Title of Regulation: 20VAC5-315. Regulations Governing Net Energy Metering (amending 20VAC5-315-20, 20VAC5-315-50).

Statutory Authority: §§ 12.1-13 and 56-594 of the Code of Virginia.

Effective Date: November 16, 2011.

Agency Contact: Kelli Gravely, Senior Utility Analyst, Energy Division, State Corporation Commission, P.O. Box 1197, Richmond, VA 23218, telephone (804) 371-9765, FAX (804) 371-9350, or email kelli.gravely@scc.virginia.gov.

Summary:

The amendments (i) increase the maximum capacity of an electrical generation facility of a residential customer that qualifies for participation in a net energy metering program from 10 to 20 kilowatts and (ii) require that a residential customer-generator whose generating facility has a capacity that exceeds 10 kilowatts shall pay a monthly standby charge that allows the supplier to recover that portion of its infrastructure costs that are properly associated with serving the eligible customer-generator. The amendments conform to Chapter 239 of the 2011 Acts of Assembly.

AT RICHMOND, NOVEMBER 1, 2011

COMMONWEALTH OF VIRGINIA, ex rel.

STATE CORPORATION COMMISSION

CASE NO. PUE-2011-00079

Ex Parte: In the matter of amending regulations
governing net energy metering

ORDER ADOPTING REGULATIONS

The Regulations Governing Net Energy Metering, 20 VAC 5-315-10 et seq. ("Net Energy Metering Rules"), adopted by the State Corporation Commission ("Commission") pursuant to § 56-594 of the Code of Virginia, establish the requirements for participation by an eligible customer-generator in net energy metering in the Commonwealth of Virginia. The Net Energy Metering Rules include conditions for interconnection and metering, billing, and contract requirements between net metering customers, electric distribution companies, and energy service providers.

On July 12, 2011, the Commission entered an Order Establishing Proceeding ("Order") to consider revisions to the Net Energy Metering Rules to reflect statutory changes enacted by Chapter 239 of the 2011 Acts of Assembly ("Chapter 239"), which amended § 56-594 of the Code of Virginia to: (1) increase, from 10 to 20 kilowatts, the maximum capacity of an electrical generation facility of a residential customer that qualifies for participation in a net energy metering program; and (2) require that a residential customer-generator whose generating facility has a capacity that exceeds 10 kilowatts shall pay a monthly standby charge that allows the supplier to recover that portion of its infrastructure costs that are properly associated with serving the eligible customer-generator. Chapter 239 requires the Commission to approve of any such standby charges proposed by an electric utility upon finding that the standby charges are properly associated with serving the eligible customer-generator.

The Commission appended to its Order proposed amendments ("Proposed Rules") revising the Net Energy Metering Rules, which were prepared by the Staff of the Commission to reflect the permitted increase in residential capacity and to require residential customer‑generators with an installed capacity of more than 10 kilowatts to pay a tariffed monthly standby charge to their respective suppliers.

Notice of the proceeding and the Proposed Rules were published in the Virginia Register of Regulations on August 1, 2011. Additionally, each Virginia electric distribution company was directed to serve a copy of the Order upon each of their respective net metering customers. Interested persons were directed to file any comments and requests for hearing on the Proposed Rules on or before September 26, 2011.¹

The Virginia Electric Cooperatives ("Cooperatives")² and Virginia Power as well as several other persons and entities filed comments. No one requested a hearing on the Proposed Rules.

NOW THE COMMISSION, upon consideration of this matter, is of the opinion and finds that the regulations attached hereto as Appendix A should be adopted as final rules. To the extent parties have requested changes to the Proposed Rules that go beyond the scope of such rules, we will not expand the scope of this proceeding to consider issues beyond those required to implement the amendments to § 56-594 of the Code of Virginia.

Virginia Power and the Cooperatives both generally stated that they support the Proposed Rules and that the Proposed Rules accurately and closely reflect the statutory requirements. The Cooperatives also expressed a concern that net metering customers are subsidized by non-net metering customers, an issue that the Cooperatives believe will be partially remedied by implementing the proposed standby charge.

The other comments filed relevant to the Proposed Rules generally stated that, while the increase in the capacity limit to 20 kilowatts is welcome, the statutory standby charge is not desirable since it will discourage residential net metering development, particularly for installations exceeding 10 kilowatts. Some commenters also believe that the standby charge would cause reductions in small-scale generation deployment, job growth, and use of renewable energy.

