Net Metering Program Driving Up Energy Bills

by Rob Roper 

Green Mountain Power recently announced the need to raise its rates by 5%. Why? One growing reason is Vermont’s “Net Metering” program.

The way Net metering works is, in a nutshell, electric customers who generate their own electricity, usually through solar panels, can sell any excess power they create back to the electric company. The company is mandated by law to buy it – and here’s the cost driver to the average ratepayer – at 21.8 cents per kilowatt hour. This a significantly higher price than electricity market price for electricity. Hydro Quebec electricity, for example, costs about 6 cents per kilowatt hour.

The Net Metering program was designed to make it more attractive/cost effective for people to install “green” energy technology, so, in that sense it works as intended. The problem is that this rob-Peter-to-pay-Paul scheme makes it less attractive/cost effective for everyone else to power their homes and businesses. Is this fair? We are the ones who are ultimately being forced to buy this wickedly expensive electricity.

As net metering has expanded in Vermont, the amount of overpriced energy in the system has increased. According to 2016 numbers (the latest available), the percentage of net metered energy of all energy/power purchased is 1.73%, but the cost of all net metered energy purchased is 6.26% of the total cost.

If the Net Metering program is allowed to continue and is encouraged to grow, this math and our electric bills will only get worse.

For a good overview of how Vermont’s renewable energy policies are affecting electric rates, check out Green Mountain Power: Green energy having a negative ‘tangible rate impact’ by Mike Bielawski of TNR.

- Rob Roper is president of the Ethan Allen Institute

{ 4 comments… read them below or add one }

Clara Schoppe January 19, 2018 at 1:21 pm

It’s time for those of us who have any income or assets to move out of Vermont.

Reply

Philip Grantham January 19, 2018 at 10:21 pm

Now I know why my neighbor–who has a roof full of solar panels–boasts that he “breaks even” on his electricity costs…I am subsidizing the heck out of him….

Reply

Milton Eaton January 20, 2018 at 5:04 am

In the last annual conference by the Energy Information Agency (EIA) it was reported that they had stopped calling sources to finance subsidized renewables after contacting 15 source they had offered over five billion dollars in available funds for the subsidized programs if the projects had the necessary permits and licenses. That means a lot of profit for the financers of the project and lots of additional expense for the customers.

Reply

Willem Post January 23, 2018 at 4:19 pm

GMP Purchased Electricity in 2016: GMP purchases electricity from about 25 sources. An increasing proportion has been expensive renewables, such as wind and solar.

GMP also produces electricity with its hydro plants, and wind and solar systems. The electricity produced (MWh) and the cost of the self-produced electricity ($; c/kWh) is unknown to the public at this time, but likely known to GMP, the PUC and DPS.

The data in the table was obtained from a GMP spreadsheet titled “GMP Test Year Power Supply Costs filed as VPSB Docket No: Attachment D, Schedule 2, April 14, 2017”.

NOTE:
– ISO wholesale market electricity cost is 46% less than GMP average cost.
– It would be much wiser for GMP to buy more ISO wholesale electricity to reduce its average costs.
– HQUS electricity cost is 8% less than GMP average cost.
– It would be much wiser for GMP to buy more HQUS electricity, which is abundant. Instead, GMP refuses to purchase additional, low-cost (5.549 c/kWh), very low-CO2 (much less than wind and solar), renewable, HQUS electricity even though 200 MW of a new power line, to be completed in 2019, is reserved for Vermont.
http://www.windtaskforce.org/profiles/blogs/gmp-refusing-to-buy-additional-hydro-energy-from-hydro-quebec
– Net-metered electricity cost is 3.61 times GMP average cost.
– Standard Offer electricity cost is 3.61 times GMP average cost.
– In 2016, the PUC finally wised up, after 6 years, and began competitive bidding of SO solar systems. A few competitively bid, large-scale, SO solar systems produce at about 13.5 c/kWh; heavily subsidized. More such systems would slowly reduce the average SO cost of 21.793 c/kWh.
– Ryegate, a wood chip-fired power plant, sells all of its output at 10 c/kWh, about 66% in excess of GMP average cost.

This URL has a clean version of the table.
http://www.windtaskforce.org/profiles/blogs/subsidized-solar-systems-cause-chronic-budget-deficits-in-vermont

Table 1A 1 2 3 4 5 6
GMP purchases, 2016; MWh % of purchases Cost, $ c/kWh % of Cost Ratio of 5/2
HQUS (Hydro-Quebec); 919312 22.13 51013678 5.549 20.34 0.92
Standard Offer; 78920 1.90 17199202 21.793 6.86 3.61
Net metered; 71970 1.73 15699137 21.813 6.26 3.61
Ryegate (wood); 126707 3.05 12710175 10.031 5.07 1.66
ISO wholesale; 575553 13.85 18645214 3.240 7.43 0.54
1772462 42.66 115267406 6.503 45.96 1.08
Other; 2382075 57.34 135516232 5.689 54.04 0.94
Total GMP purchases; 4154537 100.00 250783638 6.036 100.00 1.00
ISO midday wholesale; 6.000

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