INTERCONNECTION OF CO-GENERATION
AND SMALL POWER PRODUCTION FACILITIES
The Public Utility Regulatory Policies Act of 1978 (PURPA) declared purpose is to encourage co-generation and small power production. PURPA authorizes the Federal Energy Regulatory Commission (FERC) to issue rules to implement Sections 201 and 210 of the Act. FERC has issued such final rules to implement Sections 201 and 210 of the Act.
This Policy provides the manner in which Southeastern Electric Cooperative, Inc. (Southeastern) will implement Subpart C (Arrangements between Electric Utilities and Qualifying Co-generation and Small Power Production Facilities under Section 210 of PURPA) other than Section 292.302 thereof, of the regulations set forth in Part 292, Chapter I, Title 18, Code of Federal Regulations.
Southeastern is a member of East River Electric Power Cooperative, Inc. (East River) Madison, South Dakota. It is legally obligated by contract to obtain all its requirements for electric energy and capacity from East River.
East River has contracted with the United States Department of Energy - Western Area Power Administration (WAPA) for the purchase of electric energy and capacity. Electric energy and capacity in excess of the amount of energy and capacity furnished by WAPA is furnished to East River pursuant to contract with Basin Electric Power Cooperative, Inc. Bismarck, North Dakota.
For the purpose of this Policy a co-generation and/or small power production facility owner is hereinafter referred to as the Customer. East River is hereinafter referred to as the Power Supplier. Southeastern is hereinafter referred to as the Utility.
The Utility will conform with all the requirements of Sections 201 and 210 of PURPA, Co-generation and Small Power Production, and with the actual regulations set forth in Part 292 of Chapter I, Title 18, Code of Federal Regulations which are applicable to this Utility.
The following definitions apply for the purpose of this Policy.
1. "Qualifying facility" means a co-generation facility or a small power production facility which is a qualifying facility or a utility geothermal small power production facility, under applicable Federal Energy Regulatory Commission's regulations.
2. "Purchase" means the purchase of electric energy or capacity or both from a qualifying facility by an electric utility.
3. "Sale" means the sale of electric energy or capacity or both by an electric utility to a qualifying facility.
4. "System emergency" means a condition on a utility's system which is likely to result in imminent significant disruption of service to customers or is imminently likely to endanger life or property.
5. "Rate" means any price, rate, charge, or classification made, demanded, observed or received with respect to the sale or purchase of electric energy or capacity, or any rule, regulation, or practice respecting any such rate, charge, or classification, and any contract pertaining to the sale or purchase of electric energy or capacity.
6. "Avoided costs" means the incremental costs to an electric utility of electric energy or capacity or both which, but for the purchase from the qualifying facility or qualifying facilities, such utility would generate itself or purchase from another source.
7. "Interconnection costs" means the reasonable costs of connection, switching, metering, transmission, distribution, safety provisions and administrative costs incurred by an electric utility directly related to the installation and maintenance of the physical facilities necessary to permit interconnected operations with a qualifying facility, to the extent such costs are in excess of the corresponding costs which the electric utility would have incurred if it had not engaged in interconnected operations, but instead generated an equivalent amount of electric energy itself or purchased an equivalent amount of electric energy or capacity from other sources. Interconnection costs do not include any costs included in the calculation of avoided costs.
8. "Supplementary power" means electric energy or capacity supplied by an electric utility, regularly used by a qualifying facility in addition to that which the facility generates itself.
9. "Backup power" means electric energy or capacity supplied by an electric utility to replace energy ordinarily generated by a facility's own generation equipment during an unscheduled outage of the facility.
10. "Interruptible power" means electric energy or capacity supplied by an electric utility subject to interruption by the electric utility under specified conditions.
11. "Maintenance power" means electric energy or capacity supplied by an electric utility during scheduled outages of the qualifying facility.
CRITERIA FOR A QUALIFYING FACILITY
A qualifying facility, either a co-generation or small power production facility, must be owned by someone other than a person primarily engaged in the generation or sale of electric power. The membership test is satisfied if more than 50 percent of the equity interest in a facility is owned by persons other than electric utilities and related entities.
A small power production facility may not become a qualifying facility if its capacity exceeds 80 megawatts. Also, its primary energy source (more than 75 percent) must be a renewable resource such as water power, solar energy, wind energy, geothermal energy, biomass, or waste.
The regulations do not place a size limitation on co-generation facilities; however, the regulations do prescribe certain operating and efficiency standards for co-generation facilities.
