Arizona

In July of 1999, the Arizona Corporation Commission initiated a general investigation of distributed generation and interconnections for potential retail electric competition rules consideration under Docket No. E-00000A-99-0431.

The final report (PDF 105 KB) Download Acrobat Reader was issued June 28, 2000, and documented the results of that investigation. The final report included the identification of key stakeholder issues and recommendations for developing standards, policies, and tariffs for distributed generation through the rulemaking process. These included the following rulemaking recommendations:

• Design fair and reasonable tariffs considering proper recovery of utility costs, backup power or partial-requirements tariffs, and PURPA qualifying facilities tariffs while providing consistent treatment of DG relative to other consumer services. The advisory committee recommended a workshop be held on these issues concurrent with rulemaking.
  
  
• Consider the benefits and costs of distributed generation to the utility distribution grid.
  
  
• Address operational issues, such as the scheduling and accounting of distributed energy transactions, the control of distributed generation by a control area operator, and operational protocols for system disturbances. The advisory committee believes that workshops may be needed following ACC rulemaking efforts to address issues that arise during the implementation of distributed generation.
  
  
• Address certain technical issues and processes necessary to interconnect distributed generation to the grid.
  
  
• Define distributed generation and related terminology consistent with ACC electric competition rules and FERC.
  
  
• Define planning processes needed for distributed generation operating in parallel with the distribution grid, and consider the appropriateness of public access to distribution system operational information.
  
  
• Address distributed generation applications on network distribution systems. Because of the complex and technical nature of this issue, the advisory committee recommended that a workshop be held on this topic.
  
  
• Establish a periodic review process for monitoring the progress of implementing the policies and standards necessary for distributed generation.
  
  
• Consider how to extend DGI rules to electric utilities not subject to ACC jurisdiction.
  
  

More recently, in Decision No. 63364 dated Feb. 8, 2001, Arizona implemented an Environmental Portfolio Standard whereby any load-serving entity that sells electricity or aggregates customers for the purpose of selling electricity must derive at least 0.2% of the total retail energy sold from new solar resources or environmentally friendly renewable electric technologies. Electric service providers that are not utility distribution companies are exempt from this provision until 2004 but may comply voluntarily prior to this time. Load-serving entities are eligible for a number of extra credit multipliers that may be used to meet the portfolio standard requirements. One of these multipliers is a distributed solar electric generation and solar incentive program multiplier (0.5 extra credit). Eligible distributed solar electric generators will include both grid-connected and remote, nongrid-connected applications. For load-serving entities to claim an extra credit multiplier, they must have contributed at least 10% of the total installed cost or have financed at least 80% of the total installed cost.

An explanatory statement attached to Decision No. 63364 notes that distributed generation and interconnection rules have been proposed as an area for future action.

For additional information, see Distributed Generation and Interconnection Rules, Decision No. 63364 (PDF 80 KB) Download Acrobat Reader.

As of July 2002, each utility had adopted special contracts for the interconnection of distributed generation. Until the commission adopts formal rules, the utilities have been instructed to use these special contracts for distributed generation.

More information, including reports from the Distributed Generation & Interconnection Working Group, is available on the Arizona Corporation Commission Web site.