Under Vermont’s net metering rules, large utility customers have a financial incentive to partner with solar developers
Anyone who’s run a business knows you can’t sell your product for less than you pay for it.Barry Bernstein
“Since I left the legislature [in 2017], calculation rules have been drastically altered to create large commercial development of solar power,” said Tony Klein. Those rules allow a developer to build net-metering arrangements of up to 500 kilowatts – the size of a merchant plant – and connect the project to a utility customer.
As is common in sales, utilities offer preferred rates to customers who use a great deal of their product. However, the net metering tariff – the amount the state requires utilities to pay a generator for their power in a net metering arrangement – is set at retail rates, and does not change regarding scale.
So for large utility customers throughout Vermont, partnering with solar developers is a highly attractive prospect: instead of buying all their power exclusively from their utility, their partnership allows them to participate in and benefit from the net metering tariff, while paying large customer rates for any additional power they may need to purchase from WEC.
In WEC territory, large customers pay about $.11 cents per kilowatt hour they use. The state requires all utilities to pay about $.165 cents for each kilowatt hour net metering customers generate. Barry Bernstein observed, “Anyone who’s run a business knows you can’t sell your product for less than you pay for it.”
Harwood Unified Union School District is one of WEC’s largest members. In 2018, the HUUSD Board of Education voted to enter a net metering partnership with Middlesex-based Kingsbury Energy on a 300 kilowatt solar development installed by Waitsfield-based developer (and WEC member) Aegis. At the time, the Waterbury Record reported, “For every kilowatt-hour produced by the system, the schools get a credit. Then, they reimburse Kingsbury Energy about 88 percent of that credit, meaning their savings total about 12 percent.”
Christine Sullivan, a HUUSD school board member who was chair at the time, said in an email that there wasn’t much to the decision. “We were presented with the proposal by the owner/representative and agreed to sign on. I believe that the economic upside is limited to a discount on our bills. We were a good fit for the owner because we’re one of the few large users in the region on Washington Electric,” she stated.
State statute terms, Klein explained, also prevent the utility from knowing the financial agreement between the solar developer and net metering customer. “WEC not only doesn’t know, but is not allowed to know. But under current rules, WEC has to pay Kingsbury,” he said. “It’s a real stretch to see the connection between the power producer and the off-taker.”