Unfortunately, the PSD’s report on Act 179, expands far beyond its legislatively mandated purpose of developing a successor program to group net metering for the affordable housing community to once again advance the extreme position of ending residential net metering as we know it.
The PSD’s proposal to “reform” net metering compensation, first raised during the 2024 legislative debate on RES reform, calls for excess generation to be compensated at avoided cost, which is significantly lower than current compensation and would put going solar out of reach for almost all Vermonters. The PSD’s plan also applies cuts retroactively to the roughly 20,000 Vermont families and businesses that currently net meter.
The PSD’s proposal to credit net metering at “avoided cost” also places zero value on developing solar in the built environment. With the phase-out of virtual net metering, the net metering program only supports solar on rooftops, backyards, or immediately adjacent to where the power is used. While these smaller projects are more expensive than projects constructed outside the built environment, they have many other benefits. Absent a viable net metering program, these projects will not be built at any appreciable scale, eliminating valuable opportunities to construct solar in the built environment.
What PSD’s Proposal Would Mean for Current and Future Net Metering Customers
REV estimates that shifting all net metering projects to avoid cost compensation in 2025 would have the following impacts on the credits that customers receive over the lifetime of their systems:
Net Metering 2.0 – Installed in 2018
| Customer Type | System Size | Total Credits Lost |
| Average residential system | 7 kW | $2,800 |
| Large residential system | 20 kW | $8,700 |
| Community Solar Subscriber | 7 kW | $15,350 |
Net Metering 2.6 – Installed in 2024
| Customer Type | System Size | Total Credits Lost |
| Average residential system | 7 kW | $1,900 |
| Large residential system | 20 kW | $5,700 |
| Community Solar Subscriber | 7 kW | $10,350 |
Why PSD’s Cost Shift Concerns Are Overblown
The PSD has long asserted that net metering imposes a cost shift on Vermont ratepayers but has never fully accounted for the societal benefits of net metering – including the social cost of carbon and promotion of solar in the built environment – and has consistently failed to distinguish between the cost of older and new systems.
According to the report, “… (b)ased on data collected from each utility, the cost of net-metering in 2021 was more than $49 million higher than the market value of the products provided.’ Recent utility provided information suggests the above-market costs have continued to increase, exceeding $55 million in 2024.”
- The total cost shift numbers estimated by PSD are heavily influenced by the compensation rates paid to older systems. These rates were higher than rates today to offset the higher cost of going solar for early adopters. For the years 2022-2024 about 75MW of new net metering was brought online, with an additional cost shift is only $6m out of the $1b Vermonters spend on electricity each year
- Approximately half of this estimated cost shift is due to lost utility sales. Just as most Vermonters would not consider themselves subject to a cost shift when their neighbor switches to a more efficient electric appliance, REV philosophically disagrees that this should be included as an expense connected to net metered solar.
- Looking forward, the cost shift to residential ratepayers from new systems compensated at the current net metering rate is tiny. The table below shows the approximate monthly cost of all new net metering to residential ratepayers.
| Utility | Bill Impact ($/Mo) |
| BED | $0.01 |
| Enosburg Falls | $0.06 |
| GMP | $0.16 |
| Hardwick | $0.10 |
| Hyde Park | $0.04 |
| Lyndon | $0.01 |
| Morrisville | $0.05 |
| Stowe | $0.15 |
| VEC | $0.22 |
| WEC | $0.58 |
- The Department’s “cost shift” estimate ignores many benefits of homeowner’s solar generation. Below is New Hampshire DPS’ value stack adding up all the benefits of net metered solar. New Hampshire placed the total value of net metered solar is 16 cents kWh before considering environmental externailes while in 2019 PSD valued solar at 9 cents kWh.
While Vermont’s value stack would look different from New Hampshire’s, the PSD’s calculation of the cost shift does not account for several factors such as line losses, avoided distribution expenditures, and the environmental benefits of solar, i.e. the social cost of carbon.
Additionally, even excluding these factors, updating the PSD’s 2019 valuation to account for current REC pricing would bring the value of solar to 10 cents/kWh, reducing the cost shift from 5 cents/kWh to 4 cents/kWh for new net metering, a 20% decrease.
PSD Presentation of Energy Burden Data Conflates Thermal and Electricity Expenditures
According to the report, “As outlined in the 2023 Efficiency Vermont Energy Burden Report, considering thermal, transportation, and electricity related energy costs the average energy burden in Vermont is 11%. Excluding transportation, average electric and thermal energy burden in Vermont is roughly 5%, ranging from 2% to 11%.”
- This statement combines thermal and electric energy burden. Thermal burden is much higher especially in rural areas without access to natural gas and a higher dependence on propane.
- The 2023 Efficiency Vermont Energy Burden Report states, “… the average Vermont household energy burden is 11%. About half of that spending (45%) is for transportation. Heating, or thermal energy, accounts for another 35% percent, with 20% for electricity.
The PSD’s Proposal would put Net Metering out of reach for low-income households.
While early solar adoption skewed heavily towards higher-income households, lower-income household increasingly participated in net metering, a trend the PSD proposal puts at risk.
According to the report, “recent research by Lawrence Berkeley National Labs concluded that the adoption of rooftop, net-metered solar has been inequitable when considering income, housing type and tenure, and race.”
- In a 2023 report, Lawrence Berkley also concluded that “Solar adoption continues to shift toward less affluent households over time” and that “[s]olar adopters come from all income groups.” The Department’s proposal to reduce net metering compensation would work directly against the growing adoption of solar by low-income households.
The PSD Report Fails to Show the Strong Support for Renewables in Its Own Polling Data
By highlighting Vermonters’ concerns about electric rate affordability but not the broad support for renewables—including the majority support for paying more for renewables if necessary—the PSD failed to provide a complete picture of its own public outreach.
According to the report, an overarching principle they heard from the Act 179 group meetings was for a group net metering successor program that should “Minimize costs, to help keep electric rates affordable and ensure that a successor program does not shift costs and unduly burden customers who cannot or do not participate. This aligns with consistent concerns raised by Vermonters through a variety of public engagement opportunities, highlighting concerns about affordability.”
The report continues, “In the public opinion polling conducted by MassInc Polling group on behalf of the Department, 82% of surveyed Vermonters noted affordability was “Very Important” when considering where electricity comes from, and the highest number of those surveyed (29%) indicated it was the single most important factor, more than emissions reductions and reliability.”
- The MassInc polling commissioned by DPS also found that only 31% of Vermonters stated they wouldn’t pay more for electricity from renewable or low-carbon sources
According to the report, “Throughout the meeting series, the Department heard from partners that sunsetting GNM while allowing the net-metering program to continue unfairly sought to, and potentially exacerbated, address existing inequities in the program. Reforming net-metering compensation would work to reduce the cost shift associated with the current compensation paradigm, appropriately valuing generation based on energy-related value (considering issues such as timing, location, and environmental attributes) separately from other public policy objectives.”
- No partner ever suggested reforming the compensation for net metering. The conversation was always centered on ensuring affordable housing developers had access to a net metering program that worked for them
The PSD Continues to Promote Ideas that Were Reject by the RES Working Group and the General Assembly
According to the report, “Other cost containment mechanisms include lowering the alternative compliance payment for utilities to procure renewable energy to meet RES Tier II requirements and to create off-ramps for utilities to purchase in-state generation (shifting requirements to purchase out-of-state, if such purchases are more cost effective) if transmission and distribution costs become too high. Both of these cost containment mechanisms were proposed by the Department as part of the legislative process to support Act 179.”
- Both of these proposals were rejected by the RES Reform Working Group and the General Assembly during the debate on H.289