1. Small Renewable Generators Tony Marciano Public Utility Commission of Texas May 2, 2007 (512) 936-7356 tony.marciano@puc.state.tx.us

2. Regulatory Background Wholesale competition began in Texas in 1995 upon enactment of a law requiring open transmission access. In 1999, the Texas Legislature passed restructuring legislation that contemplated customer choice by January 1, 2002. Legislative Response to Need for New Capacity A customer is entitled … to on-site distributed generation.” PURA §39.101(b)(3).

3. Chronology 10/98--Texas’ DG initiative commenced after a summer peak capacity squeeze 2/99--DG interconnection guidelines adopted 6/99--enactment of statute giving all customers right to “on-site” DG 12/99--completed initial rulemaking

4. Chronology, cont’d. 11/00--completed DG Interconnection Manual 12/00--DG rule amendments adopted 1/01--Pre-certification document approved by the Commission

5. List of Approved Nationally Recognized Testing Laboratories (NRTL) Underwriters Laboratories Inc. 333 Pfingsten Road Northbrook, IL 60062-2096 847-272-8800 Wyle Laboratories, Inc. 7800 Highway 20 West P.O. Box 07777 Huntsville, Alabama 35807 256-837-4411

6. DG Rules Adopted 12/99 25.211 adopted to address administrative issues. 25.212 adopted to address technical issues.

7. 25.211, con’t Standardized interconnection application and processing requirements. –All utilities must use a standard Commission- approved interconnection application form. –Applications for interconnection must be processed on a nondiscriminatory basis. –Interconnection of a pre-certified unit must be processed in 4 weeks. –Interconnection of any other type of unit must be completed in 6 weeks.

8. 25.211, con’t Pre-interconnection studies. –May be conducted by a utility to evaluate the system impacts of a proposed interconnection. –Study may not involve evaluation of design of a pre-certified units. –May not take more than 4 weeks. –Must evaluate both costs and benefits of interconnection. –Customer must be provided with estimate of study cost before study begins.

9. 25.211, con’t If interconnection will require substantial upgrades, the utility shall provide the customer an estimate of the cost of upgrades and upgrade schedule. Customer may elect to proceed with interconnection but must pay for upgrades. Interconnection must be completed within 2 weeks of completion of upgrades.

10. 25.211, con’t An interconnected DG unit may be disconnected –Upon expiration of interconnection agreement –For non-compliance with technical requirements of 25.212 –In case of emergency where continued interconnection will endanger persons or property, for example as necessary to conduct system repairs.

11. 25.211, con’t Reporting requirements –Utility must maintain records of interconnection applications –By March 30th of each year, each utility must file a DG report for the preceding year that identifies each DG facility interconnected to the utility’s system and status of previously interconnected units.

12. 25.211, con’t Commission rules provide for expedited handling of interconnection disputes. –Attempt to resolve informal disputes in 20 days. –Unresolved complaints to be presented to the Commission at the next available meeting.

13. Limitation on sale of electricity PURA §39.105: After January 1, 2002, a transmission and distribution utility may not sell electricity or otherwise participate in the market for electricity except for the purpose of buying electricity to serve its own needs. A DG applicant does not have the right to expect payment from the TDU for energy generated by the customer’s DG project; it is the responsibility of the DG owner to market the energy produced from the DG facility. The DG owner has the right to sell the energy, through a Qualified Scheduling Entity (QSE), to any power generation company or Retail Electric Provider (REP) that agrees to buy it, after January 1, 2002.

14. Limitation on sale of electricity, con’t Substantive Rule §25.242(h)(4): Each electric utility shall offer qualifying facilities using renewable resources with an aggregate design capacity of 50 kilowatts or less the option of interconnecting through a single meter that runs forward and backward. Substantive Rule §25.242(c)(4): Electric utility — An integrated investor-owned utility that has not unbundled in accordance with Public Utility Regulatory Act §39.051.

15. SUBSTANTIVE RULES §25.212(j) Metering : The utility may supply, own, and maintain all necessary meters and associated equipment to record energy purchases by the customer and energy exports to the utility system. The customer shall supply at no cost to the utility a suitable location on its premises for the installation of the utility's meters and other equipment. If metering at the generator is required in such applications, metering that is part of the generator control package will be considered sufficient if it meets all the measurements criteria that would be required by a separate stand alone meter.

16. DG Activities

17. Utilities DG Activities

18. Disputes No formal complaints have been brought to the PUC Issues may exist with co-ops and munis not subject to PUC jurisdiction

19. List of Approved Nationally Recognized Testing Laboratories (NRTL) Underwriters Laboratories Inc. 333 Pfingsten Road Northbrook, IL 60062-2096 847-272-8800 Wyle Laboratories, Inc. 7800 Highway 20 West P.O. Box 07777 Huntsville, Alabama 35807 256-837-4411

20. Information on the Web http://www.puc.state.tx.us/electric/business/ dg/dg.cfm