Rutland Herald Opinion: Fixing flawed energy program

Jan 23, 2012 No Comments by

Reposted here from the Rutland Herald.

Published: January 22, 2012


The Shumlin administration’s recent development of a comprehensive energy plan for Vermont sets a laudable goal of attaining 90 percent of our energy from renewable resources by midcentury. Unfortunately, Vermont’s current state renewable energy policy (the Vermont SPEED program) is badly flawed. Rather than moving Vermont forward on this green power goal, the SPEED program is actually resulting in the procurement of brown power for Vermonters and thus is not reducing Vermont’s carbon emissions.


While it might make for good drama to focus on how Vermont implemented such a dysfunctional renewable energy policy, it is more important that there is a clear road map to a successful alternative.


The Vermont Public Service Board, in a report to the Legislature, as well as the Shumlin administration’s comprehensive energy plan, recommend that Vermont follow the lead of 39 other states (including all of New England and New York) and adopt what is called a renewable portfolio standard (RPS). To ensure that Vermonters’ electric rates fund clean, renewable energy rather than dirty brown power, it is essential that the Legislature act this year to replace the badly flawed SPEED program with the proven renewable portfolio standard approach that other states have successfully implemented.


Here is how the process works and why the current Vermont approach is badly flawed.


Due to the laws of physics, when electric energy leaves a power plant, it cannot be physically tracked or directed to a particular customer. Instead, it follows the path of least resistance over the entire electric delivery system. Therefore, the U.S. electric industry has set up processes to account for who produces renewable energy and which utility customers can claim credit for consuming that renewable or low-carbon energy. This accounting system, which is administered centrally for New England, is meant to facilitate a regional renewable electric industry, while protecting consumers from fraudulent claims about the sources of electric energy.


The unit of accounting for this system is the renewable energy credit (REC). One renewable energy credit is created for each megawatt-hour of renewable electricity generated. To ensure that these credits are not “double-counted,” a renewable portfolio standard requires that a utility claiming to provide renewable energy to its customers must purchase renewable energy credits from qualified renewable energy projects. The utility must then retire or remove the REC from the market and not sell the REC to another party.


Vermont’s current SPEED program allows Vermont utilities with renewable energy contracts to register their project with the SPEED program and count this electricity toward the SPEED requirement (e.g., meeting 20 percent of Vermont electric load with SPEED resources by 2017). These SPEED resources also create renewable energy credits through the New England accounting system.


Unlike most other states’ programs, the Vermont SPEED program does not require that the renewable energy credits be retired for compliance with the Vermont program. As a result, Vermont utilities are allowed to register these same resources with the RPS programs in other states and sell them the RECs. Therefore, most of the renewable energy credits from Vermont SPEED projects are also being sold by Vermont utilities into the Massachusetts and Connecticut renewable programs.


Since the same generation is being counted twice, the Vermont SPEED program does not result in new renewable generation being developed in the region. Furthermore, since Vermont utilities are largely selling the renewable energy credits for their Vermont SPEED resources out of state, it is the out-of-state utilities that may legally claim their customers are purchasing renewable energy. The Vermont utility customers, through the New England accounting system, are credited with purchasing brown power (the residual New England energy mix including coal-, oil- and gas-fueled generation). While some Vermont utilities and state officials have made improper public claims that Vermont SPEED resources are producing low-carbon renewable energy for Vermonters, the reality is that the green energy is largely being sold out of state and in its place Vermonters are receiving high-cost brown power.


The 39 states with a renewable portfolio standard ensure their utility customers get the green energy they pay for by mandating the retirement of the renewable energy credits. The Vermont Legislature should follow the recommendation of the Vermont Public Service Board and adopt a renewable portfolio standard and end the charade that the Vermont SPEED program is anything but an expensive brown power program for Vermont electric customers. The citizens of the Green Mountain State deserve better.


Kevin B. Jones of Chittenden is the smart-grid project leader for the Institute for Energy and the Environment at Vermont Law School. This commentary does not necessarily reflect the views of the institute or the law school.

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