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Regulations affecting DG are being developed in concert with state electric industry restructuring laws. A review of recent regulations by state follows.

Arizona  Arkansas  California  Connecticut  Delaware  Illinois  Maine  Maryland  Massachusetts  Michigan  Montana  Nevada  New Hampshire  New Jersey  New Mexico  New York  Ohio  Oklahoma  Oregon   Pennsylvania  Rhode Island  Texas  Vermont  Virginia

Arizona (AZ)

In August 1998 Arizona Corporation Commission (ACC) approved final rules for restructuring. The ACC is on a fact track to accommodate DG. The ACC was approached by the Distributed Energy Association of Arizona in May 1999 who suggested that they consider DG. This resulted in a first workshop held on June 28 1999. It was sponsored by the ACC Utilities Division to consider advancements in distributed generation technology and requirements for interconnecting to the electric utility grid from a retail competition paradigm in Arizona.

Out of this workshop came a special open meeting at the end on August 30, 1999 to consider distributed generation and interconnections (DGI). This meeting resulted in the formation of a DGI workgroup and associated committees. As a result three committees were established: an Interconnections Standards Committee, a Siting, Certification and Permitting Committee, and an Access, Metering and Dispatch Committee. Committee meetings will be held in September and October and two workgroup status meetings are scheduled in October. The ACC aims to keep this process on track and by the end of this year arrive at some recommended rules for DG.

On October 4, 1999 the ACC held a special open meeting to report DGI Workgroup progress. The minutes of this meeting are reproduced below. The progress for each committee was as follows:

Interconnection Standards Committee: This committee has assembled and discussed existing and emerging national, industry and regulatory interconnection standards. It was concluded that most utilities in Arizona already have interconnection standards that accommodate qualifying facilities as defined by PURPA. APS, SRP and TEP agreed to develop and supply a draft interconnection document for committee consideration. The document has been provided and is a composite of the three utilities¡¯ interconnection standards with some negotiated modification where there were significant differences. This committee is currently reviewing the draft document.

The Interconnection Standards committee has concluded that interconnection of distributed generators to the utility system utilizes three distinct technologies: inverter, synchronous generators and induction generators. Based upon protection issues presented by application of these three distinct technologies this committee has grouped Distributed Generation into four classes: 50 KW or less, 51-300 kW, 301-5 MW and greater than 5 MW. Attendees questioned the choice of 300 kW as opposed to 500 kW for the breaking point between Class II and Class III. A request was made for additional inverter technology manufacturer representation on the committee. The new technologies are being UL and ETL type tested on an equipment manufacturer basis. However, attendees raised concerns that complete systems were not being type tested.

Siting, Certification & Permitting Committee: This committee reported agencies and various local jurisdictional requirements already assume responsibility for air quality, fuel supply, noise and safety compliance. It is generally believed that application for most types of distributed generation technology will comply with such pre-existing requirements. Attendees raised a concern regarding differing requirements for different countries or local jurisdictions. For example, Maricopa County is considering new special use permit language that addresses generating plants. Secondly, there was concern raised regarding the aggregate effects of locating multiple unites in a common geographical area. The committee was encouraged to explore the siting topic with other countries and municipalities not participating in the process.

This committee¡¯s attention is now focused on considering two key processes. Future committee meeting will be devoted to considering a process for pre-certification of distributed generation systems and an application process for consumers desiring to install distributed generation technology. The informational content of the processes will be shaped by needs identified by the Access, Metering & Dispatch Committee and the Interconnection Standards Committee.

Access, Metering & Dispatch Committee: This committee began by conceptualizing different operational scenarios that could emerge form deployment of distributed generation. The committee¡¯s assigned workshop were then repackaged into two categories - tariff issues and operational issues. As a result this committee has organized into a tariff subcommittee and an operation s subcommittee. This committee has conceptualized unit sizes into three groups for discussion purposes: less than 1 MW, 1-10 MW and greater than 10 MW. Whether a Utility Distribution Company has an obligation under the new Arizona Electric Competition rules to accommodate an interconnection for Distributed Generation purposes was raised by the audience. This committee has not yet reached a conclusion regarding this issue. 

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Arkansas (AR)

Arkansas passed their restructuring Act in April 1999. There is nothing specific in their legislation covering DG. Any potential legislation would be worked through the Arkansas Energy Office.

