Taking From the Poor to Fund Solar Panels

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Vermont’s supposedly “progressive” net metering program subsidizes residential solar panels by paying homeowners a whopping premium for the solar energy they generate. These costs are passed through to ratepayers, many of whom cannot afford or do not support solar power. This is not only unethical, but unconstitutional: there is no due process by which ratepayers can appeal this extrication of wealth. More Vermonters must understand why their electricity rates are so high — and so unfair.

Vermont’s Department of Public Utilities Commission (DPUC) is authorized by 30 Vermont Statutes Annotated Sec. 8010 to create the net-metering program, under rules that, “to the extent feasible, ensure that net metering does not shift costs included in each retail electricity provider’s revenue requirement between net metering customers and other customers.”

As I outlined in an article almost exactly one year ago, that’s precisely what has been done: “This wealth transfer impacts poor and elderly ratepayers, who are forced to subsidize those with the resources to install expensive — and profitable — solar arrays. Further, the solar panels are manufactured using fossil fuels and mining operations (mostly in China), are shipped or flown long distances at environmental cost, and will one day become obsolete toxic waste at further environmental cost. Poor ratepayers are undermined in their ability to install comparable systems because their wealth is depleted by inflated fee structures that Vermont’s statutes forbid.”

Despite my commentary’s very public complaint, the DPUC issued its biennial net metering rate update on Nov. 12, 2020, in which it reduced the net metering rate a single cent. I attended a DPUC hearing last spring, in which I was told I could not, as a mere ratepayer, be granted standing to protest against this inequitable and grossly regressive scheme. Thus, we ratepayers lack any process whatsoever to appeal these rates, though special interest groups are specifically granted party status under DPUC rules.

In its Biennial Report, the DPUC not only ignored my public complaints made on the record on behalf of low-income ratepayers, but it ignored the issue entirely. The Commission’s Report revealingly just omits that statutory requirement that “to the extent feasible … net metering does not shift costs included in each retail electricity provider’s revenue requirement between net metering customers and other customers.” Sounds like clear legislative direction — but the DPUC does not even pay the concern lip service in its report. (Though it says that’s the purpose of the thing!)

The DPUC, noting on page 3 of its report, does not deny there is money transferred:

According to Green Mountain Power Corporation (“GMP”), the additional cost of net-metering means that each 20 MW of new capacity creates a cost shift of $47.4 million to non-participating customers over 25 years. In 2019, GMP interconnected over 29 MW of new net-metering systems.

And to its credit, the DPUC increasingly understands that net metering is only one path forward:

What REV has not persuasively shown is why Vermont ratepayers should pay such a large premium for net-metering systems when the value of those benefits is not commensurate with the cost of net-metered power and when solar can be developed in Vermont using more cost-effective strategies. (p.35).

Presumably this awareness is the reason the DPUC did drop the net metering rate by a penny. But that’s not enough to correct this grossly unfair imbalance.

The Department of Public Service, which has been a very aggressive advocate for consumers (but is similarly swept aside) was noted in the report:

The Department argues that net-metering is among the State’s least cost-effective pathways to advance Vermont’s renewable and environmental objectives. According to the Department, the compensation rates currently paid to net-metering customers substantially exceed the value of the output and the cost of obtaining an equivalent resource elsewhere, resulting in an inequitable cost shift between customers who net-meter and those who do not. … The Department estimates that net-metering systems installed through 2018 are costing customers an additional $37 million annually, or $60 per residential customer. The Department contends that this cost shift falls heaviest on lower-income Vermonters who cannot afford the up-front costs of purchasing a net-metering system. (pp. 13–14).

Numerous solar energy business interests were recounted in “the Report that ignores ratepayers.” This highlights the implicit conflicts of interest that have corruptly plagued every step of this boondoggle rip-off program.

Consider this warning from a 2005 Vermont Law Review article:

By failing to assert consistently the interests of ratepayers through an ecumenical prudence standard, PUCs create a void into which those asserting other interests, such as industry organizations, can creep … Notwithstanding the fact that industry organizations do represent industry ratepayers, individual electricity consumers do not enjoy the support of an organized group outside the PUC to advocate for their interests.

These are not small sums of money: initial installation incentives are substantial; the net metering transfers are additional subsidization. There was never any question that net metering programs would be regressive, which is why the (earlier) Essex Plan included provisions for rebates to low-income electricity consumers: this never happened.

It is unconscionable that our Legislature passed laws leaving it to the DPUC to ignore taxpayers while favoring renewable energy interests. This is perpetuated under Vermonters’ noses while progressives seek to enact yet more regressive policies in the name of helping those they impoverish. In fact, the Vermont Tax Structure Commission recently proposed to subject electricity to a sales tax, compounding the inflated rates caused by net metering. (Presumably, sales of solar panels would remain exempt from sales tax!)

The final irony is that the inflation of electricity prices caused by net metering becomes a selling point for the renewable energy industry. Says one retailer:

Vermont’s electricity rates are more than 43% higher than the national average, but increased control of electric bills isn’t the only reason Vermonters are going solar. When you switch to solar, you can also create and store your own clean, renewable energy to protect your home from outages and reduce your carbon emissions. Plus, there are excellent state incentives to help you start your solar journey for less.

The higher prices go, the more economically attractive solar looks, even though Vermont is one of the worst states for sun in America. And the more residences that install solar systems, the higher the rates will be for ratepayers unwillingly subsidizing them, even if the DPUC graciously drops them another penny in 2022.

This picture should look familiar by now — destroying the poor while claiming to help them. OneCare Vermont, single-payer health care, EB-5, “affordable” housing, free opioids, EV cars, welfare, free lunches, pensions — in these and many other cases, our government purports to rescue us, expanding itself exponentially while making everything worse.

None of this is economically or politically sustainable.