&EPA
                                                                              CHP
                                                                        &EPA COMBINED HEAT AND
                                                                              POWER PARTNERSHIP
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   Standardized  Interconnection  Rules

n  Effective Policy to Encourage Distributed  Generation
i
A                      standardized interconnection rule is
                      one of several tools that states can
                      adopt to increase the amount of clean
                 distributed generation (DG) in their state.
                 Standardized interconnection rules, which are
                 generally developed and administered by a
                 state's public utility commission, establish
                 clear and uniform processes and technical
                 requirements for connecting DG systems to
                 the electric utility grid. These rules are an
                 important mechanism for improving the
                 market conditions for clean DG.
                 Utility interconnection can be a critical
                 component of a successful DG  project.
                 Connecting to the grid enables the facility to:
                   Purchase power from the grid to supply
                   supplemental power as needed (e.g.,
                   during periods of planned
                   system maintenance).
                   Sell excess power to the utility.
                   Maintain grid frequency and voltage
                   stability,  as well as utility worker safety.
The primary objective of a standard
interconnection rule is to obtain the benefits
that clean DG can provide without comprising
grid safety or reliability.
This topic is of particular interest as the
Energy Policy Act of 2005 directs states to
consider upgrading their standards for
interconnecting small generators within one
year of enactment.

Why Is Standard
Interconnection  Needed?
Standard interconnection rules encourage the
application of clean DG  by reducing
uncertainty. They establish clear and uniform
processes and requirements for connecting to
the electric utility grid. These uniform
requirements ensure that the costs of
interconnection are the  same throughout the
state and are commensurate with the nature,
size, and scope of the DG project. They also
help DG project developers accurately  predict

                        What Is Clean DG and What Are Its Benefits?
                        DG is the generation of electricity at or near the energy end-user. Clean energy
                        technologies include renewable energy sources such as solar, wind, geothermal, biomass,
                        biogas, and low-impact hydroelectric, as well as combined heat and power (CHP) (the
                        simultaneous generation of electric and thermal energy from a single source).
                        Clean DG projects yield numerous public benefits, including:
                          Spurring economic development.
                          Reducing peak electrical demand on the grid.
                          Reducing grid congestion in targeted load pockets, potentially deferring or displacing
                          more expensive transmission and distribution infrastructure investments.
                          Reducing the environmental impact of power generation.
                          Reducing fuel price volatility.

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the time and costs involved in the application process and
the technical requirements for interconnection.  Finally,
standard  rules ensure that the project interconnection
meets the safety and reliability needs of both the energy
end-user and the utility.

What Are the  Key Elements of a
Standard Interconnection Rule?
Standard interconnection rules address the application
process and the technical  requirements for interconnecting
DG projects of a specified type and size with the
electric grid.
Application Process - Includes some or all parts of the
interconnection process, starting from when a potential
customer considers submitting an application up to the
time when the interconnection agreement is finalized. For
example, rules might specify application forms,  timelines,
fees, dispute resolution processes, insurance requirements,
and interconnection  agreements.
Technical  Interconnection Requirements - Includes
technical  protocols and standards that govern how
generators  must interconnect with the electric grid. Rules
generally specify the type of generation technology that
can be interconnected, the required attributes of the
electrical  grids where the system will be connected, the
types of equipment and protocols required for the physical
interconnection, and the maximum system size  that is
eligible for the interconnection process.
These requirements  may specify that DG must conform to
industry or national standards (such as IEEE 1547 and UL
1741),  and might include protection systems designed to
minimize degradation of grid reliability and performance,
as well to maintain worker and public safety.
Which States Have Adopted
Interconnection Standards?
As of May 2007,19 states have adopted standard
interconnection rules for DG (see Figure 1). Fifteen
additional states are in the process of developing
their rules.
In addition to interconnection requirements, many states
have adopted net metering provisions. Net metering
occurs when a DG project output exceeds the site's
electrical needs and the utility either pays the customer for
excess power supplied to the grid or allows the net surplus
to carry over to the next month's bill. Net metering
provisions streamline interconnection  standards but are
often limited to specified sizes and types of technologies.
As of May 2007, 41 states plus the District of Columbia
have adopted net metering rules (see Figure 2). In some
of these states, net metering provisions are limited in
scope (e.g., limited to small systems, specified
technologies, or particular fuels of local interest). For
current net metering information, visit the  Interstate
Renewable Energy Council at www.irecusa.org.
Some state net metering rules lack detailed specifications
and procedures for utilities and  customers  to follow and
vary across utilities within the state. Several states,
however, have implemented net metering  provisions and
interconnection rules that provide a complete  range of
interconnection processes and requirements (e.g., New
Hampshire and New Jersey have developed standard
interconnection processes and requirements as part of
their net metering provision).
  Figure 1.
  States with DG Interconnection Standards
                     f>

  Current as of May 30, 2007
                                                                   States with interconnection rules

                                                                   States with proposed interconnection rules

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Elements of a Successful Policy
Based on the experiences of states that have developed
rules for standard interconnection, a number of best
practices have emerged for designing effective
interconnection standards that balance the needs of the
utility company, DG owners, and the public. States
considering interconnection standards can use the best
practices that follow as models as they develop their own
interconnection rules:
 Work collaboratively with interested stakeholders to
  develop clear, concise interconnection rules that are
  applicable to all potential DG technologies. Key
  stakeholders include:
         Electric utilities.
        State public utility commissions.
         Developers of CHP and renewable energy
         systems.
        Third-party technical organizations (e.g., the
         Institute of Electrical and Electronic Engineers
         [IEEE 1547] and  Underwriters Laboratory, Inc.
         [UL Standard 1741]).
  Figure 2.
  States with Net Metering Rules
          State-wide net metering for all utility types

          State-wide net metering for certain utility types
          (e.g, Invester-Owned Utilities only)

          Net metering offered by one or more individual utilities
 Current as of May 30, 2007
         Regional transmission organizations.
         Other government agencies, such as the Federal
          Energy Regulatory Commission (FERC) or state
          environmental and public policy agencies.
 Tailor rules to address specific issues faced by different
  project sizes. Consider overlaying a screen mechanism
  to determine which procedure a particular system must
  go through.

