Vermont Legislature SmartTranscripts:

[Sen. Anne Watson (Chair)]: Response to the fact that the federal solar tax credits just expired. They ran out, as we just heard after decades of being in place. And so one of the things that we can do is look at, well, guess since you got it, every couple of years, the Public Utility Commission adjusts the, I believe it's the net metering rate, and it has been typically going down. And so one of the things that we can potentially do for, the solar industry is to just put the brakes on, just take a pause, not, The next time it would be adjusted would be, I believe it be this summer. And so the intent of this is to say, we're not going to adjust the rates this summer. We're going to pause that and wait until 2028 before we look at adjusting the rates again, as a way to sort of freeze things as they are. With that said, I will invite our legislative council up to walk us through this super short bill. Sure. I'm Lynn Chaykowski, Oxley Legislative Counsel. I'm here on S170.

[Lynn Chaykowski, Office of Legislative Counsel]: And so it is quite short. So before I read it to you, I'm going to build a little bit on what Senator Watson just said. So you will recall that in Title III meeting, Section two forty eight establishes that the construction of an energy generation facility, including that metering systems require a certificate of public good. So the PUC does a review of the criteria and determines if the construction of this new generation facility will be in the good of the state. You have then also narrowed the scope a little bit for net metering systems. They have their own special procedure because they are generating electricity systems, but they are typically on a much smaller scale. So you enacted 30 BSA 8010, which directs the PUC to create and update rules on net metering systems. And so prior to that statute being updated to its current form, the legislature used to set rates for net metering in statute, but that no longer happens. You have delegated the authority to the PUC as part of their rulemaking, set the rates. You've given them some parameters on that, but as part of the rules they have adopted for net metering systems, in the rule it says that every other year, every two meters, the PUC will reevaluate the rates for engineering systems and determine new rates. So every even year, they've been doing a process to reevaluate those rates, and those rates have been issued in an order. So the provision in the 01/1970 is a session law provision, because there really wasn't anything for me to amend any statute on this. But yes, so they go through the process of reevaluating the rates every two years, and they issue that immediate order, which is a slightly different process than a full rule making process. So as far as the text of the bill, it's only one section. It's net metering rate orders. The Public Utility Commission shall not adopt new renewable energy credit adjusters or citing adjusters prior to the 2028 biennial update required by Rule 5.1. Rule 5.1 is the net metering rule for PUC issues, and then this takes effect on passage. So like Senator Watson said, the intent is to not go through an update this year, but to wait until the next update, which would be in 2028. And I would just also preface that I'm not familiar with the procedure that they use when do, when they reevaluate their grades. So I can't answer that. And also, I am not super familiar with the types of formulas they use for the different adjusters. So I think I would be having limited ability to answer your detailed questions on those and that you should hear from the people who actually do those calculations. Yes. So in your own words, what does this do? It just keeps things the way they are for another year.

[Sen. Anne Watson (Chair)]: Even though the economy went down. Right. Until 2020. Okay. So what types

[Sen. Scott Beck (Clerk)]: of things could the PUC do if they did need to adjust this No.

[Sen. Anne Watson (Chair)]: So if like in the absence of this bill, so they would go through with their normal every two year review of the rates, which has historically been going down. And so the thought was to, you know, could we leave things as a step as well? Open to

[Peter Sterling, Executive Director, Renewable Energy Vermont]: well, open to this discussion. Yeah.

[Sen. Anne Watson (Chair)]: Does that answer your question?

[Sen. Scott Beck (Clerk)]: Yeah. It's I didn't put it to the way everything. The whole world is working against solar. This is one little thing we can do.

[Sen. Anne Watson (Chair)]: Right. Right. This is one little thing that we could show.

[Sen. Seth Bongartz (Member, Bennington District)]: Yeah. I would just be I mean, I don't

[Peter Sterling, Executive Director, Renewable Energy Vermont]: maybe you get it last year, not you.

[Sen. Scott Beck (Clerk)]: But I would just really like to know how you said some of

[Sen. Anne Watson (Chair)]: the rates.

