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Small Electric Generators
Utility "Exit Fees"

Under some state electric industry restructuring programs, generators who install DG may be required to pay "exit fees" or similar charges for reduced use of the grid. As part of electric restructuring, many states require traditional electric utilities to divest themselves into electric generation companies and electric transmission and distribution companies. These requirements leave many utilities with stranded costs that need to be recovered through the use of so called Competitive Transition Charges (CTC). The utilities argue that customer's who install DG shift an unfair financial burden upon the utility's other customers, who must make up the loss by paying higher CTCs. Most exit fees are determined by state restructuring laws or by regulations promulgated by the state public utility commission (PUC). In general, they are assessed as a fee multiplied by the customer's historical load usage in kilowatt-hours. They vary by state, sometimes by application and may change or phase out over time. Some exit fees call for a one-time lump sum payment, while others are spread out over a number of years. There are sometimes exemptions or variations depending on the kind of generation used (ie., renewable, CHP). These fees can have a significant effect on the economic viability of a DG project.