                                 CODE OF VIRGINIA

NET ENERGY METERING PROVISIONS (§ 56-594)

A. The Commission shall establish by regulation a program that affords eligible
customer-generators the opportunity to participate in net energy metering, and a
program, to begin no later than July 1, 2014, for customers of investor-owned
utilities and to begin no later than July 1, 2015, and to end July 1, 2019, for
customers of electric cooperatives as provided in subsection G, to afford
eligible agricultural customer-generators the opportunity to participate in net
energy metering. The regulations may include, but need not be limited to,
requirements for (i) retail sellers; (ii) owners or operators of distribution or
transmission facilities; (iii) providers of default service; (iv) eligible
customer-generators; (v) eligible agricultural customer-generators; or (vi) any
combination of the foregoing, as the Commission determines will facilitate the
provision of net energy metering, provided that the Commission determines that
such requirements do not adversely affect the public interest. On and after July
1, 2017, small agricultural generators or eligible agricultural
customer-generators may elect to interconnect pursuant to the provisions of this
section or as small agricultural generators pursuant to &#xA7; 56-594.2, but not
both. Existing eligible agricultural customer-generators may elect to become
small agricultural generators, but may not revert to being eligible agricultural
customer-generators after such election. On and after July 1, 2019,
interconnection of eligible agricultural customer-generators shall cease for
electric cooperatives only, and such facilities shall interconnect solely as
small agricultural generators. For electric cooperatives, eligible agricultural
customer-generators whose renewable energy generating facilities were
interconnected before July 1, 2019, may continue to participate in net energy
metering pursuant to this section for a period not to exceed 25 years from the
date of their renewable energy generating facility&#8217;s original
interconnection.

B. For the purpose of this section:
			&#8220;Eligible agricultural customer-generator&#8221; means a customer that
operates a renewable energy generating facility as part of an agricultural
business, which generating facility (i) uses as its sole energy source solar
power, wind power, or aerobic or anaerobic digester gas, (ii) does not have an
aggregate generation capacity of more than 500 kilowatts, (iii) is located on
land owned or controlled by the agricultural business, (iv) is connected to the
customer&#8217;s wiring on the customer&#8217;s side of its interconnection with
the distributor; (v) is interconnected and operated in parallel with an electric
company&#8217;s transmission and distribution facilities, and (vi) is used
primarily to provide energy to metered accounts of the agricultural business. An
eligible agricultural customer-generator may be served by multiple meters
serving the eligible agricultural customer-generator that are located at the
same or adjacent sites, such that the eligible agricultural customer-generator
may aggregate in a single account the electricity consumption and generation
measured by the meters, provided that the same utility serves all such meters.
The aggregated load shall be served under the appropriate tariff.
			&#8220;Eligible customer-generator&#8221; means a customer that owns and
operates, or contracts with other persons to own, operate, or both, an
electrical generating facility, including any additions or enhancements such as
battery storage or a smart inverter, that (i) has a capacity of not more than 25
kilowatts for residential customers and not more than three megawatts for
nonresidential customers; (ii) uses as its total source of fuel renewable
energy, as defined in &#xA7; 56-576; (iii) is located on land owned or leased by
the customer and is connected to the customer&#8217;s wiring on the
customer&#8217;s side of its interconnection with the distributor; (iv) is
interconnected and operated in parallel with an electric company&#8217;s
transmission and distribution facilities; and (v) is intended primarily to
offset all or part of the customer&#8217;s own electricity requirements. No
contract, lease, or arrangement by which a third party owns, maintains, or
operates an electrical generating facility on an eligible
customer-generator&#8217;s property shall constitute the sale of electricity or
cause the customer-generator or the third party to be considered an electric
utility by virtue of participating in net energy metering. In addition to the
electrical generating facility size limitations in clause (i), the capacity of
any generating facility installed under this section between July 1, 2015, and
July 1, 2020, shall not exceed the expected annual energy consumption based on
the previous 12 months of billing history or an annualized calculation of
billing history if 12 months of billing history is not available. In addition to
the electrical generating facility size limitation in clause (i), in the
certificated service territory of a Phase I Utility, the capacity of any
generating facility installed under this section after July 1, 2020, shall not
exceed 100 percent of the expected annual energy consumption based on the
previous 12 months of billing history or an annualized calculation of billing
history if 12 months of billing history is not available, and in the
certificated service territory of a Phase II Utility, the capacity of any
generating facility installed under this section after July 1, 2020, shall not
exceed 150 percent of the expected annual energy consumption based on the
previous 12 months of billing history or an annualized calculation of billing
history if 12 months of billing history is not available.
			&#8220;Net energy metering&#8221; means measuring the difference, over the
net metering period, between (i) electricity supplied to an eligible
customer-generator or eligible agricultural customer-generator from the electric
grid and (ii) the electricity generated and fed back to the electric grid by the
eligible customer-generator or eligible agricultural customer-generator.
			&#8220;Net metering period&#8221; means the 12-month period following the
date of final interconnection of the eligible customer-generator&#8217;s or
eligible agricultural customer-generator&#8217;s system with an electric service
provider, and each 12-month period thereafter.
			&#8220;Small agricultural generator&#8221; has the same meaning that is
ascribed to that term in &#xA7; 56-594.2.

