Program to promote renewable energy gets new scrutiny

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A program meant to spur renewable-energy development is receiving scrutiny from the state's top energy regulators, following the Public Utility Commission's end-of-the-year order calling for a review of Vermont's "standard offer" program.

Supporters of the program say it's an important tool for putting cheap renewable energy generators on the ground in Vermont. Some critics say the program is easy to abuse, and in need of reform. Regulators say it's a good time to evaluate what works and what doesn't.

"We definitely support the standard offer program," said Olivia Campbell-Andersen, executive director of the industry group Renewable Energy Vermont. "It's a great program that enables renewable energy projects to be built in Vermont at competitive prices."

But the program could use some fine-tuning, said hydroelectric developer Matthew Rubin, who also heads the group responsible for administering the standard offer program, called Vermont Electric Power Producers.

A major problem Rubin identified is the number of developers who bid low electricity prices for their projects, but who can't actually deliver the projects that would generate at those prices.

Developers waste their own time on these long-shot attempts, perhaps thinking mistakenly when they're bidding that technology prices will diminish enough to meet those promised low prices between the time they submit bids and the time they're scheduled to actually build, Rubin said.

Regulators also waste administrative time reviewing projects with unrealistically low price projections, when those projects don't materialize after the PUC awards them a standard-offer contract, he said.

The PUC would be better off returning to the system that was in place until 2013, Rubin said, wherein state regulators would simply determine what electricity was worth from a given type of renewable-energy generator, and require standard-offer projects to meet that price. The lowest-bidder process currently in place hasn't worked well in practice, he said.

It's also not clear that the lowest-bid criteria is the only one that should be applied when regulators are trying to decide which projects to approve, PUC commissioners said in the Dec. 29 order that commences the standard-offer program review.

Regulators' focus on cost alone, and not on location or other factors, has led to a glut of generation capacity in some parts of the state where the electrical grid isn't well suited for that much power, PUC members stated in the order.

The program review also was prompted by a recent agreement between the Vermont commission and the Lawrence Berkeley National Laboratory, in which lab analysts will at no cost to the state advise state regulators to come up with a modern standard-offer program that builds on successful models used in other states, said Jake Marren, a PUC staff attorney.

The program is also statutorily authorized through 2022, Marren said, which means that it's about midway through its lifespan. That's a good time to for PUC commissioners to ask, "`Are we doing this the best way we can?'" Marren said.

The standard offer program allows renewable-energy developers to submit bids to the state for what they expect electricity to cost from new projects they hope to build; the Public Utility Commission selects the bids with the lowest price, from among several types of generators.

The program awards contracts to a number of low bidders whose power adds up to the amount of small-scale renewable energy the PUC is scheduled to allow in total that year — five megawatts per year between 2013 and 2015, 7.5 megawatts each year from 2015 until 2018, and 10 megawatts from 2019 to 2022.

Each project that developers bid into the standard offer program must not exceed size limits set for each of the seven different types of generating technologies (hydroelectric, wind, solar, methane from farm waste, methane from food waste, and biomass) that the program supports.

Created by the Legislature in 2009, the standard offer program was initially meant to get 50 megawatts of new renewable-energy generators built within Vermont. That target was met in 2015, and the program has been rejiggered since then to bring a total of 127.5 megawatts of renewable-energy generation to the state.

It's one of three programs the state government has in place to encourage the development of in-state renewable energy generators.

Another program aimed at smaller generators, called net metering, recently underwent an extensive rewrite of its own.

The recent revisions to Vermont's net metering program, which the PUC finalized this fall, are expected to curtail the rate of small-scale renewable-energy development by sharply cutting the subsidies these projects have received in recent years.

The third state program intended to encourage renewable-energy development within Vermont's borders results from a long-standing federal law called the Public Utility Regulatory Policies Act. This program, established by the federal government in the 1970s in response to high oil prices from foreign suppliers, requires utilities to purchase electricity from some types of larger electricity generators, such as the half-dozen 20-megawatt solar arrays around the state pushed by New York-based developer Ranger Solar and Gov. Phil Scott's chief of staff, Jason Gibbs.

The PUC is currently accepting public comments on the standard-offer program and will continue doing so through Feb. 22.

Disclosure: Matthew Rubin is treasurer of the Vermont Journalism Trust, with which VTDigger merged in 2010.

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