DATE:	December 23, 2013
TO:	Office of Commission Clerk (Stauffer)
FROM:	Office of Industry Development and Market Analysis (Crawford, Clemence) Division of Economics (Garl) Division of Engineering (Matthews) Office of the General Counsel (Corbari)
RE:	Docket No. 130225-EQ – Petition for approval of modification to standard interconnection agreements contained in tariffs, by Florida Power & Light Company.
AGENDA:	01/07/14 – Regular Agenda – Interested Persons May Participate
COMMISSIONERS ASSIGNED:			All Commissioners
PREHEARING OFFICER:			Administrative
CRITICAL DATES:			02/13/14 (90-Day Deadline for Rule Waiver)
SPECIAL INSTRUCTIONS:			None

 

 Case Background

In 2002, the Florida Public Service Commission (Commission) promulgated Rule 25-6.065, Florida Administrative Code (F.A.C.), referred to henceforth as “the rule,” concerning the interconnection of small photovoltaic systems of investor-owned utilities (IOUs).  In 2008, the Commission substantially revised and expanded the rule, which now addresses the interconnection and net metering of customer-owned renewable generation.  The revised rule  provides the terms and conditions for all customers owning renewable generation systems up to 2 Megawatts (MW) to interconnect with the grid, and allows these systems to be net metered, wherein they receive credit for the energy they deliver to the grid.  Subsection (3) of the rule requires each investor-owned utility in Florida to file a tariff with the Commission allowing for customer-owned renewable generation.

 

On August 22, 2013, Florida Power & Light Company (FPL) filed its “Petition for Approval of Modification to Standard Interconnection Agreement.”  On October 25, 2013, FPL filed an amended petition for approval of modification to standard interconnection agreements and for permanent rule waiver pursuant to Section 120.542, Florida Statutes (F.S.), and Rule 28-104.002, F.A.C.  In its petition, FPL requests the authority for five changes:

 

1)      A waiver of the portion of Rule 25-6.065(6)(a), F.A.C., that requires customers to locate the manual disconnect switch on renewable generation systems adjacent to the meter;

2)      A provision that allows the manual disconnect switch to be placed in a location not adjacent to the meter if proper noticing requirements are met;

3)      Elimination of the manual disconnect switch requirement on UL 1741 compliant inverter-based customer-owned renewable generation systems;

4)      Modification of the indemnity and insurance provisions in order to eliminate conflicts with statutory limitations on government authority; and

5)      Inclusion of the “Gross Power Rating” definition in the Standard Interconnect Agreements to make the definition readily accessible to customers and reduce the errors in the application process.

 

FPL’s request for rule waiver is addressed in Issue 1.  The remaining items are addressed in Issue 2.

 

Notice of FPL’s permanent waiver request was published in the Florida Administrative Weekly on October 30, 2013, and no written comments were received during the 14-day comment period.  On October 31, 2013, staff requested additional information from FPL regarding several aspects of the waiver request.  Staff received responses to its inquiry from FPL on November 15, 2013.  Pursuant to Section 120.542(8), F.S., a determination on FPL’s waiver request must be made by February 13, 2014. [1]

 

The Commission has jurisdiction in this matter pursuant to Sections 120.542, 350.127, 366.02, 366.04, 366.041, 366.05, 366.81, 366.82, 366.91 and 366.92. F.S., and Rule 28-104.002, F.A.C.

 

 

 

Discussion of Issues

 

Issue 1: 

 Should the Commission approve FPL's request for permanent waiver of the manual disconnect switch location requirement portion of Rule 25-6.065(6)(a), F.A.C.?

