2017 -- S 1007 SUBSTITUTE A

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

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A N   A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS -- NET METERING

     Introduced By: Senator Louis P. DiPalma

     Date Introduced: June 29, 2017

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 39-26.4-2 Sections 39-26.4-2 and 39-26.4-3 of the General Laws in

Chapter 39-26.4 entitled "Net Metering" is 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) "Community remote-net-metering system" means a facility generating electricity

using an eligible net-metering resource that allocates net-metering credits to a minimum of one

account for system associated with low or moderate housing eligible credit recipients, or three (3)

eligible credit-recipient customer accounts, provided that no more than fifty percent (50%) of the

credits produced by the system are allocated to one eligible credit recipient, and provided further

at least fifty percent (50%) of the credits produced by the system are allocated to the remaining

eligible credit recipients in an amount not to exceed that which is produced annually by twenty-

five kilowatt (25 kW) AC capacity. The community remote-net-metering system may transfer

credits to eligible credit recipients in an amount that is equal to or less than the sum of the usage

of the eligible credit recipient accounts measured by the three-year (3) average annual

consumption of energy over the previous three (3) years. A projected annual consumption of

energy may be used until the actual three-year (3) average annual consumption of energy over the

previous three (3) years at the eligible credit recipient accounts becomes available for use in

determining eligibility of the generating system. The community remote-net-metering system

may be owned by the same entity that is the customer of record on the net-metered account or

may be owned by a third party.

     (2) "Electric-distribution company" shall have the same meaning as § 39-1-2, but shall

not include block island power company or Pascoag utility district, each of whom shall be

required to offer net metering to customers through a tariff approved by the public utilities

commission after a public hearing. Any tariff or policy on file with the public utilities

commission on the date of passage of this chapter shall remain in effect until the commission

approves a new tariff.

     (3) "Eligible credit recipient" means one of the following eligible recipients in the

electric-distribution company's service territory whose electric service account or accounts may

receive net-metering credits from a community remote net-metering system. Eligible credit

recipients include the following definitions:

     (i) Residential accounts in good standing.

     (ii) "Low- or moderate-income housing eligible credit recipient" means an electric service

account or accounts in good standing associated with any housing development or developments

owned operated by a public agency, nonprofit organization, limited-equity housing cooperative,

or private developer, that receives assistance under any federal, state, or municipal government

program to assist the construction or rehabilitation of housing affordable to low- or moderate-

income households, as defined in the applicable federal or state statute, or local ordinance,

encumbered by a deed restriction or other covenant recorded in the land records of the

municipality in which the housing is located, that:

     (A) Restricts occupancy of no less than fifty percent (50%) of the housing to households

with a gross, annual income that does not exceed eighty percent (80%) of the area median income

as defined annually by the United States Department of Housing and Urban Development (HUD);

     (B) Restricts the monthly rent, including a utility allowance, that may be charged to

residents, to an amount that does not exceed thirty percent (30%) of the gross, monthly income of

a household earning eight percent (80%) of the area, median income as defined annually by

HUD;

     (C) That has an original term of not less than thirty (30) years from initial occupancy.

Electric service account or accounts in good standing associated with housing developments that

are under common ownership or control may be considered a single low- or moderate-income

housing-eligible credit recipient for purposes of this section. The value of the credits shall be used

to provide benefits to tenants.

     (iii) "Educational institutions" means public and private schools at the primary,

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secondary, and post-secondary levels.

     (4) "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

excluding all other listed eligible biomass fuels;

     (5) "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-year (3) 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-year (3) 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 may

be owned by the same entity that is the customer of record on the net-metered accounts or may be

owned by a third party that is not the customer of record at the eligible net-metering system site

and which may offer a third-party, net-metering financing arrangement or public entity, net-

metering financing arrangement, as applicable. Notwithstanding any other provisions of this

chapter, any eligible net-metering resource: (i) Owned by a public entity, educational institution,

hospital, nonprofit, or multi-municipal collaborative or (ii) Owned and operated by a renewable-

generation developer on behalf of a public entity, educational institution, hospital, nonprofit, 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,

educational institution, hospital, nonprofit, or multi-municipal collaborative for net metering shall

be treated as accounts eligible for net metering within an eligible net-metering-system site.