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California (CA)

Rulemaking (R.98-12-015) was initiated in December 1998 to consider further structural and regulatory reforms related to distributed generation and the broader issue of competition in distribution service. The Order Instituting Rulemaking (OIR) called for a collaborative effort between the CPUC, the Energy Commission and the Electricity Oversight Board (EOB) to determine the scope of the issues to be addressed and the procedure for doing so. Energy Commission Docket 99-DIST-GEN(1) was opened as a result. All comments are publicly displayed on the CPUC website. Under the OIR the CPUC covered a broad range of issues. These included:

Whether they should have policies governing Distribution Competition as well as Distributed Generation.
Where has distributed competition already emerged in California and what has been the market penetration?
Should the CPUC implement any regulatory reforms to adequately address the disincentives currently existing towards DG?
What is the Commissions role in DG?
How can integrity, reliability, safety and efficiency of the T&D system by affected by DG?
What effects would occur on the regulatory jurisdiction if more competition in DG is allowed?
What are the environmental impacts of increased competition in DG?
What are the ratemaking consequences of DG?
Does competition in electric distribution service have implications on the delivery infrastructure for natural gas?

The CEC in California is still in the process of releasing the proposed rulemaking as a rule of this process. The original date for release was August 16, 1999, at the time of writing it is still not available.

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Connecticut (CT)

An Act Concerning Electric Restructuring was signed in April 1998 with no specific provisions for DG. Connecticut has net metering for renewables and cogeneration, this legislation will be replaced by an expended rule at the outset of 2000. The new rule expends the eligible fuel types to include solar, wind, hydro, fuel cells, and sustainable biomass. The policy is to accommodate whatever the market will bear as they open the retail market to competition.

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Delaware (DE)

The "Electric Utility Restructuring Act of 1999" was passed in March this year. As in the case of CT there is nothing specific in the law to disallow DG. The State of Delaware does not have any DG projects underway. The view taken by Delaware PSC is to let the marketplace find its own niche and then the PSC will respond on a case by case basis or other wise if necessary. The Act as it stands has addressed and allows for energy net metering, but limits the eligible fuel types to renewables. The rules are in place to allow an entity to connect generation resources to the grid without the UDC putting up many barriers. The PSC has taken into account the generally accepted standards and expects to use these. UDC will not be allowed to charge fees, and costs should be incremental.

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Illinois (IL)

Illinois passed Public Act 91-0050 on July 16, 1999. This Act encourages the development of co-generation and self-generation of electricity.

On July 16, 1999 the 91st Illinois General Assembly legislated amendments to their Public Utilities Act by passing Public Act 91-0050. This was done to encourage the development of cogeneration and self-generation of electricity in the state. The regulations specifically address how self-generators are to be served and charged by distribution companies.

The new rules mandate utility distribution companies serving at least 1 million Illinois customers to provide delivery services for cogenerated or self-generated power to other retail industrial customers. The cost of providing these delivery services are set by the Energy Commission; charges are cost-based and include the costs of owning, operating and maintaining T&D facilities.

Self-generated electricity consumed on the generation premises, or self-generated electricity sold to a third party and distributed through the retail customer¡¯s own electrical distribution facilities, is exempt from transition charges or exit fees. For example, an office park which produces electricity with distributed generation may sell power to individual office park occupants without transition charges, provided the power is distributed using the office park¡¯s own distribution system.

Self-generators are exempt from the definition of "alternative retail electric supplier". Therefore they do not need to obtain a certificate of service authority from the Energy Commission. This means distributed resources used by individual customers can be installed without significant permitting and licensing costs. However, they still must obtain an environmental operating permit for any distributed generation unit.

By specifically mandating how distributed resources are to be treated, Illinois has guaranteed the right to interconnection. They have also established the principles governing fees for interconnection and use of the T&D system, mitigating uncertainty for those contemplating installation of distributed resources.

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Maine (ME)

Restructuring legislation was passed in May 1997; retail access is about to be introduced in March 2000 and the PUC is currently concentrating on this. As in CT and DE there are no rules within the restructuring act on DG and as yet, no one has sought such rules. There are some large industrial customers for whom standby rates are an issue and these are being determined. Net metering was there before under the PURPA but it is not being enforced any more. Maine PUC remains responsive to public demand and would examine DG if and when the public demands it.

