Senate minority leader compares Vermont renewable energy credits to ‘Enron’

By David Flemming

Vermont produces so much renewable energy that we can sell “credit” for producing it to other states. While Massachusetts and Connecticut are willing to pay high prices for a share of that energy, the risks associated with producing more renewable energy isn’t worth it for Vermont.

In the Senate Finance Committee on Feb. 16, Sen. Randy Brock, R-Franklin, asked Ed McNamara of the Department Public Service some probing questions about Vermont’s convoluted energy market.

state of Vermont

Senate Minority Leader Randy Brock, R-Franklin

The conversation was initially about Vermont’s renewable energy credits, or RECs, and the ability of our state to profit off of the REC system set up in New England. Whenever a solar, wind or other renewable array in Vermont produces a megawatt of power, the utility is notified and they produce a REC, which can be sold on a secondary market. Of late, this market has been New England utilities outside Vermont who don’t produce enough renewable energy in-state to meet the renewable energy mandates set by their legislatures. This is because a REC is worth far less in Vermont than in other states with renewable energy mandates.

Sen. Brock asked, “Suppose this whole arrangement of RECs and arbitrage … went away and there wasn’t anything like that at all. Would we [Vermont] do anything different?”

McNamara responded, “I believe we would. … The [Vermont] Legislature essentially told Green Mountain Power and the other utilities ‘go out and build wind, go out and contract for wind.’ And GMP is now saying, ‘OK, that wind that you built, we don’t value that. So sell that to Massachusetts, sell it to Connecticut (instead).’”

Brock found this answer remarkable: “I picture myself sitting in the seat in Massachusetts and trying to explain to my constituents why I just spent $3.7 million dollars to buy something worth $80,000 [in] Vermont? And I’m just having difficulty trying to articulate that. I mean, this reminds me of Enron, quite frankly.”

Enron was an energy company that declared bankruptcy in 2001 after using fraudulent accounting schemes to defraud investors.

There’s no way we could shuffle this burden off on other states, except as McNamara put it, “Vermont is 4% of New England’s load. So a lot of times what we do has very minimal impact. … [So] $3.6 million is a drop in the bucket for Massachusetts.”

Our Vermont legislators are betting that because we are so small, Vermont’s mark-up of RECs is only a minor nuisance to these larger states — perhaps how an elephant might feel after being bitten by a mosquito.

More money from those states means lower electric bills for Vermonters if those utilities put all of that money from selling RECs into lower rates. But is Vermont really gaming the system by outsmarting the politicians in Massachusetts and Connecticut? The only reason we sell our RECs is because we have a renewable energy standard, which carries hefty compliance costs. Setting that aside for the moment, we’re fooling ourselves if we think that this arrangement comes without graver concerns than mere electricity cost considerations.

In 2019, we reported how nearly 50% of Vermont’s 150 electrical power substations were at risk of “transmission ground fault overvoltage” (TGFOV) if more solar was added. Energy expert Meredith Angwin notes that “when we close nuclear and coal plants and don’t build gas pipelines, we increase our weather-vulnerable dependency.”

Anytime a megawatt of renewables is created, this creates more strain on our aging electric grid. We shouldn’t keep producing more RECs simply because other states are more willing to pay for our excess solar energy. Reliable electricity is vital to keeping Vermont households safe.

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

Images courtesy of Flickr/Eflon and state of Vermont

3 thoughts on “Senate minority leader compares Vermont renewable energy credits to ‘Enron’

  1. Of course, everyone should understand that we’re paying about 16 cents per kwh for Vermont’s generated renewable energy while we could be buying it from Hydro Quebec for 6 cents per kwh.

    Go figure???

  2. David,

    This sounds like a high level, esoteric debate.

    The whole REC situation is so absurd, because it likely was dreamt up by politicians, influenced by “break-their-will” RE Zealots.

    I better not participate, because I would quickly be unwell, and start vo…g

    Meanwhile,

    Governor and Senators Seeking More Electric Vehicles and Buses with COVID Money
    https://www.windtaskforce.org/profiles/blogs/electric-bus-systems-likely-not-cost-effective-in-vermont-at

    The energy priorities of New England governments are driven by a self-serving cabal of “break-their-will” RE zealots, because of excessive subsidies for wind, solar, etc. They have powerful allies on Wall Street, which is molding the minds of people by means of generous donations to universities and think tanks. Here is an example of the resulting double-speak:

    Vermont’s Governor: “Investing in more energy-efficient public transportation is important for our economy and environment,” the governor said. He added that the money is enabling the transportation agency to replace as many as 30 buses and fund energy-efficient projects.”
    http://www.truenorthreports.com/governor-and-senators-seeking-more-

    The Vermont House Energy/Environment Committee and the VT Transportation Department echo the same message, to “convince” legislators, people in the Governor’s Office, and Vermonters to buy expensive electric buses to deal with a minor pollution problem in a few urban areas in Vermont. Such an electric vehicle measure would be much more appropriate in the over-crowded Boston Area and the Connecticut Gold Coast.

    They urge Vermonters to buy electric buses at about:

    $750,000 – $1,000,000 per mass-transit bus, plus high-speed charging systems; a standard diesel mass-transit bus costs $380,000 – $420,000
    $330,000 – $375,000, per school bus, plus high-speed charging systems; a standard diesel/gasoline school bus costs about $100,000
    https://atlaspolicy.com/wp-content/uploads/2019/07/Electric-Buses-a

    COVID money for Electric Buses: The Governor and bureaucrats are throwing COVID money, meant for suffering people and businesses, into another climate-fighting black hole.

    Vermont has cold winters, and hills, and snow-covered roads, and dirt roads in rural areas; kWh/mile would be high.
    Those buses likely would need 4-wheel-drive, or all-wheel-drive in rural areas.

    • We no longer have people in office that listen to the people paying the bill. And they have rigged the system so you lose your home, your business or ability to live if you do not comply. Ordinary people just haven’t figured it out yet.

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