     (6) "Eligible net-metering-system site" means the site where the eligible net-metering

system or community remote 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 or

community remote-net-metering system is located or a farm in which the eligible net-metering

system or community remote-net-metering system is located. Except for an eligible net-metering

system owned by or operated on behalf of a public entity, educational institution, hospital,

nonprofit, 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

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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, educational

institution, hospital, nonprofit, or multi-municipal collaborative through a public entity net-

metering financing arrangement, or except for a community remote-net-metering system, 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

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.

     (7) "Excess renewable net-metering credit" means a credit that applies to an eligible net-

metering system or community remote-net-metering system for that portion of the production of

electrical energy 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 or the sum of the usage of the eligible credit recipient accounts associated

with the community remote-net-metering system 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

kilowatt hour (kWh) charge for the rate class and time-of-use billing period (if applicable)

applicable to the customer of record for the eligible net-metering system or applicable to the

customer of record for the community remote-net-metering system. 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.

     (8) "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.

     (9) "Hospital" means and shall be defined and established as set forth in chapter 17 of

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title 23.

     (9)(10) "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 (16)(18).

     (10)(11) "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.

     (11)(12) "Net metering" means using electrical energy generated by an eligible, net-

metering system for the purpose of self-supplying electrical energy and power at the eligible net-

metering-system site, or with respect to a community remote-net-metering system, for the

purpose of generating net-metering credits to be applied to the electric bills of the eligible credit

recipients associated with the community net-metering system. The amount so generated will

thereby offset consumption at the eligible net-metering system site through the netting process

established in this chapter, or with respect to a community remote-net-metering system, the

amounts generated in excess of that amount will result in credits being applied to the eligible

credit-recipient accounts associated with the community remote-net-metering system.

     (12)(13) "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.

     (14) "Nonprofit" means a nonprofit corporation as defined and established through

chapter 6 of title 7, and shall include religious organizations that are tax exempt pursuant to 26

U.S.C. §501(d).

     (13)(15) "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.

     (14)(16) "Project" means a distinct installation of an eligible net-metering system or a

community remote-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.

     (15)(17) "Public entity" means the federal government, 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.

     (16)(18) "Public entity net-metering Net-metering financing arrangement" means

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arrangements entered into by a public entity, educational institution, hospital, nonprofit 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, educational institution, hospital, nonprofit or multi-municipal

collaborative, where: (i) The eligible net-metering resource is located on property owned or

controlled by the public entity, educational institution, hospital or one of the municipalities, as

applicable, and (ii) The production from the eligible net-metering resource and primary

compensation paid by the public entity, educational institution, hospital, nonprofit 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.

     (17)(19) "Renewable net-metering credit" means a credit that applies to an eligible net-

metering system or a community remote-net-metering system up to one hundred percent (100%)

of either the renewable self-generator's usage at the eligible net-metering-system site or the sum

of the usage of the eligible credit-recipient accounts associated with the community remote net-

metering system over the applicable billing period. This credit shall be equal to the total kilowatt

hours of electrical energy generated up to the amount consumed on-site, and/or generated up to

the sum of the eligible credit-recipient account usage 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, except that for remote public entity and multi-municipality collaborative net-

metering systems that submit an application for an interconnection study on or after July 1, 2017,

and community remote-net-metering systems, the standard offer service kilowatt-hour charge

shall be net of the renewable energy standard charge or credit;

     (ii) Distribution kilowatt-hour charge;

     (iii) Transmission kilowatt-hour charge; and

     (iv) Transition kilowatt-hour charge.

