lincoln electric system - generation renewable rebate

Policy &Guidelines forCustomer-ownedGeneration

Lincoln Electric System

1040 O Street, P.O. Box 80869Lincoln, NE 68501-0869

p: 402.475.4211www.les.com

Effective as ofMarch 2012

2012 POLICY AND GUIDELINES FOR CUSTOMER-OWNED GENERATION

Addendum Effective June 1, 2014

LINCOLN ELECTRIC SYSTEM

Technical Requirements for Inverter Systems Technical requirements for Qualifying Facilities which use an inverter to interconnect to LES are listed below. Qualifying Facilities are defined by the Public Utilities Regulatory Policy Act of 1978 (PURPA) generally as renewable energy powered generators and cogeneration units. See the 2012 Policy and Guidelines for Customer-Owned Generation for the requirements for interconnecting Qualifying Facilities which do not use an inverter and for non-Qualifying Facilities (i.e., emergency generators). Requirements for 0 to 100 kWDC systems:

• Meet or exceed IEEE 1547 Standard • Meet or exceed UL 1741 Standard • Install a lockable disconnect switch between the generator and the electric

meter in a location which is accessible to LES personnel For systems greater than 100 kWDC, contact LES staff.

Lincoln Electric System Schedule Issued June 1, 2014 Approved LES Administrative Board Supersedes Schedule Issued March 1, 2012 Resolution: 2014-5 Effective with all bills rendered after May 31, 2014

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Schedule RNM – 25 kW RENEWABLE NET METERING RIDER

APPLICABLE: To The credits (payments) of this rider will apply to Customers with renewable generation who purchase energy from LES under an appropriate retail rate and who may supply energy to LES. AVAILABLE: To renewable generation with production capacity of 25 kW or less, in conjunction with a retail load. Renewable generation includes electric generators powered by methane, wind, solar, biomass, hydro or waste technologies. New renewable generation will be placed on this rider until the total generating capacity of all renewable generation using net metering is equal to or exceeds one percent (1.0%) of the capacity necessary to meet LES’ average aggregate customer monthly peak demand forecast for that calendar year. At that point, this rider will be closed to new customers. CHARACTER OF SERVICE: Unless otherwise provided by contract, the character of purchased power will be single- or three-phase alternating electric current at 60 hertz. Voltage shall be determined by the voltage of LES’ distribution system in the vicinity unless otherwise agreed. Facilities on this service will be metered with an LES supplied bi-directional meter. PURCHASE OF OUTPUT FROM RENEWABLE GENERATOR CUSTOMERS: Owners of renewable generation will be allowed to parallel these facilities with LES and use the electrical output of their renewable generation to supply all or a portion of their own load and deliver the surplus to LES. RATE: At the end of the billing period, LES will net the metered energy which was delivered to LES and the metered energy which was supplied by LES.

• Net energy supplied by LES to the Customer in a billing period will be billed at the applicable retail rate.

• Net energy delivered to LES in a billing period will be purchased by LES at the appropriate Renewable Net Metering Rider – Tier Energy Payment.

• Other applicable fees and charges, including the Customer & Facilities Charge and the Demand Charge of the retail rate, will be billed to the Customer.

Purchases by LES will appear as credits on the bill. Credits which exceed charges for a billing period will roll-over to the following billing period. At the end of each calendar year, any credits remaining will be paid by check from LES in the final billing period of the year.

• Tier 1 Energy Payment: For renewable generation installed prior to the date the total Customer renewable energy generation on LES exceeds one (1) megawatt, the Energy Payment rate will be 100% of the Residential Energy Charge (“Tier 1 Rate”). The Tier 1 Rate will be effective for 10 years from the year of initial installation or the year 2014, whichever comes later. After such 10 years has expired, the Energy Payment rate for Tier 1 generators will be the current Energy Payment rate based on the current tier in effect.


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Schedule RNM – 25 kW RENEWABLE NET METERING RIDER

• Tier 2 Energy Payment: For renewable generation installed after the date the total

Customer renewable energy generation on LES exceeds one (1) megawatt (such date is yet to be determined) but before the date the total Customer renewable energy generation on LES exceeds two (2) megawatts, the Energy Payment rate will be 50% of the Residential Energy Charge (“Tier 2 Rate”). The Tier 2 Rate will be effective for 10 years from the year of initial installation. After such 10 years has expired, the Energy Payment rate for Tier 2 generators will be the current Energy Payment rate based on the current tier in effect.

• Tier 3 Energy Payment: For renewable generation installed after the date the total

Customer renewable energy generation on LES exceeds two (2) megawatts (such date is yet to be determined), the Energy Payment rate will be at the representative renewable avoided cost, to be determined at that time.

• In no case will the Energy Payment Rate be less than the Small Power Production rate.

RENEWABLE NET METERING RATE RIDER Summer Winter

Tier 1 Energy Payment for energy delivered to LES, $/kWh $0.0995 $0.0573


Tier 3 Energy Payment for energy delivered to LES, $/kWh TBD TBD

CAPACITY PAYMENT: LES will make a one-time capacity payment to the owner of the renewable generation based on the contribution of peak reduction by the renewable resource, valued at a traditional resource cost of $1,000 per kWAC. Capacity increases or additions in future years will be eligible for the capacity payment. The capacity payment will be paid on the following basis:

• Predominantly southern facing fixed solar: $375.00 per kWDC of nameplate capacity

• Predominantly western facing fixed solar: $475.00 per kWDC of nameplate capacity

• Single or dual-axis tracking solar: $475.00 per kWDC of nameplate capacity

• Other solar installations: No capacity payment

• Wind: No capacity payment

• Other technologies besides solar and wind: $1,000.00 per average kWAC net demand output of the generation at 5:00 pm during the months of July and August (as determined by LES)


Sheet 3 of 3 Schedule RNM – 25 kW

RENEWABLE NET METERING RIDER TERMS AND CONDITIONS:

1. A signed written agreement between the renewable generator Customer and

2. LES will be required. Agreement can be viewed at http://www.les.com/pdf/rates/customer-generation.pdf.

3. Renewable generation is Federal Regulatory Energy Commission (FERC) defined Small Power Production Qualifying Facilities using those energies created by methane, wind, solar, biomass, hydro or waste technologies.

4. The renewable generation’s connection to the LES distribution system must pass an inspection by LES for safety and power quality.

5. The renewable generator Customer must supply a meter socket and a disconnect switch between the renewable generation/inverter and LES’ service drop.

6. This is an exploratory incentive rate rider that is subject to review and revision as new technologies and economic factors change.

7. The renewable generator Customer must comply with all applicable city, county, and state sales tax, laws and regulations.

8. Service will be furnished subject to the LES’ Service Regulations and the interconnection standards contained in LES’ Policy & Guidelines for Customer-Owned Generation (http://www.les.com/pdf/rates/customer-generation.pdf).

Lincoln Electric System Schedule Issued June 1, 2014 Approved LES Administrative Board Supersedes Schedule Issued NA Resolution: 2014-5 Effective with all bills rendered after May 31, 2014

Sheet 1 of 3

Schedule RG – Renewable Generation - 70 RENEWABLE GENERATION RATE

APPLICABLE: The charges and credits (payments) of this rate will apply to Customers with renewable generation who supply energy to LES. AVAILABLE: To renewable generation with production capacity of greater than 25 kW and less than 100 kW. Renewable generation includes electric generators powered by methane, wind, solar, biomass, hydro or waste technologies. New renewable generation will be placed on this rate until the total generating capacity of all renewable generation on this rate (not including net metering) is equal to or exceeds one percent (1.0%) of the capacity necessary to meet LES’ average aggregate customer monthly peak demand forecast for that calendar year. At that point, this rate will be closed to new customers. CHARACTER OF SERVICE: Unless otherwise provided by contract, the character of purchased power will be single- or three-phase alternating electric current at 60 hertz. Voltage shall be determined by the voltage of LES’ distribution system in the vicinity unless otherwise agreed. Facilities on this service will be metered with an LES supplied bi-directional meter. This rate schedule is intended for generation without load. PURCHASE OF OUTPUT FROM RENEWABLE GENERATOR CUSTOMERS: Owners of renewable generation will be allowed to parallel these facilities with LES and sell energy to LES. Positive net energy delivered to the Customer in a billing period will immediately disqualify this service from continuing to receive this Renewable Generation Rate. Such disqualification will cause this service to be billed at the applicable retail rate and energy delivered to LES will be credited at the Small Power Production rate. RATE: At the end of the billing period, LES will net the metered energy which was delivered to LES and the metered energy which was supplied by LES.

• Net energy delivered to LES in a billing period will be purchased by LES at the appropriate Renewable Generation Rate – Tier Energy Payment.

• Other applicable fees and charges, including the Customer & Facilities Charge and the Distribution Facilities Charge, will be billed to the Customer.

Purchases by LES will appear as credits on the bill. Credits which exceed charges for a billing period will roll-over to the following billing period. Once per calendar quarter, any credits remaining will be paid by check from LES.

• Tier 1 Energy Payment: For renewable generation installed prior to the date the total Customer renewable energy generation on LES exceeds one (1) megawatt, the Energy Payment rate will be 100% of the Residential Energy Charge (“Tier 1 Rate”). The Tier 1 Rate will be effective for 10 years from the year of initial installation or the year 2014, whichever comes later. After such 10 years has expired, the Energy Payment rate for Tier 1 generators will be the current Energy Payment rate based on the current tier in effect.


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• Tier 2 Energy Payment: For renewable generation installed after the date the total Customer renewable energy generation on LES exceeds one (1) megawatt (such date is yet to be determined) but before the date the total Customer renewable energy generation on LES exceeds two (2) megawatts, the Energy Payment rate will be 50% of the Residential Energy Charge (“Tier 2 Rate”). The Tier 2 Rate will be effective for 10 years from the year of initial installation. After such 10 years has expired, the Energy Payment rate for Tier 2 generators will be the current Energy Payment rate based on the current tier in effect.

• Tier 3 Energy Payment: For renewable generation installed after the date the total Customer renewable energy generation on LES exceeds two (2) megawatts (such date is yet to be determined), the Energy Payment rate will be at the representative renewable avoided cost, to be determined at that time.

• In no case will the Energy Payment Rate be less than the Small Power Production rate.

