Vermont considers new REC compliance program

OREANDA-NEWS. Vermont legislators have introduced a bill to replace the state's current renewable energy program with one requiring utilities to use renewable energy certificates (RECs) for compliance.

The bill, H40, would create the program that governor Peter Shumlin (D) proposed earlier this month to replace the Sustainably Priced Energy Enterprise Development (SPEED) program.

The new policy, known as the Renewable Energy Standard and Energy Transformation program, would take effect on 1 July and would require electricity providers to own RECs to meet its overall renewable energy goals starting in 2017. The bill would require renewables to account for 55pc of power sales by 2017, matching the original SPEED target, increasing by 1.3pc/yr to reach 75pc by 2032. The SPEED targets are scheduled to increase by 4pc every three years. The bill retains the current policy's standard offer program, which uses long-term contracts to support projects less than 2.2MW in size.

The bill aims to correct the potential problem of double counting of RECs generated from SPEED resources. Vermont counts the energy from the projects toward SPEED goals but the RECs can be sold to other New England states. The state Public Service Department last month recommended that legislators adopt a more conventional renewable portfolio standard in place of SPEED, which required REC retirements.

House Natural Resources and Energy Committee chairman Tony Klein (D) and vice chair Rebecca Ellis (D) are the lead sponsors of the bill. The committee will discuss the bill at a hearing tomorrow.

The bill also includes a 1pc/yr requirement for distributed generation resources, such as rooftop solar, starting in 2017 and increasing by 0.6pc/yr to 10pc by 2032. It also requires 2pc of sales in 2017 to come from new "energy transformation" projects such as energy efficiency and and improvements for home heating and cooling. The target increases to 12pc by 2032 and is separate from the overall 55pc target.

The bill encourages electricity providers to consider other distributed resources that reduce the consumption of fossil fuels and lower costs to ratepayer. Projects are eligible if they are in service in 2015 or later.

The program would initially set alternative compliance payments, which companies can pay instead of buying RECs, at 1?/kWh for the overall target and 7?/kWh for distributed renewable generation. The payment level would be adjusted each year according to inflation.

The Public Service Board must start a rule-making to implement the bill on or before 1 August 2015 with the state Public Service Board adopting a final rule on or before 1 July 2016.