Recommendation: 

 Yes.  The Commission should grant FPL’s request for permanent waiver of the manual disconnect switch location requirement portion of Rule 25-6.065(6)(a), F.A.C., provided that: (1) mounting the manual disconnect switch adjacent to the meter socket would not be practical for engineering design or safety reasons; (2) FPL and the customer mutually agree on where the manual disconnect switch should be located; (3) the location of the manual disconnect switch meets all applicable safety and engineering standards; and (4) the customer is required to install a permanent, weather-proof plaque adjacent to the FPL meter socket, which clearly indicates the location of the manual disconnect switch on the customer’s premises.    (Corbari, Matthews)

Staff Analysis: 

 Under Section 120.542, F.S., and Rule 28-104.002(2), F.A.C., a person affected by a Commission rule may petition the Commission for a waiver of that rule.  The Commission has authority to grant a waiver under Section 120.542(2), F.S., which states:

 

Variances and waivers shall be granted when the person subject to the rule demonstrates that the purpose of the underlying statute will be or has been achieved by other means by the person and when the application of a rule would create a substantial hardship or would violate principles of fairness.  For purposes of this section, “substantial hardship” means a demonstrated economic, technological, legal, or other type of hardship to the person requesting the variance or waiver.

 

Rule 28-104.002(2), F.A.C., states in part:

 

 (2) The petition must include the following information:

 

(g) The specific facts that demonstrate a substantial hardship or a violation of principles of fairness that would justify a waiver or variance for the petitioner;

 

(h) The reason why the variance or the waiver requested would serve the purposes of the underlying statute;

 

On August 22, 2013, FPL filed a petition for approval of modifications to its Standard Interconnection Agreements (SIAs).  One modification proposed by FPL was a provision concerning the placement of the manual disconnect switch (switch) of a customer-owned renewable generation system.  FPL provided that, in the event FPL determined that it would be impractical from a safety or engineering design practice, the switch would be installed in a location on the customer’s premises that was mutually agreed upon by FPL and the customer, and which met any applicable safety and design considerations.  In the event the switch was mounted in a location not adjacent to the meter, FPL would also require that the customer install a permanent, weather-proof plaque adjacent to the FPL meter socket, indicating the location of the switch on the customer’s premise.

 

Staff conducted several informal conferences with FPL representatives to discuss certain questions and concerns of staff with regard to some of FPL’s proposed modifications.  Of particular concern was that the proposed provision permitting the manual disconnect switch to be mounted in a location other than adjacent to the meter socket did not appear to comply with Rule 25-6.065(6)(a), F.A.C., which states:

 

Each investor-owned utility’s customer-owned renewable generation Standard Interconnection Agreement may require customers to install, at the customer’s expense, a manual disconnect switch of the visible load break type to provide a separation point between the AC power output of the customer-owned renewable generation and any customer wiring connected to the investor-owned utility’s system.  Inverter-based Tier 1 customer-owned renewable generation systems shall be exempt from this requirement, unless the manual disconnect switch is installed at the investor-owned utility’s expense.  The manual disconnect switch shall be mounted separate from, but adjacent to, the meter socket and shall be readily accessible to the investor-owned utility and capable of being locked in the open position with a single investor-owned utility padlock.

 

During discussions with FPL, staff inquired whether FPL had encountered circumstances that warranted the switch not being mounted adjacent to the meter socket.  FPL responded that it had encountered such circumstances and currently had several renewable generation system customers with manual disconnect switches mounted in locations other than adjacent to the meter socket.  Since FPL’s current SIA requires the switch to be mounted adjacent to the meter socket, FPL required those customers whose systems included manual disconnect switches not mounted adjacent to the meter socket to sign a supplemental agreement[2] providing for the switch to be mounted apart from the FPL meter socket at a location agreed to by the customer and FPL. 

 

FPL explained that it did not install the renewable energy systems; rather, the customers installed the systems.  It was not until after the systems were installed and the customer requested connection that FPL became aware of the switch location.  Where the manual disconnect switch was not mounted adjacent to the meter socket, FPL engineers tried to avoid causing the customer to incur additional costs or adverse system impact.  After reviewing each system, FPL engineers connected the customer’s system, after ensuring that the manual disconnect switch was readily accessible, the customer installed signage at the meter providing the location of the switch, and the system met all safety and engineering design standards.

 

 

 

FPL Petition for Permanent Waiver of Portion of Rule 25-6.065(6)(a)

 

            In its amended petition, FPL seeks a waiver of the portion of Rule 25-6.065(6)(a), F.A.C., that requires customers to locate the manual disconnect switch of renewable generation systems adjacent to the meter socket.  FPL asserts that the waiver of this requirement will promote customer renewable generation usage and reduce costs.