[Peter Sterling, Executive Director, Renewable Energy Vermont]: Yeah, I think that would

[Sen. Anne Watson (Chair)]: be interesting. I mean, obviously we should hear from them, but I wonder if there's a, if it might actually have an opposite effect that they might consider that the credits have been taken away and they would raise the rates. And so that we should hear because it might

[Sen. Ruth Hardy (Member)]: have the opposite effect than what's intended. That's a fair assumption.

[Sen. Scott Beck (Clerk)]: Whether you challenge your appraisal.

[Sen. Anne Watson (Chair)]: Yes, okay, thank you. All right, so next up we have Peter Sterling from renewable energy remote, both of them.

[Peter Sterling, Executive Director, Renewable Energy Vermont]: I I can answer a bunch of questions. Peter Sterling, Director of Renewable Energy in Vermont. I also want to publicly say I'm sorry for the little Jude minor heart attack when you went to spam, so Jude is always a symposse. So I don't know if my do you all have my slides or?

[Sen. Anne Watson (Chair)]: No, you have to share. Just hit share on your screen. You're you're in meetings, so if you share see the green button that says share? Then you can share your slides.

[Ben (Committee Assistant)]: Okay. There we go.

[Peter Sterling, Executive Director, Renewable Energy Vermont]: Not really sure how to share it so I don't have the slides on my phone. Do you mind if you

[Ben (Committee Assistant)]: Yeah. Borrow the computer? Okay. Somebody who maybe I don't have any slides.

[Peter Sterling, Executive Director, Renewable Energy Vermont]: I can follow you my slides. I'm sorry about this, yeah.

[Sen. Anne Watson (Chair)]: It's okay. That would be great, Ben. Should we take, like, a quick break?

[Peter Sterling, Executive Director, Renewable Energy Vermont]: Take a once. Yeah. I can get this to Ben right now. Okay.

[Sen. Anne Watson (Chair)]: Ben, you have to

[Peter Sterling, Executive Director, Renewable Energy Vermont]: Hi. Good. I should. I mean, this is what's unfair about over 50 to do technology on phone. We're doing good to be over certain. Who's that contest?

[Sen. Anne Watson (Chair)]: Okay. You're good?

[Peter Sterling, Executive Director, Renewable Energy Vermont]: I'm good.

[Sen. Anne Watson (Chair)]: Well, that part is good.

[Peter Sterling, Executive Director, Renewable Energy Vermont]: Alright. Did you

[Sen. Anne Watson (Chair)]: send the slides?

[Peter Sterling, Executive Director, Renewable Energy Vermont]: I sent slides. Okay. Alright. Ready to hear Bennington? We can book you.

[Sen. Seth Bongartz (Member, Bennington District)]: Sorry.

[Peter Sterling, Executive Director, Renewable Energy Vermont]: I they've emailed it about the salary. It's not

[Sen. Anne Watson (Chair)]: bad, Britney. Yeah. Okay. So the see it, Rose. You can proceed.

[Peter Sterling, Executive Director, Renewable Energy Vermont]: Okay. So why don't I start and then Brandon could throw out this piece of all those. Alright. Thank you all. The Trump administration and Congress have an anti federal support for purchasing net metering at home, we're essentially solely calling net metering. The bill entered the federal tax credit as of thirty first of last year. In addition, the US EPA has withdrawn $62,000,000 in solar for all funding designated to help loans and Vermonters for solar at home. So we are hoping that there will be some kind of Vermont response. So now we can talk about the process for setting net metering rates. In 2017, the legislature gave its authority of setting net metering rates to the PUC. This updated that every two years of statute. The next update begins in March. The PUC will announce the new rate sometime in May and they will take effect sometime over the summer or fall, I'm sure, and be in effect for two years through 2028. So how are net metering rates set? In statute there is a formula that establishes the blended rate for electricity. So it's in statute, the Department of Public Service then runs the numbers and comes up with this blended rate and that blended rate is giving to the public utility commission. Oh yeah and there it is, look at that. Next one Ben?

