§37-4-140. Purchase of electricity.

(a) For purposes of this section only, the following terms shall have the following meanings:

(1) AVOIDED COSTS. Costs that a utility or a commission non-jurisdictional electric supplier which purchases electrical energy from a distributed generation facility would have been required to incur but for the distributed generation facility's provision of electrical energy during the same period of time. To the extent such costs are actually avoided, the term may include incremental fuel costs, incremental energy losses, incremental emission allowance costs, and incremental fuel-related operation and maintenance expenses. The term does not include, among other things, costs associated with capacity, the transmission and distribution system, administrative and general costs, customer accounting costs, and general plant in service costs.

(2) COMMISSION. The Alabama Public Service Commission.

(3) COMMISSION NON-JURISDICTIONAL ELECTRIC SUPPLIER.

a. A municipality that owns or operates an electric system.

b. Any public corporation, cooperative corporation, membership corporation, agency, authority, board, or other entity or body which is engaged in the business of selling electricity to its members at wholesale, or purchasing electricity from, or distributing or selling electricity to, retail electric consumers in the state, which is not subject to the jurisdiction of the commission, and which is organized and existing pursuant to the provisions of any of the following:

1. A local act providing that the governing body of the entity is to be appointed by the governing body of a municipality and is authorized to furnish electricity to the public in the municipality or in the municipality and the surrounding territory.

2. Article 9 of Chapter 50 of Title 11.

3. Chapter 50A of Title 11.

4. Article 15 of Chapter 50 of Title 11.

5. Article 16 of Chapter 50 of Title 11.

6. Chapter 5 of Title 37.

7. Chapter 6 of Title 37.

8. Chapter 7 of Title 37.

9. Chapter 7 of Title 39.

(4) DISTRIBUTED GENERATION FACILITY. A facility owned and operated by a customer of the utility or a commission non-jurisdictional electric supplier for the production of electrical energy that is located on the customer's premises, that may transmit electrical energy to distribution facilities at any time, that has a peak generating capacity of not more than 100 kW, and that is intended primarily to offset part or all of the customer's requirements for electricity.

(5) RENEWABLE ENERGY RESOURCE. The meaning given in Section 40-18-1.

(6) UTILITY. A utility as defined by Section 37-4-1(7)a., that is subject to the jurisdiction of the commission.

(b)(1) The commission shall not require a utility to purchase electrical energy from any distributed generation facility at a price that exceeds the utility's avoided costs.

(2) Notwithstanding subdivision (1), the commission may approve a utility proposal to establish a renewable energy program whereby the utility purchases energy from a distributed generation facility that generates electrical energy from a renewable energy resource.

(c) To the extent a utility purchases electrical energy from any distributed generation facility under subsection (b), all of the following requirements shall also apply:

(1) The commission shall approve the utility's rates, fees, and charges for services to a distributed generation facility including, but not limited to, metering service, administering metering service, standby power, supplementary power, back-up power, and maintenance power. The utility shall also be allowed to recover the costs associated with interconnecting a distributed generation facility from the applicable customer. The commission may not require the utility to allocate such costs to the utility's entire customer base. The commission shall require that a customer with a distributed generation facility pay for all such applicable costs.

(2) The commission may adopt or approve any safety, power quality, reliability, and interconnection requirements for a distributed generation facility that the commission determines are necessary to protect public safety, power quality, and system reliability.

The customer shall at all times be responsible for the proper installation, maintenance, and operation of the distributed generation facility and all related wiring, equipment, and apparatus. The utility shall have no obligation to install, maintain, operate, or inspect any electrical facilities owned or operated by the customer and shall not be liable to any person, group of persons, or legal entity for damage to or loss of property, injury, or death that arises in any way from the improper installation, maintenance, or operation of the customer's electrical facilities or the failure of the customer to satisfy all applicable interconnection requirements.

(d)(1) A commission non-jurisdictional electric supplier shall not purchase electrical energy from any distributed generation facility at a price that exceeds the commission non-jurisdictional electric supplier's avoided costs.

(2) Subdivision (1) shall not apply to a renewable energy program established by a commission non-jurisdictional electric supplier whereby the supplier purchases energy from a distributed generation facility that generates electrical energy from a renewable energy resource.

(3) To the extent that the governing board of a commission non-jurisdictional electric supplier determines that it will establish a program to purchase electrical energy from any distributed generation facility, then all of the following requirements shall also apply:

a. The governing board of a commission non-jurisdictional electric supplier shall establish rates, fees, and charges for services to a distributed generation facility including, but not limited to, metering service, administering metering service, standby power, supplementary power, back-up power, and maintenance power. The commission non-jurisdictional electric supplier shall also be allowed to recover the costs associated with interconnecting a distributed generation facility from the applicable customer. The applicable governing board may not allocate such costs to its entire customer base and shall require that a customer with a distributed generation facility pay for all such applicable costs.

b. The governing board of a commission non-jurisdictional electric supplier may adopt any safety, power quality, reliability, and interconnection requirements for a distributed generation facility that it determines are necessary to protect public safety, power quality, and system reliability.

The customer shall at all times be responsible for the proper installation, maintenance, and operation of the distributed generation facility and all related wiring, equipment, and apparatus. The commission non-jurisdictional electric supplier shall have no obligation to install, maintain, operate, or inspect any electrical facilities owned or operated by the customer and shall not be liable to any person, group of persons, or legal entity for damage to or loss of property, injury, or death that arises in any way from the improper installation, maintenance, or operation of the customer's electrical facilities or the failure of the customer to satisfy all applicable interconnection requirements.

(4) Nothing in this section shall:

a. Subject any commission non-jurisdictional electric supplier to the jurisdiction or control of the commission.

b. Affect the authority of the governing board of each commission non-jurisdictional electric supplier to determine whether it will establish a program to purchase electrical energy from a distributed generation facility.

c. Apply to any commission non-jurisdictional electric supplier, which is a party to a wholesale power supply contract with a federal agency or instrumentality of the United States Government under which it purchases electricity for resale to its customers, in any manner which would be inconsistent with the terms and conditions of any of its contracts with said federal agency or instrumentality of the United States Government.

d. Apply to any commission non-jurisdictional electric supplier which is a party to a contract entered into pursuant to the provisions of Section 11-50A-17, in any manner that would be inconsistent with the terms and conditions of this contract.

e. Apply to any contract, agreement, or arrangement that is in existence on May 8, 2008, pursuant to which a commission non-jurisdictional electric supplier purchases or is entitled to purchase electrical energy, electrical capacity, or both, from a distributed generation facility, including without limitation, renewals and extensions of such contracts, agreements, or arrangements whether containing the same or different terms and conditions as is effect on May 8, 2008.

(Act 2008-275, p. 402, §3.)