 

FPL states that each of the statutes implemented by the rule concerns renewable energy and reflects the intent of the Legislature to promote the development of renewable energy in Florida.  Specifically, Section 366.81, F.S., sets out the Legislature’s finding and intent, providing that “it is critical to utilize the most efficient and cost-effective demand-side renewable energy systems . . .” and “that the use of solar energy, renewable energy sources [and] highly efficient systems . . . be encouraged.”  FPL asserts that none of the statutes implemented by the rule require a customer-owned renewable system to have a manual disconnect switch, or dictate where the switch must be located.  Rather, the Legislature left such matters to the expertise of the Commission for determination.

 

FPL asserts that strict compliance with the rule could create a substantial hardship for a range of FPL customers that wish to install renewable generation systems on their premises.  For example, in order to comply with the rule, FPL customers who wish to install a renewable energy system in a high-rise building would have to run conductors a substantial distance from the roof to the ground floor to connect to a manual disconnect switch adjacent to the meter socket, and then to their AC wiring. In addition, other building configurations may require similar excessively long cable runs or alterations to the building structure, or may be impractical for safety or engineering reasons.[3] In many circumstances, strict compliance with Rule 25-6.065(6)(a), F.A.C., results in increased installation costs for the customer.  In addition, longer cable runs increase energy losses, reducing the customers’ benefit gained from the renewable energy systems, and increasing their need to buy electricity from their local utility. These additional potential costs create a substantial hardship and may discourage some customers from installing renewable generation systems altogether.

 

Purpose of Underlying Statute

 

Pursuant to Section 120.542, F.S., the petition must demonstrate that the purpose of the underlying statute will be, or has been, achieved by other means by the person.  Rule 25-6.065, F.A.C., implements Sections 366.02, 366.04, 366.041, 366.05, 366.81, 366.82, 366.91 and 366.92, F.S., which govern and promote renewable energy in Florida. 

 

During the 2005 session, the Florida Legislature enacted Section 366.91, F.S., requiring utilities to offer contracts for the purchase of renewable energy.  Section 366.91(1), F.S., states:

 

The Legislature finds that it is in the public interest to promote the development of renewable energy resources in this state.  Renewable energy resources have the potential to help diversify fuel types to meet Florida’s growing dependency on natural gas for electric production, minimize the volatility of fuel costs, encourage investment within the state, improve environmental conditions, and make Florida a leader in new and innovative technologies.

 

Section 366.92, F.S., was enacted in 2006 to establish a renewable energy policy for Florida.  Section 366.92(1), F.S., states:

 

It is the intent of the Legislature to promote the development of renewable energy; protect the economic viability of Florida’s existing renewable energy facilities; diversify the types of fuel used to generate electricity in Florida; lessen Florida’s dependence on natural gas and fuel oil for the production of electricity; minimize the volatility of fuel costs; encourage investment within the state; improve environmental conditions; and, at the same time, minimize the costs of power supply to electric utilities and their customers.

 

            Section 366.91(5), F.S., was enacted in 2008, in order to direct public utilities to enact standardized agreements to allow net metering of customer-owned renewable energy generation. Section 366.91(5), F.S., states:

 

On or before January 1, 2009, each public utility shall develop a standardized interconnection agreement and net metering program for customer-owned renewable generation.  bThe commission shall establish requirements relating to the expedited interconnection and net metering of customer-owned renewable generation by public utilities and may adopt rules to administer this section.

 

On March 18, 2008, the Commission adopted Rule 25-6.065, F.A.C.  Prior to the rule’s adoption, the location of manual disconnect switch was discussed at length by the Commission. Concerns discussed included that mounting the switch adjacent to the meter may not be practical in some instances due to safety or design reasons, locating the switch adjacent to meter may result in additional installation costs, and permitting the switch to be mounted in various locations may result in safety and liability issues.[4] Ultimately, the Commission determined that the switch should be located adjacent to the meter socket.  The Commission, however, also realized that circumstances may necessitate change as the utilities become more experienced with renewable generation.[5]

 

            After reviewing FPL’s data regarding renewable systems with the manual disconnect switches not located adjacent to the meter, staff agrees with FPL that no compelling reasons exist to invest the time and expense that would be required to modify the customer-owned renewable energy systems in order to comply with Rule 25-6.065(6)(a), F.A.C.  Each of these systems is sufficient and meets the National Electric Code (NEC) as well as any Florida building codes, none of which require the presence of a manual disconnect switch for inverter-based systems for any reason, including safety.  Moreover, the NEC does not require a disconnect switch, if present, to be mounted adjacent to the meter.