The Commission believes that the Proposed Rules are consistent with Chapter 239 and the Commission's statutory authority; therefore, the Proposed Rules should be adopted as final rules.

Accordingly, IT IS ORDERED THAT:

(1) The Regulations Governing Net Energy Metering, as shown in Appendix A to this Order, are hereby adopted and are effective as of November 16, 2011.

(2) A copy of this Order with Appendix A including the Regulations Governing Net Energy Metering shall be forwarded to the Registrar of Regulations for publication in the Virginia Register of Regulations.

(3) On or before January 11, 2012, each electric utility in the Commonwealth subject to Chapter 10 (§ 56-232 et seq.) of Title 56 of the Code of Virginia shall file with the Clerk of the Commission, in this docket, one (1) original document containing any revised tariff provisions necessary to implement the regulations adopted herein, excluding any tariff provisions implementing standby charges, and shall also file a copy of the document containing the revised tariff provisions with the Commission's Division of Energy Regulation. The Clerk of the Commission need not distribute copies but shall make such filings available for public inspection in the Clerk's Office and post them on the Commission's website at: http://www.scc.virginia.gov/case.

(4) All electric utilities in the Commonwealth subject to Chapter 10 (§ 56-232 et seq.) of Title 56 of the Code of Virginia desiring to implement standby charges as contemplated by the regulations adopted herein shall file with the Commission, for consideration in separate dockets, applications for approval of the proposed methodologies for such charges.

(5) This docket shall remain open to receive the filings from electric utilities pursuant to Ordering Paragraph (3).

AN ATTESTED COPY hereof shall be sent by the Clerk of the Commission to all electric distribution companies licensed in Virginia as shown on Appendix B, hereto; and a copy shall be sent to the Commission's Office of General Counsel and Divisions of Energy Regulation, Public Utility Accounting, and Economics and Finance.

_______________________

¹ The Commission's Order originally specified that comments were to be filed on or before August 22, 2011. On August 11, 2011, Virginia Electric and Power Company ("Virginia Power") filed a motion for additional time to complete service on its net metering customers and to extend the public comment period, citing an administrative problem in mailing the Order to its net metering customers. On August 19, 2011, the Commission entered an Order Extending Procedural Schedule granting Virginia Power's motion and providing interested persons until September 26, 2011, to file comments and requests for hearing.

² The filing entitled "Comments of the Virginia Electric Cooperatives" was submitted jointly on behalf of: A&N Electric Cooperative, BARC Electric Cooperative, Central Virginia Electric Cooperative, Community Electric Cooperative, Craig-Botetourt Electric Cooperative, Mecklenburg Electric Cooperative, Northern Neck Electric Cooperative, Northern Virginia Electric Cooperative, Powell Valley Electric Cooperative, Prince George Electric Cooperative, Rappahannock Electric Cooperative, Shenandoah Valley Electric Cooperative, and Southside Electric Cooperative, as well as the Virginia, Maryland & Delaware Association of Electric Cooperatives.

20VAC5-315-20. Definitions.

The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:

"Billing period" means, as to a particular customer, the time period between the two meter readings upon which the electric distribution company and the energy service provider calculate the customer's bills.

"Billing period credit" means, for a nontime-of-use net metering customer, the quantity of electricity generated and fed back into the electric grid by the customer's renewable fuel generator in excess of the electricity supplied to the customer over the billing period. For time-of-use net metering customers, billing period credits are determined separately for each time-of-use tier.

"Demand charge-based time-of-use tariff" means a retail tariff for electric supply service that has two or more time-of-use tiers for energy-based charges and an electricity supply demand (kilowatt) charge.

"Electric distribution company" means the entity that owns and/or operates the distribution facilities delivering electricity to the net metering customer's premises.

"Energy service provider (supplier)" means the entity providing electricity supply service to a net metering customer either as tariffed or competitive service.

"Excess generation" means the amount of electricity generated by the renewable fuel generator in excess of the electricity consumed by the customer over the course of the net metering period. For time-of-use net metering customers, excess generation is determined separately for each time-of-use tier.

"Net metering customer (customer)" means a customer owning and operating, or contracting with other persons to own or operate, or both, a renewable fuel generator under a net metering service arrangement.

"Net metering period" means each successive 12-month period beginning with the first meter reading date following the date of final interconnection of the renewable fuel generator with the electric distribution company's facilities.

"Net metering service" means providing retail electric service to a customer operating a renewable fuel generator and measuring the difference, over the net metering period, between electricity supplied to the customer from the electric grid and the electricity generated and fed back to the electric grid by the customer.

