State official outlines Vermont electric policies, growth of rooftop solar and costs of compliance

TJ Korr, regulated utility planning director at the Vermont Department of Public Service, told the Natural Resources & Energy committee that the presentation was "part 2" of an overview of Vermont's electricity policies, focusing on energy efficiency programs, the Renewable Energy Standard (RES), the standard-offer program and net metering.

Korr said the state collects roughly $50,000,000 a year from a separately stated energy-efficiency charge to fund electric-efficiency programs run by Efficiency Vermont and, as an exception, by Burlington Electric Department. He told the committee that Vermont gas systems budgets for thermal/process-fuel efficiency total about $6 million to $6.5 million annually and that some thermal-efficiency funding also comes from Regional Greenhouse Gas Initiative (RGGI) revenues and forward capacity-market payments.

The Renewable Energy Standard, Korr said, is now organized into five tiers. He described Tier 1 as the total renewable requirement; Tier 2 as an in-state distributed-generation requirement (resources under 5 MW sited on the Vermont distribution system); Tier 3 as a fossil-fuel reduction requirement; Tier 4 as a new renewable-generation tier for projects built after 2010 (no size limit, deliverable into ISO New England); and Tier 5 as a load-growth tier for utilities that have already met high shares of renewables. Korr said the law aims for a statewide 100% renewable target by 2035 and that the Tier 2 in-state requirement was increased to about 20% by 2035 for several utilities under last year's changes.

On compliance sources and costs, Korr said two-thirds of 2023 RES compliance came from large hydro and nuclear imports delivered into the region, with roughly another quarter from in-state or New England hydro and only about 5% coming from historically small Tier 2 resources (largely net-metered projects). He reported 2023 gross ratepayer costs for RES compliance on the order of tens of millions of dollars (Korr cited a figure of about $32,000,000 and said that equated to roughly a 3.5% rate impact for 2023). He also said Tier 2 renewable energy credit (REC) prices have stabilized near $40/MWh (about $0.04/kWh) in recent years, while the larger-market Tier 1 proxy prices have averaged roughly $3.50/MWh in recent years.

Korr reviewed the standard-offer program, noting earlier tranches that awarded contracts for small in-state projects. He said the most-recent competitive solicitation produced prices just over $0.08/kWh but that some awarded projects later withdrew because they could not build at those prices; roughly 30 MW from past awards remain pending construction. He said certain farm-methane projects and other specially designated projects may be awarded contracts outside the principal program cap.

On net metering, Korr summarized the current structure (often referred to as net metering 2.6). He said program compensation depends on system size, site-category (on-site roof, preferred site, larger preferred-site projects, and non-preferred projects), whether a customer transfers RECs to the utility, and a statewide blended excess-generation rate that the Public Utility Commission updates every two years. Korr reported the statewide blended excess-generation rate under the current revision is a little over $0.18/kWh; after category adjustments, compensated rates for exported energy can range roughly from $0.10/kWh to about $0.18/kWh depending on project category and whether RECs are transferred.

Korr told the committee that net metering deployment in Vermont has reached roughly 375 MW, and that combined program activity (net metering plus standard-offer and utility PPAs) yields about 545 MW of distributed solar plus nearly 50 MW of wind and roughly 80 MW of hydro ' in total almost 700 MW of distributed supply ' with about 74 MW of storage on the system. He observed that those distributed resources represent a large share of Vermont's peak demand and that the RES distributed-generation need under the new rules is estimated at roughly 42'50 MW per year to meet Tier 2 requirements going forward.

Korr also reviewed specific program details that affect cost calculations: some REC revenues previously sold forward reduced utilities' apparent renewable shares, changes in how RES is measured (from retail sales to total load, which includes losses) require utilities to procure slightly more energy, and certain long-term base-load contracts (he cited the Rygate biomass facility as an example) are fixed-price arrangements currently adjusted for wood-supply costs and tied to efficiency or waste-heat-use conditions.

Committee members asked about the cumulative savings from Efficiency Vermont, the mix of measures driving fossil-fuel reductions (heat pumps and electric vehicles were cited as major contributors), and whether additional effort is needed to maintain or increase savings now that "low-hanging fruit" measures such as lighting have been widely deployed. Korr said potential studies conducted for three-year budget cycles show technical and economic potential is relatively flat and that future gains will require higher-cost or custom measures and will likely track electrification trends (for example, heat-pump adoption creates new electric-efficiency opportunities).

Korr closed by noting the presentation raised many questions from the committee and offered to return for further discussion. There were no formal motions, votes, or decisions recorded during the briefing portion covered in the transcript.