 

            Staff believes that allowing these switches to be mounted in locations other than adjacent to the meter will promote and encourage the installation of renewable energy systems by FPL’s customers.  In fact, staff concurs with FPL that requiring customers to incur additional expense in order to comply with the rule may actually discourage customers from installing such systems.

           

Staff believes FPL’s request for a permanent rule waiver of the switch location portion of Rule 25-6.065(6)(a), F.A.C., not only meets, but also promotes the purposes of the underlying statutes.  Staff further believes that providing FPL’s customers flexibility as to the placement of their manual disconnect switches when installing their renewable systems will continue to promote the development of renewable energy in Florida.

 

Substantial Hardship

 

Staff concurs with FPL that, in certain instances and under certain circumstances, it is reasonable and preferable for customers to mount the manual disconnect switch in a location other than adjacent to the meter.  In its responses to staff’s first data requests, FPL provided detailed descriptions of each of the 46 customer systems that currently do not meet the requirement of Rule 25-6.065(6)(a), F.A.C., requiring the manual disconnect switch (if present) to be mounted apart from but adjacent to the meter socket.[6] In each of those systems, circumstances exist under which locating the switch in the prescribed location is impractical or even impossible. 

 

            In many of the cases, cost is the limiting factor for re-installing or locating the manual disconnect switch adjacent to the meter. Typically, relocating the switch would involve the installation of long runs of conductor (wires) and conduit around, through, or under roads, buildings, landscaped areas, and other obstructions.  In some cases, lack of space or accessibility was the issue.  In addition to the cost of installing long runs of conduit and conductor, the additional distance would increase line losses resulting in loss of power and, therefore, cost effectiveness from the renewable generation system.  In other cases, the switch could have been located adjacent to the meter, but because the systems were installed prior to contacting FPL for service connection, relocating the switch after-the-fact would result in an unnecessary and potentially excessive expense.  In every case, FPL engineers inspected the systems and agreed that no harm would come from leaving the switch in its original location and, in fact, was preferred over causing undue financial hardship and unnecessarily increased line losses.

 

            In each of the 46 customer systems cited by FPL that currently do not meet the requirement of Rule 25-6.065(6)(a), F.A.C., the alternate locations of the manual disconnect switches result in no compromise to the customer’s system.

 

Compliance with Rule 25-6.065(6)(a)

 

            Since the rule was adopted, FPL has encountered instances where mounting the manual disconnect switch of a customer-owned renewable generation system was impractical from safety, design or engineering principles.  In each instance, FPL attempted to accommodate any customer who wished to install or connect a renewable generation system, but for design or financial reasons could not mount the manual disconnect switch adjacent to the meter socket.  FPL worked with the customer to agree upon a location for the switch that was not adjacent to the meter socket, so long as it met all applicable safety and engineering standards.  FPL also required the customer to install a permanent, weather-proof plaque adjacent to FPL’s meter socket, indicating the location of the switch on the customer’s premises.

 

            Although each customer-owned renewable generation system with a manual disconnect switch not located adjacent to the meter socket is an apparent violation of Subsection (6)(a) of the rule, staff does not recommend that any action be brought against FPL for these violations.  There is nothing to suggest that any customer was harmed financially or otherwise from locating the manual disconnect switch apart from the meter.  Moreover, FPL cooperated fully with staff to resolve any possible violations in an effort to fully comply with Commission rules in requesting the rule waiver, and providing staff with all information staff requested.