PROCEDURES FOR OBTAINING QUALIFYING STATUS
The owner or operator of a qualifying facility must furnish FERC with the following information:
1. The name and address of the applicant and location of the facility.
2. A brief description of the facility, including whether such facility is a small power production facility or a co-generation facility.
3. The primary energy source used or to be used by the facility; and
4. The power production capacity of the facility.
The owner or operator of a facility has the option to file an application with FERC for certification that the subject facility is a qualifying facility.
Utility is not required to purchase electric energy from a facility with design capacity of 500 KW or more until 90 days after the owners or operators thereof notify the Utility that it is a qualifying facility, or until 90 days after an application has been made to FERC for certification of the facility.
Subject to the provisions of the Policy and the requirements of Section 201 and 210 of PURPA and Part 292 of the regulations pertaining to said described sections, the Utility assumes the following obligations:
1. To purchase any electric energy and capacity that is made available from a qualifying facility;
2. To sell to any qualifying facility any electric energy and capacity requested.
3. To make interconnections with any qualifying facility to accomplish purchases or sales; and
4. To offer to operate in parallel with a qualifying facility.
5. The Utility will attempt to negotiate with the Customer for the right of the Utility to transmit the electric energy or capacity of the Customer's qualifying facilities to the Utility's power supplier.
SAFETY AND RELIABILITY STANDARDS
Interconnection between the Customer's generation equipment and the Utility's electric system and/or Power Supplier's electric system mandate the establishment by this Utility of reasonable standards to ensure the safety and reliability of the Utility's electric system and/or Power Supplier's electric system, and to protect the Customer and its generating system, the general public, and the Utility's and/or Power Supplier's personnel.
The Utility will permit the Customer to operate its generation equipment in parallel with the Utility's electrical system whenever this can be done without adverse effects on the general public, other utility consumers, or to the Power Supplier or to the Utility's equipment or personnel. Certain protective devices (relays, circuit breakers, etc.) within reasonable Electrical Industry Standards specified by the Utility and/or the Power Supplier must be installed at any location where a Customer desires to operate generation in parallel with the Utility and/or its Power Supplier. The purpose of these devices is to promptly remove the infeed from the Customer's generation whenever a fault occurs, so as to protect the general public and the Utility's facilities and/or the Power Supplier's facilities and personnel from damage due to fault currents produced by the Customer's generation.
The Customer shall design, construct, operate and maintain its generation facility in accordance with Prudent Utility Practice.
For the purpose of this Policy, Prudent Utility Practice is defined as any of the practices, methods and acts, which, in the exercise of reasonable judgment in the light of the facts (including but not limited to the practices, methods and acts engaged in or approved by a significant portion of the electric utility industry prior thereto) known at the time the decision was made, would have been expected to accomplish the desired result at the lowest reasonable cost consistent with good business practices, reliability, safety and expedition, taking into account the fact that Prudent Utility Practice is not intended to be limited to the optimum practice, methods or acts to the exclusion of all others, but rather to be a spectrum of possible practices, methods or acts which could have been expected to accomplish the desired result at the lowest reasonable cost consistent with reliability, safety and expedition. Prudent Utility Practice includes due regard for manufacturers' warranties and requirements of governmental agencies of competent jurisdiction.
The Customer's generation facility and associated equipment shall meet all requirements of applicable state and federal regulations, local, state and national codes and all standards of Prudent Utility Practice.
Any Customer who desires to install a generation facility on its premises and interconnect it with the Utility's electric system must submit to the Utility a written proposal and offer to sell to the Utility electric energy and/or capacity. The proposal shall specify the terms and conditions of the sale.
Prior to connecting the Customer's generation facility in parallel to the Utility's electric system the Customer shall provide to the Utility and its electric power supplier for its review, the specifications for major equipment associated with the Customer's generation facility, detailed electrical diagrams, which diagrams must show all related wiring and safety features of the generation facility, equipment nameplate data including the interface device and the control system of the Customer's power source and a site plan and the operating characteristics for Customer's generator and interconnection, all of the foregoing must be approved by the Utility and/or Power Supplier.
Interconnection shall be made in such manner that, if the voltage from the Utility and/or the Power Supplier is absent, the electrical interconnection is immediately broken.
