Vermont slightly reduces its net metering rate during its biennial update

The Vermont Public Utilities Commission has issued a required update to the state’s net metering program. As a result of the adjustments, future net metering systems that apply for permits on or after August 1, 2024 will see a small net decrease in compensation – less than three-quarters of a cent – ​​compared to what existing systems currently receive. Most existing net metering systems will see their pay increase by 7.33% due to simultaneous statewide electricity rate increases.

Every two years, the Commission must recalculate the bill credit that net metering customers receive for the energy produced by their net metering system to reflect changes in retail electricity rates since the last biennial update. This is called the “statewide residential blended rate,” which has increased by $0.01257 per kWh since 2022.

The Commission is also required to assess the incentives and overall remuneration offered to new net metering systems and decide whether they should be adjusted upwards or downwards. The purpose of this adjustment is to ensure that the pace of net metering implementation is consistent with Vermont’s policy goals, while taking into account the program’s impact on electric rates. Consideration is given to the changing costs of installing net metering systems, the rate of past adoption of net metering systems, and the impact of net metering on all payers. This year, these considerations have resulted in a 2 percent reduction in total compensation for new systems requested on or after August 1, 2024, but the net effect of the increase in retail electricity rates discussed above is only a three-quarter reduction cent.

The net metering program, which was created in 1999, is just one of several programs available to develop solar and other renewable energy in Vermont. Customers who install net metering systems, such as solar panels and small wind turbines, can offset their electricity bills through financial incentives based on the amount of electricity produced by their net metering systems. The Commission is committed to reconsidering the financial incentives offered to new net metering systems every two years as part of the biennial review process to ensure that the program continues to provide value to all Vermonters, including those who do not directly participate in the net metering program. This order summarizes the review process.

The information and data presented in this year’s biennial review show that the net metering program – particularly solar net metering – continues to enjoy strong interest. Additionally, many of the best-located net metering systems (roof-mounted systems, for example) benefit from streamlined permitting procedures that result in CPG being issued within 15 days. In 2023 alone, 2,351 new net metering systems, representing a total of approximately 25 MW of new renewable energy generation capacity, have received public good (CPG) certification from the Commission. However, the data presented in this biennial net metering update also show that net metering is the costliest of the state’s renewable energy programs and that the pace of work on net metering installations far outpaces that of other, less costly renewable energy projects. For example, in 2023, over 28 MW of net-billed projects were connected, compared to 4.4 MW of standard-billed projects and 5 MW of utility-sourced solar at a much lower price. This trend ultimately increases rates for Vermonters who do not or cannot participate in a net metering program. Therefore, to better moderate the pace of development of new net metering systems, the Commission decided to reduce the compensation offered to new net metering systems by 2 cents per kWh, resulting in a net decrease of USD 0.00743 per kWh, or less than three-quarters of one cent . However, due to other adjustments made in today’s order, most existing net metering systems will benefit from an increase in the current wage of $0.01257 per kWh, or approximately 7.33%.

“Vermont’s efforts to address climate change will require a significant shift to electric vehicles and heat pumps powered by zero-emission electricity generation technology,” said Commission Chairman Ed McNamara. “Even with a net metering compensation reduction of $0.00743 per kWh for new systems, Vermonters still pay significantly more for net metering compared to equivalent new renewable energy generation sources. Going forward, Vermont should prioritize generating renewable energy as cheaply as possible to meet our climate and renewable energy requirements.”

The adjustments announced in the biennial update will take effect on August 1, 2024.

Vermont Public Utility Commission Message