The idea is to encourage more small-scale solar, hydro and wind power generation by municipalities, property owners and businesses, partially replacing the state's current energy supplies over the coming years.

The change in the state's so-called "net metering" program is part of a large and complex energy bill which could have far-reaching impacts on the state's power future, the second such bill crafted by the House Natural Resources and Energy Committee in two years.

Those bills, supporters said, are part of planning for a decade from now when contracts with Vermont Yankee nuclear plant and Hydro-Quebec begin to expire. Those two sources provide two-thirds of the state's energy.

This year's bill is still in the early stages — it will clear the first hurdle if it is approved by the committee by early next week.

The most controversial part of the proposal will likely be the expansion of net metering.

Under current law homeowners can install solar panels or other energy-generating systems and feed any extra power they produce back into the power grid, effectively running their electricity meters backward.

But such net-metered systems are limited to 15 kilowatts or less, a little more than enough power to cover a typi-cal house's energy use.

Farms can operate similar systems, for instance generators powered by methane from cow manure, of up to 150 megawatts.

Under the proposed bill the size of both types of systems could be greatly expanded — up to 250 megawatts. The expansion would allow groups of power customers, such as residents of an apartment building or condominium complex, to join and build such a system together.

Expanding the size of such projects will allow them to be more efficient, supporters said.

"We want net metering to be more economical," said Rep. Robert Dostis, D-Waterbury, chairman of the committee.

Power utilities worry that such systems could become, in essence, tiny sub-utilities inside their service area. And, since the sale of electricity covers the cost of infrastructure and management, if a large number of people opted for such systems the cost of the utility infrastructure could be shifted onto other ratepayers.

Kerrick Johnson, director of governmental affairs for Central Vermont Public Service, the state's largest utility, said that could be a concern.

"You could have our customers subsidizing the net-metering people," he said.

That could happen because net metering projects benefit from the poles, wires and other assets of the utility, but don't pay for them through their power bills.

Avram Patt, general manager of Washington Electric Cooperative, agreed it could be a problem.

"At what point is this really a commercial operation?" he said of the net-metered systems.

WEC has supported net metering projects in its service territory under the current rules, and 18 of its customers have such systems, about twice what is typical for the state.

But such large-scale projects may be better suited to operate under the energy program created in the House Natural Resources and Energy Committee last year, Patt said. That program was designed to encourage utilities to buy locally produced power.

"That could have an impact on the utilities," said James Volz, chairman of the Public Service Board. "The cost is going to have to be absorbed by the other customers."

Volz said he is not opposed to the bill, but it should be written so his board will have a large amount of leeway in determining how the goals of the legislation should best be met, he said.

The expanded net metering projects will still be built the right size to cover — but not greatly exceed — a customer or group of customers' power needs, said supporters of the bill.

That is because the owners of a net metered project sell excess electricity to their utilities at below the market price of power, said Rep. Tony Klein, D-East Montpelier. That removes the financial incentive to overbuild such projects.

"It is important to keep our utilities financially sound," he said. "I am not going to do anything to harm the utilities."

The committee has heard from towns which want to do such projects, and industry experts who say there is a market for them, Klein said.

Net-metering projects cannot produce more than 1 percent of the utility's total power production now, although the committee members are considering expanding that to 2 percent.

Some members of the committee, such as Rep. Joseph Krawczyk, R-Bennington, wondered whether the some portions of the bill are needed before the results of the sweeping energy bill of the last lawmaking session are known.

Much of what is proposed in this bill might be able to be done already, said Krawczyk, an important supporter of last year's measure.

A second potentially controversial portion of the proposal does not deal with electricity at all.

It would authorize a study to see if a program to promote conservation of gasoline, fuel oil and other non-regulated energy sources would pay off for the state.

Currently the state's "efficiency utility" Efficiency Vermont, which is supported by a surcharge on electricity paid by customers, promotes and supports energy efficiency programs.

The proposed study would look at whether a similar system for other sources of energy would work.

The committee is also considering whether the state should implement commercial building codes for energy efficiency. Although such codes are mandated by federal law Vermont has yet to implement them as a requirement, although the state recently updated its commercial building guidelines.

The bill is really an attempt to "continue to move us toward greater energy independence and energy security," said Dostis. "We all realize we can't do business as we have been doing it."