[Sen. Seth Bongartz (Member, Bennington District)]: You want to just Oh yeah, thank you. Yeah, you're right.

[Peter Sterling, Executive Director, Renewable Energy Vermont]: Down. There we go. Okay. So let me know this rate of step by recalculating the state by collective eight. Again, that's in statute. And then publicly authority conviction uses its own authority, its own to then have put on adjusters to this lender rate that essentially for the last seven biennial updates have brought the rate down. If you jump to the bottom there and 08/24 through 07/26, the current net metering, the statewide lender rates calculated 18.3¢. The PUC has decided to put on a minus 4¢ adjuster to that. So people at home who wanna go solar then get paid 14.3¢. And you can see the other dates where there used to be no negative adjuster then in May 2021, it was minus 1¢, twenty '20 two minuteus 2¢. So the rate is set by calculating the blended rate which is in statute, but then the PUC decides how much negative adjusters to put to bring that price down because that's what they want to do and they have their own reasons for doing that. You want me to pause there for a second?

[Sen. Ruth Hardy (Member)]: Questions? Go ahead. I mean this is probably a better question for the PUC for them to explain why, like what goes into calculating the negative, the adjustment. That's a great

[Peter Sterling, Executive Director, Renewable Energy Vermont]: question them to answer, that they should answer. In general, well I think the bigger picture of what they would say is over time the cost of going solar has indeed gotten cheaper. Solar costs used to be like a lot more money than cheaper, so let's decrease that rate a little. Let's decrease that rate of stuff because the price is coming down. They also believe that there is a cost shift, which I would go into. Wait a minute, that $0.14 that a net metering customer gets is more than what a utility at some times will pay for that power. There are some other ratepayers, there's caution and then public utility commissioners are concerned about that.

[Sen. Anne Watson (Chair)]: I'll have him back to me now.

[Peter Sterling, Executive Director, Renewable Energy Vermont]: Okay. And we'll go into that object part in

[Sen. Anne Watson (Chair)]: a second. Yeah, I'm just gonna

[Sen. Scott Beck (Clerk)]: So in this bill we're talking about freezing column three, the compensation rate.

[Peter Sterling, Executive Director, Renewable Energy Vermont]: Okay. No, no, well no you're not freezing the comp you're freezing the adjuster the minus 4¢. Okay, because the blended rate will

[Sen. Scott Beck (Clerk)]: that's what this bill would

[Peter Sterling, Executive Director, Renewable Energy Vermont]: be made. Correct, the blended rate will certainly go up a little bit and by freezing the adjuster by not letting it go more negative, it would go up to negative five or six, your sense of how trying to close the delta created by the loss of that investment tax rate. The 30% tax rate right away being this big extra cost for people want to go by not letting that negative adjuster go up

[Sen. Scott Beck (Clerk)]: you would actually smoosh it down. So now for an existing solar let's say something put around the roof in 2010

[Peter Sterling, Executive Director, Renewable Energy Vermont]: nothing changed this is only for new this is

[Sen. Scott Beck (Clerk)]: only for new okay thank you all

[Peter Sterling, Executive Director, Renewable Energy Vermont]: right once you sign once you go solar you are you have a contract

[Sen. Scott Beck (Clerk)]: the person this year is getting 14.3 that's what they get for

[Peter Sterling, Executive Director, Renewable Energy Vermont]: Well yeah basically, the adjuster is what doesn't change for a decade, you have this in your contract, see what someone goes over with you and that's how they decide your payback period like here's what your adjuster is, here's what's going be tomorrow, here's what the lender rate will be, they give this long target, they say this is based on what we think is going happen over the twenty years of your panels, we think you're going to pay back in eight years, ten years, this is like a bill price, they give you all that. So it's all calculated out when you go into that.

[Sen. Anne Watson (Chair)]: So one further question about this chart. So when we say negative $01 negative $02 negative 0 point dollars is that relative to the baseline of 2021 or is that relative to the previous row? That make sense? The previous bienni. Is it cumulative or is it? No, it's the one,

[Peter Sterling, Executive Director, Renewable Energy Vermont]: it's the adjuster forever. You get that minus four. If you sign up for solar in 2025, last year, you've got that minus 4¢ for a decade.

