Net metering and interconnection standards

Section 113 of the Public Utility Regulatory Policies Act of 1978 is amended by adding the following new subsections at the end thereof:

(d)

Net metering

(1)

Definitions

As used in this subsection: (A)The term customer-generator means the owner or operator of a qualified generation unit. (B)The term net metering means measuring the difference between the electricity supplied to a customer-generator and the electricity generated by a customer-generator that is delivered to a local distribution section system at the same point of interconnection during an applicable billing period and providing an energy credit to a customer-generator in the form of a kilowatt-hour credit for each kilowatt-hour of energy produced by a customer-generator from a qualified generation unit. (C)The term qualified generation unit means an electric energy generation unit that meets each of the following requirements: (i)The unit is a fuel cell or uses as its energy source either solar, wind, biomass, geothermal, anaerobic digestion or landfill gas, or a combination of the foregoing. (ii)The unit has a generating capacity of not more than 1,000 kilowatts. (iii)The unit is located on premises that are owned, operated, leased, or otherwise controlled by the customer-generator. (iv)The unit operates in parallel with the retail electric supplier. (v)The unit is intended primarily to offset part or all of the customer-generator’s requirements for electric energy. (D)The term retail electric supplier means any electric utility that sells electric energy to the ultimate consumer thereof. (E)The term local distribution system means any system for the distribution section of electric energy to the ultimate consumer thereof, whether or not the owner or operator of such system is also a retail electric supplier. (2)

Adoption

Not later than one year after the enactment of this subsection, each State regulatory authority (with respect to each electric utility for which it has ratemaking authority), and each nonregulated electric utility, shall provide public notice and conduct a hearing respecting the standards established by paragraph (3) and, on the basis of such hearing, shall adopt such standard. (3)

Establishment of net metering standard

Each retail electric supplier shall offer to arrange (either directly or through a local distribution company or other third party) to make net metering available, on a first-come-first-served basis, to each of its retail customers in accordance with the provisions of this subsection and each of the following requirements: (A)Rates and charges and contract terms and conditions for the sale of electric energy to customer-generators shall be the same as the rates and charges and contract terms and conditions that would be applicable if the customer-generator did not own or operate a qualified generation unit and use a net metering system. (B)Each retail electric supplier shall notify all of its retail customers of the standard established under this paragraph upon adoption of such standard. (4)

Net energy measurement

Each retail electric supplier shall arrange to provide to customer-generators who qualify for net metering under subsection (b) an electrical energy meter capable of net metering and measuring the flow of electricity either to or from the customer and using a single meter and single register, except where it is not practical to do so. Where it is not practical to provide the meter to the customer-generator, the retail electric supplier (either directly or through a local distribution company or other third party) shall, at its own expense, install one or more of such electric energy meters for the customer-generator concerned. (5)

Billing

Each retail electric supplier subject to subsection (b) shall calculate the electric energy consumption for a customer using a net metering system in the following manner: (A)The retail electric supplier shall measure the net electricity produced or consumed during the billing period using the metering installed as provided in paragraph (4). (B)If the electricity supplied by the retail electric supplier exceeds the electricity generated by the customer-generator during the billing period, the customer-generator shall be billed for the net electric energy supplied by the retail electric supplier in accordance with normal billing practices (C)(i)If electric energy generated by the customer-generator exceeds the electric energy supplied by the retail electric supplier, the customer-generator shall be billed for the appropriate customer charges for that billing period and credited for the excess electric energy generated during the billing period, with this credit appearing as a kilowatt-hour credit on the bill for the following billing period. The kilowatt-hour credits shall be applied to customer-generator electric energy consumption on the following billing period bill (except for a billing period that ends in the next calendar year). At the beginning of each calendar year, any remaining unused kilowatt-hour credits shall be extinguished. (ii)Except as provided in this clause, if the customer-generator is using a meter and retail billing arrangement that has time differentiated rates, (a time-of-use meter), the kilowatt-hour credit shall be based on the ratio representing the difference in retail rates for each time of use rate or the credits shall be shown on the customer-generator’s bill as a monetary credit reflecting retail rates at the time of generation of the electric energy by the customer-generator. Notwithstanding the standard established under section 11(d)(14), the supplier may require, at the supplier’s option, the customer-generator with net metering to take electric service under a non-time differentiated energy rate tariff or service that it offers to customers in the same rate class as the customer-generator. (6)

Percent limitations

(A)

Two percent limitation

The standard established under this subsection shall not apply for a calendar year in the case of a customer-generator served by a local distribution company when the total generating capacity of all customer-generators with net metering systems served by that local distribution company in that calendar year is equal to or in excess of 2 percent of the capacity necessary to meet the local distribution company’s average forecasted aggregate customer peak demand for that calendar year. (B)

One percent limitation

The standard established under this subsection shall not apply for a calendar year in the case of a customer-generator served by a local distribution company when the total generating capacity of all customer-generators with net metering systems served by that local distribution company in that calendar year using a single type of qualified generation units (as listed in paragraph (1)(C)(i)) is equal to or in excess of 1 percent of the capacity necessary to meet the company’s average forecasted aggregate customer peak demand for that calendar year. (C)