"Person" means any individual, corporation, partnership, association, company, business, trust, joint venture, or other private legal entity and the Commonwealth or any municipality.

"Renewable Energy Certificate (REC)" represents the renewable energy attributes associated with the production of one megawatt-hour (MWh) of electrical energy generated by a renewable fuel generator.

"Renewable fuel generator" means an electrical generating facility that:

1. Has an alternating current capacity of not more than 10 20 kilowatts for residential customers and not more than 500 kilowatts for nonresidential customers unless the electric distribution company has chosen a higher capacity limit for nonresidential customers in its net metering tariff;

2. Uses renewable energy, as defined by § 56-576 of the Code of Virginia, as its total fuel source;

3. The net metering customer owns and operates, or has contracted with other persons to own or operate, or both;

4. Is located on the customer's premises and is connected to the customer's wiring on the customer's side of its interconnection with the distributor;

5. Is interconnected pursuant to a net metering arrangement and operated in parallel with the electric distribution company's facilities; and

6. Is intended primarily to offset all or part of the net metering customer's own electricity requirements.

"Time-of-use net metering customer (time-of-use customer)" means a net metering customer receiving retail electricity supply service under a demand charge-based time-of-use tariff.

"Time-of-use period" means an interval of time over which the energy (kilowatt-hour) rate charged to a time-of-use customer does not change.

"Time-of-use tier (tier)" means all time-of-use periods given the same name (e.g., on-peak, off-peak, critical peak, etc.) for the purpose of time-differentiating energy (kilowatt-hour)-based charges. The rates associated with a particular tier may vary by day and by season.

20VAC5-315-50. Metering, billing, payment and contract or tariff considerations.

Net metered energy shall be measured in accordance with standard metering practices by metering equipment capable of measuring (but not necessarily displaying) power flow in both directions. Each contract or tariff governing the relationship between a net metering customer, electric distribution company or energy service provider shall be identical, with respect to the rate structure, all retail rate components, and monthly charges, to the contract or tariff under which the same customer would be served if such customer was not a net metering customer with the exception exceptions that a residential customer-generator whose generating facility has a capacity that exceeds 10 kilowatts shall pay any applicable tariffed monthly standby charges to his supplier, and that time-of-use metering under an electricity supply service tariff having no demand charges is not permitted. Said contract or tariff shall be applicable to both the electric energy supplied to, and consumed from, the grid by that customer.

In instances where a net metering customer's metering equipment is of a type for which meter readings are made off site and where this equipment has, or will be, installed for the convenience of the electric distribution company, the electric distribution company shall provide the necessary additional metering equipment to enable net metering service at no charge to the net metering customer. In instances where a net metering customer has requested, and where the electric distribution company would not have otherwise installed, metering equipment that is intended to be read off site, the electric distribution company may charge the net metering customer its actual cost of installing any additional equipment necessary to implement net metering service. A time-of-use net metering customer shall bear the incremental metering costs associated with net metering. Any incremental metering costs associated with measuring the total output of the renewable fuel generator for the purposes of receiving renewable energy certificates shall be installed at the customer's expense unless otherwise negotiated between the customer and the REC purchaser.

A net metering customer shall receive no compensation for excess generation unless the net metering customer has entered into a power purchase agreement with its supplier.

Upon the written request of the net metering customer, the customer's supplier shall enter into a power purchase agreement for the excess generation for one or more net metering periods, as requested by the net metering customer. The written request of the net metering customer shall be submitted prior to the beginning of the first net metering period covered by the power purchase agreement. The power purchase agreement shall be consistent with this chapter. If the customer's supplier is an investor-owned electric distribution company, the supplier shall be obligated by the power purchase agreement to purchase the excess generation for the requested net metering periods at a price equal to the PJM Interconnection, L.L.C. (PJM) zonal day-ahead annual, simple average LMP (locational marginal price) for the PJM load zone in which the electric distribution company's Virginia retail service territory resides (simple average of hourly LMPs, by tiers, for time-of-use customers), as published by the PJM Market Monitoring Unit, for the most recent calendar year ending on or before the end of each net metering period, unless the electric distribution company and the net metering customer mutually agree to a higher price or unless, after notice and opportunity for hearing, the commission establishes a different price or pricing methodology. If the Virginia retail service territory of the investor-owned electric distribution company does not reside within a PJM load zone, the power purchase agreement shall obligate the electric distribution company to purchase excess generation for the requested net metering periods at a price equal to the systemwide PJM day-ahead annual, simple average LMP (simple average of hourly LMPs, by tiers, for time-of-use customers), as published by the PJM Market Monitoring Unit, for the most recent calendar year ending on or before the end of each net metering period, unless the electric distribution company and the net metering customer mutually agree to a higher price or unless, after notice and opportunity for hearing, the commission establishes a different price or pricing methodology.

