2015 -- H 5131 SUBSTITUTE A

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS

     Introduced By: Representatives Carnevale, Handy, McKiernan, Edwards, and O'Brien

     Date Introduced: January 15, 2015

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 39-26.3-2 of the General Laws in Chapter 39-26.3 entitled

"Distributed Generation Interconnection" is hereby amended to read as follows:

     39-26.3-2. Definitions. -- The following terms shall have the meanings given below for

purposes of this chapter:

      (1) "Applicant" means an electric distribution customer or distributed generation

developer who submits an application to the electric distribution company for the installation of a

renewable distributed generation interconnection to the distribution system for a renewable

distributed generation project that, as contemplated, meets the eligibility requirements for net

metering contained within title 39 or the eligibility requirements for a standard contract contained

within title 39.

      (2) "Impact study" means an engineering study that includes an estimate of the cost of

interconnecting to the distribution system that would be assessed on the applicant for an

interconnection that is based on an engineering study of the details of the proposed generation

project. Such estimate generally will have a probability of accuracy of plus or minus twenty five

percent (25%). Such an estimate may be relied upon by the applicant for purposes of determining

the expected cost of interconnection, but the distribution company may not be held liable or

responsible if the actual costs exceed the estimate as long as the estimate was provided in good

faith and the interconnection was implemented prudently by the electric distribution company.

      (3) "Impact study fee" means a fee that shall be charged to the applicant to obtain an

impact study as specified in § 39-26.2-4 of this chapter.

      (4) "Feasibility study" means a high-level project assessment that includes an estimate of

the cost of interconnecting to the distribution system that would be assessed on the applicant for

an interconnection. Such estimate is not based on any engineering study, but is based on past

experience and judgment of the electric distribution company, taking into account the information

in the application, the location of the interconnection, and general knowledge of the distribution

and transmission system. Such estimate cannot be relied upon by the applicant for purposes of

holding the electric distribution company liable or responsible for its accuracy as long as the

electric distribution company has provided the estimate in good faith. The feasibility study

estimate shall be a range within which the electric distribution company believes the

interconnection costs are likely to be and shall include a disclaimer that explains the nature of the

estimate.

      (5) "Feasibility study fee" means a fee that shall be charged to the applicant to obtain a

feasibility study as specified in § 39-26.2-4 of this chapter.

     (6) "Renewable energy resource" as defined pursuant to § 39-26-5.

     SECTION 2. Chapter 39-26.3 of the General Laws entitled "Distributed Generation

Interconnection" is hereby amended by adding thereto the following section:

     39-26.3-4.1. Interconnection standards. – (a) The electric distribution company may

only charge an interconnecting renewable energy customer for any system modifications to its

electric power system specifically necessary for and directly related to its interconnection. Any

system modifications benefiting other customers shall be included in rates as determined by the

public utilities commission.

     (b) If the public utilities commission determines that a specific system modification

benefiting other customers has been accelerated due to an interconnection request, it may order

the interconnecting customer to fund the modification subject to repayment of the depreciated

value of the modification as of the time the modification would have been necessary as

determined by the public utilities commission.

     (c) If an interconnecting renewable energy customer is required to pay for system

modifications and a subsequent renewable energy or commercial customer relies on those

modifications to connect to the distribution system within ten (10) years of the earlier

interconnecting renewable energy customer's payment, the subsequent customer will make a

prorated contribution toward the cost of the system modifications which will be credited to the

earlier interconnecting renewable energy customer as determined by the public utilities

commission.

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     (d) All interconnection work must be performed no longer than two hundred seventy

(270) calendar days from completion of the renewable energy customer's interconnection impact

study pursuant to § 39-26.3-3, if required, or else no more than three hundred sixty (360) calendar

days from the customer's initial application for interconnection. These deadlines cannot be

extended due to customer delays in providing required information, all of which must be

requested and obtained before completion of the impact study. The electric distribution company

will be liable to the interconnecting customer for all actual and consequential damages resulting

from the noncompliant interconnection delay including, but not limited to, the full value of any

lost energy production, and any reasonable legal fees and costs associated with the recovery of

those damages. These penalties and damages shall be borne by the electric distribution company's

shareholders, not by the electric distribution company's ratepayers.

