McClaughry: Net metering subsidy

By John McClaughry

The New England Ratepayers Association has petitioned the Federal Energy Regulatory Commission to assert exclusive jurisdiction over the net metering subsidy program in Vermont and 40 other states.

Lou Varricchio

Net metering laws require utilities to purchase excess electricity from households that have their own electricity generation source. In Vermont utilities must pay full retail price for these electricity purchases.

A supportive brief filed by the Heartland Institute explains that net metering laws require utilities to purchase excess electricity from households that have their own electricity generation source. In Vermont utilities must pay full retail price for these electricity purchases. Usually these generation sources are rooftop solar panels.

Utilities typically buy electricity wholesale or generate it on their own. As a result, the power utilities purchase from “distributed-generation” like roof-top solar panels, as opposed to centralized large power plants providing power for many customers, costs them more. Utilities then pass on these costs to other ratepayers in the form of higher prices.

In addition, managing power from rooftop solar sources and other distributed sources connected to the grid requires special equipment to regulate electricity flowing two ways. The costs of installing and maintaining this equipment under net metering laws are paid by ratepayers in general rather than the customers or companies who have installed or operate distributed generation sources. Such cost-shifting is regressive, because rooftop-solar owners have generally higher incomes than others, so lower-income ratepayers end up subsidizing higher-income customers.

The bottom line here is that the state should stop subsidizing upscale rooftop solar owners by making everybody else pay those extra costs. I’ve been arguing for that for a long time.

John McClaughry is vice president of the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.

Images courtesy of Wikimedia Commons/Public domain and Lou Varricchio

10 thoughts on “McClaughry: Net metering subsidy

  1. Here is some cost shifting from solar system owners to ratepayers.


    “GMP estimated the 263,515 MWh of net-metered generation (includes small hydro, small wind, solar, etc.) in its customer area will lead to $33 million in cost shifting, from solar system owners to non-owner ratepayers, in 2020, equivalent to 5% of its total annual cost of serving customers.”

    TOTAL Vermont net-metering was 299,156 at end 2019, likely about 10% greater in 2020.

    That means TOATAL COST SHIFTING in 2020 would be (299,156 x 1.1)/265,515 x 33 million = $40.9 million


    The larger systems, under Special Offer, etc., likely would have $30 million in cost shifting, including due to subsidies and high feed-in tariffs, about 11 c/kWh (recent systems), up to 30 c/kWh (older systems), paid to the millionaire owners in 2020.

    All this cost shifting is on top of the $60 million added to electric bills for the utter boondoggle called Efficiency Vermont.

    About 90% of what they do would have happened anyway, because people are not stupid, when it comes to saving money.

    The NE wholesale prices have averaged about 5 c/kWh starting in 2009, i.e., 11 years.

  2. Interesting point about solar subsidies. Apparently a large chunk of the beneficiaries are those more than able to pay. Isn’t it ironic that we have the poor subsidizing the wealthy. Wonder if any of those do gooders have bathered to think this through or has it been too much trouble. Once the subsidy was established, the feel gooders clapped their hands and went home. Good deed for the day. Amazing

  3. subsidy n.
    Monetary assistance granted by a government to a person or group in support of an enterprise regarded as being in the public interest.

    Unless I’m totally deluded I consider myself a part of the “public”. Maybe someone more enlightened or aware can explain how this solar / windbag energy is in any way “in my interest”.

    The “clean air” nonsense is no argument for the simple reasons of the pollution generated in the manufacture, transportation and disposal costs involved.

    I’ll wait, but hurry, I’m already way past the upper COVID limit.

    • I’ll follow Cranky old Geezer
      Wonderful neighbor put many panels on his big garage roof. Our AM news, talk and views radio went to pure static.
      problem is the ‘inverter’ which takes in the Direct current power and converts it to 60 cycle Alternating current to match the street electric. 60 cycle matches 620 AM radio worst, but the whole AM is loud solid static.

      Neighbor contacted thier solar installer – no meaningful response, not Their problem. Solar is God!!
      I have called the electric company engineer several time and he claims nothing specific, but he is working on it – awfully busy. I buy clean power – this is not clean!!
      We share the same transformer on the pple so that may make our situation worse.
      Lose Rush and Common Sense radio and many others.

  4. It’s always been a scam. But it’s PC Correct. Solar is hurting rural utilitities. My old one, Washigton Electric Co-Op, is getting hurt. Wash Elec is one of the most “rural’ electric utilities in the USA….their lines go over hill and dale, valley, mountain, streams…you name it. Tree’s and such grow very fast and risk growing into the copper power lines. In bad storms, branches break and take down the elec lines. A huge portion of Wash Elec budget is just trying to trim and stay ahead & clearing of power lines from trees. All the solar people USE these lines of Wash Elec…but they don’t pay a single penny in the costs to maintain ANYTHING, but their power flows thru them. Even worse? Wash Elect is forced to take this elec they don’t really want – and then pay WAY over market price for it… Wash Elec is forced to take it…Legislature and PC types say so. So what happens? Wash Elec is thus forced to ask for elec rate increases, more often than needed to……and then people scream back at poor Wash Elec!…and, higher the rates go…the more people with money will put in SOLAR!…and the whole cost cycle goes up and up and up… and the seelct few ($$$$) with solar… are nothing but “free loaders”!

    • Your comment is the perfect description of why the solar power subsidy/rate is irrational and regressive. When solar installations And wind Installations can be sold without subsidies and be effective, then it will be a fair alternative and the already rich won’t bleed off the poor, once again!

      • I don’t consider myself rich but blue color tradesman who made an investment in10kw of solar panels 3 1/2 years ago. I took out a loan @ 6.5% from the local bank, 20 payments left @ $368/month. Why? Well , my electric bills were averaging $220+ per month despite our cost saving measures, energy star appliances, LEDs, heat pumps,new window and insulated siding. You know, all the stuff Energy Efficiency VT said would save us money,actually cost us $40K+ to buy and our rates kept climbing.
        My bill for May was -$28.00 . This credit will be used to reduce Nov.,Dec.,Jan, bills to under $200. Woo hoo. I receive 5.3cents for excess generation for ten years only, which I too subsidize with high rates.
        I made this decision to be able to afford to retire in VT when the “income flow” stops
        but the bills don’t. Time will tell unless I’m dead then I won’t care…

        • I still pay a monthly EEVT Fee which pisses me off and a $1/ month energy sharing fund( who voted for that compulsory fee?), a line maintenance charge and an Ash borer beetle fee .

    • A different perspective.

      A Wonderful neighbor put a solar array on their garage – good for them.

      The response has been that my AM band Radios, only news and talk sources, are now solid static, which is traced to the inverter?, gadget that turns their Direct current alternating current. Feeds into the pole transformer we share.

      So far – the real Electric company and the solar company wash their hands

      Anybody else have this problem?

      • Drive down Field Days Road in New Haven and kiss your AM radio reception goodbye.

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