. All this is, is liberal pipe dream . When you have idiots running the state house this is what you get
    over inflated prices for a useless utility .

    We used to have a good source with Hydro Quebec ( No CO2 ) at a good price but these liberal
    fools decided that solo panels that ” Ruin our open fields ” and wind turbines that spoil beautiful
    mountain ranges we once had , for what an agenda !!

    Wait another twenty years when these things are just rusted piles of junk . And you’ll still be paying for them ……………………..

  7. The shame of it all is that Hydro Quebec power is readily available at about 6 cents per kwh. It’s close by, sustainable and doesn’t generate CO2. Go figure.

  8. First of all Green Mountain Power has been misleading the people in the state of Vermont with their heat pumps and Energy Efficiency

    Green Mountain Power just not even offer a geothermal pump which is the most efficient pump going.

    I am wondering in this freezing cold weather how many people have had to rely on fossil fuels to stay warm because their heat pumps do not work at these cold temperatures..

    I think efficiency Vermont needs to do a study on these things and Report honestly I’m what is happening..

    When people are heating with heat pumps and do not have solar power for their energy their electric cost must be astronomical and I think this must come into play when we are reporting on the energy we are supposedly saving..

    • Richard,

      Efficiency Vermont has already “studied” this regarding heat pumps.

      At low temperatures, the coefficient of performance, COP, of an air-source heat pump (Japanese import) approaches 1.2 to 1.3, which is just a little better than electric heating, which is 1.0.

      And that electric heating takes place while it is very cold outside, meaning huge impacts on electric bills, which benefits …..GMP!

      Geothermal systems are much more expensive than heat pumps, but they have a near constant hear source, the earth.

      All this has been known for decades. No more studies are required.

      Vermont has an anemic, near-zero, real-growth economy, which does not produce enough tax revenues year after year, partially due to the huge RE giveaways, such as:

      1. Federal and state ITCs; upfront giveaways to offset any taxes.
      2. Federal and state taxes not paid due to rapid depreciation write-offs during there first 6 years
      3. Federal and state taxes not paid due to loan interest deducted from taxable profits.
      4. School portion of property taxes not paid; households have to pay more.
      5. State sales taxes not paid on some solar system components.
      6. In addition, the electricity is purchased at 13 – 14.5 c/kWh, but could have been bought at NE midday wholesale at 6 c/kWh.

      The state giving investment tax credit, ITC, money to the tax shelters of multi-millionaires, who own the larger systems, and not collecting taxes due to rapid depreciation write-offs, has resulted in contributing to chronic budget deficits.

      The addition of “excess paid above New England midday wholesale prices” has resulted in electric rates being higher than they would have been.

      Rep. Van Wyck stated 6 c/kWh as the annual average NE wholesale rate.

      In reality it is about 5 c/kWh, already since 2009 (due to low-cost nuclear, hydro and gas); it is about 3 – 4 c/kWh at night, about 6 c/kWh at midday (when solar is prevalent) and about 7 – 8 c/kWh at late afternoon/early evening peak hours (when solar is minimal). Some higher peak prices do occur, but they are rare.
      http://www.windtaskforce.org/profiles/blogs/subsidized-solar-systems-cause-chronic-budget-deficits-in-vermont

  9. Net metering turns out to be a bad deal?! Really?! And nobody saw this coming? So people sell the power for .20 cents per kWh all day Long then come home and burn coal, natural gas and nuclear generation all night. If EVERY rate payer was net metered and had NO bill. Who pays for this generation that ACTUALLY does the work on the grid? Don’t blame ISO-NE. This is on the legislature. Net metering needs to die. Folks need to install storage and plan their energy use around the availability of the resource.

  10. The “unintended consequenses” monster strikes again. Just one more of too many examples where the “do gooders” jump in before an issue is thoroughly researched. Once done and the monster strikes it’s always the fault of those that arer injured.

    • There is no excuse for any official in Vermont to claim they were not warned. The problem is that the PUC and the governor believed GMP and Mary Powell’s self-serving propaganda that GMP could build renewables cheaper than anyone else while signing long-term contracts for wind at 2-3 times more expensive than energy in the region.

  11. We, down in Rutland Town fought a VT SC case agsinst industrial solar on this and other points—and almost won but the fix was in with idealogues on the PSB. It was, and is, insanity to think you can pay over 3 times the rate power can be purchased on the open market without rayepayers getting hosed–not to mention the hosing that towns get on undervaluing these projects for property taxes. We were lied to over and over by GMP and the developers–who cares now?

  12. This type of deal is only in Vermont. I travel through the South and honestly have not seen one solar array, remember this is where the sun shines all the time and here in Vermont about 60 percent of the time. Reason, the Vermont legislature is killing us again with their stupid laws. Our pockets are empty now, no more please. Other states Attorney Generals have told their electric company’s NO increase in rates, use the large corporate tax savings to off set increases and even reduce them. Come on TJ

  13. Blaming the ISO-NE without flatly wrong! The ISO grid system has seen precipitously cost drops while the state energy policies and GMP/BED horrendous purchase agreements for big wind projects are to blame.

    • Lisa,

      I agree.

      The GMP, DPS and PUC coziness in pursuit of fantasies is hurting Vermonters.

      The Senate and House Energy committees “working closely” behind closed doors with that troika is a major problem.

      It will lead to another Vermont-style EB-5, once more date becomes available by supena.

      Note how careful and vague and bland the statements of DPS and GMP personnel in the article.

      Almost nothing, but platitudes are revealed.

      GMP REFUSES to use the 200 MW of low-cost, low-CO2 hydro reserved for Vermont.

      The Shumlin era is alive and well, despite Scott being elected.

      He needs to clean house, ASAP

      See my articles on this subject on the CitizenTaskForce website

  14. No Smart Than a Fifth Grader – Vermont’s Department of Public Service !

    The Vermont State Legislature should have seen this one coming years ago. You can’t force the state’s largest utility to buy “green” energy at nearly 4X the market rate and know that they must sell it at a profit – while the market price for all electricity is 4₵ to 5₵ per KWH – while the guaranteed purchase price for net metered surplus electricity is 20₵/KWH. There is only way this works out, with the ratepayers getting abused !

    These is No Beating the Laws of Economics !

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