     (e) The interconnection of any new renewable energy resource that replaces the same

existing renewable energy resource of the same or less nameplate capacity shall not be considered

a material modification requiring interconnection study or approval other than a review to

determine consistency with this section and to establish any costs specifically necessary to

interconnect the replacement renewable energy resource, which shall not include any system

modifications or system improvements. This review shall take no longer than sixty (60) days

subject to the penalties provided in subsection (d) of this section.

     (f) The electric distribution company shall not require interconnecting customers that do

not propose to and will not make direct sales to the wholesale market, including, but not limited

to, those enrolled under chapters 26.2, 26.4, and 26.6 of title 39, to comply with regulatory

requirements applicable to wholesale customers or sales, as defined according to 16 U.S.C. § 824.

If the electric distribution company sells any electricity generated by such interconnecting

customers in the wholesale markets, the electric distribution company will be the designated

market participant and designated entity for such sales, complying with all applicable, regulatory

requirements without any delay to the interconnection schedule set in subsection (d) of this

section. The interconnecting customer shall assist the electric distribution company by providing

information and access for such compliance if/as necessary and appropriate.

     SECTION 3. Sections 39-26.4-2 and 39-26.4-3 of the General Laws in Chapter 39-26.4

entitled "Net Metering" are hereby amended to read as follows:

     39-26.4-2. Definitions. -- Terms not defined in this section herein shall have the same

meaning as contained in chapter 26 of title 39 of the general laws. When used in this chapter:

      (1) "Eligible net metering resource" means eligible renewable energy resource as defined

in § 39-26-5 including biogas created as a result of anaerobic digestion, but, specifically

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excluding all other listed eligible biomass fuels;

      (2) "Eligible Net Metering System" means a facility generating electricity using an

eligible net metering resource that is reasonably designed and sized to annually produce

electricity in an amount that is equal to or less than the renewable self-generator's usage at the

eligible net metering system site measured by the three (3) year average annual consumption of

energy over the previous three (3) years at the electric distribution account(s) located at the

eligible net metering system site. A projected annual consumption of energy may be used until

the actual three (3) year average annual consumption of energy over the previous three (3) years

at the electric distribution account(s) located at the eligible net metering system site becomes

available for use in determining eligibility of the generating system. The eligible net metering

system must be owned by the same entity that is the customer of record on the net metered

accounts. Notwithstanding any other provisions of this chapter, any eligible net metering

resource: (i) owned by a public entity or multi-municipal collaborative or (ii) owned and operated

by a renewable generation developer on behalf of a public entity or multi-municipal collaborative

through public entity net metering financing arrangement shall be treated as an eligible net

metering system and all accounts designated by the public entity or multi-municipal collaborative

for net metering shall be treated as accounts eligible for net metering within an eligible net

metering system site.

      (3) "Eligible Net Metering System Site" means the site where the eligible net metering

system is located or is part of the same campus or complex of sites contiguous to one another and

the site where the eligible net metering system is located or a farm in which the eligible net

metering system is located. Except for an eligible net metering system owned by or operated on

behalf of a public entity or multi-municipal collaborative through a public entity net metering

financing arrangement, the purpose of this definition is to reasonably assure that energy generated

by the eligible net metering system is consumed by net metered electric service account(s) that

are actually located in the same geographical location as the eligible net metering system. All

energy generated from any eligible net metering system is and will be considered consumed at the

meter where the renewable energy resource is interconnected for valuation purposes. Except for

an eligible net metering system owned by or operated on behalf of a public entity or multi-

municipal collaborative through a public entity net metering financing arrangement, all of the net

metered accounts at the eligible net metering system site must be the accounts of the same

customer of record and customers are not permitted to enter into agreements or arrangements to

change the name on accounts for the purpose of artificially expanding the eligible net metering

system site to contiguous sites in an attempt to avoid this restriction. However, a property owner

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may change the nature of the metered service at the accounts at the site to be master metered in

the owner's name, or become the customer of record for each of the accounts, provided that the

owner becoming the customer of record actually owns the property at which the account is

located. As long as the net metered accounts meet the requirements set forth in this definition,

there is no limit on the number of accounts that may be net metered within the eligible net

metering system site.

