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More Barriers to Fuel Cell Interconnection
There are other barriers to simplified interconnection of fuel cells, beyond the development and adoption of uniform technical interconnection standards discussed in the main article. These barriers are centered on issues related to the legal and contractual relationship between the utility and the customer, the allocation of potential liabilities associated with the operation of customer-owned generation system, and the types of fees and other charges that the utility imposes on the customer’s fuel cell facility. Each of these issues is discussed briefly below.
Contractual Relationships
The legal relationships between utilities and their retail customers are usually defined by a set of rules by which utilities provide service to each class of customers. For investor-owned utilities, these rules are defined in the tariffs that utilities file with their state utility commissions for approval. For publicly-owned utilities, these tariffs are approved by the utility’s governing body. These tariffs eliminate the need for individually-negotiated service contracts between utilities and their retail customers.
The relationships between utilities and self-generating customers are more complicated, however, and utilities typically prefer to rely on contractual agreements rather than pre-filed tariffs to govern their relationships with non-utility generators. Some states have adopted simple agreements. In many cases, these simplified interconnection agreements are associated with the implementation of a state’s net metering law. In other cases, however, simplified agreements are being used for a broader category of distributed generating facilities.
Liability Allocation
One of the most controversial issues associated with utility interconnection of customer-owned generation is the issue of protecting against the risk of liabilities arising from property damage or personal injury caused by the customer generation system. A particular concern is the possibility of a fuel cell improperly backfeeding power into an otherwise de-energized portion of the utility grid, which could injure a utility worker expecting the line to be out. Many utilities want the fuel cell system owners to carry comprehensive general liability policies with coverage amounts of $1 million or more. Although commercial customers commonly carry this type of insurance, it is essentially unheard of among residential customers, whose homeowner’s insurance typically includes personal liability coverage in smaller amounts.
Fees and Charges
Another controversial issue is whether utilities should impose fees and other charges on the installation and/or operation of customer-owned generation system. Proposed charges can take many forms, but there are two that are most commonly imposed. The first is engineering study fees, which utilities have been known to impose for reviewing the plans and specifications of a proposed generating facility to ensure compatibility with the utility’s engineering and operation practices. To the utilities that impose them, these fees are a reasonable charge for conducting project-specific engineering reviews.
Standby charges are the second category of fees that often are imposed on distributed customer-owned generation systems. Originally intended to reflect the cost of maintaining spinning reserve for large self-generating customers (such as industrial customers with cogeneration facilities), standby charges seem to have evolved into a mechanism for utilities to increase the fixed costs of service for self-generating customers. This allows them to recover some of the revenue losses associated with reduced energy purchases by the customer.
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