 

            Finally, although Subsection (6)(a) of the rule requires the manual disconnect switch be mounted adjacent to the meter socket, the National Electric Code (NEC) does not contain a similar provision.  The NEC provides that the switch be installed in a readily accessible location either on the outside of a building or structure, or inside the nearest point of entrance of the system conductors.  Staff reviewed the information provided by FPL on each of the customer-owned renewable generation systems with switches not located adjacent to the meter, and did not find that any of the systems failed to meet any national electric or safety codes.  Therefore, approval of FPL’s request for permanent rule waiver would bring FPL into compliance with Commission rules. 

 

Conclusion

 

In the time since Rule 25-6.065, F.A.C., was adopted, FPL and Commission staff have become more knowledgeable of, and experienced with, renewable generation systems.  FPL has not encountered any of the “unintended problems” that were originally anticipated if the manual disconnect switch was not mounted adjacent to the meter. FPL, however, has repeatedly experienced instances where mounting the switch adjacent to the meter was not practical according to safety or engineering design principles, and resulted in additional installation costs.

 

Staff believes FPL’s request for a permanent rule waiver of the location of the manual disconnect switch portion of Rule 25-6.065(6)(a), F.A.C., should be granted provided that: (1) mounting the manual disconnection switch adjacent to the meter socket would not be practical for engineering design or safety reasons; (2) FPL and the customer mutually agree on the location to mount the manual disconnection switch; (3) the selected location of the manual disconnect switch meets all applicable safety and engineering standards; and (4) the customer is required to install a permanent, weather-proof plaque adjacent to the FPL meter socket, which clearly indicates the physical location of the manual disconnect switch on the customer’s premises.  Staff believes the waiver will achieve the purpose of the underlying statutes, and that, without the waiver there will be a substantial hardship to FPL and many of its customers. Moreover, staff believes FPL’s permanent waiver request encourages the development of renewable energy in Florida, in the most cost-effective manner without compromising safety or engineering principles.

Issue 2: 

 Should the Commission approve FPL's other proposed changes to their Standard Interconnection Agreement?

Recommendation: 

 Yes.  Staff recommends that the Commission approve to FPL’s Standard Interconnection Agreement Tariff for Customer-Owned Renewable Generation regarding the manual disconnect switch requirement, the indemnity and insurance provisions, the definition of “Gross Power Rating,” and remaining minor corrections. (Crawford)

Staff Analysis: 

 In the amended petition,  FPL requested the authority to make three additional changes:

 

1)      Eliminate the requirement that inverter-based systems include a manual disconnect switch;

2)      Modify the indemnity and insurance provisions in order to eliminate conflicts with statutory limitations on government authority; and

3)      Include the definition of “Gross Power Rating” in the Standard Interconnect Agreements to make the definition readily accessible to customers and reduce the errors in the application process.

 

In addition to these above changes, FPL has requested approval to make certain minor corrections.

 

Elimination of the Manual Disconnect Switch Requirement for Inverter-based Systems

 

            FPL seeks to modify language in the sections of its tariff that indicate requirements for a manual disconnect switch (Section 5.2 in the revised Tier 1 and 2 tariffs, and Section 5.1 for Tier 3). While the current tariff requires all systems to include manual disconnect switches, the petition seeks authority to waive the requirement for U.L. 1741 compliant inverter-based systems.

 

            U.L. 1741 compliant inverter-based systems are designed to automatically isolate the system from the electrical grid within seconds of an electrical outage.  This feature eliminates the possibility of backfeed to the system that could potentially cause safety concerns and is the reason for the manual disconnect switch requirement. As a result, FPL asserts that the requirement is duplicative and thus unnecessary.

 

            The rule allows utilities to require a manual disconnect switch in their standard interconnection agreements, but does not require it.  As a result, this change is consistent with the rule.^[7]          

 

 

 

 

 

Modification of Indemnity and Insurance Provisions

 

Section 768.28, F.S., limits claims or judgments against the state, its agencies, or its subdivisions to $200,000 for a single claim or judgment, or portions of any claim or judgment above $300,000.  The existing FPL tariff contains a requirement that Tier 2 customers maintain general liability insurance or proof of self-insurance of at least $1 million, and that Tier 3 customers carry at least $2 million in insurance.  Because of the conflict between these two provisions, government entities, such as municipalities and schools, have had a limited ability to take advantage of net metering if they have had an interest in doing so.

