Another Day, Another State Reduces Costly Solar Industry Subsidies

Jason Hopkins | Energy Investigator

Following a growing number of states, Vermont has chosen to reduce compensation given to solar panel owners and allow a more fair rate for all electricity customers in the state.

Vermont is scaling back the amount of money given to customers participating in the state’s net metering program. Changes need to be made to net metering in order to balance growth of the program while maintaining affordable electric rates, the Vermont Public Utility Commission determined, in a statement issued on May 1.

Rated in 2018 as the most environmentally friendly state in the country, Vermont certainly encourages growth of its renewable energy industry. Net metering offers an incentive for solar panel usage by paying customers an oversized amount of money for the electricity they send back into the grid. However — even in the progress enclave of Vermont — the state’s public utility commission has grown concerned about the effect expensive net metering prices are having on all electricity consumers.

“These financial incentives also make net-metering the most expensive of Vermont’s renewable energy programs because the utility is essentially ‘buying’ the net-metered output at substantially more than market rates for comparable renewable energy,” the commission explained in its statement. “[A] number of Vermont utilities expressed concern about the effect on rates of continued high net-metering prices.”

As is the case in most states, when utility companies are forced to purchase power from solar panel owners at a higher-than-market rate, those costs are ultimately passed on to all other electricity customers. To address this situation, Vermont’s commission is reducing the incentives given to future net metering systems over a two-year process. There will be a reduction in compensation for customers who transfer their solar-generated energy to utility companies by one cent per kilowatt-hour in each of the next two years. There will also be a roll back in the amount paid to larger net metering systems that benefit from better economies of scale.

Vermont follows other states across the country that are reforming their net metering programs.

In December 2016, the Arizona Corporation Commission reduced the amount solar installation owners receive in the state’s net metering program. The Michigan Public Service Commission made similar changes in April 2018. Both states took action to provide more fair rates for electricity customers not involved in net metering. Gov. Chris Sununu called for reforms in New Hampshire, suggesting these sort of subsidies prop up otherwise-inefficient renewable energy companies. Montana, on the other hand, discovered its largest utility company is overpaying net metering customers around three times the market value for their power.

Vermont’s solar industry isn’t excited about the reforms headed their way.

“Our mission at SunCommon is to tear down the barriers to clean energy. Decreasing Vermont’s solar incentive while President [Donald] Trump is promoting dirty coal and our climate is baking is wrong,” SunCommon Co-Founder James Moore said in a statement published Thursday. “Solar is creating jobs, keeping our energy dollars local, and helping build vibrant communities in Vermont. We are committed to using our business as a force for good; and today, that means helping as many Vermonters as possible get the most value from their solar. It’s what we do.”

Suncommon is a Vermont-based solar technology and installation company. Companies such as Moore’s have benefited greatly from the expensive rates utilities must pay for solar-generated power. The value of rooftop solar systems have dropped an estimated $750 after the state’s reforms.

However, the measure is not an assault on green energy initiatives, the Vermont Public Utilities Commission argues.

“This argument conflates net-metering with solar development generally,” the commission stated, according to a Thursday report from the Rutland Herald. “As the Department and the distributed utilities pointed out, there are more cost-effective ways for Vermont to develop solar resources than continuing the current net-metering incentives.”

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