Vermont Electric Cooperative, Inc.
42 Wescom Road
Johnson, VT 05656
Tel: (802) 635-2331
Fax: (802) 635-7645
August 23, 2005
Mrs. Susan M. Hudson, Clerk
Vermont Public Service Board
112 State Street, Drawer 20
Montpelier, VT 05620-2701
Re:
Implementation of Act 61
Comments of Vermont Electric Cooperative, Inc.
Dear Mrs. Hudson:
Please accept this letter as the comments of the Vermont Electric Cooperative, Inc.
(“VEC”) in response to the Clerk’s August 1, 2005 Memorandum asking the parties to address
procedural issues associated with the implementation of Act 61.
VEC is more concerned about the outcome of the Board’s efforts to implement Act 61
than about the process that is used to reach the outcome. Accordingly we are not making
detailed recommendations as to process at this time. However, there are a few general
observations we would like the Board to consider, and these are set forth below. VEC would
also like to address the first question in the Clerk’s memorandum concerning the relationship
between Act 61 and the “real-world situations” currently facing VEC. Finally, VEC notes that
National Grid, not VELCO, operates transmission facilities in the southern part of Vermont and
the Board may want to consider whether National Grid should be involved in some parts of this
Docket.
Real-World Considerations
For some time, VEC has been evaluating various power generation sources, some of
which would qualify as renewable resources under Act 61. In particular, VEC has over the past
two or three years investigated constructing a generation facility at or near the Ethan Allen
manufacturing facility at Beecher Falls, Vermont. After considering many different project
designs, VEC has recently entered into an arrangement involving the states of New Hampshire
and Vermont to install a small generator within the Ethan Allen facility.
Mrs. Susan M. Hudson, Clerk
August 23, 2005
Page 2
Through this process, VEC has identified a number of obstacles that currently exist to the
successful development of generation resources. First, there is no ready source of low-cost
capital funding for such projects. VEC was able to make the Ethan Allen project work because it
obtained grant money from Vermont and New Hampshire. Commercial banks and lending
partners have consistently been requesting an initial 20% to 25% equity investment prior to
committing funds to generation projects. While there are avenues for bridging the equity
requirements, generally the cost for the initial unsecured equity is prohibitive either because of
high yield requirements or larger ownership stakes in the economic benefits from the project.
Second, the present section 248 approval process can at times be too slow to
accommodate real world business practices. Again using VEC’s Ethan Allen generator as an
example, in order to provide cost information required for its section 248 application, VEC will
have to request bids for the new generator that it will install. However, once bids are submitted,
the standard period of time for the bid to remain valid is 90 days or less. Since it is highly
unlikely a section 248 approval for a generation project would be complete within 90 days, the
project will have to be re-bid and the economics may change, which in turn may, in circular
fashion, affect the section 248 proceeding. VEC would like the Board and parties to consider
whether some type of template could be developed to streamline the approval process – at least
for certain types of projects -- while complying with the law as currently written. We believe
that there may be projects for which a streamlined process similar to the Board's process for
approving net-metered generating facilities would be beneficial.
VEC understands that the above comments are more substantive than procedural, but
they do describe two very significant real world considerations that will come into play as
Vermont utilities attempt to expand their resource portfolios to include renewable resources.
Process Recommendations
As noted, VEC does not have detailed recommendations as to the specific processes to be
adopted at this time. Having participated in other workshop-based, collaborative processes in the
past, VEC notes that the most efficient and effective processes avoid having everyone attending
every workshop or meeting. It is much more effective to establish an executive group that
oversees and coordinates sub-groups or break-out groups. This type of process was used in
connection with the transition of DSM programs to the efficiency utility and in Docket No. 6290.
This process must encourage the free flow of information, i.e., what is said in the meeting room
stays in the meeting room. Use of the Docket 6290 “ground rules” would appear to be a good
starting point for a template for the conduct of future meetings. In order to facilitate this free
flow of information, the presence of attorneys should be minimized. Further, no meeting or
workshop should have a transcript taken by a court reporter.
As to grouping the tasks to be accomplished, VEC makes the following suggestions:
-- The creation of a Renewable Portfolio Standard should be coordinated with the
establishment of a system of tradable renewable energy credits and the development of
disclosure requirements for electricity providers regarding generation sources. This
Mrs. Susan M. Hudson, Clerk
August 23, 2005
Page 3
group should take advantage of the work done in a workshop held in 2003 on renewable
portfolio standards.
-- The establishment of the SPEED program should be on a separate track from the
Renewable Portfolio Standard, since the RPS is not dependent on SPEED but SPEED is
dependent on RPS.
-- The development of interconnection standards for distributed generation has been
addressed in Docket 6290, so that docket should be at least the starting point for this task.
This Docket adopted IEEE Standard 1547 as the interconnection standard for distributed
resources. We believe the real issue here is not the technical details of interconnection
itself, but rather the gaming of requirements to make a potential distributed resource nonviable.
-- The Board has in place a process for determining the efficiency utility’s budget but that
budget process should take place after the opt-out mechanism is developed and all optout requests have been considered.
VEC looks forward to hearing the comments of other utilities and interested parties and
to responding to those comments at the August 31 workshop. I am enclosing an original and six
copies of this letter.
Very truly yours,
Victoria J. Brown
VJB/ab
Enclosures
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