If the customer's supplier is a member-owned electric cooperative, the supplier shall be obligated by the power purchase agreement to purchase excess generation for the requested net metering periods at a price equal to the simple average (by tiers for time-of-use customers) of the electric cooperative's hourly avoidable cost of energy, including fuel, based on the energy and energy-related charges of its primary wholesale power supplier for the net metering period, unless the electric distribution company and the net metering customer mutually agree to a higher price or unless, after notice and opportunity for hearing, the commission establishes a different price or pricing methodology.

If the customer's supplier is a competitive supplier, the supplier shall be obligated by the power purchase agreement to purchase the excess generation for the requested net metering periods at a price equal to the systemwide PJM day-ahead annual, simple average LMP (simple average of hourly LMPs, by tiers, for time-of-use customers), as published by the PJM Market Monitoring Unit, for the most recent calendar year ending on or before the end of each net metering period, unless the supplier and the net metering customer mutually agree to a higher price or unless, after notice and opportunity for hearing, the commission establishes a different price or pricing methodology.

The customer's supplier shall make full payment annually to the net metering customer within 30 days following the latter of the end of the net metering period or, if applicable, the date of the PJM Market Monitoring Unit's publication of the previous calendar-year's applicable zonal or systemwide PJM day-ahead annual, simple average LMP, or hourly LMP, as appropriate. The supplier may offer the net metering customer the choice of an account credit in lieu of a direct payment. The option of a net metering customer to request payment from its supplier for excess generation and the price or pricing formula shall be clearly delineated in the net metering tariff of the electric distribution company or timely provided by the customer's competitive supplier, as applicable. A copy of such tariff, or an Internet link to such tariff, at the option of the customer, shall be provided to each customer requesting interconnection of a renewable fuel generator. A competitive supplier shall provide in its contract with the net metering customer the price or pricing formula for excess generation.

For a nontime-of-use net metering customer, in any billing period in which there is a billing period credit, the customer shall be required to pay only the nonusage sensitive charges, including any applicable standby charges, for that billing period. For a time-of-use net metering customer, in any billing period for which there are billing period credits in all tiers, the customer shall be required to pay only the demand charge or charges and, nonusage sensitive charges, and any applicable standby charges, for that billing period. Any billing period credits shall be accumulated, carried forward, and applied at the first opportunity to any billing periods having positive net consumptions (by tiers, in the case of time-of-use customers). However, any accumulated billing period credits remaining unused at the end of a net metering period shall be carried forward into the next net metering period only to the extent that such accumulated billing period credits carried forward do not exceed the net metering customer's billed consumption for the current net metering period, adjusted to exclude accumulated billing period credits carried forward and applied from the previous net metering period (recognizing tiers for time-of-use customers).

A net metering customer owns any renewable energy certificates associated with the total output of its renewable fuel generator. A supplier is only obligated to purchase a net metering customer's RECs if the net metering customer has exercised its one-time option at the time of signing a power purchase agreement with its supplier to include a provision requiring the purchase by the supplier of all generated RECs over the duration of the power purchase agreement.

Payment for all whole RECs purchased by the supplier during a net metering period in accordance with the purchase power agreement shall be made at the same time as the payment for any excess generation. The supplier will post a credit to the customer's account, or the customer may elect a direct payment. Any fractional REC remaining shall not receive immediate payment, but may be carried forward to subsequent net metering periods for the duration of the power purchase agreement.

The rate of the payment by the supplier for a customer's RECs shall be the daily unweighted average of the "CR" component of Virginia Electric and Power Company's Virginia jurisdiction Rider G tariff in effect over the period for which the rate of payment for the excess generation is determined, unless the customer's supplier is not Virginia Electric and Power Company, and that supplier has an applicable Virginia retail renewable energy tariff containing a comparable REC commodity price component, in which case that price component shall be the basis of the rate of payment. The commission may, with notice and opportunity for hearing, set another rate of payment or methodology for setting the rate of payment for RECs.

To the extent that RECs are not sold to the net metering customer's supplier, they may be sold to any willing buyer at any time at a mutually agreeable price.