1 Distributed Renewable Generation Legislation as of 5/02/07  SB 483 by Fraser- Relating to the regulation of electric generation capacity ownership in the electric power market was amended during the 2 nd and 3 rd reading in the House to include language governing the interconnection of Distributed Renewable Generation (DRG). Definition and Application Process  Distributed Renewable Generation is defined as capacity of 2,000 kw or less provided by renewable energy technology.  Customers may request interconnection by filing an application with the TDU or Utility.  A TDU or Electric Utility shall allow an interconnection if: 1.) DRG has a five year warranty against breakdown or degradation. 2.) The rated capacity of the generation does not exceed the service capacity of the wires.  The Commission shall determine safety, technical, and performance standards for DRG.  TDUs or Electric Utilities may not requiring additional liability insurance for DRG systems that meet Commission standards.

2 Metering Requirements  A TDU or Electric Utility shall make available to a DRG owner –separate meters that measure the load and generation output, or –a single meter capable of measuring separately in-flow and out-flow at the point of common coupling meter point.  The DRG owner must pay the differential cost of the metering unless the meters are provided at no additional cost.

3 RECs and Value of Surplus Energy  A Renewable Energy Credit that is earned through the DRG process is the sole property of the DRG owner unless s/he sells or trades the credit. –For electric utilities the Commission will have to address the ownership of RECs.  A REP or Electric Utility can contract with a DRG owners so that: 1.) surplus energy is made available to the transmission grid, and 2.) the net value of the surplus electricity is credited to the DRG owner  For DRG owners in customer choice areas, the DRG owner must sell the surplus to the REP that serves the DRG owners load.  The value of the surplus energy is between the REP and the DRG owner, but may include: –a value based on the clearing price of energy at the time of day that the electricity is made available to the grid –any surplus may be credited to an account during a billing period and rolled over to subsequent billing periods until the credit is redeemed.  ERCOT will have to develop DRG settlement procedures by 1/01/09.