Roper: Net metering program driving up energy bills

By Rob Roper

Green Mountain Power recently announced the need to raise its rates by 5 percent. Why? One growing reason is Vermont’s “Net Metering” program.

Rob Roper

Rob Roper is the president of the Ethan Allen Institute.

The way net metering works is, in a nutshell, electric customers who generate their own electricity, usually through solar panels, can sell any excess power they create back to the electric company. The company is mandated by law to buy it — and here’s the cost driver to the average ratepayer — at 21.8 cents per kilowatt hour. This a significantly higher price than electricity market price for electricity. Hydro Quebec electricity, for example, costs about 6 cents per kilowatt hour.

The Net Metering program was designed to make it more attractive and cost effective for people to install “green” energy technology, so, in that sense it works as intended. The problem is that this rob-Peter-to-pay-Paul scheme makes it less attractive and cost effective for everyone else to power their homes and businesses. Is this fair? We are the ones who are ultimately being forced to buy this wickedly expensive electricity.

As net metering has expanded in Vermont, the amount of overpriced energy in the system has increased. According to 2016 numbers (the latest available), the percentage of net metered energy of all power purchased is 1.73 percent, but the cost of all net metered energy purchased is 6.26 percent of the total cost.

If the Net Metering program is allowed to continue and is encouraged to grow, this math and our electric bills will only get worse.

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

Rob Roper is president of the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.

Image courtesy of Wikimedia Commons/Public domain

4 thoughts on “Roper: Net metering program driving up energy bills

  1. Bob Roper,
    I found the answer.

    GMP Purchased Electricity in 2016: GMP purchases electricity from about 25 sources. An increasing proportion has been expensive renewables, such as wind and solar.

    GMP also produces electricity with its hydro plants, and wind and solar systems. The electricity produced (MWh) and the cost of the self-produced electricity ($; c/kWh) is unknown to the public at this time. It likely is known to GMP, the PUC and DPS.

    Six electricity sources are shown in table 1B. As most of the production of the SO projects is solar, the “% in excess of ISO” is based on annual average midday wholesale prices of 6 c/kWh, which is higher than the annual average ISO price of 3.240 c/kWh.

    The data in the table was obtained from a GMP spreadsheet titled “GMP Test Year Power Supply Costs filed as VPSB Docket No: Attachment D, Schedule 2, April 14, 2017”

    – The percentage of “Net metered” electricity is 1.73%.
    – The percentage of the “Cost of Net metered” is 6.26%, i.e., prices are 3.62 times higher than average.
    – Recent, competitively bid, large-scale, solar systems are about 13.5 c/kWh; heavily subsidized
    – Ryegate sells all of its output at 10 c/kWh
    – GMP refuses to purchase additional HQUS electricity even though 200 MW of a new power line, to be completed in 2019, is reserved for Vermont.

    Table 1B/GMP purchases, 2016 c/kWh MWh % of purchases Cost % in excess of ISO
    HQUS (Hydro-Quebec) 5.549 919312 22.1 51013678 71
    Standard Offer 21.790 78920 1.9 17199202 263
    Net metered 21.810 71970 1.7 15699137 264
    Ryegate (wood) 10.031 126707 3.0 12710175 210
    ISO wholesale 3.240 575553 13.9 18645214
    6.503 1772462 42.7 115267406
    Other 5.689 2382075 57.3 135516232
    Total GMP purchases 6.036 4154537 100.0 250783638
    ISO midday wholesale 6.000

  2. They smell those extra dollars from Trump’s tax decrease in our wallets. And they are going to confiscate it.

  3. That premium has served its purpose. Electric customer who sell their excess power to the electric company should receive the rate that the electric company charges customers in that customers class, plus 0.5¢ per KWH to cover their maintenance costs.

  4. Bob Roper,
    Do you have a source for the 1.73% solar electricity costing 6.26% of all purchased electricity by Vermont utilities?
    I would like to add that to my articles.
    That would imply net metered is 3.5 times more expensive as midday wholesale, which is about 6 c/kWh
    What about the Standard Offer X % solar electricity costing Y % of all purchased.
    What about any other categories?
    When you add it all up the state largesse may be several hundred million dollars/y
    Do you know of anyone who should know these numbers?

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