Net Metering and
Interconnection Requirements
IMUA 2015 Annual Conference
May 8, 2015
Delia Patterson
General Counsel, APPA
Agenda
• Define what I mean when I use the term
“distributed generation” (DG)
• Provide you with an overview of some of
APPA’s DG resources
• Discuss Net Metering
• Discuss Interconnection Standards and
Agreements
What are DG Systems?
• DG refers to power produced at the point of consumption
– small-scale energy resources that typically range in size from 3
kilowatts (kW) to 10 megawatts (MW) or larger
– A typical household’s peak demand is about 3.5 kW, so the
smaller resources are used by residential customers, while the
larger systems are typically used by commercial and industrial
customers
– More than 90 percent of installed distributed generation in the
United States today is solar
– In addition to PV, DG can include small wind turbines, combined
heat and power (CHP), fuel cells, microturbines, and other
sources
DG Education and Tools
• APPA is concerned about the impact of
DG on members if not properly managed
– DG (esp. solar PV) is a major focus of APPA
programming; we want members to learn from
those on the front lines (CA, AZ)
– APPA has several publications on different
aspects of DG issues
DG Publications
DG Publications (cont.)
DG Webinar Series
• February 26, 2015 - May 7, 2015
• All webinars take place from 2 – 3:30 p.m. Eastern. The
series includes the following five webinars, which can be
taken individually or as a series for a discounted rate:
•
•
– Distributed Generation: A Primer – Feb. 26
– Distributed Generation: Implications for Public Utilities – March 12
– Understanding the Potential Value of Community Solar – April 2
– Solar Rooftop Impact on Retail Rate Recovery – April 21
– Solar Engagement Options for Public Power Utilities – May 7
More information at
http://www.publicpower.org/Events/Event.cfm?EventID=174077
Recordings of past webinars are available.
More DG Resources at
PublicPower.org
www.publicpower.org/distributedresources
NET METERING
What is Net Metering?
• Net metering rules generally provide consumers with
certain DG the ability for the meter to roll forward
when customer consumes and roll backwards when
the customer exports power (“netting” effect on
consumer bills)
• Currently, 43 states plus D.C. have implemented net
metering policies (policies vary significantly by state)
• Under most net-metering programs, the customer is
both charged and credited at the utility’s full retail
rate of electricity
Utility Cost Under-Recovery Is
Becoming an Issue . . .
• As penetration of solar PV has increased in some states
(California, Arizona, New Jersey, Minnesota), cost underrecovery has become a battleground issue
• Since net metering generally does not account for time
of usage, it potentially over-compensates distributed
generators and credits them with a value of generation
that is higher than the utility’s avoided cost
• If the utility’s rate structure recovers fixed costs of
service (e.g., transmission, distribution, power supply) in
volumetric rate, those costs are not recovered
– Net meters allow customers to under-pay fixed costs
Net Metering in Illinois
• Legislation enacted in 2007 (with changes in 2011 and 2012)
– IOUs and Alternative Retail Electricity Suppliers must offer net
metering
– Public power and coops not required
• Net metering available to customers generating electricity
using solar, wind, dedicated energy crops, anaerobic
digestion of livestock or food processing waste, hydropower,
fuel cells and microturbines powered by renewable fuels
• Systems up to 40 kW are eligible for net metering
• Any net excess during a billing period is carried over as a
kWh credit to the following billing period
• Credits expire at the end of an annualized period
Net Metering in Illinois (cont.)
• For customers taking service under a time-of-use (TOU) tariff,
if the customer is a net generator during any discrete TOU
period, the net kWh produced is valued at the same price per
kWh as the utility would charge for retail kWh sales during
that same time of use period.
• Dual metering available for systems greater than 40 kW but
no greater than 2 MW (generally less favorable to customers
than net metering)
Should Current Net Metering
Policies Be Updated?
• Yes
• Because of the way many net metering policies
were designed, net-metered customers often
receive the full retail electricity rate, even though
it could cost less for the utility to produce or buy
on the wholesale market
• Updates may be needed to ensure all customers
have safe, reliable and affordable electricity
Tips for Creating/Updating Your Net
Metering Policy
• Adopt policies that support renewables
w/o shifting costs between consumers
– Ensure appropriate compensation to
consumers for their net excess generation at
reasonable rates
– Ensure customer generators pay an
appropriate share of system costs, protecting
other consumers from cost-subsidies
Tips for Creating/Updating Your Net
Metering Policy (cont.)