RENEWABLE GENERATION RATE Summer Winter

Customer Billing, Metering and Connection Charge, $/Bill $17.25 $17.25

Distribution Facilities Charge, $/BILL $23.00 $23.00



Tier 3 Energy Payment for energy delivered to LES, $/kWh TBD TBD

CAPACITY PAYMENT: LES will make a one-time capacity payment to the owner of the renewable generation based on the contribution of peak reduction by the renewable resource, valued at a traditional resource cost of $1,000.00 per kWAC. Capacity increases or additions in future years will be eligible for the capacity payment. The capacity payment will be paid on the following basis:

• Predominantly southern facing fixed solar: $375.00 per kWDC of nameplate capacity

• Predominantly western facing fixed solar: $475.00 per kWDC of nameplate capacity

• Single or dual-axis tracking solar: $475.00 per kWDC of nameplate capacity

• Other solar installations: No capacity payment

• Wind: No capacity payment

• Other technologies besides solar and wind: $1,000.00 per average kWAC net demand output of the generation at 5:00 pm during the months of July and August (as determined by LES)


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TERMS AND CONDITIONS:

1. A signed written agreement between the renewable generator Customer and LES will be required. The agreement can be viewed at http://www.les.com/pdf/rates/customer-generation.pdf.

2. Renewable generation is Federal Regulatory Energy Commission (FERC) defined Small Power Production Qualifying Facilities using those energies created by methane, wind, solar, biomass, hydro or waste technologies.

3. The renewable generation’s connection to the LES distribution system must pass an inspection by LES for safety, power quality and verification that no loads are drawing power from LES.

4. The renewable generator Customer must supply a meter socket and a disconnect switch between the renewable generation/inverter and LES’ service drop.

5. This is an exploratory incentive rate that is subject to review and revision as new technologies and economic factors change.

6. The renewable generator Customer must comply with all applicable city, county, and state sales tax, laws and regulations.

7. Service will be furnished subject to the LES’ Service Regulations, Lincoln Building & Safety codes and the interconnection standards contained in LES’ Policy & Guidelines for Customer-Owned Generation (http://www.les.com/pdf/rates/customer-generation.pdf).

8. Any proposed generation installation of 25 kW or greater requires approval by the Nebraska Power Review Board and a review by LES for system adequacy. Proof of approval by the Nebraska Power Review Board must be provided to LES prior to interconnection to the system.

9. For renewable generation installations above 100 kW, contact LES for the appropriate rates and interconnection requirements.

LINCOLN ELECTRIC SYSTEM=S

POLICY AND GUIDELINES FOR

CUSTOMER-OWNED GENERATION

- COGENERATION AND SMALL POWER PRODUCTION

- NON-QUALIFYING GENERATION

MARCH 2012

TABLE OF CONTENTS Subject Page Introduction and Resolutions ............................................................................................... 1-1 Policy and Guidelines for Cogeneration and Small Power Production Facilities (Qualifying) ......................................................................................... 2-1 Procedures for Processing Requests for Customer-Owned Generation Systems ............................................................................................................ 3-1 Application for Interconnection .......................................................................................... 3-10 Contract Example (100 kW and less) .................................................................................. 4-1 Purchased Energy Rate for Small Facilities ........................................................................ 5-1 Avoided Cost Filing .............................................................................................................. 6-1 Policy and Guidelines for Non-Qualifying Facilities ............................................................. 7-1

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LINCOLN ELECTRIC SYSTEM (LES) CUSTOMER-OWNED GENERATION INTRODUCTION Cogeneration and Small Power Production (Qualifying) The National Energy Act (Public Law 95-617) was signed into law by the President in November, 1978. As a part of that Act, the Public Utility Regulatory Policies Act (PURPA) had the effect of placing certain regulatory requirements on electric utilities. The goals of PURPA are to encourage...

1. The conservation of energy supplied by electric utilities,

2. the optimization of the efficient use of facilities and resources by electric utilities, and

3. equitable rates to electric consumers.

Sections 201 and 210 of PURPA address the subject of customer-owned generation. In order to carry out the provisions of the Act, the Federal Energy Regulatory Commission issued certain rules and regulations (18 C.F.R. Part 292) regarding electric utility obligations and qualifying status for customer-owned generation. The purpose of PURPA Sections 201 and 210 and the FERC rules was to encourage the use of cogeneration and small production facilities where such devices might utilize alternate fuels and thus might make a significant contribution to the nation=s effort to conserve energy resources. These customer-owned generation devices (called qualifying facilities) are divided into two subsets, cogenerators and small power producers. Cogeneration facilities simultaneously produce two forms of useful energy such as electric power and steam. Cogeneration facilities use significantly less fuel to produce electricity and steam (or other forms of energy) than would be needed to produce the two separately. Small power production facilities rely on biomass, waste, or renewable resources, including wind, solar and water to produce electric power. Reliance on these fuels can reduce the need to consume fossil fuels to produce electricity. Under the FERC regulations, LES is generally obligated to interconnect with, operate in parallel, purchase electricity from and sell electricity to generators who qualify under FERC=s standards. LES will consider wheeling the qualifying facility=s output to another electric utility should such a request be made. All generation and transmission interconnections shall comply with the requirements of NERC and MAPP. The regulations allow LES to establish interconnection standards to ensure electrical system safety and reliability. The Act and regulations also make it clear that LES= other customers are not to be detrimentally affected as a result of the interconnection. Thus, other customers shall not see a higher cost of electricity or a lower quality of service because of the qualifying facility, plus LES will not be required to make uncompensated investments to interconnect with qualifying facilities.

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As required by FERC, utilities by March 20, 1981 were to adopt local regulations, guidelines and policies in order to implement the FERC rules. LES did adopt such regulations on an interim basis for a two-year period. The policy statements and guidelines were readopted in somewhat modified form by the LES Administrative Board on March 18, 1983. Copies of the policy statement and guidelines are attached. The Policy and Guidelines are reviewed and changed if necessary approximately every two years. This set of documents demonstrates the general requirements for interconnection and parallel operation, LES obligations, and the federal requirements as specifically applied to LES. Also included as required by law, is a copy of the purchase rate from customer-owned generation under 100 kW in capacity. The purchase rate from qualifying facilities is based (as stated by FERC) upon the cost that can be avoided by LES with such purchases. Avoided costs can be classified into two basic components, energy related and capacity related. Energy related avoided costs are those associated with the cost of not burning or purchasing certain fuels. In the near term, the only costs that can be avoided are those associated with energy, i.e., not burning coal, nuclear fuel, oil, etc. Capacity avoided costs are those associated with the capital cost of adding new generation, a Demand Side Management (DSM) option or the demand portion of a wholesale power purchase. At the present time, LES has sufficient generation capacity in its system but is evaluating new generation, DSM options and purchases for the next several years. As LES is able to avoid construction or purchase capacity costs and if the qualifying facility has a reliable capacity value, then LES will also include a capacity component in the purchase rate. Federal regulations require LES to keep on file avoided cost data for the next five years to be updated every two years. A copy of the latest filing is included in Section 6. Any prospective customer who wishes to apply to LES to be interconnected and operate in parallel should fill out and return the enclosed application. (See Section 3.) After LES reviews such application, LES will contact the customer regarding a meeting for both parties to discuss the proposed interconnection and each party=s obligations and rights. LES= guidelines and policy also require the customer-owner and LES to enter into a contractual arrangement, an example of which is attached for reference. Standby and Emergency Generation (Non-Qualifying) Any customer-owned generation that does not satisfy FERC qualifying status requirements will not be allowed to operate in parallel with the LES electrical system. These devices will only be connected to an LES approved transfer switch that will break the circuit connected to the LES electrical system before making the circuit with the Customer=s generation or an LES approved closed-transition switch.

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LINCOLN ELECTRIC SYSTEM LES RESOLUTION 2012-4

WHEREAS, it is the intent of the Lincoln Electric System (LES) Administrative Board to encourage cost-effective cogeneration and small power production of electricity by customer-owned generation facilities; and

WHEREAS, this intent is in accordance with the goals set forth in the National

Energy Act, which are the conservation of energy, the efficient use of resources and equitable rates; and

WHEREAS, the attached A2012 Policy and Guidelines for Customer-Owned

Generation@ remain in compliance with the requirements of the Public Utilities Regulatory Policies Act and Federal Energy Regulatory Commission=s regulations;

NOW, THEREFORE, BE IT RESOLVED that in recognition of the above

statements, the LES Administrative Board hereby adopts the A2012 Policy and Guidelines for Customer-Owned Generation@ attached hereto and fully incorporated herein by reference.

Patrick Beans - signed Chair

Adopted: February 17, 2012

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Substantive Changes and Comparisons to Policy and Guidelines for Cogeneration and Small Power Production 2009 versus 2012

Comparisons

Page

Section

2009 2012

Percent Change

4-12

Loss Factor Adjustment used to adjust purchase rate delivered to LES

1.055 1.050

-0.5%

4-13

Additional Interconnection Cost (This monthly charge is proposed to continue to be waived through December 31, 2013.)

$2.81 $2.73

-3%

5-1 to 5-2

Purchase Prices from Schedule ($/kWh):

Summer Winter

$0.0284 $0.0227

$0.0186 $0.0162

-35% -29%

5-1 5-3 to 5-4

Standard Meter

Interval Meter Renewable Net Metering Price ($/kWh):

Summer Winter

$3.90 $19.50

$0.0284 $0.0227

$3.23 $5.04

$0.0470 $0.0470

-17% -74%

+65% +107%

Page

Section Description

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Guidelines

Informs Customers of the need to obtain approval from the Southwest Power Pool prior to interconnecting to the transmission system.

5-1 to 5-4 6-2 to 6-4

Purchased Energy Rate for Small Facilities Avoided Energy Cost

Prices are updated. Wholesale price changed to new renewable avoided cost. Renewable net metering policy and pricing includes an incentive capacity payment. Costs are updated. Includes a new renewable avoided cost table.