[Sen. Anne Watson (Chair)]: Right, but the minus 4¢ is relative to?

[Peter Sterling, Executive Director, Renewable Energy Vermont]: The blended rate.

[Sen. Anne Watson (Chair)]: Oh, I see, I see, okay. Which rate change?

[Peter Sterling, Executive Director, Renewable Energy Vermont]: Yeah.

[Sen. Anne Watson (Chair)]: Which has been so

[Sen. Scott Beck (Clerk)]: if I'm an existing solar owner I'm always going to get negative four but the blended rate will fluctuate.

[Peter Sterling, Executive Director, Renewable Energy Vermont]: Right. Okay. But again I know this is getting really into the weeds of how we do solar but that's all calculated in the beginning that there's an at your solar company, if you go solar at home, we'll go to you and say, this is what the luxury is today, but based on inflation, it's like 3%. We think it's going go up and up and up, and based on how much power you're using and the size of the panels, this is what we think it's going to cost you over the life of the things, so it's all baked in at the blended rates. Not new money, it's not found money when the blended rate comes up, it's been baked into your contract that you have to go solar. So it's not found money, we don't know exactly what inflation is. Alright, so the PUC, again, I'm sure you're holding in here, has reduced engineering compensation steadily since 2017 which has, as many would not say surprisingly decrease the rate at which Vermont has obtained residential solar. The blue column and the gold column there are the adjusters, can see before 2021 they were positive, you actually got money, but then starting in 2021 it started to go negative that money was taken off of that blended rate and that's our estimate of where we think things are going if the negative adjusters keep increasing. So when someone said, I think your analogy about the don't question your appraisal is a real good one, maybe the PUC would do nothing. However, history has not shown that they are willing to hold the line on that. Okay, so S170 makes going solar home more affordable for more homeowners. S170 composes a two year pause, increasing the negative adjusters, again that's a very big thing about it, but increasing going to the negative adjusters more costly, That made net metering more expensive for those seeking to go solar at home, freezing the site those adjusters for systems up to 25 kw at the current minus 4¢ would have a pretty slow impact on most monthly electric bills. No, being measured in the cents per month, definitely not dollars. However, it would save homeowners who are trying to install a system many thousands of dollars. And then this is what I want to end with and I think this is a really important point. The Department of Public Service or others criticize NetHeary, talk about that caution, meaning I'm getting this higher rate to develop a solar home and other customers, but the way the cost shift is calculated by Department of Public Service is bill credits you get for going solar plus lost sales to the utility. Meaning when I have solar on my roof and the sun is shining and that electricity goes from my roof into plug, charge my car, that's a lost sale to the utility. They could have otherwise sold me that power and made money and paid for things. So when I go solar at home, that's a lost sale. And that is what is a big part of this cost shift that we hear about. That is a, I have a lot of problems, I think both of us who care about climate change would have a lot of problems with that calculation because you can see from this chart many things we're asking people to do would then be a lost sale. When you get a new refrigerator that is more efficient, you're losing less electricity, that is a lost sale to utility. We do not think of it like that, that is not a negative thing, that's a good thing. We want to incentivize people upgrading and putting in LED light bulbs, getting hot water heaters, getting ready electric baseball heater, those are good things to do but they are all lost sales to utility. So when we hear about the extra cost of net metering, is involved, a big part of that is this supposed cost shift from the lost sales utilities, but should be very careful in not encouraging people to go solar at home because we're afraid that utilities won't sell as much electricity to the bonders.

[Sen. Anne Watson (Chair)]: And also

[Sen. Ruth Hardy (Member)]: in other ways they're selling more electricity because it's more people buy electric cars and switch to electric heat pumps. That's an increased sale for them.

[Peter Sterling, Executive Director, Renewable Energy Vermont]: It is

[Sen. Ruth Hardy (Member)]: an increased sale. Doesn't it?

[Peter Sterling, Executive Director, Renewable Energy Vermont]: They are saying a lot more than them, know, we sell even more electricity.

