Patrick Parke Midwest Energy Hays, KS September 26, 2007

1. Interconnection of Small Wind & Solar Systems to Distribution Utilities:A Cooperative Perspective Patrick Parke Midwest Energy Hays, KS September 26, 2007

2. Outline • Governing statutes & regulations • Interconnection tariff content (generic) • Net metering

3. Governing Statutes • KSA 66-1,238 – Directed KCC to establish interconnection provisions for renewable sources • KSA 66-1,184 – Interconnection and buy-back • KSA 17-4652 – Renewable generation coops • FERC guidelines apply if the device is connected to FERC-jurisdictional transmission lines or no KCC-approved guidelines are in place.

4. KSA 66-1,184 interconnection and buy-back provisions • Residential – 25 kW or less • Commercial – 200 kW or less (previously 100) • Appropriately sized for customer’s load • Excess generation priced at 150% of system average energy cost (Note: Customer gets value of full retail rate for every kWh displaced) • Dodge City CC/Cloud County CC – 1.5 MW • Buy-back = 100%of system average energy cost

5. KSA 66-1,184 interconnection andbuy-back provisions (Cont.) • Annual bill credit/payment or when total = $25 • Utility owns, supplies & maintains meter(s) • Very general safety/protection guidelines • Total connected capacity may be limited by capacity of line or 4% of utility peak load • Subject to KCC-approved tariffs or current FERC procedures and regulations

6. Generic InterconnectionTariff Content • Applicability • Process overview • Technical requirements • Cost responsibility • Metering • Boilerplate • Sample agreements

7. Applicability • Who qualifies? Per KSA 66-1,184 • Residential customers up to 25 kW • Commercial customers up to 200 kW • Schools (CCCC & DCCC) up to 1.5 MW • Utilities not prohibited from connecting larger systems

8. Process Overview – Series of steps largely dependent on generator size

9. Typical Screens • Use of qualified inverter (UL 1741) • Aggregate generation as % of annual peak on that line segment • % contribution to maximum fault current • % of short circuit interrupting capacity • Contribution to imbalances • % voltage drop for motoring

10. Technical Requirements • Interconnection • Operation • Disconnection – For protection of people and property on both sides of the meter. Customers may not understand these provisions, but their vendors should!

11. Cost Responsibility: Interconnecting Customer • Review and study costs • Interconnection equipment costs • System modification costs • May be a requirement of creditworthiness • Minimal/no fees for smallest systems • Midwest Energy, up to 10 kW = $0 • SGIA model = $100 • Utilities must provide cost estimates in advance (KSA 66-1,184)

12. Metering • KSA 66-1,184: Cost is utility’s responsibility • For larger systems: Utility specific • Meter type dependent on generator size and contract provisions

13. Boilerplate • Definitions • Insurance requirements • Indemnifications • Confidentiality provisions • Notices • Amendments • Assignment • Etc.

14. Typical Agreements • Combined Application & Agreement (10 kW category) • Review or Study Agreements • Interconnection Agreement

15. Net Metering

16. Net Metering Definition • Customers use their own generation to offset consumption; electric meters turn backwards when electricity is generated in excess of actual load

17. Net Metering Definition (Cont.) • Net metering allows for the flow of electricity both to and from the customer through a single, bi-directional meter • Customers may receive retail prices for the excess electricity they generate, depending on the state • Avoided cost; average power cost or monthly market rate also used (per IREC)

18. Net Billing • A second meter measures electricity that flows back to the utility • Utility purchases the power measured by the second meter at rate reflecting variable energy cost (w/o capacity cost) • The amount that the utility pays the customer is netted against the amount that the customer owes the utility

19. Reasons Cited for Allowing Net Metering • Easy to administer – standard electric meter registers net flow (w/o TOU info) • Subsidy encourages investment in renewable energy technologies • Allows customers to "bank" their energy and use it a different time than it is produced, i.e., another subsidy, especially with wind

20. Components of Retail Service • When a utility sells electric energy to the customer, the utility is selling 3 services • Generation • Transmission • Distribution • With rare exceptions, all three services are “firm”, but wind is an intermittent resource

21. 110 MW Gray County Wind Farm2005 Operating History • 18% of year: output was 0 MW • 32% of year: output was <10% capacity • 66% of year: output was <50% capacity • 22 occasions, the output dropped by 55 MW or more in a ten-minute period; 4 occasions by more than 99 MW. • 38 occasions, the output increased by 55 MW or more in a ten-minute period; 1 occasion by more than 99 MW. • Wind is an intermittent energy source, not firm capacity

22. Net Metering Subsidy • Customer generation is non-firm • Customer does not own transmission or distribution (T&D); significant portion of the costs in retail rates • Payment calculated using the firm retail rate is too high for intermittent power produced and absence of T&D functions

23. Net Metering Subsidy (Cont.) • Subsidy is paid by remaining customers • I.e., a subsidy from those who cannot afford generators to those who can; not everyone can afford a $30,000 - $40,000 wind machine and tower. (Bergey Excel) • Environmental benefits flow to all citizens; cost of net metering subsidy falls on customers of mostly rural systems

24. Kansas Coops Demonstrating Support for Renewable Energy • Concern with net metering ≠ opposition to renewable energy • Sunflower: 100 MW of wind • Midwest Energy: 25 MW contracted; 25 MW under negotiation • KEPCo gaining access via supply contracts • 150 MW = 20,000 Bergey Excel 7.5 kW units

25. Smart Shopping • Typical wholesale wind cost <5 cents/kWh • Average residential rate >10 cents/kWh • Net metering means the utility pays firm retail rates for a wholesale commodity • Why should the coop pay 10 cents for what it can buy at under 5 cents?

26. An Economist’s Perspective: Two Policy Questions • Does net metering lead to greater efficiency? • Not if the result is paying double for wind energy! • Does net metering lead to greater equity? • Not if those who can afford renewable generators are subsidized by those who cannot.

27. The End