The Utility and/or the Power Supplier will not assume any responsibility for the protection of the generator(s), or of any portion of the Customer's electrical equipment. The Customer is fully responsible for protecting its equipment in such a manner that faults or other disturbances on the Utility's system and/or the Power Supplier's system do not cause damage to the Customer's equipment, the general public, the Utility's and/or electric Power Supplier's equipment and personnel.
The Utility and the generator owner must comply with all applicable provisions of the State Electrical Code, the National Electric Safety Code and the National Electrical Code.
The Customer's generating system, including interconnecting equipment, shall meet the requirements of and be inspected and approved by the State Electrical Commission and any other public authority having jurisdiction before any interconnection is made to the electric system of the Customer or the Utility.
Wind driven generating facilities, for safety purposes, shall be connected by underground conductor to a point of a horizontal length not less than 1.5 times the fall distance of the generating facility from the Utility facility(s).
To protect appliances and equipment on the premises of the Customer and other consumers, the power generated by the Customer shall not induce excessive distortion to the system's voltage or current sine waves. The maximum allowable distortion must not exceed 10% measured at the consumer's service box.
If the generating system interferes with the operation of Utility's equipment or interferes with other consumer services, the Utility reserves the right to disconnect.
The Customer's (generator owner's) load, in conjunction with the generating system, shall not have a power factor of less than .95 leading or lagging.
To protect the generating system, and to protect all parties from electric shock, the Customer shall supply and install automatic devices to positively disconnect his generating equipment from the system in the event of a disturbance or supply outage on the Utility's system. The Utility shall be allowed access to this device at all times to permit periodic safety tests.
The Customer shall furnish and install a disconnecting switch to be connected between the Utility's electric system and the generating system. This switch must provide a visual opening in the line and shall be located and equipped so that Utility personnel can have access to operate and lock the switch in case of an outage or for work on the Utility's and/or Power Supplier's system.
The Customer shall furnish and install all additional wiring and equipment needed to connect the generating system metering at existing service location. The meter socket shall be installed as close as possible to the existing service meter.
The Utility shall not interconnect with any "Qualifying Facility" as defined in Subpart A of Part 292 of the Regulations under Sections 201 and 210 of PURPA with regard to Small Power Production and Co-generation, if solely by reason of purchases or sales over the interconnection, the Utility would become subject to regulation as a public utility under Part II of the Federal Power Act.
The Customer shall give reasonable notice to the Utility concerning periods during which the Customer generated energy is proposed to be furnished and the estimated amount thereof.
The Customer shall advise the Utility prior to making any revisions to the Customer's generation facility, the control system, or interface between the two power systems after the installation. Any such revision must be acceptable to the Utility.
Should the parallel operation of the Customer's generation facility cause interference or adversely affect voltage, frequency, harmonic content or power factor in the Utility's system or other consumer's service, the Utility may require disconnection of parallel operation until the condition has been corrected.
The Utility shall be responsible for maintenance of all equipment supplied by the Utility. The Customer shall be responsible for the maintenance of his generating, protective equipment and interconnection equipment. Complete maintenance records must be maintained by the Customer and be available for the Utility's review.
The Utility reserves the right to promulgate such other safety and reliability standards necessary for the operation of its system as may be allowed or required by law.
The Utility reserves the right to inspect on demand all protective equipment including relays and circuit breakers owned and installed by the Customer at the point of interconnection.
AVAILABILITY OF ELECTRIC UTILITY SYSTEM COST DATA
The headquarters office of the Utility will maintain for public inspection appropriate data of Utility's power and energy costs. Upon request the Utility will provide to interested persons the required system cost data of its supplying Utility and the rates at which the Utility currently purchases energy and capacity.
PURCHASES AND RATES FOR PURCHASES BY UTILITY
The rates at which the Utility shall purchase electric power and energy from a qualifying facility shall be just and reasonable to the consumers of the Utility and shall be in the public interest. Such rates shall not discriminate against qualifying co-generation and small power production facilities.
The Utility will purchase power and energy from a qualifying facility at the avoided cost unless a lower rate is agreed to by the operators of the qualifying facility. The purchase price may be established at the avoided costs over a specific contract term. This avoided cost will, of course, vary from the avoided cost at a specific time of delivery.
1. The Utility will purchase energy (KWH) recorded on the meter or meters measuring energy from the Customer's generating system constructed on or after November 9, 1978 at a rate equal to its avoided cost which is deemed to be the net rate the Utility would have paid its wholesale power supplier for the energy only.
