E8-18800. Interconnection of Distributed Resources

AGENCY:

Rural Utilities Service, USDA.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The Rural Utilities Service, an agency delivering the U.S. Department of Agriculture's Rural Development Utilities Programs (Rural Development and/or Agency) proposes to require that Rural Development Electric Program borrowers will be responsible for establishing and maintaining a written standard policy relating to the Interconnection of Distributed Resources (IDR). The intended effect is that owners of distributed resources know what they have to do to connect their facilities to the electric power systems of borrower electric cooperatives.

DATES:

Written comments must be received by Rural Development Utilities Programs no later than October 14, 2008.

ADDRESSES:

Submit comments by either of the following methods: Federal eRulemaking Portal: Go to http://www.regulations.gov and, in the lower “Search Regulations and Federal Actions” box, select “Rural Utilities Service” from the agency dropdown menu, then click on “Submit.” In the Docket ID column, select RUS-08-Electric-0001 to submit or view public comments and to view supporting and related materials available electronically. Information on using Regulations.gov, including instructions for accessing documents, submitting comments, and viewing the docket after the close of the comment period, is available through the site's “User Tips” link.

Postal Mail/Commercial Delivery: Please send your comment addressed to Michele Brooks, Director, Program Development and Regulatory Analysis, USDA Rural Development, 1400 Independence Avenue, SW., STOP 1522, Room 5159, Washington, DC 20250-1522. Please state that your comment refers to Docket No. RUS-06-Agency-0052.

Other Information: Additional information about Rural Development and its programs is available on the Internet at http://www.rurdev.usda.gov/​index.html.

FOR FURTHER INFORMATION CONTACT:

Georg Shultz, USDA—Rural Development Utilities Programs, 1400 Independence Avenue, SW., Washington, DC 20250-1569, telephone [phone] or e-mail to [e-mail].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This proposed rule has been determined to be not significant for purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget.

Catalog of Federal Domestic Assistance

The program described by this proposed rule is listed in the Catalog of Federal Domestic Assistance Programs under number 10.850, Rural Electrification Loans and Loan Guarantees. This catalog is available on a subscription basis from the Superintendent of Documents, the United States Government Printing Office, Washington, DC 20402-9325 or at http://www.cfda.gov.

Executive Order 12372

This proposed rule is excluded from the scope of Executive Order 12372, Intergovernmental Consultation, which may require consultation with State and local officials. See the final rule related notice entitled, “Department Programs and Activities Excluded from Executive Order 12372” (50 FR 47034).

Information Collection and Recordkeeping Requirements

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), comments are invited on this information collection for which the Agency intends to request approval from the Office of Management and Budget (OMB).

Comments on this notice must be received by October 14, 2008.

Comments are invited on (a) whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the agency's estimate of burden including the validity of the methodology and assumption used; (c) ways to enhance the quality, utility and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques on other forms or information technology.

Comments may be sent to Michele Brooks, Director, Program Development and Regulatory Analysis, Rural Development, U.S. Department of Agriculture, 1400 Independence Avenue, SW., Stop 1522, Room 5166 South Building, Washington, DC 20250.

Title: 7 CFR part 1730, Interconnection of Distributed Resources.

OMB Control No.: 0572-XXXX.

Type of Request: New information collection.

Abstract: The Agency manages loan programs in accordance with the Rural Electrification Act of 1936, 7 U.S.C. 901 et seq., as amended (RE Act).

Distributed resources have become an important addition to the nation's energy supply. However often times the owners of distributed resources have a difficult time connecting their distributed resources to the electric power system of rural electric cooperatives. This regulation will facilitate the Interconnection of Distributed Resources (IDR) by requiring that borrower electric cooperatives publish their requirements for this interconnection in a written document that is available to the public.

Title 7 CFR part 1730 Electric System and Maintenance, subpart C Interconnection of Distributed Resources, establishes a requirement for borrowers to develop a written standard policy relating to the IDR having an installed capacity of not more than 10 megavolt amperes (MVA) at the point of common coupling.

Estimate of Burden: Public reporting burden for this collection of information is estimated to average 1/2 hour per response.

Respondents: Not for profit organizations, business or other for profit.

Estimated Number of Respondents: 150.

Estimated Number of Responses per Respondent: 1.

Estimated Annual Responses: 150.

Estimated Total Annual Burden on Respondents: 75 hours.