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LINCOLN ELECTRIC SYSTEM POLICY STATEMENT REGARDING COGENERATION AND SMALL POWER PRODUCTION PUBLIC UTILITY REGULATORY POLICIES ACT (PURPA) SECTIONS 201 AND 210

In accordance with the goals set forth in the National Energy Act, namely the conservation of energy, the efficient use of resources and equitable rates, LES encourages and supports cost effective cogeneration and small power production of electricity by customer-owned generation facilities. LES will provide rates for the buying and selling of electricity from/to these qualifying facilities. In addition, LES will aid such qualifying facilities to develop their operations in an economic and environmentally acceptable manner. The basic principles utilized in the preparation of the LES guidelines for Cogeneration and Small Power Production are the following:

a. The encouragement of cost effective dispersed power production facilities in the LES service area.

b. The guidelines shall be in compliance with the Public Utility Regulatory Policies Act

and the Federal Energy Regulatory Commission=s rules and regulations.

c. LES will provide rates for purchases from and sales to qualifying facilities which are nondiscriminatory and in the public interest.

d. The purchase rate for qualifying facility=s electrical output shall be based upon

estimates of avoided LES costs resulting from such a purchase. The purchase rate shall not adversely affect the other customers of LES.

e. The LES interconnection and operating in parallel with the qualifying facilities shall

be in conformance with prudent utility practices and shall be accomplished in such a manner as to maintain the electrical system=s integrity and ensure no adverse impacts upon the quality of service or cost of service to other LES customers. By virtue of LES interconnection with customer-owned generation, LES= other customers should not be detrimentally affected.

f. Informing potential qualifying facility owners that they have the responsibility to

comply with applicable federal, state and local regulations, codes and ordinances.

g. Recognition that the guidelines have been adopted given the current state of the development of customer-owned generation devices and associated interconnection with electric utilities. Ongoing and future studies plus online experience may require changes to the guidelines in the future.

Approved by LES Resolution 2012-4

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LINCOLN ELECTRIC SYSTEM GUIDELINES REGARDING COGENERATION, SMALL POWER PRODUCTION AND QF NET METERING/BILLING PURPA SECTIONS 201 AND 210 I. General Policy Guidelines

A. Qualifying Facilities Status

1. Criteria for qualifying status for Small Power Production Facilities and Cogeneration Facilities are the same as set forth in the FERC=s regulation and rules (18 C.F.R. Part 292 Subpart B as amended).

2. A customer who wishes to pursue installation of a qualifying facility will submit

the AApplication for Review@ as described in Section 3 of this document.

B. LES Obligations

1. LES is generally obligated to:

a. Purchase from qualifying facilities, directly or indirectly

b. Sell to qualifying facilities

c. Interconnect with qualifying facilities

d. Operate in parallel with qualifying facilities

2. Upon request by a qualifying facility, LES will give consideration to the transmission of the qualifying facility=s power and/or energy to another electric utility. The qualifying facility shall be assessed a wheeling charge and the delivery shall be adjusted for losses.

C. Purchase of Output from Qualifying Facilities

1. Owners of qualifying facilities will be allowed the option to either (1) sell the

entire electrical output of their qualifying facilities to LES or (2) use the electrical output of their qualifying facilities to instantaneously supply all or a portion of their own load and sell the instantaneous surplus, if any, to LES.

Under Option (2), depending on the nature and characteristics of the type of qualifying facility, LES may be required to reserve or dedicate capacity in its system to serve such loads when the qualifying facility=s output is intermittently reduced partially or completely. LES rates are designed to recover the cost of supplying customers that do not have generation. In the case of customers that generate, the customers load characteristics may be such that LES= rates do not fully recover the costs of standby and backup

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service provided by LES. LES has gathered data on how qualifying facilities affect LES from a cost and operating viewpoint. These backup service charges have been waived for qualifying facilities of 100 kW and less. Rates for sale of power to QFs over 100 kW will be applied as provided in Paragraph E.

2. The qualifying facility=s right to sell power to LES may be subject to temporary

curtailments when, as a result of operational circumstances, the delivery of such power would interfere with the safe and efficient operation of LES= electrical system.

3. All qualifying facilities that desire to interconnect and operate in parallel with

LES= electrical system will be required to execute contractual agreements based upon the general principles set forth in these guidelines.

4. In order to assess the long run economic feasibility of a qualifying facility,

potential owners are encouraged to base their economic analysis on an Option (1) Metering Arrangement (see the end of this section) utilizing the estimated LES avoided costs.

5. LES will provide net metering/billing service to qualified facilities of 25 kW or

less as described within the LES Renewable Net Metering Rate.

D. Purchase Rates for Power from Qualifying Facilities

1. A standard purchase rate for qualifying facilities of 100 kW and less design capacity and qualified facilities that receive net metering/billing service has been developed and attached hereto. Such purchase rate shall be reviewed and subject to change. Such purchase rate will be based upon the LES avoided costs as adjusted for the factors considered in the FERC regulations affecting rates for purchase.

2. For qualifying facilities of design capacity of more than 100 kW, purchase

rates will be developed upon a case by case basis taking into consideration the requirements of FERC regulations.

3. The purchase rate from qualifying facilities will be so developed to ensure that

LES= other customers are not adversely affected by the LES requirement to purchase power and/or energy from qualifying facilities.

4. Interconnected qualifying facilities that elect to sell their electrical output to

utilities other than LES will be subject to adjustments for line losses and wheeling charges. The qualifying facility can transmit such output to other utilities over the LES electrical system only with consent of LES and at the prevailing wheeling service charge.

5. The purchase rate from production facilities other than Anew capacity@ as

defined by the FERC regulations will be considered on a case by case basis.

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6. As provided in FERC regulations, a qualifying facility has the option to either provide energy to LES on (i) an Aas available@ basis in which case the rate for such purchase shall be based upon the current period=s estimated avoided costs or (ii) to provide energy over a specified term pursuant to a legally enforceable obligation in which the future purchase rate can be based upon the estimated avoided cost calculation at the time the obligation is incurred. The qualifying facility must exercise the option prior to the beginning of the specified term. Because of current uncertainties involved regarding the operations of small qualifying facilities of less than 100 kW, LES will contract no further than five years on the price of power purchased from qualifying facilities under 100 kW.

E. Rates for Sales of Power to Qualifying Facilities

1. Upon request by a qualifying facility, LES will provide either appropriate

existing rates or, if feasible and practical, develop and offer rates for:

a. Supplemental power, defined as electric energy or capacity supplied by LES, regularly used by the qualifying facility in addition to that which the qualifying facility generates;

b. Back-up or emergency power, defined as electric energy or capacity

supplied by LES to replace energy normally generated by a facility=s own generation equipment during an unscheduled outage of the facility;

c. Maintenance power, defined as electric energy or capacity supplied by

LES during scheduled outages of the qualifying facility; and

d. Interruptible power, defined as electric energy or capacity supplied by LES subject to interruption by LES under specified conditions.

2. The rates for sale shall meet the general rules and criteria as set forth in the

FERC regulations.

3. When the purchase of supplemental, back-up, maintenance or interruptible power requires LES to provide additional interconnection or metering facilities, the qualifying producer will pay for the additional costs of such facilities.

4. Qualifying facilities who elect to purchase supplemental, backup,

maintenance, or interruptible power from LES will do so under contract or addenda to existing contractual agreements.

5. LES will not contract or otherwise become obligated to sell power and/or

energy to any qualifying facility that is not located within the LES service area.

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F. Regional Interconnection

Owners of Qualifying Facilities who desire to (a) interconnect with the transmission system at 115 kV or higher voltage, (b) sell power and energy to electric utilities other than LES, or (c) interconnect generators totaling more than 1 MW at a site in LES' service area, will be required to make such request to LES and to the Southwest Power Pool (SPP). Communication with SPP will be via OASIS (Open Access Same-Time Information System). The Qualifying Facility will be required to participate in SPP's Transmission Service Request process. SPP requires an application, an impact study and operational considerations prior to approving system interconnections. The Qualifying Facility will pay the SPP Tariff for use of the transmission system. LES will aid the Qualifying Facility in contacting SPP and accessing OASIS.

G. Responsibility for Interconnection Costs

1. Owners of qualifying facilities will be required to pay for any additional

transmission or distribution costs to the extent that such costs are in excess of those that LES would have incurred had the owner not acquired the qualifying facility.

2. Existing customers of LES that subsequently install qualifying facilities may

also be required to compensate LES for the unamortized costs of any existing dedicated transmission or distribution facilities that are rendered surplus by changes in that customer=s supply requirements.

3. The point of delivery between LES= electrical system and the qualifying facility

will be the meters or that point where LES service wires are joined to the customer=s service terminals. LES will own the meters utilized for billing. The customer will provide the disconnect and protective devices on the customer=s side of the meter and will provide the meter socket(s) as well as room for the metering equipment. The physical electrical interconnection of the generating equipment with the customer's or LES= facilities shall meet all applicable electric codes.

4. The payment to LES of certain interconnection and other costs will take the

form of advance funds unless LES allows equivalent monthly payments including interest provided for in contracts with the owners of qualifying facilities. Monthly payments for acceptable expenses may be extended for the term of the contract between LES and the qualifying facility. In other cases, an aid to construction payment to LES may be required as per the provisions of LES= Service Regulations.

5. Under either of the two options listed in paragraph C (1) for purchasing from

qualifying facilities, LES will require that metering which is sufficient in LES= judgement in order to determine the amount of power and/or energy sold to LES from the qualifying facility and the amount of power and/or energy supplied by LES to the qualifying facility. LES may install additional metering at its expense in order to obtain other load and operating data.

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H. Compliance with LES Safety, Protection, and Operating Guidelines (See also Section II for supplemental details)

1. Qualifying facilities will be required to provide and maintain suitable apparatus

to prevent the operation of their generation facilities from causing unusual fluctuations or disturbances on the LES electrical system.

2. Owners of qualifying facilities will cooperate with LES in developing mutually

acceptable operating procedures for delivery of the output from the qualifying facility.

3. Owners of qualifying facilities will be responsible for providing and

maintaining all equipment they deem necessary for the protection of their own property and operations. By virtue of the interconnections with the qualifying facility, LES assumes no liability for the protection of any property or person associated with the qualifying facility=s operations.

4. All protection, safety, and interconnection equipment installed by owners of

qualifying facilities must meet standards of good engineering and electrical safety practices, comply with NERC, MRO and applicable SPP RTO requirements, and be capable of parallel operation with LES.

5. The owner of the qualifying facility is responsible for the installation and

operations of the facility and will indemnify and hold LES harmless from liability for damage to property or person resulting from or arising out of or in anyway connected with the installation, inspection, operation, maintenance, testing and/or use of the qualifying facility.

6. If the qualifying facility is not performing to the established standards of

service or is reducing the quality of service to other LES customers, the customer must disconnect the qualifying facility until such time the owner takes corrective action. In the event the owner refuses to discontinue parallel operation, LES may terminate electric service in accordance with LES= Service Regulations.

