1. Federal Energy Regulatory Commission Proposed Rule on Small Generator Interconnection RM02-12-000 July 23, 2003

2. Federal Energy Regulatory Commission 2 Goals of Small Generator Proposed Rule Facilitate the interconnection of small generators with a rule designed for their special features and needs Lower wholesale prices for customers, Reduce small generator interconnection time and costs, Prevent undue discrimination in interconnections,

3. Federal Energy Regulatory Commission 3 Goals of Small Generator Proposed Rule (cont’d) Preserve reliability of the electric system, Increase energy infrastructure, and Encourage the development of alternative energy sources such as wind, solar and distributed generation.

4. Federal Energy Regulatory Commission 4 Small Gen. Rulemaking Process NOPR (consisting of both large generator and small generator matters) issued in April 2002 Small Gen proponents requested separate treatment Commission issued a separate Small Gen ANOPR for generators up to 20 MW in August 2002, initiating a stakeholder negotiation process Coalition documents filed November 2002 45 comments received December 2002

5. Federal Energy Regulatory Commission 5 Small Gen Rulemaking Process (cont’d) Coalition filed two Agreements and two Procedures – one set for ≤ 2 MW and another set for 2-20 MW NARUC proposed a single set of procedures and agreement The draft NOPR draws significantly from ideas brought forth by NARUC The draft NOPR has a single set of procedures and an agreement applicable to all generators no larger than 20 MW

6. Federal Energy Regulatory Commission 6 Small Gen. Intercon. Agreement Sets forth legal rights and obligations of each party, Addresses cost responsibility for interconnection facilities and upgrades, Lays out milestones for completing the interconnection, and Sets forth the process for dispute resolution.

7. Federal Energy Regulatory Commission 7 Small Gen. Intercon. Procedures Accelerated procedures for: –Generators connecting at high voltage and –Generators >10 MW connecting at low voltage Expedited procedures for generators 2-10 MW connecting at low voltage Super-Expedited procedures for generators ≤ 2 MW connecting at low voltage

8. Federal Energy Regulatory Commission 8 Pricing and Applicability Pricing Policies – same as Large Generator Final Rule Applicability – same as Large Generator Final Rule –Interconnection to a public utility’s transmission system –Interconnection to a public utility’s distribution system, if such facilities are currently being used to make a jurisdictional wholesale sale (all upgrade costs assigned to the generator) The proposed rule may be used as a model by state regulatory commissions for interconnection subject to state regulation. State standardization will help develop renewable resources and alternative fuel technologies.

9. Federal Energy Regulatory Commission 9 Public Comments Comments are due 45 days after publication in the Federal Register. Please file your comments electronically using the Commission’s website.