 

The amended petition proposed multiple changes related to the ability of local government agencies and entities to take advantage of net metering opportunities.  These changes include:

 

1)      Adding “to the extent permitted by law without waiving or limiting any defense of sovereign immunity” to Section 8.1 for Tiers 1 and 2 and 10.1 for Tier 3, indemnifying FPL against damage to the customer;

2)      Adding “Nothing herein shall be intended to serve as a waiver or limitation of the Customer’s sovereign immunity defense as allowed by law” to the same section for all Tiers;

3)      Adding “to the extent permitted by law” and “For government entities, the policy coverage shall not exceed the entity’s maximum liability established by law” to the insurance provision of all Tiers (Section 11.1 for Tiers 1 and 2, and Section 13.1 for Tier 3); and

4)      Adding “Proof of self-insurance consistent with law shall satisfy this requirement” for the same section for Tiers 2 and 3.

 

The above changes will allow government entities to make use of net metering without violating state law.  The first two changes will allow state and government agencies that are barred by law from agreeing to the indemnity provisions of the existing tariff to participate in net metering.  Furthermore, the language added to the insurance provisions ensures that government entities barred from insuring at the levels required by the current rule will still be allowed to participate in net metering.

 

The proposed changes to the indemnity and insurance provisions of the Standard Interconnection Agreement are consistent with the rule.  Similar provisions were approved by the Commission for Duke Energy Florida’s (formerly known as Progress Energy Florida, Inc.) Standard Interconnection Agreements in 2012.^[8]

 

 

 

 

Definition of Gross Power Rating

 

The Amended Petition adds the definition of “Gross Power Rating,” contained in Section 25-6.065(2)(b), F.A.C., to the Standard Interconnection Agreement for all tiers.  This definition would be Section 1.1 for Tiers 1 and 2, and Section 1.6 for Tier 3.

 

FPL claims that many customers have submitted incorrect information due to confusion about what information to submit on their application.  Because many contractors provide power rating information in DC format, and the application requires AC format, some customers have submitted incorrect information, thus delaying their applications until this information has been corrected.  FPL proposes that adding the definition to the Standard Information Agreement will make the information more readily available to customers, reduce confusion, and reduce delays.

 

The proposed addition of the definition of Gross Power Rating to the Standard Interconnection Agreement is consistent with the rule.

 

Other Changes

 

In addition to the above changes, FPL has requested the authority to make certain minor corrections, such as: modifications to the signature blocks; updating contact information; changing wording to ensure consistency; and correcting scrivener’s errors. Several of these changes were made at the request of Commission staff.

 

            These changes do not change the substance of the Standard Interconnection Agreement. They standardize terminology across Tiers, reduce ambiguity, correct spelling, or make other minor fixes to the wording, but not the substance, of the agreement.  As such, these changes do not conflict with the rule.

 

Conclusion

 

            Staff believes that the proposed tariff modifications will allow government entities to take advantage of net metering without violating Florida laws limiting their allowed risk.  The proposed changes reduce the regulatory burden on customers, and also can be expected to both increase the customer base eligible for net metering and to streamline the process for all net metering applicants.  The inclusion of the definition of “Gross Power Rating,” as well as the various minor corrections, will both reduce application errors and clarify the new and existing provisions in the tariff.  For these reasons, staff recommends the approval of all of these proposed changes to FPL’s Standard Interconnection Agreement.

Issue 3: 

 Should this docket be closed?

Recommendation: 

  Yes.  If Issues 1 and 2 are approved, this tariff should become effective upon issuance of a consummating order.  If a protest is filed within 21 days of the issuance of the order, this tariff should remain in effect, with any revenues held subject to refund, pending resolution of the protest.  If no timely protest is filed, this docket should be closed upon the issuance of a consummating order.  (Corbari)

Staff Analysis: 

 If Issues 1 and 2 are approved, this tariff should become effective upon issuance of a consummating order.  If a protest is filed within 21 days of the issuance of the order, this tariff should remain in effect, with any revenues held subject to refund, pending resolution of the protest.  If no timely protest is filed, this docket should be closed upon the issuance of a consummating order.