Copies of this information collection can be obtained from Joyce McNeil, Program Development and Regulatory Analysis. Telephone: [phone].

All responses to this information collection and recordkeeping notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record.

National Environmental Policy Act Certification

The Agency has determined that this proposed rule will not significantly affect the quality of the human environment as defined by the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.). Therefore, this action does not require an environmental impact statement or assessment.

Regulatory Flexibility Act Certification

It has been determined that the Regulatory Flexibility Act is not applicable to this proposed rule since the Agency is not required by 5 U.S.C. 551 et seq. or any other provision of law to publish a notice of proposed rulemaking with respect to the subject matter of this rule.

Unfunded Mandates

This rule contains no Federal mandates (under the regulatory provisions of Title II of the Unfunded Mandates Reform Act of 1995) for State, local, and tribal governments for the private sector. Thus, this rule is not subject to the requirements of section 202 and 205 of the Unfunded Mandates Reform Act of 1995.

Executive Order 12988

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. The Agency has determined that this proposed rule meets the applicable standards in section 3 of the Executive Order.

Background

Rural Development Utilities Programs proposes to amend 7 CFR part 1730 by adding a subpart C titled “Interconnection of Distributed Resources”. This rule will require that Rural Development Electric Program borrowers shall be responsible for establishing and maintaining a written standard policy relating to the interconnection of distributed resources (IDR). This rule will allow owners of distributed resources to ascertain the requirements of borrower electric cooperatives regarding connection to the electric cooperative facilities by referring to written borrower standards for IDR.

This proposed rule is needed because currently the owners of distributed resources often do not know what they must do to connect their facilities to the electric power system of a borrower electric cooperative. This proposed rule would benefit the owners of distributed resources. The purpose of this action is to allow the owners of distributed resources to know exactly what they must do to connect their facilities with the electric power systems of borrower electric cooperatives.

The United States electric power system (electric power system) consists of three distinct components: Generation facilities, transmission facilities (including bulk transmission and subtransmission facilities) and distribution facilities. Specific definitions of generation, transmission and distribution facilities are located at 7 CFR 1710.2.

Rural Development Electric Program borrowers have always had a legal obligation to the Agency to maintain their respective systems. In satisfying these legal obligations, a borrower furthers the purposes of the Rural Electrification Act of 1936, as amended (7 U.S.C. 901 et seq.) while also preserving the value of its system to serve as collateral for repayment of the Agency assistance. Generally speaking, the scope of these legal obligations is frequently measured against prudent utility practices (PUP). Thus, it is entirely appropriate for the Agency to expect that its borrowers will be aware of and follow developing IDR standards using PUP. Voluntary standards using PUP are emerging within the private sector and the requirements of this proposed rule are consistent with those voluntary standards.

This rule refers to an international standard published by the Institute of Electrical and Electronic Engineers (IEEE). It also allows individual borrowers to create their own additional technical requirements to meet local conditions that are consistent with PUP. The regulation applies to IDR having an installed capacity of not more than 10 megavolt amperes (MVA). This specific value was chosen to correspond with the international standard published by IEEE.

This regulation requires liability insurance for distributed resource facilities that are interconnected to borrowers' electric systems. Current federal regulations do not specify the amount of liability insurance required except when the distributed resource facility is owned by a Rural Development Electric Program borrower, contractor, engineer, or architect. Moreover, the Agency expects that borrower ownership of distributed resources will be uncommon. Comments are specifically requested on this issue, in particular, whether the regulation should specify a minimum amount of liability insurance, and if so, what minimum amount should be required.

List of Subjects

• Electric power; Loan program—energy; Reporting and recordkeeping requirements; Rural areas

For reasons set forth in the preamble, the Agency proposes to amend 7 CFR, Chapter XVII, part 1730 by adding subpart C to read as follows:

PART 1730—ELECTRIC SYSTEM OPERATIONS AND MAINTENANCE

1. The authority citation for part 1730 continues to read as follows:

Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.

2. Add Subpart C to read as follows:

Subpart C—Interconnection of Distributed Resources

1730.60

General.

1730.61

Policy.

1730.62

Definitions.

1730.63

IDR policy criteria.

1730.64

Power purchase agreements.

1730.65

Effective dates.

1730.66

Administrative waiver.

1730.67-99

[Reserved]

Subpart C—Interconnection of Distributed Resources

§ 1730.60

General.

