Interconnection Generators Texas

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Interconnection and Net Metering

of Small Renewable Energy Generators in Texas:

Final Report of the Texas RE-Connect Project

Prepared by:

The Texas Million Solar Roofs Partnership

Managed by CSGServices, Inc., Austin, Texas

Prepared for:

Million Solar Roofs Project

U.S. Department of Energy

Under Contract #DE-FG48-03R801723

Project Team:

Steven M. Wiese, CSGServices, Inc.

John E. Hoffner, PE, CSGServices, Inc.


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Executive SummaryThe Texas RE-Connect Project began in October 2003 as an effort of the Texas Million Solar Roofs Partnership(TMSRP), a voluntary collaborative consisting of Texas utilities, renewable energy companies, public advocacyorganizations, renewable energy companies, and other renewable energy stakeholders. CSGServices, Inc., an

Austin-based renewable energy consulting and project development firm and one of the TMSRPs foundingmembers, served as the lead entity for the project. The Texas RE-Connect project concluded in April 2005 withthe publication of this Final Report, yet the TMSRP will continue its engagement in activities that extend theproject beyond its defined objectives, such as presenting findings and conclusions at industry conferences andother events, after the April 2005 completion date.

Purpose

The purpose of the Texas RE-Connect project was to gather, document, and share information on how Texaselectric utilities handle requests to interconnect and net meter small renewable energy generating systems inthe hope that such information-sharing would encourage more consistent approaches statewide.

Scope

The Texas RE-Connect project focused exclusively on the interconnection and net metering of small,

distributed, renewable energy generating systems specifically, customer-sited, grid-connected wind or solarelectric systems with nameplate capacities not larger than 10 kilowatts (kW).

These systems are entirely integrated with and deliver energy on the customers side of the electric meter, andare capable of feeding energy through the meter and onto the grid whenever the customers productionexceeds consumption. Typically, such systems are sized so that monthly (or annual) production rarely exceedsmonthly (or annual) consumption.

1

We limited our scope to cover small renewable energy generating systems with key components (such as solarpanels and inverters) that meet current IEEE operational and safety standards and that are tested to currentUnderwriters Laboratories testing protocols (i.e., they are UL-listed). We also limited our scope to systems thatare installed by competent professionals in a manner compliant with the National Electric Code and applicablelocal codes.

Objectives

The Texas RE-Connect Project was undertaken with the following objectives:

Document the status of Texas laws and regulations pertaining to the interconnection and net meteringof small renewable energy generators prior to and since the state began restructuring the electricityindustry in 1997. Describe how current laws and regulations apply to different types of electric utilities

(municipals, rural electric cooperatives, vertically-integrated IOUs, retail electric suppliers, transportationand distribution utilities, etc.) now operating within the state.

Identify current implementation practices, key issues and challenges faced by utilities when confrontedwith customers seeking to interconnect and/or net meter small renewable energy generating systems.

Recommend best practices on issues where there seems to be a lack of consensus among utilities.

Id tif / i l t d l i t ti d t t i t iff l


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Conduct outreach efforts to gather and foster peer-to-peer exchange of information (workshops,survey, report dissemination, presentations at conferences).

Pursue the entire project through a non-confrontational, non-threatening process that seeks and resultsin the voluntary adoption of best practices.

Methods

The following methods were employed during the course of the Texas RE-Connect project:

Legal/policy research, interviews with utility, regulatory, and national experts;

Regional workshops;

Surveys of municipal and cooperative utilities;

Public presentations;

Publication of results in paper and conference proceedings.

Results and Accomplishments

The following bullets describe some of what we accomplished during the course of the project.

Published and circulated a white paper describing the evolution and current status of interconnection

and net metering policies in Texas. Surveyed Texas municipal and cooperative utilities to learn whether, and if so, how, they were

implementing interconnection and net metering for small renewable energy generating technologies.Published and circulated findings.

Held workshops bringing together municipal, cooperative, and IOU utility personnel with regional andnational experts on interconnection and net metering issues, renewable energy industryrepresentatives, and interested stakeholders.

Identified model tariffs, agreements, and other documents that can be used by utilities new to or

revisiting interconnection and net metering issues.

Presented findings at numerous conferences, including:

o The 2004 annual conference of the American Solar Energy Society in Portland, Oregon;

o The 2004 World Energy Engineering Congress in Austin, Texas;

o The 2004 Texas Renewable Energy Congress in Austin, Texas; and,

o Rural Alliance for Renewable Energy (RARE) events in Corpus Christi and Waco, Texas.

Offered free technical assistance on interconnection, net metering and tariff-related issues to utilities,utility employees, and other stakeholders including New Braunfels Utilities, Pedernales ElectricCooperative, Kerrville Public Utilities Board, Austin Energy, and others.

Key Findings

Our work on the White Paperrevealed that electric industry restructuring activities in Texas since 1997 havet th d th i ht f t T t i t t ll bl t t th id b t h


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might be encountering the issue for the first time, and need quick and easy access to high-quality informationcovering the technical, legal, and implementation issues involved.

On the other hand, medium- and large-sized rural electric cooperatives and the largest municipal utilities tendedalready to have tariffs covering interconnection and net metering of small renewable energy systems in place.Despite the existence of such tariffs, utilities still expressed considerable variation and confusion about how toactually implement interconnection and net metering for small renewable energy systems. Issues involved inimplementation included:

How to meter the customer (i.e., through true net metering versus dual metering);

How to integrate net metered customers with automatic meter reading (AMR) and utility billing systems;

Whether to require the customer to obtain liability insurance, and if so, in what amount;

and many others.

Our work developing Principlesand seeking consensus on Model Tariffs, Agreements, and OtherDocuments revealed that utilities are unwilling to commit themselves to any standards or forms of agreementwithout a requirement to do so. This finding suggests the best strategy for moving forward, short of legislative orregulatory measures, may involve providing information resources to utilities on an as-needed basis andencouraging peer-to-peer exchange of information.

Recommendations for Further Action

The RE-Connect Team makes the following recommendations for further action.

1. As a next step, the Texas RE-Connect Principles document and model tariffs could be developed intoan easy-to-use implementation kit that spells out the critical decisions to be made and provides modeltariff documents and customer agreements. Both utilities and customers might benefit from theavailability of shared rules creating clear expectations on both sides.

2. Utilities that already have some experience with interconnection and net metering might best be served

through the development of a peer-to-peer continuing education forum that encourages information andexperience sharing. Such a forum would likely be most effective if coordinated through the utilitiesstatewide associations.

3. Texas utilities should consider voluntarily adopting the Principles for Interconnection and Net Meteringof Small Renewable Energy Systems in Texas when offering to interconnect small renewablegenerators (less than 10 kW-ac).

4. Texas utilities should study and, where appropriate, use the model interconnect guidelines and

standards by City Public Services in San Antonio and the City of Denton. These guidelines offer clear,fair rules and efficient procedures that protect the interests of both utilities and their customers.

5. Texas utilities should form a Distributed Generation Interconnection and Net Metering CollaborativeWork Group to formally develop and adopt renewable distributed generation principals and standardsfor interconnection. The group should create a companion document to the existing technical DGinterconnection guidelines to reflect the financial rights and responsibilities involved in net metered


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AcknowledgementsThe Texas RE-Connect project team would like to acknowledge the following individuals and organizations fortheir assistance in completing this project:

Chris Cook of E3 Energy

Bill Brooks of Endecon Engineering

Erin Scott, CSGServices intern

Mark Zion of the he Texas Public Power Association (TPPA) and many of its member utilities

Margie Bates of the US Department of Energy

Numerous Texas rural electric cooperatives and municipal utilities

Thank you for your help!


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Table of ContentsExecutive Summary

Acknowledgements

Table of Contents

1. Status of Interconnection and Net Metering in Texas 1

2. Survey of Municipal and Cooperative Utilities 2

3. Principles and Model Documents 3Interconnection and Net Metering Principles 3

Model Tariffs, Agreements, and Implementation Documents 3

Other Model Efforts 3

Texas DG Guide 3

FERC Small Generator Interconnection Rules 3

Massachusetts DG Collaborative 44. Outreach Efforts Workshops and Public Presentations 5

Workshops 5

Workshop #1 5

Workshop #2 5

Public Presentations 6

Other Outreach Activities 65. Conclusions and Recommendations 8

Conclusions 8

Recommendations 8

Appendices

Appendix A Texas Interconnection/Net Metering White Paper A-1Appendix B PUCT Substantive Rules Related to Interconnection and Net Metering B-1

Appendix C Activities Affecting Development of Interconnection and Net Metering Policies C-1

Appendix D Survey of Texas Utilities Final Report D-1

Appendix E Principles Document E-1


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1. Status of Interconnection and Net Metering in TexasAs part of the RE-Connect project, we drafted a White Paper briefing to lay out the current state of knowledgeabout Texas requirements on interconnection and net metering of small renewable energy systems. The WhitePaper was intended to educate, inform, and serve as a basis for discussion. It was revised throughout theproject term to incorporate new ideas and information.