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Maryland (MD)

Restructuring legislation was passed in April 1999. As in the case of CT, DE, and ME, there is nothing specific within the act in relation to DG. Maryland has a law since 1997 that allows for net metering for PV for residential and schools customers. Currently, certification and siting issues are brought to the PSC for approval and cogeneration is dealt with on a case by case basis. The Maryland PSC has oversight of power and are not currently working to put other rules that would affect DG in place.

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Massachusetts (MA)

In the state of Massachusetts issues relating to interconnection are called qualifying facilities (QF). Cogeneration in MA has been controlled within PURPA (Public Regulatory Policies Act, 1978) guidelines to date. However that is set to change as the Department of Telecommunications and Energy has solicited comments in response to the Notice of Proposed Rulemaking (D.T.E. 99-38) which was opened on April 27, 1999.

The rulemaking governs sales of electricity products by small power producers and cogenerators to utilities and vice versa - "QF regulations". The Department¡¯s proposed QF Regulations are intended to replace the current regulations and comply with the changes brought about by the Massachusetts Electricity Restructuring Act of 1997. Under the proposed rulemaking the QF regulations are designed to: (1) price QF power on a market basis and (2) redefine the responsibilities associated with interconnecting QF and on-site generators to an electric distribution company¡¯s system. The rulemaking order is expected before the end of 1999. All documentation on the rulemaking including comments can be found on the Massachusetts PUC website. As these rules and policies are in the making MA does not want rulemaking to be an impediment to market use of DG in an appropriate way, particularly for emergency power and small DG units that desire to be interconnected.

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Michigan (MI)

With the decision in June 1999 by the MI Supreme Court that the MPSC does not have the authority to mandate retail wheeling, a series of 6 Bills were introduced that would restructure the electric power industry, in an attempt to keep restructuring alive in MI. Consumers Energy and Detroit Edison are voluntarily restructuring according to the PSC order of March 1999. Neighboring states, Illinois and Ohio, having restructured have lowered process making MI¡¯s the highest priced electricity in the Midwest States. Under this ongoing restructuring process DG has not been a significant issue to date.

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Montana (MT)

Montana enacted SB 390 the Electric Utility Industry Restructuring and Customer Choice Act in April 1997. Under SB 409 enacted earlier this year Montana PUC allows for net metering for solar, wind or hydro power, for all customer classes. Under this new legislation MT has also created some rule making responsibilities for DG.

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Nevada (NV)

A small net metering program was established covering solar and wind power to 10kW since 1997. A comprehensive restructuring bill (SB 438, which is an amendment to the 1997 restructuring legislation, AB 366) was passed in May 1999. This restructuring legislation does not call for anything specific in relation to DG. The state is moving toward an open market and is at the outset of this implementing the restructuring process. It is expected that there will be some DG provision in the new distribution tariff that they are working on.

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New Hampshire (NH)

A net metering law was enacted to allow customers with 25 kW or less renewable generation to utilize net metering since June 1998. The timetable for distribution generation issues activities, such as, environment regulations have been suspended due to federal court adjoinment in New Hampshire. If the public service company of New Hampshire settlement is approved then that adjoinment will end and New Hampshire PUC will return to examining distributed generation issues.

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New Jersey (NJ)

An interim net metering program was put in place in 1999 to monitor metering, safety, and power quality standards for wind & solar PV systems. In brief, the main provisions of the net metering standard are:

All electric power suppliers and basic generation service providers must offer net metering at non-discriminatory rates to their residential and small commercial customers that generate electricity.
Interconnection costs shall be paid by the customer-generator and shall be in addition to any line extension charge required to meet service requirement. Interconnection shall meet IEEE, NEC or other applicable standards
The maximum allowable capacity per customer-generator is 100 kW.

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New Mexico (NM)

The Electric Utility Restructuring Act of 1999 was enacted in April this year. NM PRC Order 2847 (9/7/99), facilities net metering for renewables and cogeneration for all customer classes up to 10 kW. NM is not pursuing any other DG issues at this time.

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New York (NY)

An initiative was undertaken on standardized/ interconnection requirements. Through a collaborative effort of parties, including utilities, manufacturers of the distributed generation technologies, and other interested parties, two reports addressing interconnection requirements issues were prepared and submitted to the staff of the NYPSC. The reports were in response to a request from the chairman of the commission that staff strive to standardize and streamline existing interconnection requirements, while not impacting the safety and reliability of New York¡¯s infrastructure and not adding to ratepayer costs. Both documents are available on the NYPSC website. The staff of the NYPSC prepared a proposal based on the reports, and this proposal is currently available for comment until 20 September 1999. When comments have been received and evaluated, recommendations will be considered by the NYPSC.

