Vermont faces electricity cost, carbon, supply challenges in 2014

Developments in Vermont's energy landscape during 2014 will pose numerous challenges for electricity consumers and policy makers. For example, consumers will likely face the continued rise in wholesale electricity prices. In 2013, the average "market clearing price" was 5.1 cents per kilowatt/ hour, according to transmission grid operator ISO-New England.

Prior to that, the last time the wholesale cost of electricity rose above five cents was in September of 2011. 2012 prices averaged less than four cents. Vermonters also face a looming energy supply shortfall. The State of Vermont is predicting a regional capacity deficit in electricity within the next five years

This is a sobering reversal of recent predictions of plenty. Vermont relies heavily on "fracked" natural gas for both heat and electricity, the demand for which will exceed pipeline delivery capacity. A shortfall likely will mean higher prices and reliability challenges, if not outright disruptions. Recently, the State of Vermont announced electricity-related greenhouse gas emissions have increased despite strenuous, expensive efficiency and renewable power efforts. The Vermont Agency of Natural Resources attributes the rise in emissions in part to a shift away from low-carbon power sources toward fossil fuel-intensive market power. By far the biggest low-carbon subtraction was the March 2012 expiration of the long-standing power contracts between the state's utilities and the 650 MW Vermont Yankee nuclear power plant.

The impending closure of Vermont Yankee will pose new challenges to Vermont's energy portfolio and the state's ability to meet its long-term low-carbon goals. The Dec. 23, 2013 proposed settlement between the State of Vermont and Vermont Yankee's owner resolves most (but not all) outstanding legal and permitting disagreements, allowing the plant to continue operating through the third quarter of 2014. The settlement provides $10 million in economic development for Windham County, a continuation of Vermont Yankee's exemplary history of economic support in taxes, paychecks and philanthropy.

Meanwhile, the burden of finding an equitable replacement for Vermont Yankee's plentiful clean, affordable 24/7 baseload power falls squarely on the shoulders of state policymakers. The State's plan leans heavily on building more wind and solar generation. Yet proposed ridgeline wind projects are embattled. In southern Vermont, the 30 megawatt (MW) Deerfield II project has its permits, but faces a federal court challenge and still needs a buyer for its power. Owner Iberdrola said in October that without a power contract, it is unlikely the turbines will be built. Two Northeast Kingdom state senators say their region carries a disproportionate load. The Vermont Public Service Board review of project opponents' claim of turbine noise health problems - a phenomenon developers say is unsupported by peer-reviewed science - began with a public hearing Jan. 8.

Net metering has blossomed, as recently-enacted state laws encourage utility customers to sell power from onsite renewable energy generators (mostly rooftop and backyard solar) back to utilities at a premium. Some utilities have reached the three percent "cap" of total load permitted by state law.

Opponents say net metering raises rates for other customers; supporters say it suppresses everyone's peak-demand costs. A legislative "fix" - possibly raising the cap - is the main priority of the House committee tasked with energy legislation.

The proposed 25 MW biomass-burning power plant in Springfield may have satisfied local officials with a new access road. Also, during hearings, the State conceded the plant's power may be needed, thanks to the looming shortfall.

A Canadian company announced plans to deliver, by 2019, 1,000 MW of Quebec hydro power to Southern New England (but none to Vermont) via two buried cables running beneath Lake Champlain and central Vermont.

As Vermont seeks to obtain 90 percent of its total energy from renewable sources by 2050, these challenges and issues will assume greater importance in 2014 and beyond.

Guy Page is Communications Director with the Vermont Energy Partnership, a diverse group of more than 90 business, labor, and community leaders.


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