[Sen. Ruth Hardy (Member)]: Yeah, but then there's all these concerns about our grid being over, so you can't have soil quick. They can't have

[Sen. Anne Watson (Chair)]: it both ways in terms

[Peter Sterling, Executive Director, Renewable Energy Vermont]: of the argument. I would just say it

[Sen. Anne Watson (Chair)]: like this. I'll think so too.

[Peter Sterling, Executive Director, Renewable Energy Vermont]: There are concerns about, I just wanna say, in my mind, you may not talk about what utilities may say. Public service talks about the cost shift from net meter. They're calculating bill credits you get plus the loss savings. Yeah. And they're just looking at that one little thing, and they're saying loss sales mean is a bad thing. I would argue that that is not necessarily a bad thing for us to have utilities selling less electricity at certain times to Vermont because they're doing emissions upgrades or they're going solar home which has resilience advantages, which are not a quantum. You have a battery in a solar panel home, you're not quantifying that benefit. You're also not quantifying the benefit of solar home by there's less carbon being burned by a gas plant in Boston or San Antonio. We're not quantifying that out of other benefit in that extra cost without them visiting. So a lot of other things, but really that lost sales, it really is fun to be that. When you hear about the cost of net metering, it includes that lost sales, it's stupid trade. Other

[Sen. Anne Watson (Chair)]: can start with Kelly. Unless that's it.

[Peter Sterling, Executive Director, Renewable Energy Vermont]: No. I just wanna say thank you for taking this up. Thank you for this incredible technical assistance.

[Sen. Anne Watson (Chair)]: And

[Peter Sterling, Executive Director, Renewable Energy Vermont]: I appreciate you all considering this field really.

[Sen. Anne Watson (Chair)]: Thank you. Okay, and I think we are well,

[Sen. Ruth Hardy (Member)]: we did get a chance to get up

[Sen. Anne Watson (Chair)]: and move around, would anybody like to take a break? Would you rather keep moving forward? Maybe. Okay. Keep a break, then we'll just roll right into.

[Sen. Seth Bongartz (Member, Bennington District)]: Thank you. You're welcome. Welcome. The record again,

[Sen. Anne Watson (Chair)]: Michigan.