As of this Fall, NYPSC now encourages residential customers in the installation and development of safe clean renewable photovoltaic (PV) electric generating facilities. New York State Income Tax Credits are also available as an incentive. Residents may now benefit from the sale and direct delivery of their PV generation right in their neighborhoods. Customers can choose to self generate with up to 10 kW of clean photovoltaic technology. Details of this program are available on the NYPSC website at

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Ohio (OH)

Restructuring legislation, SB 3 was enacted and sent it to the governor for signature in June 1999. Under SB 3 Ohio has a liberal net metering rule effective October 1999. The rule covers all DG types, solar, wind, biomass, landfill gas, hydro, microturbines or fuel cells. All customer classes are eligible and there is no size limit on units. This is the extent to which DG is taken in to consideration within the restructuring legislation, the PUC is now in the process of writing rules to implement the Act and anticipate examining DG concerns more fully in the future.

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Oklahoma (OK)

The Electric Restructuring Act was passed in 1997, and the Oklahoma Corporation Commission (OCC) was directed to study the issues and develop a framework to implement retail competition. The OCC released the final report of the Joint Electric Utility Task Force on September 29, 1999. During the process of compiling the Task Force Report DG was discussed in a general way. The OCC has yet to establish a date for implementing issues under the Task Force. They anticipate writing rules in approximately 6 months. Oklahoma has net metering since 1990 for renewables and cogeneration under PURPA.

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Oregon (OR)

The restructuring bill, S.B. 1149, was passed and the governor was expected to sign it. The bill is somewhat different from the other States that have passed restructuring legislation in that residential consumers will not have retail access, but will be offered a choice of pricing plans by the utilities and regulated by the PUC. Also passed in the restructuring legislation this year a net metering law for customer-installed generators less than 25kW (and limited customer generators to one half of one percent of the utility's single-hour peak).

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Pennsylvania (PA)

At the end of 1996, the Electricity Generation Customer Choice and Competition Act, was enacted. PA brought in net metering in 1998 for renewables only, although fuel cells are included. This net metering applies to all customer classes 10kW and under and there are not restrictions on overall enrollment.

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Rhode Island (RI)

The Rhode Ireland Utility Restructuring Act of 1996 (HB 8124) was enacted allowing retail choice beginning July 1997 and continuing in phases. RI allows for net metering since 1998 for renewables and fuel cells. They are not pursuing any specific DG initiatives at this time, RI PUC is leaving it to the market for the moment.

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Texas (TX)

Texas has considered DG at length. More information is available on the PUC's website. They ratified their Proposed Interconnection Agreement on 13th September, 1999. Texas has net metering law in place since 1986 for renewables only.

On Feb 4 1999, the Public Utility Commission of Texas adopted interconnection guidelines for distributed generation and requested that staff continue its investigation of distributed resources. The task force was directed to complete two tasks:

The distributed generation interconnection task force was requested to establish a list of utility contact persons, establish a reporting procedure for requests for interconnection, and adopt a standard agreement.
The standard performance contracting task force was requested to establish a standard performance contracting (SPC) approach for Texas to address peaking resource needs in 2000.

The distributed generation interconnection task force did not complete all its tasks, however it has now become the subject of a rulemaking proceeding in project No. 21083. The task force was to continue work in three areas, (1) technical standards, (2) a standard agreement and (3) tariffs and other policy issues, until it met again.

The standard performance contracting task force did not complete its major task, however this task has been rolled over into Project No. 21074.

Four subgroups have been formed examine a variety of issues: (1) a standard offer task force will establish statewide standards for the SPC, (2) the task force on statewide implementation of energy efficiency programs will address targeted programs and market transformation programs (3) a group will meet to discuss energy efficiency funding during the transition period (prior to 1/1/02), and (4) a group will meet to discuss energy efficiency funding after 1/1/02.

The main points arising from the general discussion on DG in Texas on July 21, 1999 were centered on connection to grid requirements and the speed at which rulemaking was necessary. Other issues included allowing for a review of the IEEE standard when ready and the differentiation necessary between standards for closed transition and parallel operation.