7. LES does not allow parallel or closed-transition operation of customer-owned

generation with LES secondary spot or grid networks (i.e., LES downtown network).

I. Emergency Dispatchability of Qualifying Facilities

An emergency condition exists when the reliability of the electric system is in jeopardy and customer service is threatened. During emergency conditions, the owners of qualifying facilities may be asked to place control of their facilities under the direction of LES until the electric system has returned to normal operation. LES will determine when generation should be adjusted, brought on-line or shut down. The qualifying facilities should be able to alter their generation schedules as directed by LES= system operators.

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II. Supplemental LES Safety and Protection Requirements Applicable to Owners of Qualifying Production Facilities

These requirements shall be applicable to assure the safe and reliable operation of parallel interconnections. The adequacy of protection devices used for interconnection with qualifying facilities will be determined by LES. The following requirements shall be generally applicable unless modified in the contract between the qualifying facility and LES. If applicable, the contract will also identify the specific requirements for compliance.

A. Disconnect Equipment

The owner shall provide equipment for manually disconnecting and isolating the qualifying facility from the LES service wires. An outside-mounted visible disconnect shall be installed on the owner=s side of the point of delivery/receipt near the meter or mutually agreed upon location. Such equipment must be capable of preventing the qualifying facility from energizing the LES service wires and must include a device which, at LES= discretion, LES employees can operate and lock in place. The owner shall also provide an interconnection breaker and interconnection relay to automatically disconnect and isolate the qualifying facility from LES during a service interruption. This automatic disconnect equipment shall receive its voltage and frequency referenced from the LES service wires. The automatic disconnect shall not close without proper voltage and frequency from the LES service wires. Such equipment must be capable of preventing the qualifying facility from energizing the LES service wires during a service interruption. Please refer to the latest IEEE standard 1547 section on AIslanding.@ An exception to these requirements may be made for net-metering customers installing small inverter connected generation which uses a utility-interactive inverter. With a utility-interactive inverter, the customer-owned generation resource ceases to provide power when the utility source is interrupted. For customer-owned generation facilities that use this type of inverter, the generator shall cease to export power to LES under islanding conditions so that the generator does not energize down lines or supply power to other LES customers.

B. Fault Protection

Adequate protection facilities shall be provided by the owner to protect the LES service wires from fault currents originating from the qualifying facility. The owner shall also be responsible to provide adequate protection for the qualifying facility from fault currents originating in the LES electrical system.

C. Over/Under Voltage

It shall be the responsibility of the owner to provide adequate protection or safeguards to prevent damage to the LES electrical system caused by over/under voltages originating in the qualifying facility and to protect the qualifying facility from inadvertent over/under voltage conditions originating from the LES electrical

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system. Please refer to the latest IEEE standard 1547 for voltage ranges and clearing times when setting the interconnection relay.

D. Synchronization

The owner shall provide adequate facilities for the proper synchronization of the qualifying facility with LES service wires such that such synchronization is accomplished without causing undesirable currents, surges or voltage dips on the LES electrical system. LES employs automatic reclosing on its system circuit breakers. A fault and the subsequent breaker trip and reclose can cause an out-of-phase condition to exist between LES and the customer generation facility. Following a period of interruption, the proper resynchronization of the qualifying facility shall be the responsibility of the owner.

E. Grounding

The owner shall ground the qualifying facility and associated equipment in such a manner that coordination is maintained with the relay protection system in use by LES and the qualifying facility is protected from being subject to deleterious voltage and excessive current conditions.

F. Harmonics

Adequate design precaution must be taken by the owner to prevent excessive and deleterious harmonic voltages and/or currents caused by the qualifying facility from occurring on the electrical system of LES or LES= customers. The qualifying facility must be designed to operate with normal harmonic voltage and currents that originate from the LES electrical system. Please refer to the latest IEEE standard 1547.

G. Power Factor

The operation of the qualifying facility shall not produce nor consume excessive reactive power. Should the power factor fall outside acceptable limits either lagging or leading, as determined by LES, the Owner shall undertake the necessary modifications to meet the required power factor level.

H. Voltage Regulation

The owner shall provide the necessary voltage regulation equipment to prevent the qualifying facility from causing excessive voltage variations on the LES electrical system. The voltage variation caused by the qualifying facility must be within the ranges capable of being handled by the voltage regulation facilities used by LES.

I. Voltage Flicker

Voltage surges or flickers caused by the operation, synchronization or isolation of the qualifying facility shall be within the standards of frequency of occurrence and magnitude established by LES to prevent undue voltage flicker on the LES

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electrical system. The owner shall provide suitable equipment to reasonably limit voltage fluctuations caused by the qualifying facility.

J. Voltage Balance

The voltage produced by the qualifying facility must be balanced if it is a three-phase installation. The owner shall be responsible in protecting the qualifying facility from an inadvertent phase unbalance in LES service voltage.

K. Over/Under Frequency

The owner shall provide the necessary facilities for safeguards and protection of equipment caused by the incurrence of an over or under frequency event. Please refer to the latest IEEE standard 1547 for frequency ranges and clearing times when setting the interconnection relay.

L. Operational Oversight

1. The owner will be responsible for operating its production facility in a manner

that will not cause undesirable or harmful effects to LES or its other customers.

2. The owner will not begin initial operation of the production facility until it has

passed applicable code inspection requirements and has received written approval from LES. LES System Protection personnel must witness a trip check of the interconnection breaker and must also witness the first parallel or closed transition operation of the facility.

3. The owner shall supply LES with technical specifications and drawings upon

request relating to the production facilities and related interconnection, operation, and protective equipment. These must include a system one-line diagram, an interconnection breaker trip schematic and interconnection relay settings. LES= approval of the qualifying facility=s use of equipment shall not be construed as confirming or endorsing the design or effectiveness of the equipment or the qualifying facility=s plan for use of the equipment for actually reducing demand or energy usage, or as any warranty of the safety, durability or reliability of equipment.

4. LES shall have the right at any time to inspect and test the operation of any

control and protective equipment owned and maintained by the owner. Any future changes to the interconnection relay settings must receive the approval of LES System Protection personnel before implementation. LES will provide a label to be placed on or near the interconnection relay as a reminder of this requirement.

M. Governmental Regulations, Codes and Ordinances

The owner of the qualifying facility has the responsibility to comply with all applicable federal, state and local regulations, codes and ordinances including electrical codes. The LES review of design specification and drawings or LES

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inspections shall not be construed as approvals as to compliance with any such regulations, codes and/or ordinances. This includes environmental laws and regulations, safety laws, building and construction codes, local safety, health, industrial regulations or codes, and the LES Safety Manual.

Approved by LES Resolution 2012-4

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Cogeneration and Small Production Facilities METERING ARRANGEMENTS Assumes QF sells entire output to LES as recorded on Meter 1A. LES supplies the entire load as recorded on Meter 1B. Assumes QF first supplies its own load and sells instantaneous excess or surplus to LES as recorded on Meter M1. LES supplies the instantaneous load deficiency as recorded on Meter M2.

METER 1A

METER 1B

OUT

IN

QF

LOADLES

Option 1

LES QF

LOAD

METER M1METER M2

IN OUT

Option 2

PROCEDURE NO. 148 PAGE 1 of 9

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LINCOLN ELECTRIC SYSTEM

PROCEDURE DATE OF ISSUE: 03-23-2004 REVISED 06-16-2006 PROCEDURE NO. 148 Processing Requests for PROCEDURE TITLE: Customer-Owned Generation Systems PAGE 1 of 8 PURPOSE This Procedure covers the process involved when customers request to install generation systems. The process starts when the customer first contacts LES for information about customer-owned generation facilities, progresses through the installation and inspection of the system, and finalizes when LES gives written notice to the customer that operation of the facility may commence. This Procedure documents the steps that should be taken so that these customers can receive accurate, timely assistance from LES personnel most qualified to help them. GENERAL In accordance with the goals set forth by the National Energy Act, namely the conservation of energy, the efficient use of resources and equitable rates, LES encourages and supports cost effective generation of electricity by customer-owned facilities. LES is generally obligated to interconnect with, operate in parallel, purchase electricity from and sell electricity to generators who qualify under the rules and regulations of the Federal Energy Regulatory Commission (FERC). Customer-owned generation that does not satisfy FERC qualifying status requirements can be installed but will not be allowed to operate in parallel with LES= electric system without special approval by LES. DEFINITIONS Qualifying Facility. All forms of customer-owned electrical generation that satisfy FERC qualifying status requirements which are or could be in parallel operation with the LES System. Such equipment may include, but may not be limited to, conventional facilities as well as renewable fuels generation. Non-Qualifying Facility. Any customer-owned generation that does not satisfy FERC qualifying status requirements. Non-Qualifying Facilities will not be allowed to parallel with LES without special approval by LES. Customer. Any person, partnership, association, firm, corporation (public or private), or governmental agency receiving or intending to receive service from LES. Parallel Operation. The situation that exists when the LES electrical system and the customer-owned generation system are simultaneously operated in a synchronized electric connection.


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Closed-Transition Operation. The situation that exists when the LES electrical system and the customer-owned generation system are momentarily tied together by an electric connection while the customer=s load is transferred between the two systems. This procedure consists of three sections:

Section 1 - Beginning the Process Section 2 - Non-Qualifying Facilities Section 3 - Qualifying Facilities

RESPONSIBILITY & ACTION

Section 1 - Beginning the Process

Customer 1.01 Contact LES to get information aboutinstalling customer-owned generation.

LES Employee (receiving call/letter)

1.02 Refer the phone call/letter to the Manager,Energy Services, Consumer Services.

Manager, Energy Services/ Consumer Services

1.03 Assign an Account Executive. Contact Manager, Communications &Protection Design (Engineering) to assignan Engineer.

Account Executive/Consumer Services

1.04 Set up and attend a meeting with theCustomer and a Communications &Protection Design Engineer.


1.05 Is the proposed system likely to Aqualify@for parallel operation with the LESsystem? Yes Go to Section 3, Step 3.01 No Go to Section 2, Step 2.01

Section 2 - Non-Qualifying Facilities


2.01 Prepare/mail a letter to the Customer notifying them of the non-qualifying status of the proposed system and the conditions under which it may be installed. Include the APolicy and Guidelines for Non-Qualifying Generation@ which instructs the Customer how to proceed. Copy the letter to the following:


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$ Manager, Distribution & Street

Lighting Design (Engineering) $ Manager, Communications &

Protection Design (Engineering) $ Manager, System Control

(Operations).

