1. Net Metering and Interconnection A Policy Perspective Brad Klein Staff Attorney Envt’l Law & Policy Center March 28, 2007

2. Policy and market mechanisms affecting distributed generation (DG) Diagram from Dick DeBlasio, NREL (2004)

3. Interconnection Basics Interconnection = the physical connection between the customer-sited generator and the utility grid. Interconnection problems one of the “principal obstacles” to effective adoption of DG (NREL, 2000) – Redundant and excessive technical requirements (e.g. safety studies, equipment testing and approval, engineering analysis, transmission studies, system upgrades) – Uncoordinated and expensive procedural requirements, fees, and application process delays – Insurance and indemnification requirements.

4. Standardized Interconnection Rules Establish clear and uniform technical requirements & approval procedures FERC Small Generator Interconnection Procedures (Orders 2006 a & b) – Apply to “small” generators = 20 MW and under – Generally apply to transmission level interconnections State rules – Usually administered by state utility commission – Generally apply to distribution level interconnections – “Model” state rules: e.g. IREC (2005); MADRI (2005); ELPC

5. Interconnection Rules – important elements Standardized technical requirements – Often based on IEEE 1547 and UL 1741 standards “Expedited” review pathways – “plug & play” for small (e.g. <10 kW) pre-certified equipment – Streamlined review if pass technical screens – Separate pathway for non-exporting applications (e.g. CHP) Clear fees and timelines Standardized application forms and interconnection agreements No discriminatory / redundant requirements (e.g. external disconnect switches, additional insurance requirements)

8. States with Standardized Interconnection Rules Standards for net-metered systems only Standards for net-metered systems and other DG (November 2006)

9. Net Metering – basics Economic arrangement to simplify the reconciliation of value of customer produced power. “True” net metering: 1:1 offset of power consumed by power produced (contrast to “dual” metering as in MO)

10. Net Metering – Policy considerations Eligible technologies? – Wind, solar, biomass, digesters, fuel cells, etc? – System size caps? (2 MW is now “best practice”) Aggregate caps? – often limited to 0.1% to 5% of utility max peak load Metering considerations – Flat rate, time of use, who pays? Reconciliation of NEG? – Monthly, annual, carry forward, utility give-back? Treatment of RECs?

11. Net Metering State-wide net metering for certain utility types (e.g., IOUs only) Net metering offered by one or more individual utilities Net metering is available in 41 states + D.C. NH: 25 MA: 60 RI: 25 * CT: 100 50 www.dsireusa.org February 2007 8,000 100 1,000 25 50 100 40 20 25/100 2,000 40 150 10/100 25 no limit 25/100 10 500 VT: 15/150 10/400 PA: 50/1,000/2,000 NJ: 2,000 DE: 25 MD: 500 DC: 100 VA: 10/500 15 10 100 25 50 10 30 * State-wide net metering for all utility types * * * * * * * * * * * * * * * * #s indicate system size limit (kW); in some cases limits are different for residential and commercial as shown * 20/100 * * * 25

12. Net Metering – Best Practices Max system capacity > 2 MW All renewables eligible (+ CHP) All utilities must participate All customer classes eligible No limit on aggregate capacity Annual reconciliation of NEG, or no expiration Interconnection standards No application fees, special charges, or tariff changes Customer retains RECs

13. Energy Policy Act of 2005 Section 1254: Interconnection PUCs and certain nonregulated utilities must “consider” an interconnection standard. Must complete “determination” by 8/8/07. Section 1251: Net Metering PUCs and certain nonregulated utilities must “consider” a net- metering standard. Must begin “consideration” by 8/8/07. Must complete “determination” by 8/8/08. (The other new PURPA standards relate to fuel diversity; fossil fuel generating efficiency; and time-based metering and communications – see EPAct §§ 1251-52)

14. EXAMPLES Iowa -- interconnection – Iowa Utility Board Docket NOI-06-4 – Issue: Should standards apply to Rural Electric Cooperatives? Illinois -- interconnection – Illinois Commerce Commission Docket 06-0525 – Issue: How should standards be implemented? Statewide administrative rule? utility tariff? utility website? Missouri – See Warren Wood’s presentation at 1:30

15. Resources IREC: www.irecusa.orgwww.irecusa.org – Tracking state “consideration” of EPAct standards – Model net metering and interconnection rules – State-by-state tables of state rules & policies DSIRE: Database of State Incentives for Renewables and Efficiency – www.dsireusa.org www.dsireusa.org

16. Contact information: Brad Klein Staff Attorney bklein@elpc.orgklein@elpc.org 312-673-6500 www.elpc.org

17. Thanks to: Chris Cook, SunEdison LLC / IREC Rusty Haynes, N.C. Solar Center, N.C. State University Brad Johnson, ACN Energy Ventures / NREL