Interconnection & Net Metering in Massachusetts

1. Interconnection & Net Metering in Massachusetts Massachusetts Department of Public Utilities Nathan Phelps, Electric Power Division

2. Disclaimer Comments reflect my personal observations, and do not necessarily reflect the position of the Commonwealth of Massachusetts, the Department of Public Utilities, or the DPU Commissioners Outline Background Basics D.P.U. 11-75 MA Department of Public Utilities

3. Department of Public Utilities (DPU) • DPU Mission Statement • The Department is responsible for oversight of investor-owned electric power, natural gas, and water industries in the Commonwealth; developing alternatives to traditional regulation; monitoring service quality; regulating safety in the transportation and gas pipeline areas; and for the siting of energy facilities. The mission of the Department is to ensure that utility consumers are provided with the most reliable service at the lowest possible cost; to protect the public safety from transportation and gas pipeline related accidents; to oversee the energy facilities siting process; and to ensure that residential ratepayers' rights are protected • Commission • Ann G. Berwick, Chair • Jolette A. Westbrook, Commissioner • David W. Cash, Commissioner Outline Background Basics D.P.U. 11-75 MA Department of Public Utilities

4. Interconnection MA Department of Public Utilities

5. Interconnection: Big Picture • Interconnection is the process by which an electricity generating facility is integrated into the electricity grid • Interconnecting facility cannot impact: • Safety; • Reliability; or • Power Quality Outline Background Basics D.P.U. 11-75 Engineering, Engineering, and Engineering MA Department of Public Utilities

6. Interconnection: Big Picture Cont. • For the distribution companies, interconnection is normally for distributed generation (“DG”) • Interconnection is technology neutral • NOTE: Interconnection does not determine how the owner of the facility will be compensated for the output of the facility Outline Background Basics D.P.U. 11-75 MA Department of Public Utilities

7. The Process in MA • Interconnection process is uniform for all four distribution companies in MA • Municipal light districts do not have to follow the standardized interconnection process • There is also an interconnection process at ISO-NE Outline Background Basics D.P.U. 11-75 MA Department of Public Utilities

8. Simplified Process • Translation • Applies to small projects (e.g. residential) with approved equipment Engineering Terms • For Projects: • 10 kW or less on single-phase radial service w/inverter • 25 kW or less on three-phase radial service w/inverter • 15 kW or less on spot network w/inverter may apply • Inverters must be IEEE 1547 compliant and tested at a national lab Outline Background Basics D.P.U. 11-75 Very Quick Process…Normally MA Department of Public Utilities

9. Expedited/Standard • EngineeringTerms • Expedited • Facilities that pass screens on radial circuits • Standard • All other projects • Translation • Expedited = complicated • Standard = very complicated • Expedited • Facilities that pass screens on radial circuits • Standard • All other projects Outline Background Basics D.P.U. 11-75 Can take a very long time MA Department of Public Utilities

10. Application Costs • Simplified Process = $0 • Expedited & Standard Process = $3/kW • Minimum of $300 • Maximum of $2,500 Outline Background Basics D.P.U. 11-75 MA Department of Public Utilities

11. Interconnection Studies • Studies can be: • Time consuming; and • Costly • Cost is borne by applicant Outline Background Basics D.P.U. 11-75 MA Department of Public Utilities

12. Other Costs • Utility Upgrade Costs • Applicant pays for all necessary upgrades • Can be very costly • Witness Tests • Depending on the interconnection process, applicant may have to pay for the Distribution Company to inspect the facility • Relatively inexpensive Outline Background Basics D.P.U. 11-75 MA Department of Public Utilities

13. Interconnection Milestones • Submit Application • Complete Studies (if needed) • Signed Interconnection Service Agreement (“ISA”) • Utility Upgrades (if needed) • Witness Test Outline Background Basics D.P.U. 11-75 MA Department of Public Utilities

14. D.P.U. 11-75: Interconnection NOI • CEC & DOER commissioned an interconnection report in 2011 • DPU opened an investigation in order to address interconnection issues in 2011 • Interconnection Working Group submitted a report to the DPU on 9/14/12 • DPU held an interconnection technical conference on 10/24/12 • Next steps TBD Outline Background Basics D.P.U. 11-75 MA Department of Public Utilities

