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April 18, 2016 Focus: Energy

Towns push to expand virtual net metering

PHOTO | HBJ File Hartford was the first Connecticut municipality to put solar on a closed landfill (shown in the photo), although it had to do it without the benefit of virtual net metering.
Claudia Baio, mayor, Rocky Hill
Paul Michaud, executive director and founder, Renewable Energy & Efficiency Business Association and energy attorney, Murtha Cullina LLP

About a dozen Connecticut towns stand to benefit from a bill changing the state's virtual net metering (VNM) program to help them complete solar projects that will save municipalities and their taxpayers money, as much as $300,000 a year in reduced energy costs in some cases.

Right now, the towns are locked out of the program because of a statewide cap on the amount of electricity that the systems can collectively sell or share at $10 million a year, of which $4 million is available for municipalities, with the balance for agricultural and state property. A proposal that passed the Energy and Technology Committee on March 22 adds $5 million to the cap, an amount expected to help the so-called “stranded” towns complete their projects.

VNM allows municipalities to assign surplus production from their solar generators, typically sited on otherwise unproductive town property such as closed landfills, to other metered accounts that are not physically connected to the generator, such as town halls, public works facilities, and school buildings.

The pending legislation, Senate Bill 394, would allow stranded towns to go forward with approved shovel-ready projects that received Zero Emissions Renewable Energy Credit (ZREC) awards, but were shut out of the VNM program.

If the legislation passes, the towns and solar companies with which municipalities have power-purchase agreements would also be able to recoup the investments they've made in preparing their projects for the VNM program.

Stranded solar projects

Rocky Hill Mayor Claudia Baio said she hopes the legislation will salvage the town's stranded solar project, which includes three power-purchase agreements with SolarCity to construct a 3.9-megawatt solar array consisting of 13,000 solar panels on 15 acres of a former town-owned sand pit.

Rocky Hill estimates it would save $200,000 to $300,000 per year in energy costs, plus receive about $90,000 per year in lease revenues from Solar City.

“We're talking about substantial electric bill savings that can be passed onto the town,” Baio said.

Other stranded towns are Branford, Beacon Falls, Bethel, Cheshire, Clinton, Milford, Oxford, Newtown, Putnam and Woodbridge, according to Paul Michaud, executive director and founder of the Hartford trade group Renewable Energy & Efficiency Business Association, and an energy attorney at Murtha Cullina LLP in Hartford.

State Rep. Charles Ferraro (R-Milford), who testified in support of SB 394, said VNM proved so popular that 14 municipalities quickly consumed the municipal credits, leaving at least 11 other towns, “which have spent considerable money and effort,” unable to advance.

Queue filled quickly

Eversource Energy said it started accepting VNM applications in Sept. 2014 and the VNM queue was filled by April 2015.

Eversource, which transmits 80 percent of the electric load in the state, can allocate 80 percent of the $4 million for municipalities to its VNM customers, or $3.2 million. United Illuminating, now called Avangrid, carries the balance of the state's power.

An Eversource official seemed open to the legislative proposal accommodating the stranded cities, while cautioning that there's still a lot to learn about the administrative, operational, engineering and cost impacts on the broader distribution system from myriad alternative-energy projects.

“This program, if we just expand it by $5 million and it's really purposed for dealing with the few municipal entities in the queue right now, that makes sense, but all those other issues we need to keep looking at … ,” said Ed Davis, director of rates for Eversource.

Eversource's concern is that as these kinds of programs expand, there's a cost to customers, Davis said.

High cost per kilowatt hour

The utility buys excess power from the generating municipalities, at more than about 20 cents per kilowatt hour, on average, which is pretty high for production, he said.

“Somebody has to pay for that, so what happens, the cost of these programs are borne by our customers,” Davis said. “Our concern is as the program expands we're seeing increases to what ratepayers are supporting.”

In written testimony, the Office of Consumer Counsel (OCC) also expressed concern about ratepayer impact, but gave conditional support for the $5 million VNM-cap expansion.

The state Department of Energy and Environmental Protection said it's analyzing VNM in the context of other state programs to increase clean energy in Connecticut as part of an upcoming update to its statewide Comprehensive Energy Strategy plan.

Miniscule impact

Michaud, the energy lawyer, said the impacts on the distribution system from the VNM program are miniscule.

“[Utilities] will argue that they're looking out for the ratepayers and they don't want costs to be shifted to the ratepayers who don't use solar; I don't really agree with that argument,” he said. “ … What's happening … is the private contractors are actually paying to upgrade the system.”

Stafford is among the towns that isn't stranded, building 2.8 megawatts of solar arrays, including an 800-kilowatt unit at a landfill that it hopes will offset 80 percent of its electricity costs. It's paying to upgrade the distribution system for its project and is buying its solar equipment rather leasing it. It expects to pay off the equipment in nine years and save $250,000 to $300,000 a year by year 10, said Dennis Milanovich, town engineer.

The challenge is to produce only as much power as you need, said Milanovich, who praises the VNM program, but acknowledges its complexity.

“You put in a lot of hours on something like this to get your arms around it,” he said. “It's not been too hard a burden, but it could have been a little easier.”

Michaud said the program is a victim of its own success and limitations.

“If they would lift the cap, the program — Connecticut has over 240 closed landfills — could theoretically energize the entire state on landfills, approximately 80 megawatts worth if you were to use every closed landfill,” he said.

It would essentially be enough generation to replace a small fossil-fuel burning power plant, Michaud said.

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