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 Utility
Connections
Net
Metering
Most states now require electric utilities
to offer net metering service – a relatively simple way
for utilities to measure the amount of electricity generated on
their power lines by residential energy systems. (Notable states
that still lack net metering include Midwestern states Nebraska,
Kansas, and South Dakota. See the
Database of State Incentives for Renewable Energy to learn
about net metering and other important policies in your state).
Net metering allows customer-generators
to spin their meters backward when producing more electricity
than they’re consuming. This transaction is a good deal
for customers because they essentially receive full retail value
for their excess generation rather than a lower wholesale rate
utilities might pay otherwise. The heightened value of the generation
can considerably shorten the payoff period for a small wind turbine
or other residential energy system.
Net metering generally involves the use
of a single, reversible meter - similar to those used by most
residential customers and many small commercial and agricultural
customers. In most states, utilities are allowed to claim any
excess generation left over at the end of an annual billing cycle
without reimbursing the customer.
From utilities' perspective, net metering
eases the administrative burden of handling small, customer-owned
generation, eliminating the need to read a second meter and issue
monthly checks for purchases of small amounts of electricity.
Residential generators may also reduce the need to upgrade distribution
lines because they produce power close to where it’s needed.
But some utilities oppose net metering
on principle because granting customers retail credit for their
excess generation reduces electric sales. However, a utility may
gain financial benefits from residential systems if the power
they contribute helps avoid building new generating plants or
power lines.
Even when measured as an absolute loss
of revenue, without accounting for utilities’ avoided expenses,
the "cost" of net metering for utilities is minimal
even for market penetration several orders of magnitude larger
than any state has experienced to date.
Model: View
the attached language
For Example: Iowa,
Massachusetts,
and North
Dakota require utilities to purchase or give customers credit
for excess generation at the end of billing cycles.
Line
Extension Policies
Extending electrical transmission and distribution
lines to remote, unserved areas is expensive -- averaging about
$10 per foot, though varying widely depending upon terrain and
the type of line extension.
Existing utility customers typically subsidize line extensions
for new hookups. These subsidies have been rationalized as a means
for capturing economies of scale through greater numbers of customers,
or as development incentives in urban and rural areas. Under most
line extension policies, customers are granted a free footage
allowance within which the costs are borne entirely by the utility
(and, ultimately, its customers). Additional subsidies are often
available for distances exceeding the free footage allowance.
Reducing or eliminating line extension subsidies would enhance
the financial appeal of residential renewable energy systems in
remote areas. Owners of new homes confronted with the actual costs
of a line extension would likely consider the benefits of generating
their own power. Assuming a cost
of $10 per foot, the reduction of a free footage allowance from
1,200 feet to 300 feet shifts $9,000 in costs from existing ratepayers
to the new customer.
Other changes to line extension policies
that could increase the use of renewable energy include: 1) requiring
utilities to inform customers that remote power systems are an
alternative to costly line extensions and 2) allowing utilities
to market, finance and install remote power systems rather than
extend lines.
Model:
View
the attached language.
For Example: The
Texas Public Utility Commission website offers a brochure
that tells customers about alternatives to line extensions, including
wind and solar stand-alone systems, and helps them assess whether
those alternatives are feasible.
In New
Mexico, electric utilities are required to provide information
on alternative energy systems to remote customers with less than
a 25-kW load who request line extensions. This requirement applies
when the cost of the requested line extension is more than 15
times the estimated annual revenue from the line extension.
In
Arizona, homeowners who would need expensive line extensions
can lease photovoltaic systems instead.
Interconnection
agreements
Utilities are responsible for the safety
and reliability of the grid, and maintain strict control over
the terms and conditions for interconnection by nonutility generators.
But sometimes they impose unnecessarily expensive requirements
on residential energy systems. Owners of small generators, who
cannot negotiate on an equal footing with the utilities, can be
discouraged from pursuing projects.
Standardized interconnection requirements
can eliminate the need for individual negotiations, reduce transaction
costs, and ensure equitable treatment for customer-owned systems.
The development of predefined interconnection requirements can
be simplified by relying on nationally recognized standards such
as those developed by the Underwriters Laboratories. Institute
of Electrical and Electronic Engineers, and the National Fire
Protection Association, which drafted the National Electrical
Code. (See National
Wind Coordinating Committee State Policy Options, pp. 61-62)
Model: See the National Association
of Regulatory Utility Commission's Model
Distributed Generation Interconnection Procedures and Agreement.
For Example:Southern California
Edison has a rule
governing the interconnection of small wind energy systems, and
a 1-page
application for solar and wind generators.
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