 Develop standards that cover the scope of the desired
  DG technologies, generator types,  sizes, and distribution
  system types.

 Address all components of the interconnection process,
  including issues related to both the application process
  and technical requirements.

 Consider making the application process and related
  fees commensurate with generator size.

 Create a streamlined process for small and simpler
  systems that are certified compliant to IEEE 1547 and
  UL Standard  1741.

 Consider using existing rules and models as templates,
  including the National Association of Regulatory Utility
  Commissioners, Interstate Renewable Energy Council,
  FERC, and rules of other states (see Additional
  Resources below).

 Try to maximize consistency between  the Regional
  Transmission Organization and the state standards for
  large generators.

 Where possible, be consistent with other states' rules to
  help reduce compliance costs for project  proponents.

 After adopting a standard, monitor effectiveness and
  update as needed based on rule effectiveness, feedback
  from  utilities and applicants, changes  in DG/CHP and
  electric utility technologies, and changes  in consensus
  standards of third-party technical organizations.

EPA Assistance Available
The EPA CHP Partnership is a voluntary program that
seeks to reduce the environmental impact of power
generation by promoting the use of cost effective CHP.
The Partnership assists state policy makers and regulators
to evaluate opportunities to encourage CHP through the
implementation of policies and programs. See
www. epa. gov/chp.

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State Examples
Developing interconnection requirements is a complex task
and states wishing to undertake this process should review
the development procedure and actual interconnection
standards of other states. The interconnection standards
or draft standards cited below (Massachusetts, Texas,
Oregon, and Maryland)  contain many of the elements of
successful interconnection policies highlighted on page 3.
Massachusetts created and adopted a Model
Interconnection Tariff through a collaborative, stakeholder-
involved process that simplifies the interconnection
approval procedure, eliminates fees, and ensures
applications are processed within 15 days.  These simplified
interconnection rules apply to certified single-phase DG
units less than 10 kilowatts (kW) in capacity and certified
three-phase systems up to 25 kW in capacity. Information
on the interconnection process is available on the
Massachusetts Technology Collaborative Web site, at
http://masstech.org/renewableenergy/public_policy/DG/
resources/02-38-C_Att-A_ Tariff, doc.
In Texas, the Public Utility Control of Texas (PUCT)
adopted interconnection standards in 1999 and the rules
apply to DG units with a maximum capacity of 10
megawatts (MW). Under these rules, the PUCT must
approve or reject an interconnection application within 4
to 6 weeks and there are pre-certification provisions
allowing for fast-track interconnection. In addition,
qualifying DG units are  not required to carry additional
insurance and direct liability for the unit is  limited.
Information on Texas's interconnection standards can be
found in the Distributed Generation Interconnection
Manual, available at www.puc.state.tx.us/electric/business/
dg/dgmanual.pdf.
The Oregon  Public Utility Commission (PUC) is developing
a Standard Small Generator Interconnection Rule for DG
sources, which should be finalized on July  16, 2007. The
proposed rule applies to small DG units of  10 MW or less
and outlines a four-tiered application fee schedule,
depending on the unit's generating capacity and if the unit
plans to export power offsite. View Oregon's  proposed rule
                and accompanying documents are available at
                www.puc.state.or.us/PUC/admin_rules/intercon.shtml.
                In Maryland, the Small Generator Interconnection
                Standards Working Group released a proposed  rule in
                March 2007, which offers an expedited interconnection
                review process for DG units. The working group
                established draft standard procedures and administrative
                practices for the interconnection of small DG units of 10
                MW or less. The rule should be finalized by November 1,
                2007. View Maryland's proposed rule and simplified
                interconnection application forms at www.psc.state.md.us/
                psc/electric/workinggroups.htm.

                Additional Resources
                EPA has created The Clean Energy-Environment Guide to
                Action. The Guide provides an overview of clean energy
                supply technology options and, in addition to
                interconnection standards, presents a range of policies
                that states have adopted to encourage continued growth
                of clean energy technologies and energy efficiency. The
                Guide is available at www.epa.gov/deanenergy/stateandlocal/
                guidetoaction.htm.
                The National Association of Regulatory Utility
                Commissioners Model Interconnection Procedures and
                Agreement for Small Distributed Generation Resources. See
                www.naruc.org/associations/1773/files/dgiaip_oct03.pdf.

                The Interstate Renewable Energy Council's Model
                Interconnection Standards and  A Guide to DG
                Interconnection Issues. See www.irecusa.org/fileadmin/
                user_upload/ConnectDocs/ModelICSta ndards.pdf and
                www.irecusa.org/fileadmin/user_upload/ConnectDocs/
                ModelICGuide.pdf.

                The Regulatory Assistance Project's  Distributed Resource
                Policy Series supports state policy efforts. See
                www. raponline. org.

                The U.S. Combined Heat and Power Association has been
                an active stakeholder in  the development of standard
                interconnection rules in various states. See
                http://uschpa. admgt. com/stateCHP. html#iconnect.
 For more information, contact:
          CHP
   &EPA COMBINED HEAT AND
          POWER PARTNERSHIP
          Katrina Pielli
U.S. Environmental Protection Agency
       Phone: 202-343-9610
   e-mail: pielli.katrina@epa.gov
Last updated July 2, 2007

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