Appendix A presents our analysis of the evolution and current status of interconnection and netmetering policies in Texas. The white paper presented in the Appendix was first drafted in early 2004,but has undergone frequent revisions as we have learned more throughout the project.

Appendix B contains references to Texas state utility commission rules that pertain to interconnectionand net metering.

Appendix Ccontains links and references to other work related to interconnection and net metering atthe Texas state and national levels.


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2. Survey of Municipal and Cooperative UtilitiesAfter we completed the White Paper, the project team realized that although we understood clearly theregulatory requirements interconnection and net metering, we did not well understand how, or even whether,many utilities were implementing such policies in the field. We decided that a survey of rural electriccooperatives and municipal utilities would allow us to gather baseline data on the different approaches taken byutilities with regard to interconnection and net metering of small renewable energy resources.

Although the survey was not an original goal of the Texas RE-Connect project, the resulting information willprove invaluable to future efforts at standardizing practices in Texas. In addition, in the process of conductingthe survey and sharing its results, we were able to communicate our efforts to nearly every municipal.and ruralelectric cooperative utility in the state.

Appendix Dpresents the final survey report.


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3. Principles and Model DocumentsInterconnection and Net Metering Principles

At several meetings the advisory team for the Texas RE-Connect project discussed the need for a list ofagreed-upon Principles that should be considered when utilities and distribution companies develop andimplement interconnection and net metering guidelines for small renewable generators. The intent of thePrinciples document was to establish common understanding of what terms should be incorporated into utilityguidelines that would comply with applicable law and rules, be objective and consistent in the treatment ofrenewable generation technologies, reflect the current state of renewable energy generation technologies, and

protect the safety of the grid and consumers.Six principles were drafted by Texas RE-Connect staff and discussed with the Core Collaborative Group (CCG,the Texas RE-Connect projects steering committee) at two of the general meetings. The CCG, which includedutility members, did not wish to officially endorse or approve the list of Principles. Therefore, the Principlesdocument is presented here as having been discussed by the CCG and incorporating their feedback. However,the Texas Million Solar Roofs Partnership recommends that the Principles be adopted by utilities and otherstakeholders throughout Texas.

Appendix Epresents the Principles document.

Model Tariffs, Agreements, and Implementation Documents

Texas RE-Connect staff members examined and reviewed interconnect standards and guidelines of municipalutilities and electric cooperatives throughout Texas. Most of the guidelines were received directly from membersof the CCG or through the phone survey process. Using the list of Principles as a guideline for selecting modeldocuments, it was determined that City Public Service (CPS) in San Antonio and the City of Denton hadadopted exemplary interconnection tariffs, guidelines and standards for small renewable generators. The CPSand Denton guidelines and procedures are relatively simple yet comprehensive, and could easily be adoptedand implemented by other utilities.

The CPS tariff is shown inAppendix F. (The City of Dentons tariff was not available electronically.A copy is on file with CSGServices in Austin.)

Other Model Efforts

Texas DG Guide

The Public Utility Commission of Texas (PUCT) prepared this manual to guide the inclusion of distributedgeneration into the Texas electric system. It is intended for use by utility engineers processing distributed

generation interconnection applications, as well as those persons considering or proposing the interconnectionof distributed generation with a transmission and distribution utility (TDU). While the manual specifies technicalrequirements and processes that are legally applicable only to utilities regulated by the Commission, it serves asa useful platform for development of equivalent requirements and processes for all utilities in Texas.

The Texas Distributed Generation Interconnection Manual can be obtained at this web site:http://www.puc.state.tx.us/electric/business/dg/dgmanual.pdf.
http://www.puc.state.tx.us/electric/business/dg/dgmanual.pdfhttp://www.puc.state.tx.us/electric/business/dg/dgmanual.pdfhttp://www.puc.state.tx.us/electric/business/dg/dgmanual.pdf


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FERCs Small Generator Interconnection Rule is available here:http://www.ferc.gov/industries/electric/indus-act/gi/small-gen/05-12-05-order2006.doc.

Massachusetts DG Collaborative

The State of Massachusetts implemented an aggressive process to develop and implement comprehensivedistributed renewable generation rules. The process was conducted through a collaboration of industry, utilities,government agencies and end-users called the DG Collaborative, and resulted in a statewide model tariffs forconnecting distributed generators to the grid. Each utilitY in Massachusetts has now adopted the modelagreement (with modifications where necessary and appropriate) AND is implementing the standards with theircustomers.

Texas RE-Connect staff have reviewed the model agreement and the DG Collaborative process and

recommends that a similar process be undertaken in Texas. The goal would be to develop voluntary, or ifnecessary mandatory, interconnect guidelines and standards that would promote consistency amonginterconnection and net metering implementation by all utilities in Texas. Consistent, safe standards wouldencourage more production of energy from distributed renewable generators and help the State of Texas meetits goals for renewable energy as established by the Legislature.

Information on the DG collaborative can be obtained at the web site:http://masstech.org/renewableenergy/public_policy/DG/collab_overview.htm)
http://www.ferc.gov/industries/electric/indus-act/gi/small-gen/05-12-05-order2006.dochttp://www.ferc.gov/industries/electric/indus-act/gi/small-gen/05-12-05-order2006.dochttp://masstech.org/renewableenergy/public_policy/DG/http://masstech.org/renewableenergy/public_policy/DG/http://www.ferc.gov/industries/electric/indus-act/gi/small-gen/05-12-05-order2006.doc


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4. Outreach Efforts Workshops and Public PresentationsWorkshops

We held two workshops on interconnecting and net metering small renewable energy systems.

Workshop #1

The first workshop was held in Austin in January 2004. The daylong workshop attracted 15 participantsrepresenting utilities, industry, advocacy groups, and other stakeholders. The following presentations weredelivered:

John Hoffner introduced everyone and established goals and an agenda.

Russel Smith provided a historical overview of net metering in Texas.

Steve Wiese described the current status of interconnection and net metering rules in Texas sincerestructuring. His presentation is included in Appendix G.

Representatives of City Public Service of San Antonio described their processes forinterconnecting and net metering small solar generators. Their presentation is included in AppendixG.

Chris Cook discussed technical aspects of interconnection and net metering. His presentation isincluded in Appendix G.

Chuck Wright gave his perspective as a system owner who had recently interconnected withOncor. His presentation appears in Appendix G.

Bluebonnet Electric Cooperative also described how it is implementing net metering.

Complete notes from the workshop are presented here:

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Workshop #2

Our second workshop was also held in Austin in July 2004 and attracted 17 participants.

Bill Brooks of Endecon Engineering presented about utility safety issues with small interconnected

renewables. His presentation is in Appendix G.

Complete notes from the meeting are presented here:

\\WBDCAUS2K\shared projects\Adv


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Steve Wiese delivered the Texas net metering paper and presentation at ASES in Portland in July.Jane Pulaski moderated the panel and Steve Wiese presented findings from these efforts in Texas.

Committed to making a presentation on net metering/interconnection during September meeting of theTexas Rural Alliance for Renewable Energy in Corpus Christi. His presentation is in Appendix G.

John Hoffner made a presentation about the Texas net metering project at the World EnergyEngineering Congress meeting on September 22.

Steve Wiese delivered the Texas net metering paper and presentation at First Annual Texas CleanEnergy Congress meeting in Austin, TX.

Other Outreach Activities

Texas RE-Connect project team members also worked with various Texas utilities to supply current informationon interconnection and net metering on an as-needed basis:

Project team leaders John Hoffner and Russel Smith visited with the head of the Kerrville Public UtilitiesBoard, which has been involved in a net metering dispute with a customer for several years. In theprivate meeting, KPUBs director agreed that his technical concerns over small PV systems wereinvalid, and agreed that KPUB could proceed to develop a tariff to cover very small interconnected PVsystems (


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5. Conclusions and RecommendationsConclusions

Our work on the White Paperrevealed that electric industry restructuring activities in Texas since 1997 havestrengthened the right of most Texans to interconnect small renewable energy systems to the grid, but haveweakened the right of most to net meter those systems. Nevertheless, required and voluntary actions byinvestor-owned utilities, large municipal utilities, and some rural electric cooperatives have had promise inpreserving and extending these rights.