C. The Commission&#8217;s regulations shall ensure that (i) the metering
equipment installed for net metering shall be capable of measuring the flow of
electricity in two directions and (ii) any eligible customer-generator seeking
to participate in net energy metering shall notify its supplier and receive
approval to interconnect prior to installation of an electrical generating
facility. The electric distribution company shall have 30 days from the date of
notification for residential facilities, and 60 days from the date of
notification for nonresidential facilities, to determine whether the
interconnection requirements have been met. Such regulations shall allocate
fairly the cost of such equipment and any necessary interconnection. An eligible
customer-generator&#8217;s electrical generating system, and each electrical
generating system of an eligible agricultural customer-generator, shall meet all
applicable safety and performance standards established by the National
Electrical Code, the Institute of Electrical and Electronics Engineers, and
accredited testing laboratories such as Underwriters Laboratories. Beyond the
requirements set forth in this section and to ensure public safety, power
quality, and reliability of the supplier&#8217;s electric distribution system,
an eligible customer-generator or eligible agricultural customer-generator whose
electrical generating system meets those standards and rules shall bear all
reasonable costs of equipment required for the interconnection to the
supplier&#8217;s electric distribution system, including costs, if any, to (a)
install additional controls and (b) perform or pay for additional tests. No
eligible customer-generator or eligible agricultural customer-generator shall be
required to provide proof of liability insurance or to purchase additional
liability insurance as a condition of interconnection.

D. The Commission shall establish minimum requirements for contracts to be
entered into by the parties to net metering arrangements. Such requirements
shall protect the eligible customer-generator or eligible agricultural
customer-generator against discrimination by virtue of its status as an eligible
customer-generator or eligible agricultural customer-generator, and permit
customers that are served on time-of-use tariffs that have electricity supply
demand charges contained within the electricity supply portion of the
time-of-use tariffs to participate as an eligible customer-generator or eligible
agricultural customer-generator. Notwithstanding the cost allocation provisions
of subsection C, eligible customer-generators or eligible agricultural
customer-generators served on demand charge-based time-of-use tariffs shall bear
the incremental metering costs required to net meter such customers.