• If net metering policies are adopted,
impose appropriate limits:
– They should only apply to small residential
generators (<10 kW) that use intermittent
renewable energy
– They should only be permitted up to a small
percentage (e.g., 0.1%) of the utility’s historic
peak load
Interconnection Standards
and Agreements
Federal Interconnection Procedures
and Agreement
• FERC’s Small Generator Interconnection
Procedures (SGIP) and Small Generator
Interconnection Agreement (SGIA) adopted in
2005 (Order No. 2006) and revised in 2013
(Order No. 792)
– Governs FERC-jurisdictional interconnections up to
20 MW (but sets standard for the industry . . .)
– Generally do not apply to distribution-level
interconnection unless specifically adopted at the
state or local level
Federal Interconnection Procedures
and Agreement (cont.)
• Order No. 792 is FERC’s response to the rapid
increase in solar PV development and related
changes in interconnection technology
– Provides generators more flexibility
• Order No. 792 changes:
– Customers can now request a pre-application report regarding a
point of interconnection to help that customer select the best site
for its small generating facility
– Increased Fast Track eligibility from 2 MW to 5 MW (available
only to inverter-based systems)
Federal Interconnection Procedures
and Agreement (cont.)
– Revised supplemental review process, which is the next step if a
small generator fails the Fast Track screens
• Performed at discretion of Interconnection Customer
• 3 new screens – 100% of minimum load; power quality and voltage; and
safety and reliability
– Customers may comment on required upgrades
Illinois Commerce Commission
Interconnection Standards
• For DG up to 10 MW (including CHP), the rules set 4 levels of
review for interconnection requests, which are eligible for
expedited review:
– Tier 1: inverter-based systems up to 10 kW
– Tier 2: systems up to 2 MW, connected to a radial distribution
network or a spot network serving one customer
– Tier 3: systems up to 50 kW, connected to an area network and
from which power will not be exported, or certified, non-exporting
systems up to 10 MW, connected to a radial distribution network
– Tier 4: systems up to 10 MW that do not meet the criteria for
inclusion in a lower tier, including all systems using non-certified
components and those that require additional construction by the
utility in order accommodate the facility
Illinois Commerce Commission
Interconnection Standards (cont.)
• For DG systems (including CHP) >10 MW, an
interconnection feasibility study and a system impact
study will be required
• A standard interconnection agreement form is available
from the utility, and fees and insurance requirements will
be determined on a case-by-case basis
Then there is PURPA . . .
• Section 210 of the Public Utility Regulatory Policies Act
applies to all utilities (including yours)
• PURPA established 2 types of Qualifying Facilities (QFs)
– Small power production facilities
• Primary source is biomass, waste or renewable
• No bigger than 80 MW
– Cogeneration facilities
• Produces steam/heat for industrial purposes and electric energy
• Any size
Then there is PURPA . . . (cont.)
• PURPA provides QFs the right to sell power to electric
utilities at avoided cost rates unless the utility is exempt
– Negotiated rates and net metering permitted
• QFs have the right to receive supplementary, backup,
maintenance and interruptible power
• QFs also have the right to interconnect and wheel
– Utility entitled to interconnection costs, which must be set at a
non-discriminatory basis
• Interconnection costs include the reasonable cost of connecting, switching,
metering, upgrades to distribution, safety provisions, and administrative
costs incurred by the utility directly related to interconnecting the QF
Interconnection Agreements
• The purpose of interconnection agreements is to ensure
consumers installing DG are addressing the following
and other issues up front:
– Certification of the reliability and safety of the proposed DG facility and
physical interconnection equipment
– The need for costs of any distribution system upgrades required to
integrate the DG facility
– Responsibility and requirements for the control, operations, and
maintenance of the DG facility and related equipment
– Metering and payment for any net energy exports to the system
– Inspection rights
– Liability and indemnification
– Insurance
Questions
Delia Patterson
American Public Power Association
dpatterson@publicpower.org
202-467-2993 (office)
301-529-4480 (cell)