Second Regular Session Sixty-eighth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 12-0495.01 Duane Gall x4335 HOUSE BILL 12-1264 HOUSE SPONSORSHIP Solano, SENATE SPONSORSHIP (None), House Committees Senate Committees Agriculture, Livestock, & Natural Resources A BILL FOR AN ACT Concerning measures to facilitate the process of distributed generation interconnection. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) Section 1 of the bill declares that Colorado's efforts to incorporate distributed generation (DG) from renewable sources could be improved through the adoption of updated standards for interconnection between customer-generators of DG and the utility-owned distribution networks into which they feed power. Section 2 directs the Colorado public utilities commission (PUC) to adopt amended rules on interconnection, using as a basis the recommended standards developed by the interstate renewable energy council, especially with regard to: Customer-generator insurance requirements, including a limitation on scope to include only liability for property damage to the utility's infrastructure and a complete exemption for systems below a threshold size; and Standards of review for compatibility with the distribution system, incorporating a catchall standard for systems that do not fit within the existing 3 categories specified in PUC rules. Section 3 creates a task force on DG interconnection issues to meet during the 2012 interim and produce an initial report to specified committees of the general assembly concerning ways in which interconnection and related issues could be addressed in order to further facilitate the deployment of DG from renewable sources in Colorado. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Legislative declaration. (1) The general assembly hereby finds and declares that: (a) Colorado's advances in energy development through the use of in-state renewable sources have earned the state a grade of "A" for net metering and "B" for interconnection standards from the vote solar initiative and the network for new energy choices in their publication "Freeing the Grid 2011"; (b) With minor revisions, Colorado's rules for interconnection could move the state to a grade of "A" and allow Colorado's residents and businesses to reap the rewards of lower energy costs, greater energy security, both short-term and long-term job creation, and less dependence on out-of-state and foreign sources of energy through additional distributed generation here in Colorado; (c) The Colorado public utilities commission has adopted interconnection standards based on orders of the federal energy regulatory commission dating from 2006. While these standards represent an advance over the prior state of the art, Colorado's energy development can be further enhanced with legislative guidance derived from more recent experience and the recommendations of the interstate renewable energy council. SECTION 2. In Colorado Revised Statutes, 40-2-124, amend (1) introductory portion, (1) (b), and (1.5) as follows: 40-2-124. Renewable energy standard - definitions - net metering - legislative declaration. (1) Each provider of retail electric service in the state of Colorado, other than municipally owned utilities that serve forty thousand customers or fewer, shall be considered is a qualifying retail utility. Each qualifying retail utility, with the exception of cooperative electric associations that have voted to exempt themselves from commission jurisdiction pursuant to section 40-9.5-104 and municipally owned utilities, shall be is subject to the rules established under this article by the commission. No additional regulatory authority of the commission other than that specifically contained in this section is provided or implied. In accordance with article 4 of title 24, C.R.S., the commission shall revise or clarify existing rules to establish the following: (b) (I) Standards for the design, placement, and management of electric generation technologies that use eligible energy resources to ensure that the environmental impacts of such facilities are minimized; (II) Interconnection standards for distributed generation. In adopting these standards, the commission shall use as a basis, and shall incorporate in substantially similar form, the most recent available edition of the model interconnection procedures and recommended interconnection agreement as published by the interstate renewable energy council or its successor organization with regard to: (A) The scope and amount of insurance required, including the limitation that customers be required to purchase insurance, if at all, only for damage to public utility equipment and infrastructure and that no insurance be required for customers whose generating capacity does not exceed specified thresholds, which, as of 2009, were fifty kilowatts and one megawatt for noninverter-based and inverter-based generating facilities, respectively; and (B) The levels of review applicable to proposed interconnections based on system characteristics, including the adoption of a default "level 4" for all generating facilities that do not meet the criteria for level 1, level 2, or level 3 review as specified in existing rules of the commission. (1.5) Notwithstanding any provision of law or of the commission's rules to the contrary: (a) Paragraph (e) of subsection (1) of this section shall does not apply to a municipally owned utility or to a cooperative electric association. (b) The interconnection standards adopted pursuant to subparagraph (II) of paragraph (b) of subsection (1) of this section apply to every electric utility in Colorado that is either a qualifying retail utility, an electric utility subject to orders of the federal energy regulatory commission, or both. SECTION 3. In Colorado Revised Statutes, add 40-2-130 as follows: 40-2-130. Task force on interconnection issues for distributed generation - fund - definition - reports - notice of funding through gifts, grants, and donations - repeal. (1) Task force. (a) There is hereby created the task force on interconnection issues for distributed generation, also referred to in this section as the "task force". The task force shall provide technical expertise and strategic policy recommendations, from a statewide perspective, to the commission and the general assembly. The task force's primary task is to produce a report containing recommendations and analysis on the existing barriers to statewide deployment of distributed generation, as defined in section 40-2-124 (1) (a) (II), with particular attention to interconnection issues. (b) The task force shall elect a chair and a vice-chair from its members at its first meeting. (c) In collecting information for its report, the task force shall: (I) Hold at least four open meetings, which the task force shall publicize in advance. The task force shall solicit and receive comments, including written comments, from members of the public. The task force may determine the manner in which to receive comments. (II) Consider and give weight to any comments received from the general public as well as written comments from affected counties, cities, state agencies, electric utilities and their customers, environmental groups, and other interested stakeholders; (III) Consider and give weight to research papers and technical information made available through