Note: VEC's net metering program is full for 2016. Check back for updates about when members can apply to install net metering systems in 2017
Net Metering Information and FAQ
Net metering is a program instituted by Vermont law that allows members to connect small-scale renewable energy systems to the grid and receive credit on their electric bills. The most common type of net metering is solar, but wind, hydro and methane can also be used under the net metering program.
In 2011, the state legislature set a net metering cap of 4% of a utility's peak demand. VEC reached that cap in July 2013 and subsequently closed the program to new applicants. In April 2014, Governor Shumlin signed a new net metering bill into law that raised the cap to 15% of a utility's peak demand. VEC's net metering program opened to new applicants and the 2015 and 2016 caps were reached and the program again closed until 2017.
Statement about VEC's Net Metering Program
We know that some members are concerned that we have reached our net metering caps for 2015 and 2016.
The net metering program closed at the end of November and will stay closed until 2017 when the new rules for net metering will come into effect. As a member-owned, nonprofit utility, VEC makes every effort to be responsive to the concerns of our members. Over the past few years we have been consistently hearing that members are very concerned about electric rates and the cost of service, and also that they want to see more renewable energy utilized to meet our energy needs. We do not believe these are conflicting goals. Both goals can be achieved if we consider the needs of all of our members and make thoughtful policy choices with a long-term perspective. It is not going to be easy. VEC towns have some of the highest poverty levels in the state, so we make all of our decisions with cost in mind. We will continue to do our best to meet the needs of all our members in a thoughtful and sustainable way. In response to some questions we have been hearing:
What is the net metering cap based on?
In 2014, the legislature raised the net metering cap to 15 percent of a utility’s peak demand. When the law went into effect, VEC was at 4 percent of peak demand. The statute sets an additional 4 percent aside for VEC’s Co-op Community Solar project; and VEC is required to allocate the remaining 7 percent equally among 2014, 2015, and 2016 (ie 2.33 percent for each year).
Why did VEC hit the cap so soon?
The net metering rate of $.19 or $.20 per kilowatt hour, coupled with federal tax credits caused a huge increase in the number of applications, many of which are large commercial projects. About 70% of our 2014-2016 reserved capacity for net metering is taken up by these large projects, which generally are not co-located with homes or businesses. If the net metering program were limited to smaller projects, we would not have hit the cap so soon.
Why have a cap at all?
The cap was put in place to limit the financial exposure that the net metering program creates. Utilities in Vermont are required by law to pay either $.20 or $.19 per kilowatt-hour (which increases every time we have a rate increase), depending on the size of the project. These rates are above our retail rates and far above the wholesale rate we pay for other power sources, including renewable ones. We are required to pay this rate even as solar installation costs have dropped in recent years. We could do away with the net metering cap if the net metering rate were in line with the market rate.
Why can’t you just pay retail rate instead of the higher net metering rate?
The reason we don’t simply pay members the retail rate for rolling their meter backwards when they produce more solar power than they use is that we are legally required to pay $.19 or $.20 per kilowatt-hour for projects that come online through 2016. We simply don’t have the option to pay less.
In sum, VEC’s job as a non-profit, member-owned utility is to deliver reliable, cost-effective power to members. We welcome renewable generation in the right location and at the right price. In fact, we are working with solar developers to build several megawatts of solar in locations that will benefit the grid at a price that makes sense. We hope the net metering rules being developed for 2017 will create a sustainable program that supports increased distributed generation at a cost-effective rate.
In Vermont, we need to work together to create the renewable electric grid of the future, which will require innovation, investment and a tough look at the real-world challenges that stand in the way of reducing carbon-based power sources. This project will require considerable investment of money and collaboration among all stakeholders, including developers, legislators, regulators, utilities and anyone who uses electricity. Spending too much on net metering now (and for ten years because those rates are locked in) drains long-term resources that will be critical to this endeavor. We have to use our resources strategically and work together to get it right.