My name is Maril Hazlett, and I represent CEP. Thank you for the opportunity to address the Commission on the proposed regulations for net metering and interconnection (NMI). We also appreciate the work of the KCC staff in facilitating an open, transparent stakeholder process on the topic. CEP participated in that process for both the RES and net metering.

To summarize CEP’s position: We do not support these regulations in their current draft form. However, we have been very encouraged by the process. There have been many productive discussions among the various stakeholders, including the utilities.

We would like to see this stakeholder discussion continue in order to develop consensus regulations that achieve the following goals:

1)              The regulations - in accordance with the letter and intent of the net metering and easy connect act - should establish a uniform statewide interconnection standard for investor-owned utilities. A statewide standard will establish regulatory certainty. That certainty is critical for supporting economic development and making Kansas regionally competitive in small renewables installation and manufacturing;

2)              The regulations should reflect previous stakeholder suggestions that the KCC model the interconnection standards on the IREC best practices model, with respect for the FERC small generator interconnection based standards already developed by the Kansas rural electric cooperatives; and

3)              These regulations should be simple and easily understood, as they are public documents that will be widely accessed through the internet by not just utilities, but also by the consumers, ratepayers, installers, investors, government entities, various public interest organizations, researchers, and others.

WHY NET METERING AND INTERCONNECTION MATTER

These regulations are extremely important – how well they are written will make or break net metering and distributed generation in Kansas. If the regulations are unclear or inadequate, then they will discourage net metering and interconnection rather than facilitate them, and that will undermine the intent of the Act.

What transmission is to big wind development, interconnection standards are to small wind, solar, and biomass. Without good interconnection standards, the little guys in Kansas miss out on opportunities to install and develop renewables. Those little guys (and medium size guys, and even some large corporations) are ratepayers, consumers, schools, churches, working farms and ranches, as well as other small businesses and renewables start-ups. They represent the future of distributed generation in the state.

These policies also have financial consequences. Net metering and interconnection are an important part of the state’s policy environment for renewables. Developers and manufacturers evaluate these policies as part of their decision whether or not to look at Kansas. Good, consistent policies are a critical part of economic development.

When it comes to renewables development and manufacturing, Kansas is locked in competition with its regional rivals, such as Colorado, Iowa, Illinois, and Missouri. It’s no secret that when it comes to net metering and interconnection, Kansas was already far behind the rest of the nation, as well as these four states. Forty-four other states passed net metering before we did, and we are one of only eleven states without a uniform statewide interconnection standard.[1] We are starting from the back of the pack and trying to build credibility. To do that, we need good regulations that send a clear policy signal that Kansas is open for business for all scales of renewables.

PROBLEMS WITH THE PROPOSED REGULATIONS

This Commission has already shown itself to be exceptionally apt at handling complicated transmission issues. The net metering and interconnection regulations produced under their watch should meet a similar high standard.

The draft regulations before you do not accomplish this. There is plenty of other policy, legal, and technical testimony on this point, and CEP would like to align itself with the comments of the Interstate Renewable Energy Council (IREC), Environmental Law and Policy Center (ELPC), Sierra Club, K-State Wind Application Center, Alan Lehman of George Butler and Associates, as well as others. On technical engineering points, such as external disconnect switches for installations of 25 kW and below, we defer to Ruth Douglas-Miller of K-State.

From CEP’s perspective, here are the problems with the current draft:

·       It does not establish statewide uniform and simple interconnection standards as instructed in the law. Instead, it maintains the status quo of utility-by-utility interconnection standards, exactly the non-uniform patchwork regulation that the law was intended to redress. The language also lacks clarity. For example, the strawman regulations used in the stakeholder process incorporated language from the statute, while this subsequent version does not. This version also appears to have dropped the sample interconnection application.

·       The current draft does not balance utility interests with consumer interests. To quote an assessment from IREC staff posted on their website: “The rules read more like guidelines for protective measures utilities should take to protect themselves from net-metered systems.”[2]  This assessment is of great concern. At all costs, Kansas needs to avoid leaving any impression that its energy policy is restricted to a closed conversation between utilities and regulators, with no room for other participants – especially as that is not the case.

·       The current draft sends a mixed message on where Kansas stands on renewable energy policies, and that mixed message will discourage economic development. We now have a pretty good net metering law in place. However, these regulations do not help implement that law. Instead, they undermine it with vagueness and contradiction. That discordance sends a mixed message to renewables businesses looking to open up shop here. It raises the fear that while Kansas might pass renewables legislation, we will not follow through with the necessary regulations.

Mixed messages and regulatory uncertainty have financial consequences. For example, NexGen, a Colorado-based company that installs small and community wind and solar projects, has delayed its expansion plans for Kansas. In a recent news story its vice-president Ted Rose was quoted as saying: "Obviously, Kansas has fantastic wind potential, and there are a stack of municipalities and school districts and businesses that want to work with us. Unfortunately, we're in a holding pattern. Without the uniform standard, without a clear signal of how projects will get done, they won't get done."[3]

·       The current draft does not address the issue of third party ownership, which was raised by at least two of the stakeholders, SunEdison and NexGen. In CEP’s conversations with the public – especially schools and churches - this issue comes up a great deal. The regulations need to address this question and provide a clear answer, one way or another.

The answer to that question will also have economic consequences. CEP has not been in contact with SunEdison, but we noted that they had submitted comments for the stakeholder process, and we did a little research. We came across a recent newspaper article in the Washington Post that noted SunEdison was about to begin a joint venture that could generate up to $1.5 billion in new projects.[4] That is the level of company asking about third party ownership in Kansas. This is also an example of a company who will be looking at these regulations, and seeing if they want to do business here. 

SOLUTION

CEP would support: (1) A continuing stakeholder discussion to develop a consensus set of uniform, simple, statewide net metering and interconnection regulations that take these concerns into account, (2) At a minimum, those stakeholders should include KCPL, Westar, IREC, ELPC, K-State Wind Application Center, Sierra Club, CEP, and representatives of the KCC, and (3) The resulting regulations should be modeled on best practices, with respect for the standards already implemented by the Kansas rural electric coops.