As Electricity Rates Soar, VT and NH Putting Negative Pressure on Solar

What’s wrong with this picture?  As New England electric utilities hike their rates by record numbers this summer, they’re also cutting payments for solar power fed into the grid by their customers.  Aren’t we supposed to be incentivizing, rather than penalizing, the adoption of clean, renewable energy?!

Here’s a mid-year update on rate and net-metering decisions in New Hampshire and Vermont:

New Hampshire Rates Set to Double as Net Metering Goes Under Review

Rate increases just approved in New Hampshire are the largest since the state deregulated its utility system in 1996.  Eversource and Liberty Utilities, the two largest power providers, are set to double their energy service rates from about 11 cents per kilowatt-hour to more than 22¢/kWh this summer to cover much higher costs for natural gas.  This energy surcharge will push the average monthly electric bill for their customers from about $150 to $220 – a spike of nearly 50%.  Unitil, serving the Concord area, also increased rates in the 50% range earlier this year.

Meanwhile, New Hampshire regulators are about to issue a third round of rules for net metering payments to solar customers selling power back into the grid.  As things stand now, homeowners get full credit at the retail rate for solar generation directed into their homes.  But excess solar generation sold back into the grid faces deductions – about 4¢/kWh for “non-bypassable” distribution charges and a penny more for storm recovery costs.  Depending on how much excess generation a solar homeowner sells into the grid, the final net-metering credit typically ranges from only 75% to 95% of the retail price paid by the customer for electricity.

Now, the New Hampshire Public Utilities Commission (PUC) is about to open a review of its net metering program, drawing on an analysis currently underway by Dunsky Energy + Climate Advisors.  While details of New Hampshire’s successor program await the findings of this review, there are growing concerns that attempts to cut net metering in other states like California and Florida now could spread here.  

So, for those not wanting to take chances on the outcome of this utility-centered process, it may be better to lock in net-metering contracts now in New Hampshire, rather than waiting to sign up after the new rules go into effect.

Vermont Braces for More Rate Increases and More Cuts in Net Metering Rates

Flower shaped solar panel in front of a state building

In Vermont, utility rate increases have been confined to mainly the single digits so far this year.  But, if New Hampshire’s recent rates hikes are any indication, the next round of increases could go much higher.  Vermont’s largest utility, Green Mountain Power, is poised to request new retail rate increases by the end of this year.  

Meanwhile, for the sixth time in six years, the Vermont PUC is entertaining a cutback in the state’s net-metering rates.  The proposed rate decrease, recommended by the Department of Public Service last April, would trim the credit by 0.3¢/kWh, to about 14.5¢/kWh.  On top of prior net-metering reductions, including two issued in 2021, a Vermonter installing a residential solar system this fall would receive approximately $225 less in net metering compensation each year as compared to contracts signed in 2017, when payment rates in Vermont were more on par with retail rates.  With Vermont contracts lasting 10 years, the decline in these credit payments adds to the pay back period for a typical residential solar installation, according to Renewable Energy Vermont, a trade group that advocates for in-state renewable energy development.

Much like New Hampshire, for those not wanting to take chances on the outcome of this utility-favored process in Vermont, it’s better to lock in 10 year solar net-metering contracts now, rather than waiting to sign up after the new rules go into effect.

Can We All Get Along?

When you put it altogether, lots of state policies in Vermont and New Hampshire are working at cross purposes with their climate action goals.  For example, the only practical way for most renters and low-income homeowners to gain access to solar power is through shared sites like parking lots, brownfields and apartment complexes.  Yet the siting rules for these solar projects typically preclude many of these same development opportunities.  

At the same time, the shift in carrying costs for utility transmission and distribution systems – from higher-income solar customers to lower-income ones – is often cited as the primary reason for cutting back on net-metering rates.  Yet, as a practical matter, each 1¢/kWh reduction in these rates – while adding months or even a year to a solar project’s payback period – merely reduces a low-income customers’ monthly electric bill by just a few pennies.  That’s hardly enough savings to achieve any meaningful rate relief for low-income customers.  Yet the cutback in net-metering rates can render some projects uneconomic, especially at the commercial level.  Better ways to achieve the right balance include expanding weatherization and heating assistance programs for low-income customers in our service area.  

All told in Vermont, nearly 3,000 solar net-metering systems and one wind net-metering system received Certificates of Public Good in 2021.  That’s a total of about 45 megawatts (MW) of new, renewable energy capacity in the state, surpassing the 36 MW of net-metering permits issued in 2020.  But with 40 MW of new solar capacity representing only about 1% of Vermont’s yearly total power requirements, the current rate of deployment is only half of what it should be to help the state meet its clean energy goals.

New Hampshire faces similar challenges to ramp up its renewable energy production – except it hasn’t even laid out any clean energy goals by which to measure its future progress!

It’s time to return to rewarding customers for their solar investments rather than penalizing them through cutbacks in net metering rates.  Such self-generating customers are speeding the transition to a renewable energy future and helping to build out a climate-friendly, 21st century grid.  Moreover, with utilities’ push to electrify everything through a switch to electric vehicles and home heat pumps, the need to properly align these policy incentives with their customers’ needs has never been greater.  

Solaflect Energy is your home energy management partner.  We help you install clean and affordable solar electricity and home battery systems for a more resilient and climate-friendly future.  For more information email us, or call (802) 649-3700.

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