Our work surveying municipal utilities and rural electric cooperativesrevealed that customer requests for

interconnecting and net metering small renewable energy systems are least common among the smallest ruralelectric cooperatives and all but the largest municipal utilities. And not surprisingly, these utilities are the leastlikely to have existing tariffs in place addressing the issue. When faced with a customer request, these utilitiesmight be encountering the issue for the first time, and need quick and easy access to high-quality informationcovering the technical, legal, and implementation issues involved.

On the other hand, medium- and large-sized rural electric cooperatives and the largest municipal utilities tendedalready to have tariffs covering interconnection and net metering of small renewable energy systems in place.Despite the existence of such tariffs, utilities still expressed considerable variation and confusion about how toactually implement interconnection and net metering for small renewable energy systems. Issues involved inimplementation included:

How to meter the customer (i.e., through true net metering versus dual metering);

How to integrate net metered customers with automatic meter reading (AMR) and utility billing systems;

Whether to require the customer to obtain liability insurance, and if so, in what amount;

and many others.

Our work developing Principlesand seeking consensus on Model Tariffs, Agreements, and Other

Documents revealed that utilities are unwilling to commit themselves to any standards or forms of agreementwithout a requirement to do so. This finding suggests the best strategy for moving forward, short of legislative orregulatory measures, may involve providing information resources to utilities on an as-needed basis andencouraging peer-to-peer exchange of information.

Recommendations for Further Action

The RE-Connect Team makes the following recommendations for further action.

1. As a next step, the Texas RE-Connect Principles document and model tariffs could be developed into

an easy-to-use implementation kit that spells out the critical decisions to be made and provides modeltariff documents and customer agreements. Both utilities and customers might benefit from theavailability of shared rules creating clear expectations on both sides.

2. Utilities that already have some experience with interconnection and net metering might best be servedthrough the development of a peer-to-peer continuing education forum that encourages information and

i h i S h f ld lik l b t ff ti if di t d th h th tiliti


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4. Texas utilities should study and, where appropriate, use the model interconnect guidelines andstandards by City Public Services in San Antonio and the City of Denton. These guidelines offer clear,fair rules and efficient procedures that protect the interests of both utilities and their customers.

5. Texas utilities should form a Distributed Generation Interconnection and Net Metering CollaborativeWork Group to formally develop and adopt renewable distributed generation principals and standardsfor interconnection. The group should create a companion document to the existing technical DGinterconnection guidelines to reflect the financial rights and responsibilities involved in net meteredrenewable generating resources. The goal should be to adopt general standards and guidelines by theend of 2006.


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Appendices


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Appendix A:Texas Interconnection/Net Metering White Paper


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Interconnection and Net Meteringof Small Renewable Energy Systems in Texas

A White Paper of the Texas RE-Connect project*

The Texas RE-Connect Team, Final Draft, June 2005

BackgroundTexas was one of the first states in the nation to recognizethe right of electricity customers to interconnect smallgeneration to the electric distribution system with a single, bi-directional meter, and to receive compensation for theelectricity they supplied to the grid. Texas net meteringrule,

2approved by the Public Utility Commission of Texas

(PUCT) in 1985 (and amended thereafter), originally appliedto the states investor-owned utilities and rural electric

cooperatives, both of which were regulated by the PUCT.The rule required interconnection and net metering of on-siterenewable generators under 50 kW with a single meter thatruns forward and backward, effectively enabling theseresources to earn a retail price for energy production thatoffset on-site consumption, and a lower, wholesale price forexcess energy exported to the grid. And although municipal utilities and river authorities were exempt from therule, the 1990s witnessed progress statewide as many utilities, regulated and unregulated, developedinnovative net metering programs of their own.

Effects of RestructuringElectric utility industry restructuring legislation enacted by the Texas Legislature in 1999 aimed to preserve thisprogress, stating: A customer is entitled to have access to on-site distributed generation.

3

The legislation de-integrated the states largest investor-owned electric utilities into new and distinct entities -retail electric providers (REPs), transmission and distribution companies, and generation companies to whichapplication of the existing net metering rule was uncertain. The task of sorting out this uncertainty while creatinga competitive marketplace for energy lead to four main outcomes for interconnection and net metering:

On the positive side, the restructuring process spurred development of new and revised rules regardingthe interconnection and parallel operation of on-site distributed generation (DG).4These rules

strengthened the right to interconnect and streamlined the process for interconnecting small generatingsystems to the grid for utilities still under PUCT jurisdiction.

Definitions

Interconnection The right of an electricitycustomer to physically interconnect an on-site generating system to an electricitydistribution system, and the technicalrequirements, rules and/or processes bywhich that interconnection is to be made.

Net Metering The right of an owner of anon-site generating system to becompensated for energy generated by thatsystem, whether used on-site or exported tothe electricity distribution system, and therules and/or procedures which govern thisfinancial relationship.


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On the negative side, the net metering rule revisions weakened existing customer protections byexempting the states largest utilities5from having to pay for any energy supplied to the grid by smallgenerators (less than 100 kW), whether fueled by a renewable energy source or not, and by putting an

expiration date of 2007 on required purchases from larger generators.6

The net metering rule revisions also failed to maintain the requirement for a single meter that spinsforward and backward for small (less than 50 kW) renewable energy systems connected to the statesnewly competitive investor-owned utilities.7The removal of this requirement allows these utilities toimpose metering conditions that could prevent small renewable generators from earning retail prices forthe portion of their generation that offsets on-site energy consumption. They also open the door forutilities to impose additional metering fees including one-time fees for installing a second meter andrecurring fees for reading that meter that were not applicable under the old rule. Such conditions andfees can entirely eliminate the economic benefits small renewable generators had been able to captureunder the previous rule.

Finally, restructuring legislation exempted rural electric cooperatives from PUCT jurisdiction outright,meaning the existing net metering rule, and the newly strengthened interconnection rules, no longerapplied to them.

In sum, as Figure 1 shows, the process of restructuring Texas retail electricity markets strengthened the right tointerconnect small renewable energy systems to the grid for about 80% of Texans (those served by investor-owned utilities inside and outside ERCOT), but eliminated interconnection rights for about 10% of Texans (thoseserved by rural electric cooperatives). Restructuring also weakened or eliminated the right to net meter these

resources for about 70% of Texans (those served by investor-owned utilities inside ERCOT and rural electriccooperatives).

Issue ImportanceSmall-scale, customer-sited renewable energy generating systems today make up only a tiny fraction of totalgrid-connected generating capacity, both in Texas and nationally. However, a number of factors are working toincrease their contribution, including declining costs,8improving efficiency,9the introduction of renewable energy

credit markets,10and favorable new policies like renewable portfolio standards.11Add to this the long-standing

5This refers to all of the formerly-integrated investor-owned utilities that operate within the ERCOT region, including the operating companies

of TXU, Reliant, and American Electric Power.

6PUCT Substantive Rule 25.242. The net metering requirement applies to retail electric providers with a price-to-beat obligation, or PTB-

REPs. When the price-to-beat obligation expires in 2007, PTB-REPs will cease to exist, and the requirement to net meter will no longer apply

to these utilities.7The requirement for a single meter that runs forward and backward still applies to investor-owned utilities outside ERCOT that have notentered the competitive retail marketplace, however.

8Paul Maycock, The State of the PV Market, Solar Today, January/February 2004. Actual prices of PV modules declined more than 22

percent between 1990 and 2000, from $4.50/watt to $3.50/watt. An industry survey in 2002 showed an additional decline in price to

$3.25/watt.


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support for small-scale renewable energy technologies expressed at both the state and federal levels,12and themarket for small-scale renewable energy systems seems poised to grow in the next decade and beyond. Oneforecast predicts sales of residential- and commercial-scale solar electric systems (systems with capacity less

than 100 kW) to experience a seven-fold increase worldwide between 2002 and 2010.13

However, this market growth may not be realized unless barriers to development of the industry are removed.Renewable energy industry representatives argue that consistent application of interconnection and netmetering rules, procedures, and agreements throughout a large geographic region statewide or nationally isa necessary precursor to full development of their industry.

Industry representatives point to the existence of long-standing standards ensuring safe operation of smallrenewable energy systems

14and a flawless safety record

15as evidence of the industrys technical maturity, and

they argue that widely varying utility policies on interconnection and net metering are evidence the policies

arbitrary nature. They argue that these policies pose a barrier to an industry that promises to provide new jobs,cleaner air, and a more reliable electric system for all Texans.

Voluntary Measures Taking HoldDespite the lack of legislative or regulatory clarity on the issues, Texas has witnessed considerable progress byrural electric cooperatives, municipal utilities, and investor-owned utilities on a voluntary basis.

