Title 39
Public Utilities and Carriers

Chapter 26.2
Distributed Generation Standard Contracts

§ 39-26.2-7. Standard contract — Form and provisions.

The following process shall be implemented to establish the non-price terms and conditions of the standard contract:

(1) A working group (“contract working group”) shall be established and supervised by the board, consisting of the following members: (i) The director of the office of energy resources; (ii) A designee from the division of public utilities and carriers; (iii) Two (2) designees of the electric distribution company; (iv) Two (2) individuals designated by the office of energy resources who are experienced developers of renewable-generation projects; (v) One individual designated by the office of energy resources who represents a customer of the electric distribution company; and (vi) A lawyer designated by the office of energy resources who has at least three (3) years of experience in negotiating and/or developing power-purchase agreements. With respect to the lawyer designated in (vi), the electric distribution company shall enter into a cost-reimbursement agreement with the lawyer, to compensate the lawyer for the time spent serving in the contract working group at the reasonable hourly rate negotiated by the office of energy resources. The costs incurred by the electric distribution company under the reimbursement agreement shall be recovered in rates by the electric distribution company in the year incurred or the year following incurrence through an appropriate filing with the commission. The contract working group shall be an advisory group that is not to be considered to be an agency for purposes of the administrative procedures act or any other laws pertaining to public bodies.

(2) The contract working group shall work in good faith to develop standard contracts that would be applicable for various technologies for both small and large distributed-generation projects. The standard contracts should balance the need for the project to obtain financing against the need for the distribution company to protect itself and its distribution customers against unreasonable risks. The standard contract should be developed from contracting terms typically utilized in the wholesale power industry, taking into account the size of each project and the technology. The standard contracts shall provide for the purchase of energy, capacity, renewable energy certificates, and all other environmental attributes and market products that are available, or may become available from the distributed-generation facility. However, the electric distribution company shall retain the right to separate out pricing for each market product under the contracts for administrative and accounting purposes to avoid any detrimental accounting effects or for administrative convenience, provided that such accounting, as specified in the contract, does not affect the price and financial benefits to the seller as a seller of a bundled product. The standard contract also shall:

(i) Hold the distributed-generation facility owner liable for the cost of interconnection from the electric-distribution facility to the interconnect point with the distribution system, and for any upgrades to the existing electric-distribution system that may be required by the electric distribution company. However, a distributed-generation facility owner may appeal to the commission to reduce any required system upgrade costs to the extent such upgrades can be shown to benefit other customers of the electric distribution company and the balance of such costs shall be included in rates by the electric distribution company for recovery in the year incurred or the year following incurrence;

(ii) Require the distributed-generation facility owner to make a performance guarantee deposit to the electric distribution company of fifteen dollars ($15.00) for small distributed-generation projects or twenty-five dollars ($25.00) for large distributed-generation projects for every renewable energy certificate estimated to be generated per year under the contract, but at least five hundred dollars ($500), and not more than seventy-five thousand dollars ($75,000), paid at the time of contract execution;

(iii) Require the electric distribution company to refund the performance-guarantee deposit on a pro-rated basis of renewable energy credits actually delivered by the distributed-generation facility over the course of the first year of the project’s operation, paid quarterly;

(iv) Provide that if the distributed-generation facility has not generated ninety percent (90%) of the output proposed in its enrollment application within eighteen (18) months after execution of the contract, the contract shall be terminated and the performance guarantee shall be forfeited. An eligible, small-scale, hydropower-distributed-generation facility that has not generated ninety percent (90%) of the output proposed in its enrollment application within forty-eight (48) months after execution of the contract shall result in the contract being terminated and the performance guarantee being forfeited. An eligible anaerobic-digestion-distributed-generation facility that has not generated ninety percent (90%) of the output proposed in its enrollment application within thirty-six (36) months after execution of the contract shall result in the contract being terminated and the performance guarantee being forfeited. Any forfeited performance-guarantee deposits shall be credited to all distribution customers in rates and not retained by the electric distribution company;

(v) Provide for flexible payment schedules that may be negotiated between the buyer and seller, but shall be no longer than quarterly if an agreement cannot be reached;

(vi) Require that an electric meter that conforms with standard industry norms be installed to measure the electrical energy output of the distributed-generation facility, and require a system or procedure by which the distributed-generation facility owner shall demonstrate creation of renewable energy credits, in a manner recognized and accounted for by the GIS; such demonstration of renewable energy credit creation to be at the distributed-generation facility owner’s expense. The electric distribution company may, at its discretion, offer to provide such a renewable energy credit measurement and accounting system or procedure to the distributed-generation facility owner, and the distributed-generation facility owner may, at its discretion, use the electric distribution company’s program, or use that of an independent third party, approved by the commission, and the costs of the measurement and accounting are paid for by the distributed-generation facility owner.

(vii) All distributed-generation projects that have executed contracts will be required to submit quarterly reports on the progress of the project to the distribution company and the office of energy resources. Failure to submit these quarterly progress reports may result in the termination of the contract.

(3) If the contract working group reaches agreement on the terms of standard contracts, the board shall file the contracts with the commission for approval. If there are any disagreements, they shall be identified to the commission. The commission shall review the standard contracts for conformance with the standards set forth in subsection (2). Should there be any disputes, the commission shall issue an order resolving them. To the extent the commission needs expert assistance to resolve any disagreements noted in the filing, the commission is authorized to hire a consultant to assist it in the proceedings, the costs of which shall be recovered from electric distribution customers pursuant to a uniform factor established by the commission in rates for recovery by the electric distribution company in the year incurred or the year following incurrence, as requested through a filing by the electric distribution company. The commission shall issue an order approving standard forms of contract within sixty (60) days of the filing.