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Vermont Renewable Energy and Energy Efficiency Act of 2009 to become law

By Shems Dunkiel Kassel & Saunders PLLC

Governor Douglas did not veto the Renewable Energy and Energy Efficiency Act passed by the legislature and so it will become law. We tracked this bill as it worked its way through the House and Senate. According to Renewable Energy Vermont, the statute's components, include:
* a standard offer for renewable energy
* clarification that thermal energy fits within the purview of the CEDF
* regulatory incentives ensuring utilities can recover permitting costs for renewable energy
* requirement that ANR reconsider its policy prohibiting wind on State lands
* improvements to residential- and commercial-building standards
* pilot downtown-community renewable-energy projects in Montpelier and Randolph
* clean energy assessment districts that would allow towns, cities, and incorporated villages to use municipal bonds to finance residential renewable-energy or energy-efficiency projects
* limitations on the power of municipalities and deeds to prohibit residential installation of renewable-energy and energy-efficiency devices, such as solar panels and residential wind turbines

One of the more controversial aspects of the statute pertains to the inclusion of a standard offer - setting a minimum price to be paid by consumers for certain renewable energy. In Governor Douglas' letter summarizing his concerns about the statute, he compares the standard offer to PURPA, the 1978 statute that required utilities to purchase power from independent power producers under long-term fixed contracts. As an interesting aside, some proposals for a national renewable portfolio standard use amendments to PURPA as the legislative vehicle.

The minimum price paid requirements apply to renewable energy facilities that are 2.2 MW or less and would apply until at least a total of 50 MW of qualifying capacity comes online in Vermont.

For most renewable energy sources, the contracts would range from 10-20 years, but solar contracts can range from 10-25 years. The statute requires the PSB to set a minimum price through a noncontested case docket. The docket will start before September 15, 2009. Until, the PSB concludes its docket, the minimum prices set by the statute are as follows:
-methane from a landfill or agriculture operation is $.12 per kWh for facilities up to 2.2 MW.
-wind power is $.20 per kWh for facilities up to 15 kW.
-solar power is $.30 per kWh for facilities up to 2.2 MW.

Until the PSB concludes its docket, the minimum price to be paid for electricity from solar and wind facilities between 15 kW - 2.2 MW, and certain biomass facilities, is the price equal to the average residential rate per kWh charged by all in-state retail electricity providers weighted by the retailers portion of the overall state load at the time the new facility comes online.

In the PSB docket setting the prices, the statute requires consideration of 2 factors: 1) a calculation of a generic cost of each form of renewable energy, and 2) a rate of return on equity comparable to the highest rate of return received by a Vermont investor-owned utility. The statute also gives the PSB broad discretion to make "adjustments" to the factors above to "ensure that the price provides sufficient incentive for the rapid development and commissioning" of the new renewable facilities.

Full post as published by Renewable Energy Law Blog on May 28, 2009 (boomark / email).