For example, the states two largest municipal utilities, Austin Energy and City Public Service of San Antonio,

have adopted interconnection and net metering policies that are friendly to small. These policies generally allowinterconnection and parallel operation of UL-listed equipment installed in accordance with the National ElectricCode and local codes. If the equipment meets listed requirements and passes local inspections, it is allowed tointerconnect. Both cities also allow these systems to be net metered with a single meter, essentially treating theinterconnected system as

Options for Resolving the IssueThis section presents an overview of options for resolving interconnection and net metering problems facingsmall renewable energy generators in Texas. Voluntary, regulatory, and legislative options are considered.

Voluntary Options

Work with stakeholders statewide to develop voluntary, consistent interconnection and net metering standards.Voluntary options would be the most effective means for reaching municipal utilities and rural electriccooperatives, since these utilities are exempt from state regulation. Specifically, work to provide the following:

1. Promote efforts to educate and inform utility personnel with facts and information about interconnection

and net metering.

12Texas laws and regulatory policies contain a franchise tax deduction for solar energy devices (1981), a franchise tax exemption for

companies that manufacture them (1981), a property tax exemption for solar and wind energy systems (1981), a net metering rule (1985), and

distributed generator interconnection rules (2002), among other provisions. Federal law recognizes the right of small generators to

interconnect with the grid and to be paid a utilitys avoided cost for energy supplied to the grid in the Public Utility Regulatory Policy Act(1978) Despite these protections most Texas electric consumers today do not in fact have a meaningful right to both interconnect and net


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2. Consolidate high-level agreement among stakeholders on principles related to interconnection and netmetering of small renewable resources. Also, create a checklist that can be used to evaluate whetherutility net metering programs conform to these principles.

3. Create a library of model interconnection and net metering processes, rules, tariffs, and agreements,and make this library widely available.

4. Encourage adoption of model language by utilities throughout the state.

In fact, voluntary measures have already shown promise among all utilities in Texas. After restructuring, forexample, Texas investor-owned distribution utilities within ERCOT were no longer covered by the net meteringrule, yet in implementing interconnection guidelines for distributed generation resources, most of these utilitieshave embraced net metering as a standard operating practice for small generators.

State Regulatory Options

For entities of the state under PUCT jurisdiction, work to amend language in the Texas distributed generationand net metering rules. Specifically, work to address these issues:

1. Amend the net metering rule to reapply the requirement that renewable energy systems less than 50kW be interconnected through a single meter that spins forward and backward to all TDUs underPUCT jurisdiction.

2. Amend the net metering rule to maintain the net metering obligations of PTB-REPs after the PTB ratefreeze period expires in 2007.

3. Amend the net metering rule to eliminate the requirement that utilities or REPs purchase excess energyfrom small renewable energy systems at avoided cost. This would simplify the process of net meteringfrom a utility billing standpoint while encouraging small renewable energy systems to be built at a scalethat would only offset on-site consumption.

State Legislative Options

For all areas of the state, work with the Texas Legislature to ensure the rights to interconnect and net metersmall renewable energy systems. Specifically:

1. Reestablish the right of owners of small renewable energy systems to connect to the distributionsystem with a single meter that spins forward and backward.

2. Ensure that this right is applied to all utilities in the state, not just those regulated by the PUCT.

The Texas RE Connect ProjectThe Texas RE-Connect project aims to promote consistency in utility interconnection and net metering policies

affecting small renewable energy resources in Texas through a voluntary process involving utilities, therenewable energy industry, and other interested stakeholders. The Texas RE-Connect Project is and effort ofthe Texas Million Solar Roofs Partnership, funded by the U.S. Department of Energy.


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Texas RE-Connect A-6 CSGServices, Inc.

Figure 1. Effect of Restructuring on Interconnection and Net Metering of Small Renewable Resources in Texas (continued)

Type of Utility Before Restructuring After Restructuring

Rural Electric Cooperatives

Serve ~10% of Texans

Examples:There are over 70 rural electriccooperatives in Texas.

Interconnection: Same as above.

Net Metering: Same as above.

Interconnection:No state regulatory obligation tointerconnect. Interconnection is at the discretion of each utility.

Net Metering: No state regulatory obligation to net meter. Net

metering is at the discretion of individual utilities.

Other Utilities (Municipals, River Authorities,etc.)

Serve ~10% of Texans

Examples: There are over 70 municipal utilities inTexas, the largest of which are City Public Service ofSan Antonio and Austin Energy.

Interconnection and Net Metering: No state regulatoryobligation to interconnect or net meter. Policies are at thediscretion of each utility.

Interconnection and Net Metering: No change.


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Appendix B:PUCT Substantive Rules Related to

Interconnection and Net Metering


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PUCT Substantive Rules Related toInterconnection and Net Metering

A Resource of the Texas RE-Connect project*

The Texas RE-Connect Teams, Final Draft, June 2005

CHAPTER 25. SUBSTANTIVE RULES APPLICABLE TO ELECTRIC SERVICE PROVIDERS

Subchapter I. Transmission and Distribution

DIVISION 2. TRANSMISSION AND DISTRIBUTION APPLICABLE TO ALL ELECTRICUTILITIES

25.211 Interconnection of On-Site Distributed Generation (DG)

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25.212 Technical requirements for Interconnection and Parallel Operation ofOn-Site Distributed Generation

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Subchapter J. COSTS, RATES AND TARIFFS

DIVISION 1. RETAIL TARIFFS

25.242 Arrangements Between Qualifying Facilities and Electric Utilities

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Appendix C:

Activities Affecting Development of

Interconnection and Net Metering Policies


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Activities Affecting Development ofInterconnection and Net Metering Policies

A Resource of the Texas RE-Connect project*

The Texas RE-Connect Teams, Final Draft, June 2005

This Appendix outlines activities currently taking place at the state, regional, and/or national levels that mayaffect the future of interconnection and net metering practices in Texas.

Activities in Texas

o Activities by Municipal Utilities

Austin Energy. Austin Energy announced in December 2003 plans to achieve 100MW of solar photovoltaics over the next 15 years. Link:http://www.austinenergy.com/Energy%20Efficiency/Programs/Rebates/Solar%20Rebates/index.htm.

City Public Service (of San Antonio) initiated a net metering program for smallrenewable energy systems in 2003. Link:http://www.citypublicservice.com/content_list.asp?sect_id=545&elmt_id=8.

o Activities by Coops

Several rural electric cooperatives have tariffs that allow interconnection and netmetering of small renewable energy generating systems. Typically, these tariffsrequire installation of a second meter to record generation and the use of a non-detentmeter to record consumption.

o Activities by Investor-Owned Utiltiies

ONCOR TXUs distribution company has a tariff that allows interconnection and netmetering.

o Public Utility Commission of Texas Distributed Generation Interconnection Manual. Link:http://www.puc.state.tx.us/electric/business/dg/dgmanual.pdf.

o Texas State Energy Conservation Office (SECO) SECOs Renewable EnergyDemonstration Program funds installation of small renewable energy systems for educationaland demonstration purposes. Link: http://www.seco.cpa.state.tx.us/re.htm.

o Rural Alliance for Renewable Energy (RARE) A group formed in 2003, it aims to bring ruralstakeholders together to promote development of renewable energy resources as aneconomic development opportunity. Link: http://www.treia.org/rare.htm.

National Standards Development

o IEEE 1547 Interconnection Standard. Adoption of the IEEE 1547 Standard for InterconnectingDistributed Resources with Electric Power Systems in 2003 culminated several years of work
http://www.austinenergy.com/Energy%20Efficiency/Programs/Rebates/Solar%20Rebhttp://www.citypublicservice.com/content_list.asp?sect_id=545&elmt_id=8http://www.citypublicservice.com/content_list.asp?sect_id=545&elmt_id=8http://www.puc.state.tx.us/electric/business/dg/dgmanual.pdfhttp://www.puc.state.tx.us/electric/business/dg/dgmanual.pdfhttp://www.seco.cpa.state.tx.us/re.htmhttp://www.seco.cpa.state.tx.us/re.htmhttp://www.treia.org/rare.htmhttp://www.treia.org/rare.htmhttp://www.treia.org/rare.htmhttp://www.seco.cpa.state.tx.us/re.htmhttp://www.puc.state.tx.us/electric/business/dg/dgmanual.pdfhttp://www.citypublicservice.com/content_list.asp?sect_id=545&elmt_id=8http://www.austinenergy.com/Energy%20Efficiency/Programs/Rebates/Solar%20Reb


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requirements for interconnection agreements. Link:http://grouper.ieee.org/groups/scc21/1547/1547_index.html.

o National Electric Code. The NEC specifies standards for installation of grid-connected solarenergy systems. Link: http://www.re.sandia.gov/en/ti/tu/Copy%20of%20NEC2000.pdf.

o UL 1741. UL 1741 is a testing protocol that certifies the safe operation of grid-connectedinverters. Link: http://www.eere.energy.gov/de/ul_1741.html.

o IEEE 929. IEEE 929 specifies technical requirements for safe operation of grid-connectedinverters. Link: http://www.nrel.gov/ncpv/hotline/utility_inter.pdf.

o NABCEP Certification. A national voluntary certification program for PV practitioners, intendedto ensure quality and competence among PV installers. Link: http://www.nabcep.org/.