     Notwithstanding the foregoing, except for systems that have requested an interconnection

study for which payment has been received by the distribution company, or if an interconnection

study is not required, a completed and paid interconnection application, by December 31, 2018,

the renewable net-metering credit for all remote public entity and multi-municipal collaborative

net-metering systems shall not include the distribution kilowatt hour charge commencing on

January 1, 2050.

     (18)(20) "Renewable self-generator" means an electric distribution service customer of

record for the eligible net-metering system or community remote-net-metering system at the

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eligible net-metering-system site which system is primarily designed to produce electrical energy

for consumption by that same customer at its distribution service account(s), and/or, with respect

to community remote-net-metering systems, electrical energy which generates net-metering

credits to be applied to offset the eligible credit-recipient account usage.

     (19)(21) "Third party" means and includes any person or entity, other than the renewable

self-generator, who or that owns or operates the eligible net-metering system or community

remote-net-metering system on the eligible net-metering-system site for the benefit of the

renewable self-generator.

     (20)(22) "Third-party, net-metering financing arrangement" means the financing of

eligible net-metering systems or community remote-net-metering systems through lease

arrangements or power/credit purchase agreements between a third party and renewable self-

generator, except for those entities under a public entity net-metering finance arrangement. A

third party engaged in providing financing arrangements related to such net-metering systems

with a public or private entity is not a public utility as defined in § 39-1-2.

     39-26.4-3. Net metering.

     (a) The following policies regarding net metering of electricity from eligible net-metering

systems and community remote-net-metering systems and regarding any person that is a

renewable self-generator shall apply:

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

nameplate capacity, shall be ten megawatts (10 MW), effective sixty (60) days after passage. 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; and

     (ii) Through December 31, 2018, the maximum, aggregate amount of community remote-

net-metering systems built shall be thirty megawatts (30 MW). Any of the unused MW amount

after December 31, 2018, shall remain available to community remote-net-metering systems until

the MW aggregate amount is interconnected. After December 31, 2018, the commission may

expand or modify the aggregate amount after a public hearing upon petition by the office of

energy resources. The commission shall determine within six (6) months of such petition being

docketed by the commission whether the benefits of the proposed expansion exceed the cost. This

aggregate amount shall not apply to any net metering finance arrangement involving public entity

facilities, or multi-municipal collaborative facilities, educational institutions, the federal

government, hospitals, or nonprofits. By June 30, 2019, the commission shall conduct a study

examining the cost to all customers of the inclusion of the distribution charge as a part of the net-

metering calculation.

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     (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 or community remote-net-

metering system; and

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

system site or the sum of the consumption of the eligible credit-recipient accounts associated with

the community remote-net-metering system, 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 and community-remote-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 the following billing period.

     (3) If the electricity generated by an eligible net-metering system or community remote-

net-metering system during a billing period is equal to, or less than, the net-metering customer's

usage at the eligible net-metering-system site or the sum of the usage of the eligible credit-

recipient accounts associated with the community remote-net-metering system during the billing

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

the net-metering customer's usage on accounts at the eligible net-metering-system site, or shall be

used to credit the eligible credit-recipient's electric account.

     (4) If the electricity generated by an eligible net-metering system or community remote-

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 or the sum of the usage of the eligible credit-

recipient accounts associated with the community remote-net-metering system during the billing

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period, the customer shall be paid by excess renewable net-metering credits for the excess

electricity generated up to an additional twenty-five percent (25%) beyond the net-metering

customer's usage at the eligible net-metering-system site, or the sum of the usage of the eligible

credit-recipient accounts associated with the community remote net-metering system during the

billing period; unless the electric-distribution company and net-metering customer have agreed to

a billing plan pursuant to subdivision (2).

     (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 any renewable

net-metering credits or excess, renewable net-metering credits provided to accounts associated

with eligible net-metering systems or community remote-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 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS -- NET METERING

***

     This act would make educational institutions and nonprofit corporations established

pursuant to chapter 6 of title 7 eligible for net-metering financing arrangements.

     This act would take effect upon passage.

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