[Sen. Seth Bongartz (Member, Bennington District)]: Bennington District, the University just going talk about the Durbin Solar, about net metering, this the is a more traditional solar relative to the smaller plug in arrays that we're talking about earlier. Peter just gave you a great grounding in what this is, what it would do, and some of the facts and figures around net metering. So I wanted to hopefully complement that with a little bit of context around the moment we're in and where we've come from and why the experts think this makes sense based on those two things. So the residential tax credit, which we've been talking about, it's sort of been thrown out there, it's been in place for decades. More specifically, it actually the modern version of it, there was a version in the 70s and 80s that went away in '85, but the modern version of it started under George W. Bush in 2005, it was extended and extended also under George W. Bush in 2008, extended under Obama in 2015, and then Trump in 2020, and then of course President Biden and Congress expanded it for ten years in the inflation reduction. So over twenty years this has been either initiated or expanded under four administrations, two Democratic and two Republican presidents, and generally speaking those votes have also been bipartisan. Until this summer when the Trump administration and Congress decided to axe the residential solar tax credit at the beginning of this year. So the other tax credits are also going away, the commercial solar tax credit for instance is going away over the next few years, but it has a longer runway than the residential tax credit which went away at the end of the year. So in practical terms six days ago, cost the of going solar in Vermont and every other part of this country for residential customers went up 30% from thirty first to the first, that's what happened. So obviously this committee can't control federal tax policy, but it can control how Vermont reacts to it, how it addresses this new context. And I also just want to note this is not the legislature getting into the sort of nut and bolt of them hearing is not something that's happened recently, but it's not historical in the sort of broader sense. Net metering started in '97 and until 2014, which is to say the majority of the history of the program, it actually was entirely almost all the detail that were determined by the legislature. How much was allowed was determined by the legislature and the rates were determined by the legislature. The initial adjuster which was an adder of sixth sense was put in place by the legislative authority. The legislature determined in May 14 that it made sense because they were having to do such frequent updates to it, it was becoming essentially an annual thing, that handing over to the PUC and formalizing the process made sense. This is not, you know, the ability you have before you is not the legislature opening up everything and taking this back over to the PUC and saying it was for two years on this one part. And that to me feels in line with the kind of legislative exercise in the past about it. Obviously we talk about what if we're wrong, what if the PSC might increase rates? We don't know what the PSC will do, but we do know that every single time they have made a decision about rates relative to net metering they have decreased those rates. So I think it's reasonable to assume that the most likely course corrected is further decrease in rates. So obviously that is not knowable if you have it at the UCN, I strongly suspect they would not tell you, they've not gone through the process yet, but we see this sort of pause for residential solar in particular as a better safe than sorry strategy. The other thing that's going on right now in electricity in the city and in the country more broadly is for the first time in a long time the electric sector is really generation constrained. Or put another way, we're seeing load growth in the electric sector for the first time in decades. That was already starting to happen because of electric vehicles and heat pumps, know, like we just talked about, and it is accelerating rapidly in certain parts of the country because of the advent of data centers, which are massively power hungry, they're individual data centers, that will be a significant chunk of the entire electric usage of the state of the mind. And so as a brief aside, but I think it's relevant to your consideration of this bill, I would argue that the attempts to dramatically slow down the deployment of clean energy at the federal level is just a massive self inflicted wink of this country. We have electric resources that are clean, are some of the cheapest resources available, that we are actively trying to stop in a moment where we need every kilowatt hour that we can generate. So half of that relates to this bill, would say, is if we can slow down the slowdown in the residential solar space, if we can make things a little bit better in that space instead of allowing the PUC to make things a little bit worse, then probably that means a little bit more solar deployment. And a moment where offshore wind is being stopped in its tracks by the Trump administration, and these commercial tax credits while available now are also going away, having a little bit more employment in the residential space rather than a little bit less I think makes all the sense in the world from an antithubia source standpoint. So fundamentally what I'll leave you with is you've basically got two choices, two paths, two doors in front of you. One, do nothing, don't pass this legislation, and take the risk that the PUC doubles down on what the Trump administration is trying to do in slowing down further beyond what has already happened at the federal level the deployment of solar and making it harder for Vermont families to go solar. Or to the door two, hit pause, give the industry a couple of years to get its feet under it, and you all a couple of years to understand what's actually happening. How fast has the slowdown been? Have we actually seen a sort of plateau and level out even though the tax credits have gone away? What has the solar industry been able to do in reaction to that tax credit going away? And then make a decision, allow the PUC to make a decision in 2028 on what the appropriate reaction is with better information and a couple of years of experience under our belt with this sort of new financial situation that the solar industry and people are trying to go solar. And I don't think it should surprise you to hear we're strongly urging you to go with burn for two. Do

[Sen. Ruth Hardy (Member)]: you or you, Peter, one of you have a table, it would be helpful to say, to see like what table of what it would cost an average Vermont household to get solar in 2025 versus 2026. I mean, the 30% cut on the tax credit at the federal level is dramatic, but just having the comparison would be helpful. Thanks.

[Peter Sterling, Executive Director, Renewable Energy Vermont]: All

[Sen. Anne Watson (Chair)]: right, any other questions?

[Sen. Seth Bongartz (Member, Bennington District)]: Super.

[Sen. Anne Watson (Chair)]: Thank you so much. So we are ten minutes down. Yeah, I was gonna say we're already a little bit ahead. So the only person from our original set of folks who could make it today was Jerry Duvall to give us an update from the most recent Energy Action Network annual report. And that's not until 10:30. So, we're going to take a break until then. Oh, it's broken up. That's order. In order, we're have to get a new one we have to.

[Sen. Scott Beck (Clerk)]: What'd you

[Sen. Seth Bongartz (Member, Bennington District)]: get a light on?

[Peter Sterling, Executive Director, Renewable Energy Vermont]: What we thought?