Vermont’s Public Utility Board Rules on Interm FIT Rates for 2009

By Paul Gipe


Vermont’s Public Utility Board (PUB) ruled in a decision September 30 2009 on interim feed-in tariffs for the remainder of 2009. The decision was in response to H. 466 that passed the Vermont legislature in late May. The board was required to rule on interim rates contained in the bill and begin a rate-setting docket for tariffs to go into effect in 2010.

While the PUB ruling was expected, it did contain some surprises. The PUB ruled that the tariff for wind turbines greater than 15 kW should be only $0.125/kWh. Previously, proponents of the bill had suggested that the tariff would be $0.14/kWh.

The tariff for wind turbines less than 15 kW remains at $0.20/kWh. This remains the highest tariff for small wind turbines in North America outside Washington State. However, unlike Washington State, the Vermont tariffs are for a full 20 year contract.

In a surprising development, the PUB raised the tariff for farm methane from $0.12/kWh to $0.16/kWh. This tariff is only slightly less than that in Ontario for on-farm biogas less than 100 kW in size.

The PUB ruling contained some elements of interest. The PUB ruled that no one technology can occupy more than 25% of the queue for the 50 MW program cap.

One disturbing aspect of the PUB ruling is the inclusion of RECs trading values in determining the tariff. For example, the PUB ruled that “. . . we adjust the 18.7 cents rate downward to reflect the expected value of RECs (approximately 2.5 cents/KWh) . . . and accordingly we adopt a rate of 16 cents/kWh” for farm methane generation.

RECs do not trade at a constant value and it is their widely fluctuating value that makes them unsuited for pricing long-term investments such as renewables. Thus, the PUB’s tariffs are based on the RECs trading value today. Tomorrow the trading value could be zero and the tariff determined then could be substantially higher. This is why most jurisdictions do not mix RECs trading values with the determination of feed-in tariffs. The two systems are incompatible.

A further concern is the lack of transparency in the PUB’s ruling. The PUB makes a point of revealing only the final estimates of cost for several technologies, including solar PV. And in the case of solar PV, the PUB excludes discussion of the costs for solar PV below 150 kW and then concludes that the $0.30/kWh in the legislation is adequate even though it acknowledges that projects above 150 kW cost $0.335/kWh.

The PUB also ruled that even though the tariff necessary for Northern Power’s 100 kW wind turbine (>15 kW tranche) was from $0.171/kWh to $0.269/kWh, this exceeded the statutory authority in the legislation. Therefore, turbines of this size would only be paid $0.125/kWh.

Vermont PUB Interim Price Order