Each electric program distribution borrower (as defined in § 1710.2) is responsible for establishing and maintaining a written standard policy relating to the Interconnection of Distributed Resources (IDR) having an installed capacity of not more than 10 megavolt amperes (MVA) at the point of common coupling.

§ 1730.61

Policy.

The Distributed Resource facility must not cause significant degradation of the safety, power quality, or reliability on the borrower's electric power system or other electric power systems interconnected to the borrower's electric power system. The Agency encourages borrowers to consider model policy templates developed by knowledgeable and expert institutions, such as, but not limited to, the National Association of Regulatory Utility Commissioners, the Federal Energy Regulatory Commission and the National Rural Electric Cooperative Association. The Agency encourages all related electric borrowers to cooperate in the development of a common Distributed Resource policy.

§ 1730.62

Definitions.

“Distributed Resources” as used in this subpart means sources of electric power that are not directly connected to a bulk power transmission system, having an installed capacity of not more than 10 MVA, connected to the borrower's electric power system through a point of common coupling. Distributed resources include both generators and energy storage technologies.

“Responsible Party” as used in this subpart means the owner, operator or any other person or entity that is accountable to the borrower under the borrower's interconnection policy for Distributed Resources.

§ 1730.63

IDR policy criteria.

(a) General.

(1) The borrower's IDR policy and procedures shall be readily available to the public and include, but not limited to, a standard application, application process, application fees, and agreement.

(2) All costs to be recovered from the applicant regarding the application process or the actual interconnection are to be clearly explained to the applicant and authorized by the applicant prior to the borrower incurring these costs. The borrower may require separate nonrefundable deposits sufficient to insure serious intent by the applicant prior to proceeding either with the application or actual interconnection process.

(3) IDR policies must be approved by the borrower's Board of Directors.

(4) The borrower may establish a new rate classification for customers with Distributed Resources.

(5) IDR policies must provide for reconsideration and updates every three years or more frequently as circumstances warrant.

(b) Technical requirements.

(1) IDR policies must be consistent with prudent electric utility practice.

(2) IDR policies must incorporate the standard 1547 as promulgated and amended by the Institute of Electrical and Electronic Engineers (IEEE). The title of IEEE Standard 1547 is “IEEE Standard for Interconnecting Distributed Resources with Electric Power Systems”. You may obtain a copy of IEEE Standard 1547 from: IEEE, 3 Park Avenue, New York, NY 10016-5997.

(3) IDR policies must provide for appropriate electric power system disconnect facilities, as determined by the borrower, which shall include a lockable disconnect, a visible open, and fusing, that are readily accessible to and operable by authorized personnel at all times.

(4) IDR policies must provide for borrower access to the Distributed Resources facility during normal business hours and all emergency situations.

(c) Responsible party obligations. IDR policies must provide for appropriate Responsible Parties to assume the following risks and responsibilities:

(1) A Responsible Party must agree to maintain appropriate liability insurance as outlined in the borrower's interconnection policy.

(2) A Responsible Party must be responsible for the Distributed Resources compliance with all national, State, local government requirements and electric utility standards for the safety of the public and personnel responsible for utility electric power system operations, maintenance and repair.

(3) A Responsible Party must be responsible for the safe and effective operation and maintenance of the facility.

(4) Only Responsible Parties may apply for interconnection and the Responsible Party must demonstrate the financial and managerial capability to develop, construct and operate the distributed resources.

§ 1730.64

Power purchase agreements.

Nothing in this subpart requires the borrower to enter into purchase power arrangements with the owner of the Distributed Resources.

§ 1730.65

Effective dates.

(a) Each electric program borrower with an approved electric program loan as of [DATE OF PUBLICATION OF THE FINAL RULE] shall have an IDR policy board approved and in effect no later than [DATE 2 YEARS FROM DATE OF PUBLICATION OF THE FINAL RULE].

(b) An electric program borrower that submits an application to the Agency for financial assistance on or after [DATE 2 YEARS FROM DATE OF PUBLICATION OF THE FINAL RULE] shall include with its application package a letter of certification executed by the General Manager that the borrower meets the requirements of this subpart.

§ 1730.66

Administrative waiver.

The Administrator may waive in all or part, for good cause, the requirements and procedures of this subpart.

§§ 1730.67-1730.99

[Reserved]

Dated: July 11, 2008.

James M. Andrew,

Administrator, Rural Utilities Service.