2. The Utility will also purchase capacity (demand KW) from the Customer’s systems constructed on or after November 9, 1978 that can schedule and guarantee firm delivery during the various peak use periods. Payment, therefore, will be at a rate not greater than the Utility's avoided cost for demand KW (capacity) which is deemed to be the net rate the Utility would have paid its wholesale power supplier. However, such rate for purchase of capacity shall be subject to adjustment to reflect properly the avoided cost.
In determining the avoided cost the following factors shall to the extent practicable, be taken into account.
a. The data provided pursuant to 292.302 (b), (c), or (d) of Subpart C of said Regulations - Arrangements between Electric Utilities and Qualifying Co-generation and Small Power Production Facilities under Section 210 of PURPA.
b. The availability of capacity or energy from a qualifying facility during the system daily and seasonal peak periods, including:
1. The ability of the utility to dispatch the qualifying facility;
2. The expected or demonstrated reliability of the qualifying facility;
3. The terms of any contract or other legally enforceable obligation, including the duration of the obligation, termination notice requirement and sanctions for noncompliance;
4. The usefulness of energy and capacity supplied from a qualifying facility during system emergencies, including its ability to separate its load from its generation;
5. The individual and aggregate value of energy and capacity from qualifying facilities on the electric utility's system; and
6. The smaller capacity increments and the shorter lead times available with additions of capacity from qualifying facilities.
c. The relationship of the availability of energy or capacity from the qualifying facility as derived in paragraph (e)(2) of Section 292.304 of said regulations, to the ability of the electric utility to avoid costs, including the deferral of capacity additions and the reduction of fossil fuel use; and
d. The costs or savings resulting from variations in line losses from those that would have existed in the absence of purchases from a qualifying facility, if the purchasing electric utility generated an equivalent amount of energy itself or purchased an equivalent amount of electric energy or capacity.
3. The Utility may establish rates at a lower rate than its avoided cost as determined according to pertinent PURPA regulations for purchases of energy or capacity from the Customer's generation system constructed before November 9, 1978 provided the Utility determines that the lower rate will provide sufficient encouragement of co-generation and small power production.
4. When the Utility has more energy or capacity than the Utility requires to meet its total system load the purchase rate for energy or capacity from the Customer shall only include the payment for energy or capacity which the Utility can use to meet its total system load.
5. The Utility shall not be required to deliver unusable energy or capacity to another utility for subsequent sale.
6. If the purchase of capacity by the utility from the Customer causes a decrease in the level of the purchase of capacity by the Utility from its power supplier resulting in losses of revenues to the power supplier and the power supplier assigns such loss of revenue to the Utility then the Utility will deduct such losses from the previously calculated avoided cost and shall pay the Customer accordingly.
7. The Utility shall put in effect standard rates for purchases from customers with qualifying facilities with a design capacity of 100 kilowatts or less. Such standard rate shall equal the Utility's avoided cost determined according to pertinent PURPA regulations. (See Exhibit A attached.)
8. The Utility may establish standard rates for purchase of energy or capacity from the Customer which differentiates among qualifying facilities on the basis of supply characteristics of the particular technology.
9. Notwithstanding any other provisions of the Policy, the Utility will not be required to purchase electrical energy during any period:
a. involving a system emergency if such purchase would contribute to such emergency;
b. while the Customer has breached any provision of an interconnection and electric sales agreement for small power production facilities between the Utility and the Customer.
c. involving the risk of loss to property or injury to persons by reason of such purchases; or
d. when the systems are not operated in parallel;
e. when due to operational circumstances, purchases of electric energy or capacity from Customer will result in cost greater than those which the Utility would incur if it did not make such purchase, but instead generated an equivalent amount of energy itself or purchased from its wholesale power supplier an equivalent amount of energy. However, the Utility must notify the Customer in time for the Customer to cease the delivery of energy or capacity to the Utility.
RATES FOR SALES BY UTILITY
The rates for sales by Utility to a qualifying facility shall be just, reasonable and in the public interest and nondiscriminatory. Such rates shall be similar to the rates in effect for consumers having the same characteristics as the load or other cost related characteristics of other non-generating consumer of the Utility.
Subject to the provisions of this policy and the applicable PURPA statutes and regulations the Utility, upon request from a qualifying facility will provide:
1. Supplementary power;
2. Backup power;
3. Maintenance power; and
4. Interruptible power.
The rate for supplementary power, maintenance power and interruptible power shall be the rate charged to other consumers having the same characteristics as the load or other cost related characteristics of other non-generating consumers of the Utility. The rate for interruptible power shall not be lower than the rate for firm service.