15. Issues in D.P.U. 11-75 • Transparency • Application Volume • Interconnection Costs • State v. federal jurisdiction • Process review and redesign • High amounts of DG on circuits • Dispute resolution • Interconnection Education • Network Interconnections • Organization and staffing of Distribution Companies Objective “[E]nsure an efficient and effective interconnection process that will foster continued growth of distributed generation in Massachusetts” D.P.U. 11-75 at 2-3 Outline Background Basics D.P.U. 11-75 MA Department of Public Utilities

16. Questions?

17. Net Metering MA Department of Public Utilities

18. History of Net Metering in Massachusetts • Net metering in MA since 1982 • ≤ 30 kW systems • Expanded in 1997 • ≤ 60 kW systems • Significantly revised by the Green Communities Act in 2008 • Further amended by Session Law in 2010 • Recently amended by Session Law in 2012 Outline History Basics Key Qs MA Department of Public Utilities

19. Net Metering:Basic Concept • Net metering is an incentive program to encourage customers to install distributed generation • Customers offset own electricity usage • Customers are compensated for any electricity they generate and don’t use Outline History Basics Key Qs MA Department of Public Utilities

20. Net Metering: Basic Concept (Cont.) • If consumption exceeds generation, customer pays for net kWh consumed • If generation exceeds consumption, customer receives credit on bill for net excess generation Outline History Basics Key Qs MA Department of Public Utilities

21. Net Metering Example: Solar PV Facility on School • Illustrative Example • PV System generates60,000 kWh/month • School months • Electricity usage = 80,000 kWh • School is charged for 20,000 kWh • Summer months • Electricity usage = 10,000 kWh • School is credited for 50,000 kWh Outline History Basics Key Qs = Excess Generation MA Department of Public Utilities

22. How “Big” can we go? • Net metering system can be bigger than your load • No minimum load is required • Load can be “parasitic” Outline History Basics Key Qs Wind Turbine at Jiminy Peak Mountain ResortHancock, MA MA Department of Public Utilities http://www.panoramio.com/photo/13362450

23. How “Big” can we go?(Cont.) • Private entities • 2 MW perfacility • Facility = • DG on a parcel of land • 1 interconnection point • 1 utility meter • Cannot have multiple “facilities” on one parcel of land Outline History Basics Key Qs Tips MA Department of Public Utilities

24. How “Big” can we go?(Cont.) • Public entities • Can develop up to a total of 10 MW of NM • 2 MW perunit • Unit = • For wind- a turbine • For solar- an inverter (see D.P.U. 11-11-C) • For Agricultural and anaerobic digestion- engine or combustion turbine Outline History Basics Key Qs Tips MA Department of Public Utilities

25. Key Question:Who Can Be a Host Customer? • 220 C.M.R. § 18.02: • Host Customer means a Customer with a Class I, II, or III Net Metering Facility that generates electricity on the Customer’s side of the meter • Intentionally broad definition Outline History Basics Key Qs MA Department of Public Utilities

26. Host customer example Distribution Company School Outline History Basics Key Qs Name on Account =Host Customer Muni Acct MA Department of Public Utilities

27. Key Question:What is a Net Metering Credit? • Generation is tracked on a meter in kWh, but credits are a monetary amount • Excess generation (kWh) results in net metering credits • Net metering credit = $ credit • Credits offset charges on electricity bills • Credits never expire (they “rollover”) Outline History Basics Key Qs MA Department of Public Utilities

28. What is a Net Metering Credit?(Cont.) • Credits for wind, solar, and agricultural facilities are close to the retail rate Outline History Basics Key Qs MA Department of Public Utilities

29. Example: Calculation of Net Metering Credits Electricity (kWh) x Rate ($/kWh) = NMC ($) • Calculation of credits depends on the Host Customer’s rate class • Look at your electric bill • Illustrative Example: • Excess of 100 kWh • Components of rate class = $0.10/kWh • Credit = $10 Outline History Basics Key Qs Landfill in Easthampton, MA MA Department of Public Utilities

