'Cow Power' payment rate raised
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By BRUCE EDWARDS rutland herald staff - Published: December 14, 2009
The Public Service Board has come to the aid of three farms on the verge of quitting a renewable energy program beset by low power prices.
In a 2-1 decision, the PSB this week approved a temporary payment of 8 cents per kilowatt to the three farms enrolled in the Cow Power renewable energy program run by Central Vermont Public Service Corp.
CVPS petitioned the board in October to increase the price it pays to the three participating farms. The farms turn manure into methane gas which in turn produces electricity.
The temporary payment, in effect for 180 days, is designed to give CVPS, the three farm-producers, and the Department of Public Service time to come up with a long-range plan to stabilize power payments to the farms enrolled in the Cow Power program.
The three dairies are Blue Spruce farm in Bridport, Green Mountain Dairy in Sheldon and Montagne Farms in St. Albans.
The wholesale spot price paid to farmers has been as high as 11 cents per kilowatt, but plummeted this year to as low as 3 cents per kilowatt hour. The current price is 4 cents per kilowatt hour – well below the cost of what it takes the farms to generate electricity.
Until the PSB acted, the independent CVPS Renewable Development Fund earlier this year began paying the farms the difference between the spot market price and 8 cents per kilowatt-hour.
CVPS said the order gives the utility and the farms breathing room to come up with a solution.
"The board approved exactly what we were asking for, and it will ensure the farms can cover their costs while we seek a new arrangement," CVPS spokesman Steve Costello said in an e-mail. "These farms are providing substantial environmental benefits to Vermont, and we want to keep them online for their benefit, our customers' benefit, and the state's benefit."
In its order this week amending the Voluntary Renewable Pricing Program, the PSB said the farm-producers "are on 'the verge' of ceasing to generate power" and that it's in the public interest to promote renewable energy projects.
"Temporarily modifying the program's terms so as to enable farm-producers to continue to generate power while negotiating a longer-term solution with CVPS is consistent with the goal," the board wrote in its 11-page decision.
In addition to being paid for the power produced, CVPS pays the three farms a 4-cent per kilowatt hour premium.
CVPS customers who enroll in Cow Power pay a premium to receive all or a portion of their electricity from the renewable energy program.
Board members James Volz and David Coen voted to approve the temporary price increase. The dissenting member was John Burke, a Castleton lawyer.
Burke wrote that under the CVPS alternative regulation plan, all customers bear the increase between the price paid to the farm-producers and the 8 cents per kilowatt hour. But Burke, who grew up on a farm, said while he's sympathetic to the plight of farmers, the cost shifting violates the law that requires any excess cost associated with renewable pricing programs be paid by customers who elect to sign up for the program.
"Only those customers of CVPS who chose to participate in the renewable pricing program (Cow Power) should pay the increase," Burke wrote.
In its majority decision, however, the board said while all CVPS customers will pay a portion of the increased cost, the "payments will be offset by the value of the total capacity benefits that CVPS has earned since capacity credits became available for Cow Power projects and that had not been specifically accounted for in the program."
Those credits, the board continued, are approximately equal to paying the farm-producers 8 cents per kilowatt hours for 180 days.
Under a new renewable energy pricing structure approved by the PSB, future Cow Power farms will be paid 16 cents per kilowatt hour. However, the new rate does not cover the existing farms.
Costello said one solution would be to grandfather the three farms so the power generated qualifies for the higher price.
bruce.edwards@rutlandherald.com
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