      (4) "Excess Renewable Net Metering Credit" means a credit that applies to an eligible

net metering system for that portion of the renewable self-generator's production of electricity

beyond one hundred percent (100%) and no greater than one hundred twenty-five percent (125%)

of the renewable self-generator's own consumption at the eligible net metering system site during

the applicable billing period. Such excess renewable net metering credit shall be equal to the

electric distribution company's avoided cost rate, which is hereby declared to be the electric

distribution company's standard offer service kilo-watt hour (kWh) charge for the rate class and

time-of-use billing period (if applicable) applicable to the distribution customer account(s) at the

eligible net metering system site. Where there are accounts at the eligible net metering system site

in different rate classes, the electric distribution company may calculate the excess renewable net

metering credit based on the average of the standard offer service rates applicable to those on- site

accounts. The electric distribution company has the option to use the energy received from such

excess generation to serve the standard offer service load. The commission shall have the

authority to make determinations as to the applicability of this credit to specific generation

facilities to the extent there is any uncertainty or disagreement.

      (5) "Farm" shall be defined in accordance with § 44-27-2, except that all buildings

associated with the farm shall be eligible for net metering credits as long as: (i) The buildings are

owned by the same entity operating the farm or persons associated with operating the farm; and

(ii) The buildings are on the same farmland as the project on either a tract of land contiguous with

or reasonably proximate to such farmland or across a public way from such farmland.

      (6) "Multi-municipal collaborative" means a group of towns and/or cities that enter into

an agreement for the purpose of co-owning a renewable generation facility or entering into a

financing arrangement pursuant to subdivision (7).

      (7) "Public entity net metering financing arrangement" means arrangements entered into

by a public entity or multi-municipal collaborative with a private entity to facilitate the financing

and operation of a net metering resource, in which the private entity owns and operates an eligible

net metering resource on behalf of a public entity or multi-municipal collaborative, where: (i) The

eligible net metering resource is located on property owned or controlled by the public entity or

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one of the municipalities, as applicable, and (ii) The production from the eligible net metering

resource and primary compensation paid by the public entity or multi-municipal collaborative to

the private entity for such production is directly tied to the consumption of electricity occurring at

the designated net metered accounts.

      (8) "Net metering" means using electricity generated by an eligible net metering system

for the purpose of self-supplying power at the eligible net metering system site and thereby

offsetting consumption at the eligible net metering system site through the netting process

established in this chapter.

      (9) "Net metering customer" means a customer of the electric distribution company

receiving and being billed for distribution service whose distribution account(s) are being net

metered.

      (10) "Person" means an individual, firm, corporation, association, partnership, farm,

town or city of the State of Rhode Island, multi-municipal collaborative, or the State of Rhode

Island or any department of the state government, governmental agency or public instrumentality

of the state.

      (11) "Project" means a distinct installation of an eligible net metering system. An

installation will be considered distinct if it is installed in a different location, or at a different

time, or involves a different type of renewable energy.

      (12) "Public entity" means the state of Rhode Island, municipalities, wastewater

treatment facilities, public transit agencies or any water distributing plant or system employed for

the distribution of water to the consuming public within this state including the water supply

board of the city of Providence.

      (13) "Renewable Net Metering Credit" means a credit that applies to an Eligible Net

Metering System up to one hundred percent (100%) of the renewable self-generator's usage at the

Eligible Net Metering System Site over the applicable billing period. This credit shall be equal to

the total kilowatt hours of electricity generated and consumed on-site during the billing period

multiplied by the sum of the distribution company's:

      (i) Standard offer service kilowatt hour charge for the rate class applicable to the net

metering customer;

      (ii) Distribution kilowatt hour charge;

      (iii) Transmission kilowatt hour charge; and

      (iv) Transition kilowatt hour charge.

      (14) "Renewable self-generator" means an electric distribution service customer who

installs or arranges for an installation of renewable generation that is primarily designed to

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produce electricity for consumption by that same customer at its distribution service account(s).

      (15) "Municipality" means any Rhode Island town or city, including any agency or

instrumentality thereof, with the powers set forth in title 45 of the general laws.

     39-26.4-3. Net metering. -- (a) The following policies regarding net metering of

electricity from eligible net metering systems and regarding any person that is a renewable self-

generator shall apply:

      (1) The maximum, allowable capacity for eligible net-metering systems, based on

nameplate capacity, shall be five ten megawatts (5 mw) (10 MW). The aggregate amount of net

metering in the Block Island Power Company and the Pascoag Utility District shall not exceed

three percent (3%) of peak load for each utility district.