Request a one-line diagram of the building=s electrical distribution system and the specifications of the utilized transfer switch.

Managers Listed in Step 2.01 2.02 Assign personnel to the project and notify

Account Executive/ Consumer Services of assignments.


2.03 Arrange and attend a meeting with the Customer and the assigned personnel to discuss all pertinent issues regarding the proposed system. This includes project requirements, contracts, rates, terms, timing for construction, technical inter-connection requirements, etc.

Assigned Personnel 2.04 Work with the Customer to:

$ Review drawings and relay settings$ Design utility connections $ Connect generator set and switch to

utility $ Set up metering


2.05 Coordinate with the Customer and LES System Protection staff for the final inspection and test of relay and breaker trip settings prior to issuing a compliance certificate. System Protection will affix labels instructing the Customer to notify LES of any system changes. Verify that the Customer has received all required code inspections.


2.06 Send final compliance letter to the Customer. Notify the Manager, Rates, Forecasting & Load Research of any metering changes.


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Section 3 - Qualifying Facilities


3.01 Mail to the Customer a APolicy and Guidelines for Customer-Owned Generation@ booklet with an instructional cover memo. The booklet includes:

$ General policy and guidelines $ Qualifying status requirements $ Application form $ This Procedure $ Contract example $ Rate Schedules $ Policy and Guidelines for non-

qualifying facilities Request:

$ A one-line diagram of the building=s electrical distribution system

$ Specifications of the utilized transfer switch

$ Relay settings of the intertie relay

$ Specifications of the intertie relay

$ Trip schematic and intertie breaker specifications and settings

Customer 3.02 Receive booklet, follow instructions in

cover memo. This includes completing the AApplication for Review of Interconnection and Parallel Operation@ (LES Form 803). Forward the application form and the proposed system=s technical specifi-cations, blueprints, system one-line diagram, interconnection breaker trip schematic, interconnection relay information, etc. to:

Lincoln Electric System Manager, Energy Services P.O. Box 80869 Lincoln, NE 68501


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3.03 Receive information from the Customer. If the Manager, Energy Services and the Manager, Rates, Forecasting & Load Research determine the facility is a Non-Qualifying Facility, go to Section 2 - Step 2.01. Send copies of the Customer=s application form and associated specifications, blueprints, diagrams, schematics, relay information, etc. to the following:

$ Manager, Projects Engineering (Power Supply)

$ Manager, Distribution & Street Lighting Design (Engineering)

$ Manager, Communications & Protection Design (Engineering)

$ Manager, System Control (Operations)

$ Manager, Rates, Forecasting and Load Research (Consumer Services)

$ Chief Financial Officer (APPLICATION FORM ONLY)

Managers Listed in Step 3.03 3.04 Receive above paperwork.

Assign an Engineer from your Division (as necessary) to review and process this generation project.


3.05 Arrange and attend a meeting with the Customer and the assigned Engineers.

Customer and Assigned LES Staff

3.06

Meet and discuss all pertinent issues regarding the proposed system. This includes:

$ Project requirements $ Contracts $ Rates $ Terms $ Timing for construction $ Technical interconnection requirements, etc.


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Assigned LES Staff Assigned Engineer/ Engineering Manager, Energy Services/ Consumer Services Customer Manager, Energy Services/ Consumer Services Manager, Energy Services/ Consumer Services Customer Manager, Energy Services/ Consumer Services

3.07 3.08 3.09 3.10 3.11 3.12 3.13 3.14

Coordinate with personnel in Engineering and the System Protection Department/ Operations to review the proposed design of interconnection devices for compliance with LES standards.

Communicate any required changes to the Customer and to the Account Executive/Consumer Services. Work with the Customer to meet LES standards. Notify the Manager, Energy Services/ Consumer Services when the design is in order. Coordinate with the Land Management Department/Engineering to procure any needed easements, right-of-ways, etc. Prepare and mail an AInterconnection Agreement@ to the Customer. Read, complete where applicable, and sign the AInterconnection Agreement.@ Return the Agreement to the Manager, Energy Services/Consumer Services. Receive the signed AInterconnection Agreement@ from the Customer. File the Agreement and notify staff to proceed. Prepare/mail a letter to the Customer giving notification to proceed with the installation of the now-approved interconnection equipment. Proceed with installation of the interconnection equipment. When the installation is complete, notify the Manager, Energy Services/Consumer Services. Notify assigned staff that the facility is ready for inspection.


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3.15

Arrange to have the facility inspected by appropriate LES personnel to verify that the facility has been installed per the agreed design criteria.

Assigned Engineers/ Engineering and Operations

3.16 Verify that the facility meets all LES requirements, that all payments owed to LES have been received, and that all required code inspections have been performed. Notify the Account Executive and Manager, Energy Services/Consumer Services that all requirements are in order.


3.17 Instruct the Construction & Maintenance Department/Operations to connect the service. Instruct the Maintenance & Trouble-shooting Department/Operations to install Afeedback@ stickers on the Customer=s disconnect switch and the LES transformer(s).

Assigned Engineer/ Operations

3.18 Notify the Manager, Energy Services/ Consumer Services that the service has been connected.


3.19 Notify the Customer that a test operation of the facility should be scheduled in order for LES personnel to witness interconnection breaker trip check and first paralleling operation.

Customer 3.20 Arrange to have LES System Protection

personnel witness interconnection breaker trip check and first paralleling operation.

Customer and Assigned LES Personnel

3.21 Conduct the test. Work with the Customer to make necessary improvements to pass the test. Notify the Manager, Energy Services/Consumer Services when test is successful.


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System Protection will affix labels instructing the Customer to notify LES of any system changes.

Customer 3.22 Provide to the Manager, Energy Services/

Consumer Services an Aas built@ one-line diagram and interconnection breaker trip schematic and also final interconnection relay settings.


3.23 Prepare/mail a letter to the Customer giving notification that the operation of the facility may commence. Forward the Aas built@ relay settings to System Protection. Notify the Manager, Rates, Forecasting & Load Research of any metering changes.


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REFERENCES 1. Policy and Guidelines for Customer-Owned Generation (booklet).

VICE PRESIDENT

APPROVED BY: Signed POWER SUPPLY 5/16/06 DOUGLAS BANTAM TITLE DATE

VICE PRESIDENT

APPROVED BY: Signed ENGINEERING 5/19/06 DAN PUDENZ TITLE DATE

VICE PRESIDENT APPROVED BY: Signed OPERATIONS 5/19/06

NEIL ENGELMAN TITLE DATE

VICE PRESIDENT

APPROVED BY: Signed CONSUMER SERVICES 5/15/06 J. TODD HALL TITLE DATE

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APPLICATION FOR REVIEW OF INTERCONNECTION AND PARALLEL OPERATION OF CUSTOMER-OWNED GENERATION Lincoln Electric System Attn: Manager, Energy Services Consumer Services Division P.O. Box 80869 Lincoln, NE 68501

I, , request the Lincoln Electric System to review (owner)

this application for interconnection and parallel operation of a customer-owned generation device(s) to be located at . (address where device sited)

The following specifications pertaining to the installation have been prepared by me or my representative: Generator and Prime Mover

a) Manufacturer: b) Manufacturer=s Reference Number, Style, or Type: c) Nameplate Data: d) Fuel Source: Character of Service a) Voltage: b: Phase: c) Frequency: d) Maximum Parallel Operation. This is not generation capacity but maximum kW capacity at interface: e) Disconnect Switch Description: f) Other Characteristics (if applicable):

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Tower (if wind system) a) Height: b) Rotor Diameter: Inverter (if applicable) a) Manufacturer: b) Model Number: c) Size or Rating: Type of FERC Qualifying Facility (Check all applicable) G Small Power Production ' 292.204

G Cogeneration ' 292.205

Q Topping-Cycle ' 292.202(d)

Q Bottoming-Cycle ' 292.202(e) Additional Information Attach the following to the application: a) A detailed electrical diagram(s) of the generating equipment, protective

features and proposed interconnection to LES. b) If available, data showing wave-shape of the voltage at the interface at

maximum output. c) Map showing location of the generation facility and other related equipment

in relation to property lines, buildings, roads and other landmarks.

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Additional Requirements It is understood that I will not proceed with the installation of equipment based upon parallel operation with LES until I have met with LES personnel and received written confirmation that such can proceed. It is further understood that I must comply with any local, state and federal ordinances, codes and regulations. I will supply to LES any other data concerning this installation should such be reasonably requested. Name of Applicant: Mailing Address: Telephone: Date Submitted: Received by Date: (by LES) Emergency Contact: Telephone: Cell Phone: LES Distribution: 1. Manager, Distribution & Street Lighting Design (ED) 2. Manager, Rates, Forecasting & Load Research (CS) 3. Manager, Projects Engineering (PS) 4. Manager, Communications & Protection Design (ED) 5. Manager, System Control (OP) 6. Chief Financial Officer (FS)

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Sample One-Line Diagram For Net Metering Service

Electric Generator 1 Inverter 1 Optional Generation Meter 2 Meter Socket 1 Disconnect Switch 1 Customer Load Optional Disconnect Switch 1 Bi-directional Meter 2 Meter Socket 1 1 Customer Responsibility LES 2 LES Responsibility

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COGENERATION AND SMALL POWER PRODUCTION (100 kW AND LESS) PARALLEL OPERATION, POWER SALES AND INTERCONNECTION AGREEMENT BETWEEN LINCOLN ELECTRIC SYSTEM AND

This Power Sales and Interconnection Agreement, hereinafter called the AAgreement,@ is made and entered into as of the day of , 20 , by and between , hereinafter referred to as the AOwner@ of the alternate energy generation equipment or AQualifying Facility@ and the City of Lincoln, a municipal corporation of the State of Nebraska, acting through the Lincoln Electric System, hereinafter referred to as ALES.@

WITNESSED: The Owner desires to install alternate energy generation equipment or a Qualifying Facility and has requested that it be interconnected to LES such that it operates in parallel with LES and LES may receive energy from such Qualifying Facility. LES agrees to allow such interconnection subject to the following terms and conditions, which are accepted and agreed to by the Owner: ARTICLE I

TERM OF AGREEMENT

This Agreement shall be binding upon execution and shall remain in effect for a term of twelve (12) months from the aforenamed execution date. The Agreement may be terminated by either Party by giving 30 days written notice. Upon completion of the term, the Agreement will remain effective on a month-to-month basis unless terminated by either Party. ARTICLE II

SALE OF ENERGY

The Owner of the Qualifying Facility elects to sell and deliver energy to LES under one of the following two options: (Check the appropriate option) OPTION II-A Deliver the entire electrical output of the Qualifying Facility. OPTION 11-B Deliver the instantaneous surplus or excess electrical output

beyond any load requirements associated with the Qualifying Facility.