However, any of the above services may be waived by FERC if the Utility can demonstrate that such service will:
1. Impair Utility's ability to render adequate service to its consumers; or
2. Place an undue burden on the Utility.
The Utility will require each Customer who supplies any portion of his electrical requirements by his generating facilities to contract for backup power.
For furnishing backup power to the Customer the utility will determine the rate to be charged as follows:
1. The Utility will determine its annual fixed cost of Plant Investment experienced on its system (all cost except power).
2. The Utility will divide such annual fixed costs by its total Plant Investment.
3. The percentage determined in (2) above will be multiplied by the additional investment in plant necessary to provide such backup power.
4. The result determined in (3) above shall be the annual charge for furnishing such backup power.
5. The annual charge determined in (4) above shall be divided by twelve to determine the monthly charge, which charge shall be billed monthly.
Provided, however, the foregoing charge for backup power shall not apply during such time the Customer is purchasing capacity and energy from the Utility.
During the time the Customer is purchasing capacity and energy from the Utility, the Customer shall pay the same rate the Utility charges for supplementary power, maintenance power and interruptible power, in lieu of the backup power rates.
The Customer shall pay all "interconnection cost" which cost is defined as all cost in excess of those costs which the Utility would have incurred if it had not engaged in interconnected operations with the Customer's generation facilities and includes the definition of "Interconnection Cost" as defined in the pertinent PURPA regulations referred to herein.
In event generating facilities of the qualifying applicant are multiple, it may be required that the facilities be interconnected by their own common network rather than use the Utility's facilities for interconnection. This requirement is to avoid degrading service on Utility's facilities and permit planning for adequate transformations, if required, as well as line facilities for existing service capacity and the added generation.
A qualifying facility will require significantly more metering than most industrial customers. In the event the qualifying applicant is a consumer of the Utility and qualifies only for energy credit of avoided costs, two meters, one of which will replace the existing service meter and both equipped with détente, will be used. The meter replacing the existing service meter will be furnished, installed, maintained and calibrated by the Utility at the Utility's expense and will be used to measure the amount of energy delivered by the Utility to the qualifying applicant. The second meter, which will be used to measure the energy delivered by the qualifying applicant to the Utility, will be furnished by the qualifying applicant and installed, maintained and calibrated by the Utility at the qualifying applicant's expense. The meter furnished by the qualifying applicant shall be approved by the Utility.
In the event both capacity and energy are produced and agreed that the same be delivered into the facilities of the Customer, demand and energy metering will be required so that proper credit can be provided according to the time coordination with the Customer's delivery facilities into the system and out of the system facilities by KW and KVAR. Measurements shall be provided at the expense of the qualifying Customer so that proper monitoring can be done of the power factor and assure capacity and energy credits in proper proportion.
Totalizing metering may be desirable but is not required. The Utility reserves the right to require such necessary meters to properly measure the electric power and energy into its system and the outflow of electric power and energy from the Customer's generator.
Each Customer shall enter into a contract for a minimum original term of ten (10) years and thereafter until terminated by giving at least twenty-four (24) months previous notice of such termination in writing, but the Utility may require a contract for a longer original term of years where the requirement is justified by the circumstances.
The Utility reserves the right to terminate the Customer's contract under this policy at any time upon written notice to the Customer in the event that the Customer violates any of the terms or conditions of this policy or the contract or operates his generating facilities in a manner which is detrimental to the Utility or any of its consumers. In the event of early termination of a contract under this policy or the contract, the Customer will be required to pay the Utility for the costs due to such early cancellation.
The exact conditions governing the connection and operation of a qualifying facility will be as set forth in contract between the owners or operators of each qualifying facility and the Utility and/or the Power Supplier.
If required by the rules and regulations of the Rural Utilities Service, the contract shall be subject to the approval of the Administrator of the Rural Utilities Service.
The headquarters office of the Utility shall provide appropriate reference material for the benefit of anyone interested in co-generation and small power production.
To the extent that any of the provisions of this Policy conflict with Part 292, Chapter I of Title 18, Code of Federal Regulations, and Sections 201 and 210 of PURPA and amendments thereto, the provisions of said law and regulations govern.
EFFECTIVE DATE: July 23, 2009
DATE ADOPTED: December 21, 2000
DATE REVISED: July 23, 2009
DATE REVIEWED: April 18, 2013
Pat Scheier, Secretary