Legislative Low-Down on Energy for 2011

May 4, 2011

There were two primary pieces of energy legislation this past legislative session. The bills were H.56, an ‘omnibus’ energy bill that, among many elements, focused largely on expanding opportunities for moving small-scale solar projects forward in Vermont and H.155, a bill to make strategic changes to the clean energy financing program, often referred to as PACE.

The House passed both bills decisively in April and, in late-session action by the Senate Finance Committee, the two bills were merged into one — H.56 — and passed days later by a nearly unanimous voice vote of the full Senate. Today, the House concurred with the Senate changes and H.56 is poised to move to the Governor's desk for signature.

While not as ambitious as many clean energy advocates would hope, H.56 — called the Vermont Energy Act of 2011 — takes a solid step forward on expanding opportunities for efficiency and renewables. H.56:

• Expands opportunities for net metering. Despite significant interest in siting small-scale solar and wind projects in Vermont, the current limit on net-metering projects could halt these developments. To address this, H.56:
  • Raises the amount of net metering generation allowed from the current 2 percent cap to 4 percent of utilities’ peak energy demands.
  • Raises the size cap on net-metered systems from 250 kW to 500 kW. 
     

This provision will make the decentralized generation of homegrown energy in Vermont more viable for Vermonters.
 

• Creates a financial incentive to catalyze more net-metered solar. The bill establishes a small benefit that would be paid by utilities to solar net metering customers for the energy they produce (up to a maximum of .20 cents per kWh).

This will help make solar energy more affordable and viable for Vermonters.
 

• Provides necessary bridge funding for the Clean Energy Development Fund. While many iterations of a funding stream for this small-scale renewable energy development program were considered this year, ultimately, at the urging of the Shumlin administration, they were all shelved for a solution that will essentially use existing funds instead of creating a new fee (as had been proposed). Modeled on current federal law, the provision would allow the 23 businesses offered a solar tax credit to take a 50 percent discount on the value of those credits in return for receiving an upfront, one-time grant in lieu of the credit (once projects are up and running). With $8.5 million committed to 93 projects, its anticipated this approach will raise between $2.7 million and $3 million of those funds to support other CEDF-approved renewable energy projects — at no additional cost to Vermonters.

The CEDF is pivotal to growing a decentralized, homegrown renewable energy economy in Vermont.
 

• Makes changes to Vermont’s “Property Assessed Clean Energy” program. Action by federal mortgage backers Fannie Mae and Freddie Mac essentially halted many promising PACE programs across the nation dead in their tracks over the past year — including in Vermont. To address Fannie and Freddie’s concerns and to provide Vermont municipalities more surety, H.56 makes some strategic fixes to Vermont’s existing legislation, including:
  •    Making the PACE assessment on a home secondary to the mortgage.
  •    Creating two mandatory ‘loan loss reserve funds;’ One paid for by participants and one, a statewide loan loss reserve fund, administered by the State Treasurer, paid for by Regional Greenhouse Gas Inventory funds of up to $1 million dollars. Together, these funds should provide the safety net municipalities and lenders seek.
  •    Tapping Vermont’s energy efficiency utilities — Efficiency Vermont and the Burlington Electric Department — to provide administrative support to municipalities who seek it, if they choose.
  •    Limiting the program to residential customers only, not commercial properties. While it’s unfortunate this program is no longer be available to commercial parties, it’s possible that it could be expanded fairly easily to include commercial customers down the road.
   
• Includes a ‘bill-back’ provision that would allow the state to recoup legal fees it incurs in defending itself against in litigation. This kind of “bill-back” authority is common in other types of litigation involving utility companies, but it also opens the door for the state to charge Entergy Corporation for the legal fees the state incurs as it fights the lawsuit the company filed against Vermont last month.

These are some of the core elements of the 2011 legislative session’s energy legislation. Lawmakers pointed to the need to wait for the state’s update to its Comprehensive Energy Plan — due to be completed by October 15 this year — before embarking on more ambitious energy action.

For more information about H.56, please contact Johanna Miller, Energy Program Director at the Vermont Natural Resources Council at 802-223-2328 ext. 112 or email jmiller@vnrc.org.