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ARTICLE III

RATES FOR PURCHASES FROM QUALIFYING FACILITY

LES shall pay the Qualifying Facility for energy delivered to the utility according to the current period LES price schedule for such purchases, Option III-A. This price schedule shall be reviewed and subject to change by LES at its discretion.

The Qualifying Facility has the option to contract for the future periods= energy purchase prices offered by LES, Option III-B. The option shall be exercised prior to the beginning of the specified contract term. The contract term for future energy purchase prices shall be mutually agreeable to both Parties. Should the Qualifying Facility elect to contract under this option, a price schedule denoting future periods= purchase prices shall be affixed as an Appendix to this Agreement. (Check the appropriate option) OPTION III-A Current period LES price schedule as modified from time to

time. OPTION III-B Contract for future periods= prices. ARTICLE IV

INTERCONNECTION COSTS

Those additional costs above and beyond interconnection costs with respect to retail customers of similar load characteristics shall be recovered from the Qualifying Facility. Appendix C to this Agreement shall set forth those additional items and the LES reimbursement mechanism. ARTICLE V

TERMS AND CONDITIONS

This Agreement includes the following appendices which are attached and incorporated by reference herein:

Appendix A - General Terms and Conditions of Interconnection and Power Purchases and Sales

Appendix B - Loss Factor Adjustment

Appendix C - Additional Interconnection Costs

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In addition, the terms and conditions of the LES Service Regulations, as modified from time to time, shall also apply except as expressly modified in this Agreement.

In Witness Whereof, the Parties have executed this Agreement by their duly authorized representatives as of the date hereinabove set forth: Qualifying Facility Title Attest

Lincoln Electric System Title Attest

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APPENDIX A GENERAL TERMS AND CONDITIONS OF INTERCONNECTION AND POWER PURCHASES AND SALES A-1 Electrical Service Conditions

A-1.1 General

a) Owner: b) Location:

A-1.2 Prime Mover and Generator

a) Manufacturer: b) Manufacturer=s Reference

Number, Type or Style: c) Serial Number: d) Nameplate Data: e) Fuel Source:

A-1.3 Character of Service

a) Voltage: b) Phase: c) Frequency: d) Service Amp: e) Other Characteristics:

A-1.4 Points of Delivery and Receipt

The point of delivery and/or receipt between LES and the Qualifying Facility will be the LES metering equipment or that point where the LES service wires are joined to the Qualifying Facility=s service terminals unless otherwise mutually agreed to by the Parties.

A-2 Rights and Obligations

A-2.1 Ownership and Responsibility

The Owner of the Qualifying Facility shall design, construct, install, own, operate and maintain the Facility and all equipment on the Owner=s side of the point of delivery/receipt that is required to generate and deliver energy to LES except for any special facilities as may be designated. The Facility=s protection, control, safety and all associated equipment must meet standards of good engineering and electrical safety practices as determined solely by LES and be capable of parallel operation with LES service wires. The protection, control,

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safety and other associated equipment shall at all reasonable times be accessible to authorized LES personnel.

A-2.2 Design

The Owner of the Qualifying Facility shall supply LES with three copies of

technical specifications and drawings upon request related to the production and interconnection facilities and related equipment. LES= review of the Facility=s specifications shall not be construed as confirming nor endorsing the design nor as any warranty of safety, durability or reliability of such Facility or equipment. LES shall not, by reason of such review or failure to review, be responsible for strength, details of design, adequacy or capacity of the Qualifying Facility or other equipment, nor shall LES= acceptance be deemed to be an endorsement of any Facility or equipment.

A-2.3 Interconnection Facilities

The Owner of Qualifying Facility shall construct, own and maintain

interconnection facilities as required by LES to deliver energy from the Qualifying Facility to the point of delivery/receipt. The interconnection facilities shall be of such size to accommodate the delivery of such energy. In the event it is necessary for LES to install special interconnection facilities to re-enforce its electrical system for purposes of this Agreement, the Owner of the Qualifying Facility shall reimburse LES its costs.

A-2.4 Protective Equipment

The Owner of the Qualifying Facility shall be responsible for providing and

maintaining all equipment deemed necessary for the protection of its own facilities, property and operations. Such equipment shall be provided for on the Owner=s side of the point of delivery/receipt. By virtue of the interconnection with the Qualifying Facility, LES assumes no liability for the protection of any property or person associated with the Qualifying Facility=s operations.

A-2.5 Changes in Conditions

The Owner of the Qualifying Facility agrees to make and bear all costs,

except as otherwise provided, of changes in equipment necessitated by changes in service requirements as may be reasonably required by LES.

A-2.6 Governmental Regulations, Codes and Ordinance

The Owner of the Qualifying Facility has the responsibility to comply with

all applicable federal, state and local regulations, codes and ordinances including electrical codes. The Owner shall not begin initial operation of the Qualifying Facility until it has passed applicable code inspection requirements and has received written approval from LES. The LES review of design specifications and drawing or on-site inspections shall not be construed as approvals as to compliance with any such regulations, codes and/or ordinances.

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A-2.7 Land Rights

The Owner of the Qualifying Facility grants to LES all necessary right-of-ways and easements on the property of the Owner to install, operate, maintain, replace and remove LES= metering and interconnection equipment. If any part of LES= facilities are to be located on property owned by other than a Party to this Agreement, the Owner of the Qualifying Facility shall procure all necessary right-of-ways and easements for the construction, operation, maintenance and replacement of LES= facilities upon such property in a form satisfactory to LES. The standard LES easement agreement will be utilized.

Authorized LES personnel have the right to enter at any reasonable time to

inspect equipment located on the property or within an enclosure and make safety checks. This right does not relieve the Owner of the Qualifying Facility of the obligation to maintain such facilities.

A-3 Operations and Safety

A-3.1 Procedures

The Owner of the Qualifying Facility shall cooperate with LES in developing mutually acceptable operating procedures for the delivery of the electrical output from the Qualifying Facility and associated interconnection. The Owner will be responsible for operating the Qualifying Facility and associated equipment in a manner that will not cause undesirable and harmful effects, unusual fluctuations and disturbances to occur on the electrical system of LES or LES= customers. Any future changes to the interconnection relay settings must receive the approval of LES System Protection personnel before implementation.

A-3.2 Disconnect Equipment

The Owner shall provide equipment for manually disconnecting and

isolating the Qualifying Facility from the LES electrical system. An outside-mounted visible disconnect shall be installed on the Owner=s side of the point of delivery/receipt near the meter or mutually agreed upon location. Such equipment must be capable of preventing the Qualifying Facility from energizing the LES service wires and must include a device which, at LES= discretion, LES employees can operate and lock in place.

The Owner shall also provide equipment to automatically disconnect and

isolate the Qualifying Facility from LES during a service interruption. The automatic disconnect shall receive its voltage and frequency referenced from the LES service wires. The automatic disconnect shall not close without proper voltage and frequency from the LES service wires. Such equipment must be capable of preventing the Qualifying Facility from energizing LES service wires during a service interruption. Please refer to the latest IEEE standard 1547 section on AIslanding.@

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A-3.3 Fault Protection

Adequate protection facilities shall be provided by the Owner to protect the LES service wires from fault currents originating from the Qualifying Facility. The Owner shall also be responsible to provide adequate protection for the Qualifying Facility from fault currents originating in LES.

A-3.4 Over/Under Voltage

It shall be the responsibility of the Owner to provide adequate protection or

safeguards to prevent damage to LES caused by over/under voltages originating in the Qualifying Facility and to protect the Qualifying Facility from inadvertent over/under voltage conditions originating from the LES electrical system. Please refer to the latest IEEE standard 1547 for voltage ranges and clearing times when setting the interconnection relay.

A-3.5 Synchronization

The Owner shall provide adequate facilities for the proper synchronization

of the Qualifying Facility with LES service wires such that such synchronization is accomplished without causing undesirable currents, surges or voltage dips on the LES electrical system. LES employs automatic reclosing on its system circuit breakers. A fault and the subsequent breaker trip and reclose can cause an out-of-phase condition to exist between LES and the customer generation facility. Following a period of interruption, the proper resynchronization of the Qualifying Facility shall be the responsibility of the Owner.

A-3.6 Grounding

The Owner shall ground the Qualifying Facility and associated equipment

in such a manner that coordination is maintained with the relay protection system in use by LES and the Qualifying Facility is protected from being subject to deleterious voltage and excessive current conditions.

A-3.7 Harmonics

Adequate design precaution must be taken by the Owner to prevent

excessive and deleterious harmonic voltages and/or currents caused by the Qualifying Facility from occurring on the electrical system of LES or to LES= customers. The Qualifying Facility must be designed to operate with normal harmonic voltage and currents that originate from the LES electrical system. Please refer to the latest IEEE standard 1547.

A-3.8 Power Factor

The operation of the Qualifying Facility shall not produce nor consume

excessive reactive power. Should the power factor fall outside acceptable limits either lagging or leading, as determined by LES, the Owner shall undertake the necessary modifications to meet the required power factor level.

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A-3.9 Voltage Regulation

The Owner shall provide the necessary voltage regulation equipment to prevent the Qualifying Facility from causing excessive voltage variations on the LES electrical system. The voltage variation caused by the Qualifying Facility must be within the ranges capable of being handled by the voltage regulation facilities used by LES.

A-3.10 Voltage Flicker

Voltage surges or flickers caused by the operation, synchronization or

isolation of the Qualifying Facility shall be within the standards of frequency of occurrence and magnitude established by LES to prevent undue voltage flicker on the LES electrical system. The Owner shall provide suitable equipment to reasonably limit voltage fluctuations caused by the Qualifying Facility.

A-3.11 Voltage Balance

The voltage produced by the Qualifying Facility must be balanced if it is a

three-phase installation. The Owner shall be responsible in protecting the Qualifying Facility from an inadvertent phase unbalance in LES service voltage.