30. Key Question:What can a Host Customer do withNet Metering Credits? • Option 1 • Use the credit for the Host Customer’s electric bill • Option 2 • Host Customer can allocate credits to different accounts (yours or other customers) • Thus, generation in one location can offset electricity costs in another location(a.k.a. virtual net metering) Outline History Basics Key Qs MA Department of Public Utilities

31. What can we do withNet Metering Credits? (Cont.) Outline History Basics Key Qs Allocating monetary credits to electric bills MA Department of Public Utilities

32. What can we do withNet Metering Credits? (Cont.) NEMA WCMA SEMA MA Department of Public Utilities Allocation only in same: • Distribution company service territory; and • ISO-NE load zone

33. Key Question:How Much Net Metering in MA? • Statute: • 3% cap on “private” projects • 3% cap on “public” projects • Caps are based on the distribution company’s peak demand • Small net metering systems are exempt from the net metering caps Increased as of 8/3/12 Outline History Basics Key Qs MA Department of Public Utilities

34. Is There a Net Metering “Queue?” • Soon, but not yet • The DPU is required to implement a “System of Assurance” • The System of Assurance will enable customers to know whether they will be able to net meter in the future • Implementation is ongoing Outline History Basics Key Qs MA Department of Public Utilities

35. Nathan Phelps, EconomistMA Department of Public UtilitiesOne South StationBoston, MA(617) 305-3707nathan.phelps@state.ma.us Thank You

36. Who Can Be a Host Customer?(Further Explained) • Host Customer does not have to own: • The net metering facility; or • The property on which the facility is located • Host Customer has • an account with the utility; and • a net metering facility “behind the meter” Outline History Basics Key Qs MA Department of Public Utilities

37. Key Question:Can a 3rd Party own the Facility? • Third-Party Ownership is permissible in MA • See 220 C.M.R. 18.09(5) • Allows for power purchase agreements (PPAs) for distributed generation • Very common for governmental projects in order to monetize federal tax credits and depreciation Outline History Basics Key Qs MA Department of Public Utilities

38. Eligibility • 220 C.M.R. 18.06 states: • Distribution Companies shall not provide Net Metering services to a Host Customer who is an electric company, generation company, aggregator, supplier, energy marketer, or energy broker, as those terms are used in M.G.L. c. 164, §§ 1 and 1F and 220 CMR 11.00 • Host customers must self-certify that they are not one of the above entities Outline History Basics Key Qs Additional Information MA Department of Public Utilities

39. Disclaimer • The next two slides are for illustrative and informational purposes only • Each situation is different • All customers – including Host Customers – are encouraged to seek independent professional advice on their options Outline History Basics Key Qs Additional Information MA Department of Public Utilities

40. Illustrative Example:Model A Outline History Basics Key Qs Additional Information MA Department of Public Utilities

41. Illustrative Example:Model B Outline History Basics Key Qs Additional Information MA Department of Public Utilities

42. Renewable Energy Certificates (RECs) • 220 C.M.R. 18.01(1) states: • The provision of Net Metering services does not entitle Distribution Companies to ownership of, or title to, the renewable energy or environmental attributes, including renewable energy certificates, associated with any electricity produced by a Net Metering facility Outline History Basics Key Qs Additional Information = Customer gets the RECs MA Department of Public Utilities

43. Model Schedule Z Outline Background Basics Key Issues Future Additional Information MA Department of Public Utilities

44. Model Schedule Z (cont.) Outline History Basics Key Qs Additional Information MA Department of Public Utilities

45. Model Schedule Z (cont.) Outline History Basics Key Qs Additional Information MA Department of Public Utilities

46. Model Schedule Z (cont.) Outline History Basics Key Qs Additional Information MA Department of Public Utilities

47. Model Schedule Z (cont.) Outline History Basics Key Qs Additional Information MA Department of Public Utilities

48. Model Schedule Z (cont.) Outline History Basics Key Qs Additional Information MA Department of Public Utilities