Federal Activities:

o FERC Small Interconnection NOPR. The Federal Energy Regulatory Commission hasproposed rules governing the interconnection of small generating resources to transmissiongrids. The proposed rule was published in July 2003; a final rule was issued in May 2005. Link:http://www.ferc.gov/industries/electric/indus-act/gi/small-gen.asp.

o PURPA The Public Utility Regulatory Policy Act requires certain utilities to purchase energyfrom qualified facilities typically on-site cogeneration plants and renewable energy facilities

at wholesale rates. Link:

http://www.ucsusa.org/clean_energy/renewable_energy/page.cfm?pageID=119.o US Department of Agriculture/NRECA MOU. The US Department of Agriculture and the

National Association of Rural Electric Cooperatives have agreed to begin working together onprojects aimed removing barriers to the increased use of renewable energy, including wind,solar, biomass, and other biofuels. The MOU sets out a multi-year intiative, and funding in theEnergy Bill would support the joint work. Link:http://www.usda.gov/documents/NewsReleases/2003/10/0364.doc.
http://grouper.ieee.org/groups/scc21/1547/1547_index.htmlhttp://grouper.ieee.org/groups/scc21/1547/1547_index.htmlhttp://www.re.sandia.gov/en/ti/tu/Copy%20of%20NEC2000.pdfhttp://www.re.sandia.gov/en/ti/tu/Copy%20of%20NEC2000.pdfhttp://www.eere.energy.gov/de/ul_1741.htmlhttp://www.eere.energy.gov/de/ul_1741.htmlhttp://www.nrel.gov/ncpv/hotline/utility_inter.pdfhttp://www.nrel.gov/ncpv/hotline/utility_inter.pdfhttp://www.nabcep.org/http://www.nabcep.org/http://www.ferc.gov/industries/electric/indus-act/gi/small-gen.asphttp://www.ferc.gov/industries/electric/indus-act/gi/small-gen.asphttp://www.ucsusa.org/clean_energy/renewable_energy/page.cfm?pageID=119http://www.ucsusa.org/clean_energy/renewable_energy/page.cfm?pageID=119http://www.usda.gov/documents/NewsReleases/2003/10/0364.dochttp://www.usda.gov/documents/NewsReleases/2003/10/0364.dochttp://www.usda.gov/documents/NewsReleases/2003/10/0364.dochttp://www.ucsusa.org/clean_energy/renewable_energy/page.cfm?pageID=119http://www.ferc.gov/industries/electric/indus-act/gi/small-gen.asphttp://www.nabcep.org/http://www.nrel.gov/ncpv/hotline/utility_inter.pdfhttp://www.eere.energy.gov/de/ul_1741.htmlhttp://www.re.sandia.gov/en/ti/tu/Copy%20of%20NEC2000.pdfhttp://grouper.ieee.org/groups/scc21/1547/1547_index.html


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Appendix D:Survey of Texas Utilities - Final Report


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Municipal and Cooperative UtilitiesSurvey Results Summary

A Publication of the Texas RE-Connect project*


BackgroundFrom December 2004 through January 2005, Texas RE-Connect staff conducted a telephone survey of Texasmunicipal utilities and rural electric cooperatives to find out how these utilities handled requests forinterconnection and net metering (I/NM) of small renewable energy systems. This paper describes the surveypurpose, methods, and results, and presents a discussion of key findings.

Purpose of the SurveyThe survey was intended to gather information on actual I/NM practices by municipal electric utilities and ruralelectric cooperatives in Texas.

Survey MethodTexas RE-Connect staff collected contact information for every municipal electric utility and rural electriccooperative in the state. Each utility was called initially to identify the person who would be most knowledgeable

to answer the survey questions. At smaller utilities this was typically the General Manager, whereas at largerutilities it was often a customer service representative or distribution system engineer. Survey questions wereconducted by phone, except in a few cases where the interviewee requested the survey by email or fax.

A Note about Self-Reporting and Confidentiality

Because the survey results were self-reported, they are subject to uncertainty which goes along with all self-reported data. It is possible that the survey respondent did not always understand the question completely orknow the answer with certainty. To mitigate self-reporting error, we conducted the survey whenever possible inthe manner of a friendly discussion, asking probing questions and describing our purpose whenever clearer

understanding was needed. We also promised to keep confidential any information provided to us that was notpublicly available by reporting such data only in an aggregate manner.


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Survey ResultsResponse Rate

We attempted to contact 57 municipal electric utilities and 67 rural electric cooperatives, and ultimately wereable to conduct interviews with 46 municipals (an 81 percent response rate) and 47 cooperatives (a 70 percentresponse rate).

Tabulated Survey Response Rate

# % # %

# Attempted to Contact 57 67

# Responses 46 81% 47 70%

CoopsMunis

Responses to Survey Questions

The first four questions were asked of all utilities surveyed, regardless of whether they indicated any experiencewith customer requests to interconnect and/or net meter small renewable energy generating systems.

QUESTION 1. TARIFFFS

Does your utility have a tariff governing interconnection/net metering of small renewable energygenerators? If so, will you send us a copy?

Why we asked this question

The existence of language governing interconnection and net metering of small renewable (or other)generating systems suggests the utility has considered how to handle such requests from customersand can provide a useful point of reference for utility personnel and customers alike. Conversely, the

lack of such language in the utilitys tariff, or even the lack of awareness that such language exists inthe tariff, suggests the utility has not perceived a need to address the issue.

What the utilities told us

Among municipal utilities, only 4 of the 46 respondents (9%) said they had applicable I/NM language intheir tariff, and all four submitted that tariff language to RE-Connect staff. Our review confirmedapplicable tariff language in each of the submitted tariffs. Each of these four utilities were among the tenlargest municipals in Texas.

Among rural electric cooperatives, 28 respondents (60%) said they had applicable I/NM language in

their tariffs. 14 submitted their tariffs for our review, through which we confirmed that 13 had applicablelanguage. (The one that didnt sent information on their rate structures: this utility may in fact haveapplicable I/NM language in its tariff, but it did not submit that part of its tariff to us.)

Tabulated Responses to Question 1

1 Tariff Covers I/NM? # % # %


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Discussion

While I/NM tariff language is rare among Texas municipal utilities, the few that do address this issuetended to address both the technical requirements for interconnection and the energy purchase andsale provisions clearly in their tariffs. Two municipals in particular, the largest in the state, have clearly-written technical and procedural guidelines for interconnection and clearly detail how the interconnectedcustomer will be compensated for energy supplied to the grid.

Among rural electric cooperatives, I/NM tariff language is more common but also is more likely to omitdetails regarding compensation for energy supplied to the grid up to, and in excess of, the amount ofconsumption.

Key Findings

1.a. A majority of rural electric cooperatives tariffs (60%) have language relevant to interconnectingand net metering of small distributed generation systems, while a minority of municipal utilitiestariffs (10%) contained such language.

1.b. Utilities that served a larger number of customers were the most likely to have tariffs coveringI/NM issues.

QUESTION 2. KNOWN INTERCONNECTIONS

Do you currently have any small renewable energy generators interconnected to your system?Why we asked this question

We were interested in estimating the number of small renewable energy generating systems in Texasthat were known to exist by utilities. Additionally, we wanted to find out whether the existence of thesesystems was tightly correlated to the existence of an applicable tariff. If not correlated, we wanted toknow whether utilities tended to allow such interconnections informally without tariff language in place,or conversely, whether utilities had clear rules in place despite a lack of installed systems.


Six municipal utilities (13% of respondents) and seven cooperatives (15% of respondents) reported thatthey were aware of at least one small renewable energy generator interconnected with their system.

Among municipals, one utility reported 50 or more interconnections, one reported 5-50 connections,and the rest reported 1-5 interconnections. Among cooperatives, one reported knowing of 5-50interconnections while 6 reported 1-5 interconnections.


