Vermont Becomes First State to Set Renewable Energy Rates

A new Vermont law will mandate fixed, favorable, long-term rates for power from small-scale solar, wind and other renewable energy generators.

The Green Mountain State is the first in the nation to enact such a law. It comes on the heels of the Ontario provincial legislature's passage of the in 2008, and ahead of. several other states said to be considering such "feed-in tariffs," including Washington, Oregon, California, Michigan, Indiana, and Minnesota.

In early February, the city of Gainesville, Fla. passed a fixed rate program for solar power.

Advocates say that feed-in tariffs encourage alternative energy projects by guaranteeing providers that they will be able to cover the cost of generation and also earn a small profit. The move will create jobs, say advocates, and eventually lower costs as the technologies become more widely used.

“This law puts Vermont in a leadership role on renewable energy policy and will help to bring vibrant growth and development to our local renewable energy industry," said Andrew Perchlik, executive director of Renewable Energy Vermont, in a statement. The group spearheaded a grassroots campaign in support of the law.

Vermont's program will cap out at 50 MW total. No single project can exceed 2.2 MW of generating capacity.

Wind energy rates are initially set at $0.20 per kilowatt-hour (kWh) for systems of less than 15 kW, and $0.14/kWh for those greater than 15 kW. Landfill and biogas rates are set at $0.12/kWh, and solar tariff at $0.30/kWh.

The Vermont Public Service Board will review and adjust the rates every two years, with the baseline review set to begin on September 15, and new rates to be set in January, 2010. Future rates will be based on the cost of generation, plus profit, but less applicable tax credits and other clean energy incentives.

The costs of the program in Vermont will be covered by ratepayers, unlike a somewhat similar initiative in Washington, which charges taxpayers. Still, it's considered an aggressive approach to promoting clean power. In North America, Ontario is the only other government to have enacted a feed-in tariff mandate.

The legislation came into effect in late May without the signature of Gov. James Douglas (R).

While expressing support for renewable energy and energy efficiency, the governor said in a statement that he believed the law would needlessly raise rates on Vermont consumers. There were apparently enough votes in the Vermont legislature to to override a veto. 

An additional energy-related victory was nestled in the feed-in tariff legislation: a provision giving Vermonters the "right to dry," by barring housing development managers from forbidding the use of clotheslines.