E. If electricity generated by an eligible customer-generator or eligible
agricultural customer-generator over the net metering period exceeds the
electricity consumed by the eligible customer-generator or eligible agricultural
customer-generator, the customer-generator or eligible agricultural
customer-generator shall be compensated for the excess electricity if the entity
contracting to receive such electric energy and the eligible customer-generator
or eligible agricultural customer-generator enter into a power purchase
agreement for such excess electricity. Upon the written request of the eligible
customer-generator or eligible agricultural customer-generator, the supplier
that serves the eligible customer-generator or eligible agricultural
customer-generator shall enter into a power purchase agreement with the
requesting eligible customer-generator or eligible agricultural
customer-generator that is consistent with the minimum requirements for
contracts established by the Commission pursuant to subsection D. The power
purchase agreement shall obligate the supplier to purchase such excess
electricity at the rate that is provided for such purchases in a net metering
standard contract or tariff approved by the Commission, unless the parties agree
to a higher rate. The eligible customer-generator or eligible agricultural
customer-generator owns any renewable energy certificates associated with its
electrical generating facility; however, at the time that the eligible
customer-generator or eligible agricultural customer-generator enters into a
power purchase agreement with its supplier, the eligible customer-generator or
eligible agricultural customer-generator shall have a one-time option to sell
the renewable energy certificates associated with such electrical generating
facility to its supplier and be compensated at an amount that is established by
the Commission to reflect the value of such renewable energy certificates.
Nothing in this section shall prevent the eligible customer-generator or
eligible agricultural customer-generator and the supplier from voluntarily
entering into an agreement for the sale and purchase of excess electricity or
renewable energy certificates at mutually-agreed upon prices if the eligible
customer-generator or eligible agricultural customer-generator does not exercise
its option to sell its renewable energy certificates to its supplier at
Commission-approved prices at the time that the eligible customer-generator or
eligible agricultural customer-generator enters into a power purchase agreement
with its supplier. All costs incurred by the supplier to purchase excess
electricity and renewable energy certificates from eligible customer-generators
or eligible agricultural customer-generators shall be recoverable through its
Renewable Energy Portfolio Standard (RPS) rate adjustment clause, if the
supplier has a Commission-approved RPS plan. If not, then all costs shall be
recoverable through the supplier&#8217;s fuel adjustment clause. For purposes of
this section, &#8220;all costs&#8221; shall be defined as the rates paid to the
eligible customer-generator or eligible agricultural customer-generator for the
purchase of excess electricity and renewable energy certificates and any
administrative costs incurred to manage the eligible customer-generator&#8217;s
or eligible agricultural customer-generator&#8217;s power purchase arrangements.
The net metering standard contract or tariff shall be available to eligible
customer-generators or eligible agricultural customer-generators on a
first-come, first-served basis in each electric distribution company&#8217;s
Virginia service area until the rated generating capacity owned and operated by
eligible customer-generators, eligible agricultural customer-generators, and
small agricultural generators in the Commonwealth reaches six percent, in the
aggregate, five percent of which is available to all customers and one percent
of which is available only to low-income utility customers of each electric
distribution company&#8217;s adjusted Virginia peak-load forecast for the
previous year, and shall require the supplier to pay the eligible
customer-generator or eligible agricultural customer-generator for such excess
electricity in a timely manner at a rate to be established by the Commission.
			On and after the earlier of (i) 2024 for a Phase I Utility or 2025 for a
Phase II Utility or (ii) when the aggregate rated generating capacity owned and
operated by eligible customer-generators, eligible agricultural
customer-generators, and small agricultural generators in the Commonwealth
reaches three percent of a Phase I or Phase II Utility&#8217;s adjusted Virginia
peak-load forecast for the previous year, the Commission shall conduct a net
energy metering proceeding.
			In any net energy metering proceeding, the Commission shall, after notice and
opportunity for hearing, evaluate and establish (a) an amount customers shall
pay on their utility bills each month for the costs of using the utility&#8217;s
infrastructure; (b) an amount the utility shall pay to appropriately compensate
the customer, as determined by the Commission, for the total benefits such
facilities provide; (c) the direct and indirect economic impact of net metering
to the Commonwealth; and (d) any other information the Commission deems
relevant. The Commission shall establish an appropriate rate structure related
thereto, which shall govern compensation related to all eligible
customer-generators, eligible agricultural customer-generators, and small
agricultural generators, except low-income utility customers, that interconnect
after the effective date established in the Commission&#8217;s final order.
Nothing in the Commission&#8217;s final order shall affect any eligible
customer-generators, eligible agricultural customer-generators, and small
agricultural generators who interconnect before the effective date of such final
order. As part of the net energy metering proceeding, the Commission shall
evaluate the six percent aggregate net metering cap and may, if appropriate,
raise or remove such cap. The Commission shall enter its final order in such a
proceeding no later than 12 months after it commences such proceeding, and such
final order shall establish a date by which the new terms and conditions shall
apply for interconnection and shall also provide that, if the terms and
conditions of compensation in the final order differ from the terms and
conditions available to customers before the proceeding, low-income utility
customers may interconnect under whichever terms are most favorable to them.

F. Any residential eligible customer-generator or eligible agricultural
customer-generator, in the service territory of a Phase II Utility who owns and
operates, or contracts with other persons to own, operate, or both, an
electrical generating facility with a capacity that exceeds 15 kilowatts shall
pay to its supplier, in addition to any other charges authorized by law, a
monthly standby charge. The amount of the standby charge and the terms and
conditions under which it is assessed shall be in accordance with a methodology
developed by the supplier and approved by the Commission. The Commission shall
approve a supplier&#8217;s proposed standby charge methodology if it finds that
the standby charges collected from all such eligible customer-generators and
eligible agricultural customer-generators allow the supplier to recover only the
portion of the supplier&#8217;s infrastructure costs that are properly
associated with serving such eligible customer-generators or eligible
agricultural customer-generators. Such an eligible customer-generator or
eligible agricultural customer-generator shall not be liable for a standby
charge until the date specified in an order of the Commission approving its
supplier&#8217;s methodology. For customers of all other investor-owned
utilities, on and after July 1, 2020, standby charges are prohibited for any
residential eligible customer-generator or agricultural customer-generator.

