On December 11, 2019

Is Vermont’s DPS waging war on the state’s solar industry?

By Angelo Lynn

In a little noticed Department of Public Service review of the state’s current net-metering structure, the DPS recommends to the Public Utility Commission that the net-metering rate be reduced from the current 17 cents per kWh to 9.2 cents per kWh — cutting the rate almost in half, and effectively knocking the legs out from under Vermont’s vibrant solar power industry.

It’s shocking and dumbfounding.

At this particular time in the world’s struggle to combat climate change and reduce the global carbon footprint, why would Vermont’s DPS make such a suggestion?

Here are two suppositions:

Partly, they propose this hypothetical rate as what they are calling a “straw compensation structure” figuring that it will generate a lot of negative reaction in the industry, but they’ll adjust upward and seek a compromise, but at a significant decrease in the rate subsidy, nonetheless.

Partly, the DPS is putting its job as regulators of the cost of power to consumers ahead of the jobs created by the solar industry (in Vermont, the solar industry has created 6,000-plus jobs) or the environment. In this case, reducing the cost of electricity is more important (in the minds of the DPS) than reducing the state’s carbon footprint.

A cautionary tale

The Vermont DPS’s recommendation also mirrors action taken in Nevada a few years ago, with a cautionary tale.

In December 2015, the Nevada PUC sought to negate the so-called “cost-shift” of renewable energy generation of solar power from those able to benefit from its generation to those who couldn’t (because the electricity rate charged by the utilities absorbs the subsidies that finance some of the solar generation). In that mindset, the Nevada PUC cut the solar subsidy substantially, which decimated the solar industry in Nevada. Over 2,000 jobs were lost in the first year after that action.

The harm done to the state’s solar industry created such a firestorm that the Nevada legislature intervened and 18 months afterward passed legislation reversing the PUC’s action. The legislation, which reinstated net-metering at its previous subsidy ,was passed with a bipartisan majority and signed by a Republican governor. Interestingly, Nevada had 6,000-plus solar jobs in 2015 right on par with what Vermont is today. Nevada figured the lost payroll income in that one year after the PUC’s action was more than $60,000,000. The same potential loss would be true in Vermont today.

The Nevada legislature also included language in that 2017 bill that not only reinstated net metering, but statutorily guaranteed the right to self-generate electricity and guaranteed the right for customers to interconnect rooftop solar or a solar-plus storage system in a “timely manner”; neither of those two latter provisions are currently included in Vermont’s net-metering rules. Nevada now ranks third in the nation for solar installations.

Koch connection?

What’s also interesting is that the reasoning used by Vermont’s DPS copies much of that used by Nevada’s PUC in 2015, most likely because it could have been provided by the American Legislative Exchange Council, a legislative organization that shares policy strategies among states and is partially funded by the ultra conservative Koch brothers. We’re not suggesting any nefarious political influence is going on here, just that the cost-shift justification is right out of a conservative playbook that seeks to divide and conquer by pitting those residents who benefit from solar power generation against those who don’t.

It’s also clear that the Koch brothers, and many from that ultra-conservative persuasion, don’t believe in climate change and the dangers it presents. Rather, they prefer a status quo in which big utilities control the cost of power, drive out independent production, and keep power costs as low as possible regardless of its impact on the environment.

As to an explanation of the cost shift, here is further insight from Bill Bender, president of Solaflect Energy, a Vermont solar developer based in Norwich:

“The basis of the cost shifting argument is that there are fixed costs to the grid that become more expensive to maintain on a kWh basis if fewer kWhs are sold to solar customers, and therefore solar customers are receiving a subsidy. However, the purported “cost-shift” comes from a reduction in sales by the utilities, making it harder to maintain the distribution grid, for example. However, only 18 percent of Vermont’s energy use is electricity. The only way to decarbonize the economy is to electrify the remaining 82% of energy use.

“The goal of the PUC, the DPS and the utilities needs to be to enable this shift to be fast enough to replace the kWh not sold from solarization. When consumers invest in their own solar systems, they are often bringing dollars invested in New York or Boston back to Vermont, or taking loans from local banks, and are keeping additional dollars in Vermont through the federal solar tax credit. They are also helping to reduce the $2 billion that Vermont exports each year by purchasing fossil fuels.

“The early adopters are helping to drive the cost of solar, heat pumps, battery storage, energy efficiency, and electrical transportation down by creating the businesses and skilled labor force that are continuing to drive down prices of a renewable infrastructure,” Bender said. “We will only get to a distributed generation future with thousands of Vermont consumers making a renewable choice for the future of their children and grandchildren… this is not the time to kill off the solar industry.”

Angelo Lynn is the editor and publisher of the Addison County Independent, a sister publication to the Mountain Times.

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