2. Utility has known interconnections? # % # %

Yes 6 13% 7 15%No 40 87% 40 85%No Response 0 0% 0 0%

46 100% 47 100%

Among those responding "Yes" # % # %

Munis Coops


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Discussion

Rural electric cooperatives were more likely to have reported having received customer inquiries aboutinterconnecting and net metering small renewable energy systems than municipal utilities. All utilities

that reported more than 5 inquiries per year had applicable I/NM language in their tariffs. All municipalsand 7 of the 9 cooperatives (78%) that reported more than 5 inquiries per year also reported that theyhad at least one known interconnection.

Key Findings

3.a. Customer interest in small renewable energy systems tended to be reported by all sizes ofrural electric cooperatives but only larger municipal utilities.

3.b. Nearly two-thirds of rural electric cooperatives reported receiving customer inquiries aboutI/NM of small renewable energy systems; compared to nearly one-fourth of municipal utilities.

3.c. Cooperatives and municipals with the highest numbers of reported customer inquiries tendedto be those with the largest numbers of customers, those with existing I/NM tariff language,and those with at least one known interconnected system.

QUESTION 4. AUTOMATED METER READING (AMR) SYSTEMS

Do you use an automated meter reading (AMR) system? If so, is the system compatible with net

metering (i.e., capable of distinguishing bi-directional energy flows)?


Automated meter reading systems are becoming more common as metering technology has advancedand deployment costs have declined. Once deployed, AMR systems may present unique integrationobstacles for net-metered customers and their utilities, particularly if the meter or AMR system cannottrack and distinguish between energy consumed by the customer, energy exported to the grid by thecustomer, and the net of the two.


About one third of both municipal and cooperative utilities said they used AMR systems for at leastsome of their customers. Among the 15 municipals that reported using AMR, only 2 believed their AMRsystem would work with net metered customers, 3 believed their system would not work, and 10 did notknow. Among the 15 cooperatives that reported using AMR, none believed their AMR system wouldwork with net metered customers, 8 believed their system would not work, and 7 did not know.


4. Use AMR? # % # %

Yes 15 33% 15 32%No 22 48% 32 68%No Response 9 20% 0 0%

46 100% 47 100%

Among those responding " Yes" # % # %

Munis Coops


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capable of spinning both forward and backward. Under this scenario, a meter read is taken at the endof each billing period and if the customer was a net consumer of energy during the billing period (i.e.,the current read is higher than the previous read), the customer is billed for the net amount consumed.

Alternatively, if the customer was a net producer (i.e., the current read is lower than the previous read),the customer is either paid for the excess energy provided to the grid at a rate defined in the utilitystariff or the excess is carried over and credited against net consumption on the next billing period. Thisfairly simple methodology requires no special training of meter readers and little, if any, customintegration with existing billing systems and protocols.

The use of non-detent meters (meters that do not register backward flow of energy onto the grid) and/orAMR systems that are incapable of resolving bidirectional energy flows can complicate this situation.Non-detent meters and incompatible AMR systems can obscure energy flow information contractuallynecessary in a net metering situation. While non-detent meters can be inexpensively changed out, the

potential cost involved in adapting AMR and/or utility billing systems can present a major hurdle toutilities attempting to implement a net metering option.

Key Findings

4.a. Automatic meter reading (AMR) systems are used by about a third of all municipal andcooperative utilities in Texas.

4.b. Among utilities that used AMR systems, only a small percentage believed their AMR systemswere compatible with the requirements of net metering. (The remaining utilities either believed

their systems were incompatible with net metering or did not know whether they werecompatible.)

QUESTION 5. INSURANCE REQUIREMENTS

(Note: This question was asked only of utilities that reported having a tariff governing interconnection/netmetering of small renewable energy generators.)

Do you require a customer to carry liability insurance in order to interconnect a small renewable energygenerating system to the grid? If so, in what amount?


Some utilities require customers to carry liability insurance in order to interconnect their smallrenewable energy generating system to the distribution system; others do not. We wanted to know howprevalent such requirements were among Texas utilities, whether there was any difference in therequirements of municipal utilities and rural electric cooperatives, and what the distribution of requiredinsurance amounts was.


Of the four municipal utilities with tariffs governing I/NM of small renewable energy systems, only one(25%) required liability insurance, in the amount of $1 million, to be obtained as a condition ofinterconnection. The remainder of municipal utilities required no liability insurance.

Among rural electric cooperatives with I/NM tariffs, 24 of 28 (86%) required liability insurance as acondition of interconnection. Nearly half of these (11 coops, 46%) required $1 million in liabilityinsurance and a third (8 coops 33%) required $0 5 million One coop required $2 million in liability


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5. Liability Insurance Required? # % # %

Yes 1 25% 24 86%

No 3 75% 4 14%No Response 0 0% 0 0%

4 100% 28 100%

Among those responding " Yes" # % # %

$2 million or more required 0 0% 1 4%$1 million required 1 100% 11 46%$0.5 million required 0 0% 8 33%Homeowners policy only 0 0% 0 0%

Amount not disclosed 0 0% 4 17%

Munis Coops

Discussion

There is wide variation among utilities in their approaches toward liability insurance. Utilities with theserequirements in their tariffs say it is necessary to mitigate additional risks to distribution systemequipment and utility personnel that arise from distributed generators. Utilities that dont requireinsurance, along with owners and proponents of small renewable energy generating systems, on theother hand, argue that current technology is safe, and that insurance requirements are unnecessary

and present an undue barrier to wider deployment of such systems.It is not entirely clear why rural electric cooperatives more often require liability insurance thanmunicipal utilities. Their prevalence may be a legacy from the years prior to 1997 when coops wereregulated by the Public Utility Commission of Texas. At that time coops were subject to the states 1984net metering rule, which required regulated utilities to offer net metering through a single meter thatspins forwards and backwards for renewable energy systems under 50 kW. Indeed, many cooperativetariffs contain similar language that may have arisen from common implementation of the net meteringrule and revised only minimally since then.

If liability insurance requirements do stem from utilities implementation of the 1984 net metering rule,then utilities might wish to consider revisiting the issue and updating their tariffs to more accuratelyreflect the current state of knowledge about the risks posed by small renewable energy systems. Formost small renewable energy systems, such a review would likely result in lowering or eliminatingaltogether the liability insurance requirement.

20

Key Findings

5.a. Among utilities that have tariff provisions governing interconnection and net metering of smallrenewable energy generating systems, most municipal utilities do not require the systemowner to obtain liability insurance as a condition of interconnection, whereas most rural electric

cooperatives do.

5.b. Where liability insurance is required by the utilitys tariff, the amount required ranges from $0.5million to $2 million, with $1 million being the most common.


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5.c. The prevalence of tariff language requiring liability insurance to be obtained as a condition ofinterconnection probably stems from rural electric cooperatives implementation of the PUCTsnet metering rule in the mid-1980s. It is likely that if these requirements were reviewed in light

of the technological changes and operational experience gained over the past 20 years, theliability insurance requirements would be reduced or eliminated.

QUESTION 6. METERING/BILLING IMPLEMENTATION

(Note: This question was asked only of utilities that reported having a tariff governing interconnection/netmetering of small renewable energy generators.)

Do you require an additional meter in order collect data for net metering?


Utilities either use a single, bi-directional meter to implement net metering or use dual metering toseparately monitor a customers imports and exports. Variations in metering can have importantfinancial consequences for both interconnecting customers and utilities.


Two of the four municipal utilities with tariffs (50%) said they used (or would use) a single bi-directionalmeter to collect data for net metered customers. The other two municipal utilities with tariffs (50%) useda bi-directional service meter but also required a second meter to separately monitor production from

the small renewable energy system. All data required for billing was derived from the single bi-directional service meter, and the purpose of the second meter was to gather additional data on systemperformance.

Among the 28 rural electric cooperatives with tariffs, 13 (46%) said they used (or would use) a singlemeter, 8 (29%) required two meters, 4 (14%) were unsure how they would meter, and 3 (11%) did notrespond. For the rural electric cooperatives, it is not clear how many of the single- or dual-meterresponders intended to use a single bi-directional meter for billing purposes in a similar manner as themunicipals. Some cooperatives expressed their intention to use one or more non-detent meters for netmetering customers, either to ensure the customer would be billed for their imports and paid separatelyfor their exports or to ensure compatibility with the utilitys automatic meter reading system, which theybelieved could not distinguish between forward and backward electricity flows through meters.