Records and notice

- Each retail electric supplier shall maintain, and make available to the public, records of the total generating capacity of customer-generators of such system that are using net metering, the type of generating systems and energy source used by the electric generating systems used by such customer-generators. Each such retail electric supplier shall notify the State regulatory authority and the Federal Energy Regulatory Commission when the total generating capacity of such customer-generators is equal to or in excess of the limitations set forth in subparagraph (B). (7)

Ownership of credits

For purposes of Federal and State laws providing renewable energy credits or greenhouse gas credits, the customer-generator with a qualified generating unit and net metering shall be treated as owning and having title to the renewable energy attributes, renewable energy credits and greenhouse gas emission credits related to any electricity produced by the qualified generating unit. No retail electric supplier shall claim title to or ownership of any renewable energy attributes, renewable energy credits or greenhouse gas emission credits of the customer-generator as a result of interconnecting the customer-generator or providing or offering the customer-generator net metering. (8)

Safety and performance standards

(A)A qualified generation unit and net metering system used by a customer-generator shall meet all applicable safety and performance and reliability standards established by the national electrical code, the Institute of Electrical and Electronics Engineers, Underwriters Laboratories, or the American National Standards Institute. (B)The Commission shall, after consultation with State regulatory authorities and nonregulated local distribution systems and after notice and opportunity for comment, prohibit by regulation the imposition of additional charges by electric suppliers and local distribution systems for equipment or services for safety or performance that are additional to those necessary to meet the standards and requirements referred to in subparagraph (A) of this paragraph and subsection (e) of this section (relating to interconnection). (9)

Determination of compliance

Any State regulatory authority (with respect to each electric utility for which it has ratemaking authority), and each nonregulated electric utility may apply to the Commission for a determination that any State net metering requirement or regulations complies with the requirements of this subsection. In the absence of such a determination, the Commission, on its own motion or pursuant to the petition of any interested person, may, after notice and opportunity for a hearing on the record, issue an order requiring against any retail electric supplier or local distribution company, or both, to require compliance with this subsection. Any person who violates any requirement of this subsection or any order of the Commission under this subsection shall be subject to civil penalties in the amount of $10,000 for each day that such violation continues. Such penalties may be assessed by the Commission, after notice and opportunity for hearing, in the same manner as penalties are assessed under section 31(d) of the Federal Power Act. (e)

Interconnection standards

(1)

Definitions

For purposes of this subsection, the terms defined in subsection (d) shall apply. (2)

Model standards

(A)Within one year after the enactment of this subsection the Commission shall publish model standards for the physical connection between local distribution systems and qualified generation units and electric generation units that meet the requirements of subsection (d)(1)(C) other than clause (ii) thereof and that do not exceed 20,000 kilowatts of capacity. Such model standards shall be designed to encourage the use of qualified generation units and to ensure the safety and reliability of such units and the local distribution systems interconnected with such units. (B)The model standards shall have two separate expedited procedures for interconnecting qualified generation units up to 15 kilowatts and a separate standard that expedites interconnection for qualified generation units up to 2000 kilowatts. Such expedited procedures shall be based on those best practices among the States that have adopted interconnection standards. In designing such expedited procedures, the Commission shall consider Interstate Renewable Energy Council Model Rule MR–I2005. (C)Within 2 years after the enactment of this subsection, each State shall adopt the model standards published under this paragraph, with or without modification, and submit such standards to the Commission for approval. The Commission shall approve a modification of the model standards only if the Commission determines that such modification is consistent with or superior to the purpose of such standards and is required by reason of local conditions. (D)If standards have not been approved under this paragraph by the Commission for any State within 2 years after the enactment of this subsection, the Commission shall, by rule or order, enforce the Commission's model standards in such State until such time as State standards are approved by the Commission. (E)Within two years after the enactment of this subsection, and after notice and opportunity for comment, the Commission shall publish an update of such model standards, considering changes in the underlying standards and technologies. Such updates shall be made available to State regulatory authorities for their consideration. (3)

Safety, reliability, performance, and cost

The standards under this section shall establish those measures for the safety and reliability of the affected equipment and local distribution systems as may be appropriate. Such standards shall be consistent with all applicable safety and performance standards established by the national electrical code, the Institute of Electrical and Electronics Engineers, Underwriters Laboratories, or the American National Standards Institute yet constitute the minimum cost and technical burdens to the interconnecting customer generator as the Commission shall, by rule, prescribe. (4)

Additional charges

The model standards under this subsection prohibit the imposition of additional charges by local distribution systems for equipment or services for interconnection that are additional to those necessary to meet such standards and that are in excess of the charges and equipment requirements identified in the best practices of states with interconnection standards. (5)

Relationship to existing law regarding interconnection

Nothing in this subsection affects the application of section 111(d)(15) relating to interconnection. (6)

Consumer friendly contracts

The Commission shall promulgate regulations insuring that simplified contracts will be used for the interconnection of electric energy by electric energy transmission or distribution systems and generating facilities that have a power production capacity not greater than 2000 kilowatts and shall consider the best practices for consumer friendly contracts adopted by States or national associations of state regulators. Such contracts shall not require liability or other insurance in excess of what is typically carried by customer-generators for general liability. (7)

Enforcement

Any person who violates any requirement of this subsection shall be subject to civil penalties in the amount of $10,000 for each day that such violation continues. Such penalties may be assessed by the Commission, after notice and opportunity for hearing, in the same manner as penalties are assessed under section 31(d) of the Federal Power Act.