G. On and after the later of July 1, 2019, or the effective date of regulations
that the Commission is required to adopt pursuant to &#xA7; 56-594.01, (i) net
energy metering in the service territory of each electric cooperative shall be
conducted as provided in a program implemented pursuant to &#xA7; 56-594.01 and
(ii) the provisions of this section shall not apply to net energy metering in
the service territory of an electric cooperative except as provided in &#xA7;
56-594.01.

H. The Commission may adopt such rules or establish such guidelines as may be
necessary for its general administration of this section.

I. When the Commission conducts a net energy metering proceeding, it shall:

   1. Investigate and determine the costs and benefits of the current net energy
   metering program;

   2. Establish an appropriate netting measurement interval for a successor
   tariff that is just and reasonable in light of the costs and benefits of the
   net metering program in aggregate, and applicable to new requests for net
   energy metering service;

   3. Determine a specific avoided cost for customer-generators, the different
   type of customer-generator technologies where the Commission deems it
   appropriate, and establish the methodology for determining the compensation
   rate for any net excess generation determined according to the applicable net
   measurement interval for any new tariff; and

   4. Make all reasonable efforts to ensure that the net energy metering program
   does not result in unreasonable cost-shifting to nonparticipating electric
   utility customers.

J. In evaluating the costs and benefits of the net energy metering program, the
Commission shall consider:

   1. The aggregate impact of customer-generators on the electric utility&#8217;s
   long-run marginal costs of generation, distribution, and transmission;

   2. The cost of service implications of customer-generators on other customers
   within the same class, including an evaluation of whether customer-generators
   provide an adequate rate of return to the electrical utility compared to the
   otherwise applicable rate class when, for analytical purposes only, examined
   as a separate class within a cost of service study;

   3. The direct and indirect economic impact of the net energy metering program
   to the Commonwealth; and

   4. Any other information it deems relevant, including environmental and
   resilience benefits of customer-generator facilities.

K. Notwithstanding the provisions of this section, &#xA7; 56-585.1:8, or any
other provision of law to the contrary, any locality that is a nonjurisdictional
customer of a Phase II Utility, as defined in &#xA7; 56-585.1:3, and is in
Planning District Eight with a population greater than 1 million may (i) install
solar-powered or wind-powered electric generation facilities with a rated
capacity not exceeding five megawatts, whether the facilities are owned by the
locality or owned and operated by a third party pursuant to a contract with the
locality, on any locality-owned site within the locality and (ii) credit the
electricity generated at any such facility as directed by the governing body of
the locality to any one or more of the metered accounts of buildings or other
facilities of the locality or the locality&#8217;s public school division that
are located within the locality, without regard to whether the buildings and
facilities are located at the same site where the electric generation facility
is located or at a site contiguous thereto. The amount of the credit for such
electricity to the metered accounts of the locality or its public school
division shall be identical, with respect to the rate structure, all retail rate
components, and monthly charges, to the amount the locality or public school
division would otherwise be charged for such amount of electricity under its
contract with the public utility, without the assessment by the public utility
of any distribution charges, service charges, or fees in connection with or
arising out of such crediting.

L. Any eligible customer-generator or eligible agricultural customer-generator
may participate in demand response, energy efficiency, or peak reduction from
dispatch of onsite battery service, provided that the compensation received is
in exchange for a distinct service that is not already compensated by net
metering credits for electricity exported to the electric distribution system or
compensated by any other utility program or tariff. The Commission shall review
and evaluate the continuing need for the imposition of standby or other charges
on eligible customer-generators or eligible agricultural customer-generators in
any net energy metering proceeding conducted pursuant to subsection E.

HISTORY: 1999, c. 411; 2004, c. 827; 2006, c. 470; 2007, cc. 877, 888, 933;
2009, c. 804; 2011, c. 239; 2013, c. 268; 2015, cc. 431, 432; 2017, cc. 565,
581; 2019, cc. 742, 763; 2020, cc. 1187, 1188, 1189, 1193, 1194, 1239; 2024, cc.
783, 827.