A-3.12 Over/Under Frequency

The Owner shall provide the necessary facilities for safeguards and

protection of equipment caused by the incurrence of an over or under frequency event. Please refer to the latest IEEE standard 1547 for frequency ranges and clearing times when setting the interconnection relay.

A-3.13 Emergency Dispatchability

An emergency condition exists when the reliability of the electric system is

in jeopardy and customer service is threatened. During emergency conditions, the Owners of Qualifying Facilities may be asked to place control of their facilities under the direction of LES until the electric system has returned to normal operation. LES will determine when generation should be adjusted, brought on-line or shut down. If the Owner chooses to cooperate during these emergency conditions, they should be able to alter their generation schedules as directed by LES= system operators.

A-4 Continuity of Service

LES shall not be obligated to accept and LES may require the Qualifying Facility to curtail, interrupt or reduce deliveries of energy in order to construct, install, maintain, repair, replace, remove, investigate or inspect any of its equipment or any part of its electrical system or if it determines that curtailment, interruption or reduction is necessary because of emergencies, forced outages, operating conditions on its electrical system or as otherwise required by prudent

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electrical utility practices. Such discontinuance of service or purchases shall be without notice or liability.

The Owner of the Qualifying Facility shall promptly notify LES of any

extended Qualifying Facility outage along with the estimated duration of such outage or reduction. Any violation of the terms and conditions of the Agreement or LES Service Regulations shall result in the immediate termination of the Agreement without notice or liability.

A-5 Metering

A-5.1 Ownership and Maintenance

LES shall install, own, maintain and test all billing meters and associated equipment that is necessary in LES= judgment to determine amounts and/or times of delivery of energy by the Qualifying Facility to LES and from LES to the Qualifying Facility and any associated load. The cost of any additional metering will be recovered by LES in a monthly billing for interconnection and special facility=s costs. The Qualifying Facility shall furnish the meter socket(s) and other related equipment plus sufficient space required by LES in order to accommodate such equipment.

The Owner of the Qualifying Facility agrees to allow LES, at LES= expense,

to install additional metering to obtain other load and operating data provided such metering does not adversely affect the operations of the Qualifying Facility.

A-5.2 Sealed Meters and Testing

All meters used to determine the billings shall be sealed and the seals shall

be broken by LES employees only upon those occasions when the meters are to be inspected, tested or adjusted.

If requested to do so by the Qualifying Facility, LES shall inspect or test the

meter(s) with the expense of such an inspection or test being paid by the Qualifying Facility unless upon being tested or inspected the meter is found to register inaccurately by more than two percent of full scale. LES shall give reasonable notice of the time when any inspection or test shall take place such that the Owner may have a representative present at the test and inspection. If a meter is found to be inaccurate beyond two percent or is otherwise defective, it shall be repaired or replaced, at LES= expense, in order to provide accurate metering.

A-5.3 Adjustments

If any test of metering equipment discloses any inaccuracy of more than

two percent, the accounts between the Parties shall be adjusted in accordance with this section. Such correction and adjustment shall be made from the date the meter became inaccurate, if known. If such data cannot be determined, then the adjustment shall be made for the previous month or from the date of the latest test (if within the previous month) and for the elapsed period in the month during which

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the test was made. Should any metering equipment at any time fail to register or should the registration thereof be so erratic as to be meaningless, the amounts of energy transacted shall be determined by the Parties from the best available data.

A-5.4 VAR Metering

At LES= option, VAR metering may be installed by LES at the Qualifying

Facility=s expense to measure reactive power. A-6 Billing and Payment

Once a billing month, LES shall read the billing meter(s) installed to measure energy and capacity (real and reactive, if applicable) delivered to LES from the Qualifying Facility. LES shall then prepare a statement computing the amounts owed by LES for such energy. From this amount, LES shall deduct any amounts owed by the Owner of the Qualifying Facility to LES for any additional interconnection, metering, and billing associated with the Qualifying Facility. The billing and payment shall be in accordance with adopted LES regulations regarding such items.

A-7 Uncontrollable Forces

A Party shall not be considered to be in default in respect to any obligation hereunder if prevented from fulfilling such obligation by reason of uncontrollable forces. The term uncontrollable forces shall be deemed for the purposes hereof to mean storm, flood, lightning, earthquake, fire, explosion, civil disturbance, labor disturbance, sabotage, war, national emergency, restraint by court or public authority or other causes beyond the control of the Party affected which such Party could not reasonably have been expected to avoid by exercise of due diligence and foresight. Either Party unable to fulfill any obligation by reason of uncontrollable forces will exercise due diligence to remove such disability with reasonable dispatch.

A-8 Indemnity and Liability

Each Party shall indemnify the other Party, its officers, agents, and employees against all loss, damage, expense and liability to third persons for injury to or death of person or injury to property, proximately caused by the indemnifying Party=s construction, ownership, operation, or maintenance of, or by failure of, any of such Party=s works on facilities used in connection with this Agreement. The indemnifying Party shall, on the other Party=s request, defend any suit asserting a claim covered by this indemnity. The indemnifying Party shall pay all costs that may be incurred by the other Party in enforcing this indemnity.

Nothing in this Agreement shall be construed to create any duty to any

standard of care with reference to or any liability to any person not a Party to this Agreement.

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At LES= request, the Owner shall furnish to LES copies of any property or liability insurance on the Facility.

A-9 Waiver

Any waiver at any time by either Party of its rights with respect to default under this Agreement shall not be deemed a waiver with respect to any subsequent default by the other Party under this Agreement.

A-10 Successors, Legal Representative or Assigns

This Agreement shall be binding upon and inure to the benefit of the successors, legal representatives, or assigns of the respective Parties. Neither Party shall assign this Agreement without the express written consent of the other Party, nor shall a Party be relieved of its obligations hereunder or impose additional obligations or burdens on the other Party by any assignment given.

A-11 Governmental Jurisdiction and Authorization

This Agreement is subject to the jurisdiction of those governmental agencies having control over the Parties or the Agreement. This Agreement shall not become effective until all required governmental authorization and permits are first obtained and copies are submitted to LES.

This Agreement shall at all times be subject to such changes by such

governmental agencies, and the Parties shall be subject to such conditions and obligations, as such governmental agencies may from time to time direct in the exercise of their jurisdiction. Both Parties agree to exert their best efforts to comply with all applicable rules and regulations of all governmental agencies having control over either Party or this Agreement. The Parties shall take all reasonable action necessary to secure all required governmental approvals of this Agreement in its entirety and without change.

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APPENDIX B LOSS FACTOR ADJUSTMENT

The purchase rate or avoided energy cost is calculated at the LES defined inlet of such energy. The purchase rate for energy delivered to LES shall be adjusted by a factor of 1.050 to reflect the savings resulting from the variation in local transmission and distribution losses compared to if LES had generated or purchased elsewhere an equivalent amount of energy.

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APPENDIX C ADDITIONAL INTERCONNECTION COSTS

All interconnection costs above and beyond the normal costs of interconnection with a retail customer of like load characteristics are to be recovered from the Qualifying Facility. The additional LES interconnection cost associated with this Facility is 1 or 2 below as applicable.

1. Additional Metering Investment for 200 amp service, watt hour meters. 2. Additional Metering Investment for other than 200 amp service and/or interval recording meters.

The 2012 incremental standard kWh in/out metering cost per month is $2.73. Such charge will be reviewed by LES and is subject to change on a periodic basis.

The metering cost will be determined on a case by case basis. These costs typically involve services with greater than 200 amps capacity and/or for interval recording meters.

LES intends to waive the additional LES metering and energy accounting costs incurred for the Qualifying Facility up to 200 amp service until December 31, 2013. By such date, LES shall again review such policy and made a determination regarding the future and amount of such charges. The waiver of the right to collect such charges until December 31, 2013 shall not be deemed a waiver past that date.

Lincoln Electric System Schedule Issued March 1, 2012 Approved LES Administrative Board Supersedes Schedule Issued December 18, 2009 Resolution: 2012-4 Effective with all bills rendered after February 29, 2012

TAX CLAUSE: In the event of the imposition of any new or increased tax or any payment in lieu thereof, in excess of that provided for under Article VIII, Section 12 of the Charter of the City of Lincoln, the rate provided herein may be increased to reflect the amount of such tax or in lieu of tax increase.

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Sheet 1 of 2

Schedule C&SPP-100 kW COGENERATION AND SMALL POWER PRODUCTION

AVAILABLE: To cogeneration and small power production facilities with production capacity of 100 kW and less that qualify under the guidelines for implementing PURPA Sections 201 and 210 as adopted by the LES Administrative Board. CHARACTER OF SERVICE: Unless otherwise provided by contract, the character of purchased power will be single or three phase alternating electric current at 60 hertz. Voltage shall be determined by the voltage of LES’ distribution system in the vicinity unless otherwise agreed. PURCHASE OF OUTPUT FROM QUALIFYING FACILITIES: Owners of Qualifying Facilities will be allowed the option to either (1) sell the entire electrical output of their Qualifying Facilities to LES, or (2) use the electrical output of their Qualifying Facilities to instantaneously supply all or a portion of their own load and sell the instantaneous surplus to LES. PURCHASE PRICE: Energy from qualifying small power production and cogeneration facilities of 100 kW and less without time of day metering, will be paid for on the following basis:

The purchase price shall be adjusted up or down to reflect the savings or costs resulting from variations in losses compared to if LES had generated or purchased elsewhere an equivalent amount of energy. Such an adjustment factor shall be identified in the contract between the qualifying facility’s owner and LES. SEASONAL PROVISION: Summer and winter periods are defined as:

Summer – The four-month period from June 1 through September 30 Winter – The eight-month period from October 1 through May 31

Energy Charge on the BILL will be prorated between seasons in transitional months (i.e., June and October) according to the number of days corresponding to each season covered by the BILL. ACCOUNTING CHARGE: The owner of the Qualifying Facility will pay to LES the following monthly charges for additional energy accounting expenses incurred by LES:

*For customer-owned generation facilities utilizing kWh meters, the energy accounting charge will be

waived until December 31, 2013.

