Thursday, September 24, 2009

Vermont Public Service Board Establishes Interim Standard Offer Contract Prices; Proposes Schedule For Hearings to Determine Final Contract Prices

On September 15, 2009, the Vermont Public Service Board (“the Board”) issued an Order establishing interim standard offer contract prices for small-scale renewable generators under the SPEED program, as required by the Vermont Renewable Energy and Efficiency Act of 2009 (“the Act”) (the subject of two prior posts).

The Board adopted default interim prices stated in the statute for all resources except farm methane, for which it established a higher interim price.In addition, the Board determined “the average residential rate per kWh charged by all of the state’s retail electricity providers weighted in accordance with each such provider’s share of the state’s electric load,” which the Act establishes as the default interim price for hydroelectric power, biomass, and wind resources over 15 kW.

The interim standard offer contract prices are as follows: landfill methane ($0.12/kWh); farm methane ($0.16/ kWh); wind - 15 kW or less ($0.20/kWh); wind - over 15 kW (0.125/kWh); solar PV ($0.30/kWh); hydropower ($0.125/kWh); biomass ($0.125/kWh).

The Act requires the Board to set final standard offer contract prices based on a more detailed cost analysis by January 15, 2010.

This analysis will consider, among other issues, whether the rate of return on equity the Board assumed in establishing the interim prices (12.13%) is unreasonably high. The Board will also further review whether a greater degree of “granularity” in contract prices is desirable – i.e., whether and to what degree different prices should be established for different size projects within a technology classification.

On September 24, 2009, the Board issued a proposed schedule for discovery and evidentiary hearings concerning the cost data that will inform the final standard offer contract prices. The proposed schedule, the Board’s September 15th Order, the “Report and Recommendations of the Cost Analysis Subgroup” that the Board considered in determining the interim contract prices, and other information regarding implementation of the Act are available here.

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