current research projects at the commission and academic institutions and from private citizens; and (IV) Take notice of proceedings before the commission addressing interconnection of distributed generation, confer with commissioners and commission staff, and consider and give weight to the records, findings, and decisions in those proceedings. (2) Membership. (a) The task force consists of twenty members as follows: (I) The director of the governor's energy office, created in section 24-38.5-101, C.R.S., or his or her designee; (II) The consumer counsel, appointed pursuant to section 40-6.5-102, or the consumer counsel's designee; (III) Five members appointed by the governor, each of whom has dealt in his or her career or postgraduate education with interconnection issues, as follows: (A) One member representing investor-owned electric utilities; (B) One member representing municipal utilities; (C) One member representing cooperative electric associations; (D) One member with expertise in energy policy and regulation at the state and federal level; and (E) One member with expertise in insurance issues related to the installation of customer-sited electric generation equipment; (IV) Four members representing the following constituencies and with the following areas of expertise, of whom one is appointed by the president of the senate, one is appointed by the minority leader of the senate, one is appointed by the speaker of the house, and one is appointed by the minority leader of the house: (A) One member representing commercial developers of distributed generation equipment or services and with a background in capital and business development; (B) One member representing consumer protection; (C) One member from a Colorado institution of higher education representing research and development in renewable energy technology, distributed generation interconnection technology, or both; and (D) One member with expertise in engineering standards, protocols, and technical requirements for smart grid deployment; (V) Four current members of the general assembly, two from the house of representatives and two from the senate, of whom one is appointed by the president of the senate, one is appointed by the minority leader of the senate, one is appointed by the speaker of the house, and one is appointed by the minority leader of the house; (VI) Five members appointed by the governor, each of whom has experience in environmental advocacy and represents at least one of the following five principal geographical areas of Colorado: (A) The front range; (B) The central mountain communities; (C) The western slope; (D) The eastern plains; and (E) The San Luis valley. (b) The appointing officials shall appoint members to the task force within thirty days after the effective date of this section. (c) Vacancies must be filled by appointment by the official who appointed the member whose absence resulted in the vacancy. (3) Duties - initial report - updates - issues. (a) The task force shall develop an initial report, designated the 2012 Colorado distributed generation interconnection report, in which the task force addresses and makes recommendations for the following: (I) Reforming the distribution-level interconnection process, queuing, and reporting requirements by: (A) Defining the appropriate interconnection study process for all types of generation resources seeking interconnection to the distribution system; (B) Creating distribution-level interconnection procedures for storage technologies; and (C) Evaluating and determining appropriate processes for establishing distribution-level interconnection queues, whether serial or cluster; (II) Technology operating standards, standardized engineering study methodology, and deliverability study methodology by: (A) Evaluating the need to revise technical operating standards due to advances in technology, communications, and the potential need for the system operator to control these systems; (B) Defining distinct engineering methodologies based on the characteristics of the resource, such as the resource's impact on the transmission system; and (C) Establishing a path to resource adequacy qualification for resources that have certain characteristics; (III) Limits on distributed generation penetration by reviewing and modifying, if necessary, the screening mechanism that limits an expedited interconnection to fifteen percent of a line section's peak load; (IV) Cost allocation for infrastructure upgrades by: (A) Evaluating mechanisms to improve cost certainty around infrastructure upgrades throughout the interconnection study process; and (B) Evaluating methodologies to allocate infrastructure upgrade costs between generators and ratepayers. (4) Timeline. The task force shall produce and deliver its initial report under subsection (3) of this section to the governor, the commission, the chair of the house transportation committee, the chair of the house agriculture, livestock, and natural resources committee, the senate transportation committee, and the senate business, labor, and technology committee, or the chair of any successor of those committees, on or before January 20, 2013, and shall meet at least annually thereafter to review the report, receive additional information, and consider updates to the report. (5) Funding. (a) The commission is authorized to seek and accept gifts, grants, or donations from private or public sources for the purposes of this section; except that the commission may not accept a gift, grant, or donation that is subject to conditions that are inconsistent with this section or any other law of the state. The commission shall transmit all private and public moneys received through gifts, grants, or donations to the state treasurer, who shall credit the same to the public utilities commission distributed generation interconnection study fund, which fund is hereby created and referred to in this section as the "fund". The moneys in the fund are subject to annual appropriation by the general assembly to the commission for the direct and indirect costs associated with implementing this section. (b) (I) In seeking or accepting a gift, grant, or donation, the commission shall notify the legislative council staff when it has received adequate funding through gifts, grants, or donations to provide support to the task force to perform its responsibilities specified in this section and shall include in the notification the information specified in section 24-75-1303 (3), C.R.S. (II) This paragraph (b) is repealed, effective July 1, 2015. (6) Repeal. This section is repealed, effective July 1, 2017. Prior to this repeal, the department of regulatory agencies shall review the task force in accordance with section 2-3-1203, C.R.S. SECTION 4. In Colorado Revised Statutes, 2-3-1203, add (3) (dd) (XII) as follows: 2-3-1203. Sunset review of advisory committees. (3) The following dates are the dates for which the statutory authorization for the designated advisory committees is scheduled for repeal: (dd) July 1, 2017: (XII) The task force on interconnection issues for distributed generation created in section 40-2-130, C.R.S. SECTION 5. Effective date - applicability. This act takes effect upon passage and applies to interconnection agreements entered into on or after January 1, 2013. SECTION 6. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.