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:

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

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

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

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purposes of this chapter:

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

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

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renewable distributed generation interconnection to the distribution system for a renewable

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

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

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within title 39.

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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estimate.

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

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

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

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

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

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

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

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

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

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public utilities commission.

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

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

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

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

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determined by the public utilities commission.

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

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

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

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

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

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earlier interconnecting renewable energy customer as determined by the public utilities

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commission.

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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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;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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metering system site.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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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

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

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

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

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

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metering system site.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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facilities to the extent there is any uncertainty or disagreement.

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

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

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

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

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

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

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

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financing arrangement pursuant to subdivision (7).

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

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

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

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

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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

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

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

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the designated net metered accounts.

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

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

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

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established in this chapter.

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

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

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metered.

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

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

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

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of the state.

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

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

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time, or involves a different type of renewable energy.

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

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

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

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board of the city of Providence.

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

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

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

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

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multiplied by the sum of the distribution company's:

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

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metering customer;

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      (ii) Distribution kilowatt hour charge;

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      (iii) Transmission kilowatt hour charge; and

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      (iv) Transition kilowatt hour charge.

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

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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).

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

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

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

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

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generator shall apply:

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

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

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

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

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

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

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month (12) period:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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credits to carry forward into following billing period.

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

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

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

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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.

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

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

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

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

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

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

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

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

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

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

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metering credits.

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

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

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

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

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

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

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

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

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

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

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reflected on customer bills.

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

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

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

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interconnection or net metering applications submitted and any interconnection impact studies

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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

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     This act would prohibit electrical distribution companies from charging an

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

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

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

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

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

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

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

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

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do not directly participate in the wholesale markets.

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

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

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

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purposes.

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

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interconnection or net metering applications submitted and any interconnection impact studies

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issued on or after January 1, 2015.

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