6. How Metered? # % # %

Single meter 2 50% 13 46%Two meters 2 50% 8 29%Not sure 0 0% 4 14%No response 0 0% 3 11%

4 100% 28 100%

Munis Coops

Discussion

The problem of how to meter a customer with a small renewable energy generator can be resolved inone of two ways: a utility can focus on metering the customers net consumption or generation during


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customer agreements. Both utilities and customers might benefit from the availability of shared rules creatingclear expectations on both sides.

On the other hand, medium- and large-sized rural electric cooperatives and the largest municipal utilities tended

already to have tariffs covering interconnection and net metering of small renewable energy systems in place.Municipal tariffs tended to be fairly recent in their development, while many coop tariffs tended be about 20years old. And despite the existence of such tariffs, utilities still expressed considerable variation and confusionabout how to actually implement interconnection and net metering for small renewable energy systems. Issuesinvolved in implementation included: How to meter the customer (i.e., through true net metering versus dualmetering); How to integrate net metered customers with automatic meter reading (AMR) and utility billingsystems; Whether to require the customer to obtain liability insurance, and if so, in what amount; and manyothers. The needs of these utilities may be different from those approaching interconnection and net meteringissues for the first time they might best be served through the development of a peer-to-peer continuing

education forum that encourages information and experience sharing. Such a forum would likely be mosteffective if coordinated through the utilities statewide associations.


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Appendix E:Principles Document


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Principles for Interconnecting and Net Metering

Small Renewable Energy Systems in Texas

A Publication of the Texas RE-Connect project*


PRINCIPLES ON INTERCONNECTION

1. Electricity customers should have the ability to safely interconnect and operate small, customer-sitedrenewable energy generating systems.

2. The equipment interconnected should conform to accepted industry, state and/or national standards forsafe operation.

3. The method of interconnection should conform to accepted industry, state and/or national standards.

4. Interconnection should not adversely affect the operation or safety of the distribution system.

5. The processes and non-technical requirements for interconnecting small, customer-sited renewable energysystems should not be costly or burdensome for either the utility or the customer.

6. Provided that the installation meets all the standards and tests identified above, the customer should not berequired to purchase additional insurance.

PRINCIPLES ON NET METERING

7. The energy generation of small, customer-sited renewable energy systems should be counted against acustomers energy consumption during a billing period, provided such generation does not exceedconsumption during the billing period.

8. The processes and non-technical requirements for net metering small, customer-sited renewable energysystems should not be costly or burdensome for either the utility or the customer.


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Appendix F:CPS Tariff Documents


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DISTRIBUTED GENERATION INTERCONNECTION AGREEMENT

This Interconnection Agreement (Agreement) is made and entered into to beeffective the ________ day of ________________, ______ by City Public Service of San

Antonio ("CPS"), and _______________________________________________________(Customer), a generator of distributed generation, each hereinafter sometimes referred toindividually as Party or both referred to collectively as the Parties.

Recitals

WHEREAS, Customer plans to construct a distributed generation facility (DG Facility)at a site located within CPSs retail electric service area in San Antonio, Bexar County,

Texas (DG Site), which will generate electric energy for Customers needs and produce

surplus energy which Customer wishes to deliver to the CPS electric power distributionsystem by way of electrical connection and metering facilities owned and operated by

CPS (Interconnection Facilities).

WHEREAS, Customer has completed and submitted the Application for Interconnectionof Distributed Generation with the Utility System to CPS, which is incorporated herein as

Attachment A, and CPS has conducted its pre-interconnection studies to determine

whether CPS can make available and Customer is qualified to enter into such anarrangement for such distributed generation interconnection with CPS's Interconnection

Facilities.

WHEREAS, in consideration of the mutual covenants set forth herein, the Parties agreeas follows with regard to CPSs interconnection to the distributed generation of

Customer.

1. Scope of Agreement and TermThis Agreement sets out conditions under which the Customer and CPS agree that one ormore DG Facilities, eligible for interconnection to CPS's utility system service under

CPSs Exhibit A-Rider E5, may be interconnected to CPSs electric distribution system,

in accordance with Exhibit B- Technical Requirements for On-Site DistributedGeneration (Technical Requirements). Energy shall be supplied by CPS and purchasedby Customer under this Agreement in accordance with the terms of CPSs Rules and

Regulations (Rules and Regulations), CPS' applicable Rates (Rates) and the terms

and conditions of this Agreement. The Rules and Regulations, Rates and this DistributedGeneration Interconnection Agreement together form the agreement (Agreement)


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Exhibit B-Technical Requirements for On-Site Distributed Generation. Customer will be

responsible for CPS's cost to place into service, operate and maintain the InterconnectionFacilities, and for the costs of any other protective facilities which, in CPSs sole opinion,

are required or prudent in order to protect CPSs System from disruption or damagecaused by the DG Facility. The Interconnection Facilities shall measure both the energy

produced by the DG Facility and any energy provided by CPS for Customers use at theDG Site. CPS will design the Interconnection Facilities such that the Interconnection

Facilities are sufficient to enable Customer to supply electric energy across the Point of

Interconnection to CPS's utility system service under CPS's Exhibit A-Rider E5.Customer agrees to promptly provide information requested by CPS to assist in the

design and installation of the Interconnection Facilities. Energy to be supplied under this

Agreement shall be delivered to Customer at the Point of Interconnection as set forth inthe Exhibit B-Technical Requirements.

3. Inspection of DG Facility

Prior to connection of the DG Facility to the Interconnection Facilities, CPS may send arepresentative to the DG Site to inspect and perform acceptance tests on the DG Facility

to determine if the DG Facility complies with Exhibit B-Technical Requirements and that

all metering, telemetry, communications equipment, etc., associated with the Point ofInterconnection is properly functioning and receiving and transmitting accurate

information. Customer shall not commence operation of the DG Facility until written

approval has been provided to it by CPS. CPS shall notify Customer as to whether or notapproval is granted within ten (10) working days from CPSs inspection of the DG

Facility. In the event the DG Facility does not comply, CPS shall promptly notify

Customer in writing and shall provide Customer a reasonable period of time to bring theDG Facility into compliance. CPS shall have reasonable access to the DG Site at all

times and shall provide advance notice to Customer of the need for CPS presence at theDG Site, except that no advance notice is necessary in the case of an emergency, in

connection with the performance of CPS obligations imposed on it by this Agreement, or

if necessary to meet CPSs legal obligation to provide service to CPS retail customers.

4. Charges for Interconnection Facilities and Energy

Following execution of this Agreement and prior to commencement of construction ofthe Interconnection Facilities, CPS shall invoice Customer for the estimated cost, if

any, as set out in Exhibit C-Schedule of Costs, for make-ready work required to bedone in order for Customer to safely and reliably connect it's DG Facility to CPS'sSystem in accordance with Exhibit B. Customer shall pay CPS such estimated costwithin thirty (30) days from the date of the postmark of such invoice, consistent withExhibit C. Any amount not paid within such time shall bear interest at the legal rate


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interest at the legal rate for any amount not paid by the due date. Within thirty (30)days following completion of the make-ready work, CPS shall reimburse Customerfor any amount by which the CPS estimate invoiced to and paid by Customer

exceeds the final actual cost of the construction.

Customers monthly bill for energy products and services will be calculated inaccordance with the corresponding CPS applicable Rate(s) under which theCustomer is served less any Net Electric Generation (NEG) credit to which Customermay be entitled from the previous months generation by Customer (if any). NEG, interms of kWh, is deemed to exist only if an amount equal to the difference between

the current months CPS meter read less the previous months CPS meter read isnegative. NEG credits (if any) will be computed by CPS and shall be based on CPSsestimated avoided energy cost (AEC) as defined in and calculated under Exhibit A-Rider E5 or other applicable rate schedule. Notwithstanding the above, Customeragrees that its minimum bill each month for energy will be no less than the amountspecified under the applicable Rate. Customer agrees to pay its bill for energy on orbefore the due date set forth on the bill and to deliver such payment to the office ofCPS.

5. Operation of Interconnection

During the term of this Agreement, Customer will maintain and operate the DGFacility in accordance with the Standards for Operating Reliability attached hereto asExhibit D such that the Interconnection Facilities will operate as designed and inaccordance with their intended purposes. CPSs operation and maintenance of the

Interconnection Facilities shall be excused for the duration of any outage whichmaterially prevents or impairs CPSs ability to operate and control the InterconnectionFacilities. CPS shall resume operation and maintenance as soon as possible afterthe outage. Unless otherwise provided for in Exhibit B, each Party shall, at the Pointof Interconnection, at its own risk and expense, install, operate and maintain allapparatus and necessary protective devices on its side of the meter which arereasonably necessary to comply with good operating practices and applicableERCOT Guides. CPS and Customer shall each be responsible for the safe

installation, maintenance, repair and condition of their respective lines andappurtenances on their respective sides of the Point of Interconnection. For themutual protection of Customer and CPS, only with CPSs prior authorization are theconnections between the CPSs service wires and Customer's service entranceconductors to be energized.


