(1) The commission shall establish a distributed generation program by order issued not later than 90 days after the effective date of the 2016 act that amended this section. The commission may promulgate rules the commission considers necessary to implement this program. Any rules adopted regarding time limits for approval of parallel operation shall recognize reliability and safety complications including those arising from equipment saturation, use of multiple technologies, and proximity to synchronous motor loads. The program shall apply to all electric utilities whose rates are regulated by the commission and alternative electric suppliers in this state.

  (2) Except as otherwise provided under this part, an electric customer of any class is eligible to interconnect an eligible electric generator with the customer’s local electric utility and operate the eligible electric generator in parallel with the distribution system. The program shall be designed for a period of not less than 10 years and limit each customer to generation capacity designed to meet up to 100% of the customer’s electricity consumption for the previous 12 months. The commission may waive the application, interconnection, and installation requirements of this part for customers participating in the net metering program under the commission’s March 29, 2005 order in case no. U-14346.

  (3) An electric utility or alternative electric supplier is not required to allow for a distributed generation program that is greater than 1% of its average in-state peak load for the preceding 5 calendar years. The electric utility or alternative electric supplier shall notify the commission if its distributed generation program reaches the 1% limit under this subsection. The 1% limit under this subsection shall be allocated as follows:

  (a) No more than 0.5% for customers with an eligible electric generator capable of generating 20 kilowatts or less.

  (b) No more than 0.25% for customers with an eligible electric generator capable of generating more than 20 kilowatts but not more than 150 kilowatts.

  (c) No more than 0.25% for customers with a methane digester capable of generating more than 150 kilowatts.

  (4) Selection of customers for participation in the distributed generation program shall be based on the order in which the applications for participation in the program are received by the electric utility or alternative electric supplier.

  (5) An electric utility or alternative electric supplier shall not discontinue or refuse to provide electric service to a customer solely because the customer participates in the distributed generation program.

  (6) The distributed generation program created under subsection (1) shall include all of the following:

  (a) Statewide uniform interconnection requirements for all eligible electric generators. The interconnection requirements shall be designed to protect electric utility workers and equipment and the general public.

  (b) Distributed generation equipment and its installation shall meet all current local and state electric and construction code requirements. Any equipment that is certified by a nationally recognized testing laboratory to IEEE 1547.1 testing standards and in compliance with UL 1741 scope 1.1A, effective May 7, 2007, and installed in compliance with this part is considered to be compliant. Within the time provided by the commission in rules promulgated under subsection (1) and consistent with good utility practice, and the protection of electric utility workers, electric utility equipment, and the general public, an electric utility may study, confirm, and ensure that an eligible electric generator installation at the customer’s site meets the IEEE 1547 anti-islanding requirements or any applicable successor anti-islanding requirements determined by the commission to be reasonable and consistent with the purposes of this subdivision. If necessary to promote reliability or safety, the commission may promulgate rules that require the use of inverters that perform specific automated grid-balancing functions to integrate distributed generation onto the electric grid. Inverters that interconnect distributed generation resources may be owned and operated by electric utilities. Both of the following must be completed before the equipment is operated in parallel with the distribution system of the utility:

  (i) Utility testing and approval of the interconnection, including all metering.

  (ii) Execution of a parallel operating agreement.

  (c) A uniform application form and process to be used by all electric utilities and alternative electric suppliers in this state. Customers who are served by an alternative electric supplier shall submit a copy of the application to the electric utility for the customer’s service area.

  (d) Distributed generation customers with a system capable of generating 20 kilowatts or less qualify for true net metering.

  (e) Distributed generation customers with a system capable of generating more than 20 kilowatts qualify for modified net metering.

  (7) Each electric utility and alternative electric supplier shall maintain records of all applications and up-to-date records of all active eligible electric generators located within their service area.