$3.90

$19.50Interval Meter $/meter

COGENERATION & SMALL POWER PRODUCTION ACCOUNTING CHARGE kWh Meter $/meter*

COGENERATION & SMALL POWER PRODUCTION PURCHASE Summer Winter

Energy Price $/kWh/month for all power and/or energy delivered to the Lincoln Electric System $0.0186 $0.0162



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Sheet 2 of 2

Schedule C&SPP-100 kW COGENERATION AND SMALL POWER PRODUCTION

ADJUSTMENTS TO BILLING: Monthly adjustments will be made to the purchased power billing to reflect costs incurred by LES above and beyond a normal customer interconnection. These monthly adjustments will be identified in the standard contract which the owner of the Qualifying Facility will be required to execute with LES. These adjustments will reflect the investment costs to LES for such items among others as metering and interconnection costs which are being amortized over the contract’s term or otherwise recovered. For customer-owned generation facilities utilizing kWh meters which can be installed at or near LES’ standard cost, the amortized cost of additional metering will be waived until December 31, 2013. TERMS AND CONDITIONS:

1. A signed written agreement between the Qualifying Facility and LES will be required.

2. Unless modified by contract, LES’ Policies and Service Regulations shall apply to this schedule.

3. For facilities with more than 100 kilowatts of capacity, the purchase rate and other

terms and conditions will be determined on a case-by-case basis. 4. Application and interconnectivity must be compliant with the Policy and Guidelines for

Customer-Owned Generation. 5. TERMS OF PAYMENT - BILLS on active accounts are due in full 23 days after

rendered. BILLS on final accounts are due upon receipt or the date of the most recently issued BILL, whichever is later. Any past due amounts are subject to the LES Policy – Termination of Electric Service and applicable Service Fees as established by the LES Administrative Board. Charges are subject to all applicable State and Local sales tax.

6. FLUCTUATING LOADS AND HARMONICS - Customers operating equipment causing harmonic currents and/or highly fluctuating or large instantaneous demands, including, but not limited to, variable speed drives, motor starting, welders and X-ray machines, shall be required to pay all nonbetterment costs of corrective action required to maintain acceptable service quality to the customer and not interfere with service on the System's lines or to other customers. See Paragraphs K and N of the Service Regulations.



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Sheet 1 of 2

Schedule RNM-25 kW RENEWABLE NET METERING

AVAILABLE: To renewable small power production facilities with production capacity of 100 kW and less that qualify under the guidelines for implementing PURPA Sections 201 and 210 as adopted by the LES Administrative Board. This rate shall be used in conjunction with the applicable retail rate. CHARACTER OF SERVICE: Unless otherwise provided by contract, the character of purchased power will be single or three phase alternating electric current at 60 hertz. Voltage shall be determined by the voltage of LES’ distribution system in the vicinity unless otherwise agreed. Renewable facilities will be metered as shown below. PURCHASE OF OUTPUT FROM QUALIFYING FACILITIES: Owners of renewable Qualifying Facilities will be allowed to use the electrical output of their Qualifying Facilities to supply all or a portion of their own load and deliver the surplus to LES. At the end of the billing period, LES will subtract the metered energy which was delivered to LES from that metered energy which was supplied by LES. The net positive energy supplied to the Customer will be billed at the applicable retail rate. A net positive energy delivery to LES will be purchased by LES each billing period at this Renewable Net Metering rate. Other applicable fees and charges, including the customer charge and demand charge of the retail rate, will be billed to the Customer. WHOLESALE PRICE: Energy from renewable Qualifying Facilities will be paid for on the following basis:

RENEWABLE NET METERING ENERGY PAYMENT

Energy Price $/kWh for the net positive kilowatt-hours delivered to the System during the BILLING PERIOD

$0.0470

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LES QF

LOAD

METER M1METER M2

IN OUT



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Sheet 2 of 2

Schedule RNM-25 kW RENEWABLE NET METERING

CAPACITY PAYMENT: LES will make a one-time capacity payment to the owner of the renewable Qualifying Facilities. The capacity payment will be based on the contribution of peak reduction by the resource. As identified below, capacity added in future years will be eligible for the capacity payment. The capacity payment only applies to renewable Qualifying Facilities approved for interconnection after June 1, 2012. The capacity payment will be paid on the following basis:

RENEWABLE NET METERING CAPACITY PAYMENT

Solar: $/kW times 55% of nameplate capacity $500.00

Wind: $/kW times 10% of nameplate capacity $500.00 TERMS AND CONDITIONS:

1. A signed written agreement between the Qualifying Facility and LES will be

required. 2. Qualifying Facilities, or renewable small power production facilities, are defined

as those energies created by wind, solar, biomass, waste or hydro technologies. 3. This net metering policy shall remain in effect until December 31, 2013. 4. Customer Qualified Facility installation must comply with all applicable city,

county, and state laws and regulations. 5. Service will be furnished subject to the System's Service Regulations.

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LINCOLN ELECTRIC SYSTEM COMPLIANCE WITH FEDERAL ENERGY REGULATORY COMMISSION=S

REGULATIONS ORDER 69, 18 CFR PART 292.302 The Federal Energy Regulatory Commission (FERC) has adopted certain rules and regulations which require the Lincoln Electric System to prepare and maintain for public inspection electric utility system cost data as defined in the regulations Section 292.302(b)(1) through (d). The purpose of this submittal is to make available to potential cogenerators and small power producers present and anticipated future avoided cost data of electric energy and capacity for the LES. This data is intended to help potential owners of Qualifying production Facilities evaluate the financial feasibility of a cogeneration or small power production project. This data is not intended to represent a rate for purchases from Qualifying Facilities but rather the first step in such a rate determination. The final prices paid to Qualifying Facilities will also consider those factors enumerated in Section 292.304 of the regulations. The attached tables contain that information required by the regulations, Section 292.302.

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PREFACE The calculated buyback rates for seasonal energy are set equal to the average cost of energy for the System. All energy provided by LES is charged at the System average cost in the energy component of the rates. This is basically the cost of fuel. Every customer pays the same System average energy charge. Energy not produced by LES due to customer generation also saves LES this average cost of energy. By putting the same price on every unit of energy, whether generated by LES or the customer, all parties and all ratepayers are treated equally and fairly. This cost is determined in LES= annual Cost of Service study. The costs in this document use the average energy costs determined for summer and winter seasons in the latest study, the 2011 Cost Analysis. The calculated buyback rates for seasonal energy are $0.0186/kWh and $0.0162/kWh for the summer and winter, respectively. Qualifying facilities greater than 100 kW will be treated on a case-by-case basis as allowed by federal regulations. The projected costs of energy are listed below. PURPA AVOIDED ENERGY COST Section 292.302 (b) (Dollars per kWh) 2011 2012 2013 2014 2015 2016 Summer $0.0186 $0.0191 $0.0199 $0.0202 $0.0205 $0.0214 Winter $0.0162 $0.0166 $0.0174 $0.0176 $0.0179 $0.0187 The renewable avoided cost is applicable to the Renewable Net Metering Policy and Pricing. This is the average cost of LES' renewable energy purchases for the most recently completed calendar year (i.e., 2011).

RENEWABLE AVOIDED COST

(Dollars per kWh)

2012 2013 2014 2015 2016 2017 $0.0470 $0.0470 $0.0470 $0.0470 $0.0470 $0.0470

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292.302 (b) (2) "The electric utility=s plan for additions of capacity during the next 10 years." (2012-2021) LES has no base load, intermediate or peaking resource additions committed in this time frame. LES may add renewable generating resources (e.g., wind generation) within this time frame, but these additions would most likely not be made as a result of generating capacity needs. For 2012-2021, capacity costs are estimated by using combustion turbine costs.

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292.302 (b) (3) "The estimated capacity and energy cost of additions during the next 10 years." (2012-2021) 2012 Addition The estimates shown below are the $/kW/month capacity costs for a 47 MW combustion turbine addition generation on line in 2012. The annual capacity cost is allocated evenly over each of the 12 months in the year. 2012 2013 2014 2015 2016 $3.52 $3.56 $3.61 $3.65 $3.69 2017 2018 2019 2020 2021 $3.74 $3.79 $3.83 $3.88 $3.88 The energy cost for ten years, pursuant to Section 292.302(b)(2), is determined to be the projected System average energy cost, as allowed by Section 292.302(d). This energy cost, which would be in addition to the capacity cost, is shown below in $/kWh. 2012 2013 2014 2015 2016 $0.0177 $0.0182 $0.0190 $0.0193 $0.0196 2017 2018 2019 2020 2021 $0.0205 $0.0207 $0.0209 $0.0209 $0.0209

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LINCOLN ELECTRIC SYSTEM POLICY STATEMENT AND GUIDELINES REGARDING NON-QUALIFYING GENERATION (e.g., STANDBY AND EMERGENCY) Policy As is stipulated in Lincoln Electric System=s service regulation, Paragraph L, customer-owned standby or emergency generation that does not meet the FERC criteria as qualifying cogeneration and small power production facilities will not be allowed to operate in parallel with the LES electrical system. This type of generation is hereafter referred to as Non-Qualifying generation. This type of generation was not included under FERC Qualifying Facilities because it does not further the three goals of PURPA; particularly the conservation of energy by not providing two uses of fuel; the optimization of facilities and resources by the duplication of system facilities; and being powered by limited (premium) fossil fuel resources such as oil and natural gas. On a case-by case basis, a waiver for a non-qualifying generator may be granted where the customer contracts to operate the generator in parallel only at LES= request. Guidelines An LES-approved transfer switch will be installed in the customer=s wiring to accommodate loading of the Non-Qualifying generation. The transfer switch shall break the circuit connected to LES service wires before making the circuit with the customer=s generation or shall be an approved closed transition switch. To improve power quality, the customer may install a closed transition switch at the customer=s expense. This system provides the customer=s load with continuous electrical power during generator testing. All generators connected in parallel or closed transition to the LES system must meet the requirements documented in Section I-G, page 2-5, (Compliance with LES Safety, Protection and Operating Guidelines), Section II, page 2-6, (Supplemental LES and Protection Requirements Applicable to Owners of Qualifying Facilities) and Procedure No. 148 found in this document on page 3-1. Customer Non-Qualifying generation will not be used to reduce the account=s billing demand. LES shall be notified of all such installations and approve the final wiring before the generator is put into service. The customer will operate the generator in compliance with this policy and the terms of the LES service regulations. When a customer wishes to install Non-Qualifying generation, a LES AApplication for Electric Service@ will be prepared and submitted. Customers with Non-Qualifying generation may contact LES about options available under the LES Power Purchase Program. For information, contact the Manager, Energy Services.

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