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Electrical Safety Code, approved by the American National Standards Institute, in effect

at the time of construction. Customer shall perform maintenance of the DG Facility inaccordance with the applicable manufacturer's recommended maintenance schedule.

7. Disconnection of Interconnection Facilities

Customer shall be required to install its own switch on its side of the Point of

Interconnection for its use in disconnecting the DG Facility from the CPS retail electricdistribution system. Customer may, at its option, disconnect from CPSs distribution

system by operation of its switch, upon 24 hours notice to CPS of its intent to disconnect.Customer shall have no right to operate CPSs switch located on the CPS side of the

Point of Interconnection. Such disconnection shall not constitute a termination of thisAgreement unless Customer exercises rights under Section 9. In connection with routinemaintenance and repairs on CPSs utility system requiring disconnection or other service

interruption, CPS shall provide Customer with written notice seven business days in

advance of such disconnection.

CPS shall have the right to suspend service by disconnecting in cases (i) wherecontinuance of service to Customer will, in CPSs reasonable determination,

endanger persons or property of CPS or if there is evidence that the DG Facilityoperation causes disruption or deterioration of service to other customers servedfrom the same grid; (ii) where CPS reasonably determines that Customer is failing tomeet its obligations as provided for under Exhibits A, B, C and D of this Agreement;or (iii) where CPS has reasonable cause to believe that the requirements of this

Agreement relating to use of the Interconnection Facilities pursuant to Section 1 arenot being complied with by Customer. During the forced outage of any portion ofCPSs utility system serving Customer, CPS shall have the right to suspend service

to effect immediate repairs on CPSs utility system, but CPS shall use its best effortsto provide Customer with reasonable prior notice. In addition, CPS shall have theright to disconnect the Interconnection Facilities in the event any CPS right toterminate this Agreement pursuant to Section 9 arises, subject to notice and cureperiods provided for in that Section.

8. Operating and Maintenance ChargesThe annual operating and maintenance cost of the Interconnection Facilities, as setout in Exhibit C shall be borne by Customer and shall be billed on a monthly basis,separately from the energy charges provided for under Section 4, and paid for asprovided in this Section of the Agreement. The Parties agree that the amount set outin Exhibit C shall be increased or decreased, as appropriate, on a cumulative basis


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monthly payments for operating and maintenance costs shall be due on the later ofsixteen (16) days from the date of postmark or facsimile transmission of CPSsinvoice for such charges, or the twentieth (20) day of the month. If the due date falls

on a non-business day, the payment shall be due on the next following business day.Amounts not paid on or before the due date shall be payable with interest at the legalrate of interest from the due date. Customer shall also be responsible for theinstallation and monthly costs of service for any telephone lines that may be requiredfor operation of the Interconnection Facilities.

(optional)

All payments shall be made by electronic funds transfer (EFT) through a mutuallyagreed settlement mechanism, such as the Automated Clearing House or FederalReserve System wire transfer. The Parties shall use all reasonable efforts to keepconfidential and prevent disclosure of any banking information provided by eachParty to any person who is not an authorized representative of either Party for thepurpose of completing EFT transactions under this Agreement. The Parties agreethat all EFT payments will be governed by the Operating Rules of the National

Automated Clearing House Association, as such rules may be revised or amendedfrom time to time. Each Party agrees to pay its respective costs of transmission orreceipt of EFT payments. An EFT payment shall be (i) considered timely if thepayment is completed on the payment due date and (ii) deemed completed when thereceiving Partys depository institution receives or has control of the payment. EachParty will give notice in writing to the other Party of any changes in depositoryinstitutions or other payment instructions in accordance with the notice provisions ofthis Agreement.

9. Term and Termination Rights

This Agreement becomes effective when executed by both Parties, and shall continue in effect untilterminated by either Party providing sixty (60) days prior written notice to the other Party. CPS mayterminate (i) upon CPSs determination that the DG Facility does not comply with Exhibit B-TechnicalRequirements, and after notice and reasonable opportunity by Customer to bring the DG Facility intocompliance, the DG Facility continues to be noncompliant; (ii) upon failure by Customer to generateenergy from the DG Facility in parallel with the CPSs system within twelve months after completion ofthe interconnection ;(iii) if any representation made by Customer in this Agreement proves to be false ormisleading in any material respect; provided, CPS gives Customer thirty (30) days written notice andan opportunity to cure within that 30 day period; or (iv) if CPS costs of constructing the InterconnectionFacilities as set out in Section 4 of this Agreement or the annual operating and maintenance costsprovided for in Section 8 of this Agreement are not paid by Customer as provided for in this Agreement,ft bl ti d t it f C t t d h t Th P ti h ll


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Section. The last day of the Initial Term and of each successive one-year term of this Agreement isreferred to in this Agreement as an "Anniversary Date".

10. Limitation of Liability and Indemnification

Notwithstanding any other provision in this Agreement, with respect to CPSsprovision of interconnection service to Customer, CPSs liability to Customer shall belimited as set forth in CPSs Rules and Regulations.

To the extent allowed by law, CPS shall assume all liability for and shall indemnifyCustomer against any claims, losses, costs, penalties, and expenses of any kind orcharacter made by any person to the extent caused by CPSs sole active negligencein connection with the design, construction, or operation of its facilities as describedon Exhibit D. In no event shall CPS be liable for consequential, special, or incidentaldamages, including, without limitation, loss of profits, loss of revenue or disruption ofbusiness, or loss of production by or on behalf of Customer. CPS does not assumeliability for any costs or damages arising from the disruption of the business of

Customer or for Customer's costs and expenses of prosecuting or defending anaction or claim against CPS. The limitations of liability provided in this paragraph donot apply in actionable cases of gross negligence or intentional wrongdoing on thepart of CPS, if any.

Customer shall assume all liability for and shall indemnify CPS against any claims,losses, costs, penalties, and expenses of any kind or character made by any person

to the extent caused by Customers sole active negligence in connection with thedesign, construction, or operation of its facilities as described on Exhibit B. In noevent shall Customer be liable for consequential, special, or incidental damages,including, without limitation, loss of profits, loss of revenue or disruption of business,or loss of production by or on behalf of CPS. Customer does not assume liability forany costs or damages arising from the disruption of the business of CPS or for CPS'scosts and expenses of prosecuting or defending an action or claim againstCustomer, except for the payment of amounts due under this Agreement. The

limitations of liability provided in this paragraph do not apply in actionable cases ofgross negligence or intentional wrongdoing on the part of Customer, if any.

11. Easements

C h ll C ' d b i d d b C S


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agrees that CPS' representatives, employees and assignee are hereby granted rights of

ingress and egress to the DG Site at all reasonable times for the purpose of inspection ofequipment and facilities providing service and in order to carry out the provisions of this

Agreement.

12. Dispute Resolution

The Parties agree to make a good faith effort to resolve any disputes arising betweenthem under this Agreement by non-binding mediation. The Parties hereby agreethat, in the event that any dispute between them has not been resolved by non-binding mediation, a Party will have any and all remedies in any court of competent

jurisdiction.


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13. Governing Law and Regulatory Authority

This Agreement was executed in the State of Texas and will in all respects be governed by,interpreted, construed, and enforced in accordance with the laws of Texas.

14. Amendment and Changes

This Agreement may be amended only upon mutual agreement of the Parties, whichamendment will not be effective until reduced to writing and executed by the Parties.Customer agrees that the Rates and the Rules and Regulations are expresslysubject to change by the Trustees of CPS or any governmental body having

jurisdiction over the provision of gas and electric service by CPS. Customer agreesto be bound by the Rates and the Rules and Regulations as they may change fromtime to time. Any such change shall affect only that portion of this Agreementspecifically changed and all other portions shall remain in full force and effect.Customer further agrees to pay any applicable use, sales or excise tax, at the rate ineffect at the time of the delivery of the gas and electric power, and Customeracknowledges that such tax rate may change.

15. Entirety of Agreement and Prior Agreements Superseded

This Agreement, including all attached Exhibits A-D, which are expressly made a part hereof

for all purposes, constitutes the entire agreement and understanding between the Parties with

regard to the interconnection of the facilities of the Parties at the Point[s] of Interconnectionexpressly provided for in this Agreement. The Parties are not bound by or liable for any

statement, representation, promise, inducement, understanding, or undertaking of any kind or

nature (wheth