      (2) For ease of administering net-metered accounts and stabilizing net metered account

bills, the electric-distribution company may elect (but is not required) to estimate for any twelve-

month (12) period:

      (i) The production from the eligible net metering system; and

      (ii) Aggregate consumption of the net-metered accounts at the eligible net-metering

system site and establish a monthly billing plan that reflects the expected credits that would be

applied to the net-metered accounts over twelve (12) months. The billing plan would be designed

to even out monthly billings over twelve (12) months, regardless of actual production and usage.

If such election is made by the electric-distribution company, the electric-distribution company

would reconcile payments and credits under the billing plan to actual production and

consumption at the end of the twelve-month (12) period and apply any credits or charges to the

net-metered accounts for any positive or negative difference, as applicable. Should there be a

material change in circumstances at the eligible net-metering system site or associated accounts

during the twelve-month (12) period, the estimates and credits may be adjusted by the electric-

distribution company during the reconciliation period. The electric-distribution company also

may elect (but is not required) to issue checks to any net metering customer in lieu of billing

credits or carry forward credits or charges to the next billing period. For residential eligible net

metering systems twenty-five kilowatts (25 kw) or smaller, the electric-distribution company, at

its option, may administer renewable net-metering credits month to month allowing unused

credits to carry forward into following billing period.

      (3) If the electricity generated by an eligible net-metering system during a billing period

is equal to, or less than the net-metering customer's usage during the billing period for electric-

distribution-company customer accounts at the eligible net-metering system site, the customer

shall receive renewable net-metering credits, that shall be applied to offset the net-metering

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customer's usage on accounts at the eligible net-metering-system site.

      (4) If the electricity generated by an eligible net-metering system during a billing period

is greater than the net-metering customer's usage on accounts at the eligible net-metering-system

site during the billing period, the customer shall be paid by excess renewable net-metering credits

for the excess electricity generated beyond the net-metering customer's usage at the eligible net-

metering-system site up to an additional twenty-five percent (25%) of the renewable self-

generator's consumption during the billing period; unless the electric-distribution company and

net-metering customer have agreed to a billing plan pursuant to subdivision (3).

      (5) The rates applicable to any net-metered account shall be the same as those that apply

to the rate classification that would be applicable to such account in the absence of net-metering,

including customer and demand charges, and no other charges may be imposed to offset net

metering credits.

      (b) The commission shall exempt electric-distribution company customer accounts

associated with an eligible, net-metering system from back-up or standby rates commensurate

with the size of the eligible net-metering system, provided that any revenue shortfall caused by

any such exemption shall be fully recovered by the electric distribution company through rates.

      (c) Any prudent and reasonable costs incurred by the electric-distribution company

pursuant to achieving compliance with subsection (a) and the annual amount of the distribution

component of any renewable net-metering credits or excess, renewable net-metering credits

provided to accounts associated with eligible net-metering systems, shall be aggregated by the

distribution company and billed to all distribution customers on an annual basis through a

uniform, per-kilowatt-hour (kwh) surcharge embedded in the distribution component of the rates

reflected on customer bills.

      (d) The billing process set out in this section shall be applicable to electric-distribution

companies thirty (30) days after the enactment of this chapter.

     SECTION 4. This act shall take effect sixty (60) days after passage and shall apply to all

interconnection or net metering applications submitted and any interconnection impact studies

issued on or after January 1, 2015.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS

***

     This act would prohibit electrical distribution companies from charging an

interconnecting renewable energy customer for system modifications that are not directly related

to the interconnection, except accelerated modifications for which the developer is repaid when

the modification would have otherwise been made. It would require that any interconnection

work must be completed no later than two hundred seventy (270) days from the applicant's

impact study or three hundred sixty (360) days from its initial applications. The act would enable

replacement of a renewable energy resource without study or system improvement cost and

would require the electric distribution company to take responsibility for regulatory obligations it

creates when it elects to resell in the wholesale markets electricity it receives from customers that

do not directly participate in the wholesale markets.

     This act would also allow a maximum project size of ten megawatts (10MW) for net

metered projects in Rhode Island and would ensure that net metered electricity is properly treated

as consumed at the meter or meters designated for net metering, for regulatory and valuation

purposes.

     This act would take effect sixty (60) days after passage and would apply to all

interconnection or net metering applications submitted and any interconnection impact studies

issued on or after January 1, 2015.

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