Also discussed was a draft of the "1999 Distributed Generation Interconnection Guidelines" most issues arising from this were in the following subject areas: (a) standard certification, (b) interconnection standardization (c) engineering analysis & study & costs (d) tariff availability; application and (e) application of guideline requirements: parallel operation vs. export of power vs. size. A draft interconnection agreement is available on the Texas PUC website, it was posted on 08/12/99. This draft agreement was approved by the PUC in September. Net metering for QF issues were also mentioned with the main question centering on what tariffs are necessary now, and what will be needed in 2002.

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Vermont (VT)

Vermont issued a comprehensive regulatory order to deregulate the state electric industry in December 1996. Since then several restructuring bills have been considered but no action has been taken. In order to encourage more small scale deployment of renewable resources within the state of Vermont, on April 28, 1998, the General Assembly enacted into law Act no. 136: "An Act Relating to Issuance of Permits for Self-Generation of Electricity" (H.605). This Act allows electric utility customers who use electrical generating systems, that are less than 15 kilowatts in capacity and rely on a renewable form of energy, or that are agricultural systems of no more than 100 kilowatts utilizing an anaerobic digestion process to generate electricity, to employ a "net metering system" in the purchase and sale of electricity to and from an electric utility.

They found that the use for net metering for small self-generating electric systems is in the public interest in order to: encourage private investment in renewable energy resources; stimulate the economic growth of this state; and enhance the continued diversification of the energy resources used in the state.

Then in April 1999, the Public Service Board (PSB) in Vermont entered Docket No. 6181: "Investigation into the use of a Net Metering System for the Purchase and Sale of Electricity from Small Electrical Generating Systems to and from Electric Companies. Under this Docket Vermont PSB states as its policy:

To assure that Vermont can meet its energy service need in a manner that is adequate, reliable, secure and sustainable; that assures affordability and encourages the state¡¯s economic vitality, the efficient use of energy resources and cost effective demand-side management; and that is environmentally sound.
To identify and evaluate on an ongoing basis, resources that will meet Vermont¡¯s energy service need in accordance with the principles of least cost integrated planning; including efficiency, conservation and load management alternatives, and wise use of renewable resources and environmentally sound energy supply.

The Docket also contains a recommendation that standards and procedures remain in effect until formal rules are established. These cover interconnection requirements.

"We recommend that the Board adopt a set of interconnection requirements, applicable to the net metered generation facilities under 15 kW, which provide reasonable assurance of safety and reliability¡­ With respect to generating facilities over 15 kW, we believe that the most effective and appropriate mechanism for reaching a mutual understanding of the respective roles and responsibilities of the generator and connecting utility, is an individually negotiated interconnection agreement. This agreement should be reached prior to Board approval. In addition to meeting interconnection requirements, applicants will be required to certify that they have general liability insurance¡­" (Docket No. 6181, pp.17).

The proposed interim order is consistent with the goals and recommendations of Vermont¡¯s CEP plan. Under this plan, Vermont has committed itself to meet its energy needs in a sustainable and environmentally sound manner. Specifically, the CEP calls for the promotion of wind, solar, fuel cell and methane energy technologies. In addition, the CEP recommends the adoption of policies that encourage distributed utility planning.

The Docket concludes with a recommendation that in approximately one year from the issuance of the interim order, the Board should begin formal rulemaking proceedings.

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Virginia (VA)

In March 1999 the Virginia Electric Utility Restructuring Act was enacted. Net metering for solar, wind and hydro power for residential and commercial customers was introduced under this Act. The restructuring act included the provisions below which outline the responsibilities of the PUC for interconnection and permitting. The Act states:

The commission shall establish interconnection standards to ensure transmission and distribution safety and reliability, which standards shall not be inconsistent with nationally recognized standards acceptable to the Commission. In adopting standards pursuant to this subsection, the Commission shall seek to prevent barriers to new technology and shall not make compliance unduly burdensome and expensive. The Commission shall determine questions about the ability of specific equipment to meet interconnection standards.

Furthermore the Act states that:

The Commission shall consider developing expedited permitting processes for small generation facilities of fifty megawatts or less. The Commission shall also consider developing a standardized permitting process and interconnection arrangement for those power systems less than 500 kilowatts which have demonstrated approval from a nationally recognized testing laboratory acceptable to the Commission.

Virginia PUC is now concentrating on writing rules to implement the Restructuring Act.

Back to Top of Page was last updated March 16, 2005          © 2005, Resource Dynamics Corporation

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