Kingsbury Dam: The Deal That Went Wrong

This story is part of a three part series about the Kingsbury Dam. To read more about U-32’s relationship with the dam check out Kingsbury Dam: Did U-32 Drop the Ball? . To learn more about how the dam works see  Kingsbury Dam: How Renewable Energy Works.

The contract started with a handshake. Robby Porter, owner of the Kingsbury hydroelectric dam, approached his neighbor, Conrad Smith, about a potential partnership with U-32. Porter proposed that the school enter into a group net metering deal with his dam, one which had the potential to save the school $10,000 a year.

The state legislature passed a bill in 1997 requiring utilities to allow their customers to group net meter. The intention was to give an incentive for more people to use renewable energy by making it more affordable and accessible for customers.

“[Group net metering] let customers who didn’t have a renewable generation site… buy into a share of a larger project,” says Doug Smith, the Power Planning Director for Green Mountain Power.

When a renewable energy facility generates power, it is put into the grid. That power can then be used by anyone using the grid at that moment. In group net metering, the power a renewable energy facility generates is credited to another party. The second party has the value of that generation deducted from their electricity bill, and will then pay the renewable facility a percentage of their savings.

“It’s essentially an accounting function,” says Porter. “When you put your 20 bucks in the bank and go to a different branch, you don’t get out the same 20 dollar bill, but you still get out 20 bucks.”

Prior to the U-32 contract, he says that Kingsbury was “selling power into the spot market, which means you can sell power into the market for whatever the going price is. The price fluctuates wildly.” Kingsbury was “at the mercy” of the market. Group net metering has offered him a stabler alternative, one that he finds highly preferable.

The contract was set up so that Kingsbury’s generation would be credited to U-32’s metering, and in turn, U-32 would pay 90% of their savings to Kingsbury. That would create a 10% savings off of market price for the school.

After a trial period a few months, the school and Kingsbury entered into an official contract that lasted for five years. Over those five years, the school saved about 10,000 dollars a year.

Ten thousand dollars is only 1/15 of one percent of the total school budget. Still, 10,000 dollars is 10,000 dollars.

In 2015-16, the school spent about 145,000 dollars on co-curriculars. The co-curricular budget for 2017-18 is 131,000 dollars. Ten thousand dollars could almost eliminate the need for such a reduction.

The contract was set up to be as safe as possible for the school. Most group net metering contracts are set up so that the generator cannot lose money. If the price of electricity gets so low that the electricity they generate isn’t worth the cost of generation, the customer will pay a “floor price” to ensure that the generator does not lose money. This means that the customer can be paying more than market price. The Kingsbury contract had no floor price, so it was impossible for the school to lose money.

When the contract ran out, Porter was informed that the school was going to “put the contract out to bid.” Group net metering contracts are not usually put out to bid in the same way that a construction contract is, but the idea of shopping around for another deal isn’t unheard of.

“My impression is that customers in group net metering contracts… have been able to receive an effective discount of at least a few percent off what they would’ve paid… sometimes five, sometimes ten,” says Doug Smith. “Much more rarely do they get a lot more than that, like 20 or 25 percent.”

The school has not found a better deal so far, and is purchasing its electricity from Green Mountain Power. In 2016, Green Mountain Power’s fuel mix came from renewable sources (40.3%), nuclear (13.8%), from market purchases (45.5%). Market purchases are mostly non renewable.

“I have no idea why they didn’t get back to me,” says Porter. “It was, in my opinion, stupid, because we had a very simple, safe contract for U-32, much more simple and safer than a typical solar contract. There was no risk.”