On May 27, 2009, the Vermont Energy Act of 2009 (pdf) became law, taking effect without Governor Douglas’s signature. The law implements a pilot feed-in tariff program designed to encourage the development of renewable energy in the state.
The new legislation sets minimum rates for the purchase of electricity from qualifying renewable energy sources with a plant capacity of 2.2 megawatts or less that are commissioned on or after September 30, 2009. Retail electricity providers in Vermont are required to purchase electricity from these sources under long-term, fixed contracts of 10-20 years, or 10-25 years in the case of solar energy sources. The electricity purchased and any associated costs are distributed to retail electricity providers based on their pro rata share of Vermont’s total retail electricity sales for the previous year. These contracts will be available until the cumulative plant capacity for all such sources in the state reaches 50 megawatts.
The legislation sets initial rates for electricity purchased under the program, based on the type of renewable energy technology and the size of the project. For wind energy projects less than 15 kW, initial tariffs are set at $0.20/kWh; for landfill and biogas, $0.12/kWh; and for solar, $0.30/kWh. For wind projects greater than 15 kW, hydropower, or other biomass, initial tariffs are set according to a formula based on the state’s average residential electricity rate. Retail electricity providers and renewable energy facility owners may also elect to enter into alternative arrangements.
Although the legislation sets initial tariffs, it directs the Vermont Public Service Board to reexamine those rates beginning in September 2009 and set new rates by January 15, 2010, and to review those rates every two years thereafter. The Board is directed to calculate rates by considering the costs of each type of renewable energy technology, and including profits based on the rate of return received by Vermont’s retail electricity providers. The Board may then make adjustments needed to ensure sufficient incentives for renewable energy development.
This post was contributed by Carol Garvan, summer associate at Pierce Atwood LLP.
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