(a) As used in this section:

(1) “Beneficial account” means an in-state retail end user of an electric distribution company designated by a customer host or an agricultural customer host in such electric distribution company’s service area to receive virtual net metering credits from a virtual net metering facility or an agricultural virtual net metering facility;

(2) “Customer host” means an in-state retail end user of an electric distribution company that owns, leases or enters into a long-term contract for a virtual net metering facility and participates in virtual net metering;

(3) “Agricultural customer host” means an in-state retail end user of an electric distribution company that uses electricity for the purpose of agriculture, as defined in subsection (q) of § 1-1, owns, leases or enters into a long-term contract for an agricultural virtual net metering facility and participates in agricultural virtual net metering;

(4) (A) “Unassigned virtual net metering credit” means, in any given electric distribution company monthly billing period, a virtual net metering credit that remains after both the customer host and its beneficial accounts have been billed for zero kilowatt hours related to the generation service charges and a declining percentage of the transmission and distribution charges on such billings through virtual net metering;

(B) “Unassigned agricultural virtual net metering credit” means, in any given electric distribution company monthly billing period, an agricultural virtual net metering credit that remains after both the agricultural customer host and its beneficial accounts have been billed for zero kilowatt hours related to the generation service charges and a declining percentage of the transmission and distribution charges on such billings through agricultural virtual net metering;

(5) “Virtual net metering” means the process of combining the electric meter readings and billings, including any virtual net metering credits, for a municipal, state or agricultural customer host and a beneficial account related to such customer host’s account through an electric distribution company billing process related to the generation service charges and a declining percentage of the transmission and distribution charges on such billings;

(6) “Virtual net metering credit” means a credit equal to the retail cost per kilowatt hour the customer host may have otherwise been charged for each kilowatt hour produced by a virtual net metering facility that exceeds the total amount of kilowatt hours used during an electric distribution company monthly billing period; and

(7) (A) “Virtual net metering facility” means a Class I renewable energy source or a Class III source that: (i) Is served by an electric distribution company, owned, leased or subject to a long-term contract by a customer host and serves the electricity needs of the customer host and its beneficial accounts; (ii) is within the same electric distribution company service territory as the customer host and its beneficial accounts; and (iii) has a nameplate capacity rating of three megawatts or less; and

(B) “Agricultural virtual net metering facility” means a Class I renewable energy source that is operated as part of a business for the purpose of agriculture, as defined in subsection (q) of § 1-1, that: (i) Is served by an electric distribution company on land owned or controlled by an agricultural customer host and serves the electricity needs of the agricultural customer host and its beneficial accounts; (ii) is within the same electric distribution company service territory as the agricultural customer host and its beneficial accounts; and (iii) has a nameplate capacity rating of three megawatts or less.

(8) “Declining percentage of the transmission and distribution charges” means, during the period commencing on the first day of commercial operation of a virtual net metering facility or an agricultural virtual net metering facility and ending after one year, eighty per cent of the transmission and distribution charges, during the period commencing at the beginning of the second year of commercial operation of a virtual net metering facility or an agricultural virtual net metering facility and ending after one year, sixty per cent of the transmission and distribution charges, and commencing at the beginning of the third year of commercial operation of a virtual net metering facility or an agricultural virtual net metering facility and for each year thereafter, forty per cent of the transmission and distribution charges.

(b) Each electric distribution company shall provide virtual net metering to its municipal, state or agricultural customer hosts and shall make any necessary interconnections for a virtual net metering facility or an agricultural virtual net metering facility. Upon request by a municipal, state or agricultural customer host to implement the provisions of this section, an electric distribution company shall install metering equipment, if necessary. For each municipal, state or agricultural customer host, such metering equipment shall (1) measure electricity consumed from the electric distribution company’s facilities; (2) deduct the amount of electricity produced but not consumed; and (3) register, for each monthly billing period, the net amount of electricity produced and, if applicable, consumed. If, in a given monthly billing period, a municipal, state or agricultural customer host supplies more electricity to the electric distribution system than the electric distribution company delivers to the municipal, state or agricultural customer host, the electric distribution company shall bill the municipal, state or agricultural customer host for zero kilowatt hours of generation and assign a virtual net metering credit to the municipal, state or agricultural customer host’s beneficial accounts for the next monthly billing period. Such credit shall be applied against the generation service component and a declining percentage of the transmission and distribution charges billed to the beneficial accounts. Such credit shall be allocated among such accounts in proportion to their consumption for the previous twelve billing periods.

(c) An electric distribution company shall carry forward any unassigned virtual net metering credits earned by the municipal or state customer host or unassigned agricultural virtual net metering credits earned by the agricultural customer host from one monthly billing period to the next until the end of the calendar year. At the end of each calendar year, the electric distribution company shall compensate the municipal, state or agricultural customer host for any unassigned virtual net metering generation credits at the rate the electric distribution company pays for power procured to supply standard service customers pursuant to § 16-244c and a declining percentage of the transmission and distribution charges.

(d) At least sixty days before a municipal or state customer host’s virtual net metering facility or an agricultural customer host’s agricultural virtual net metering facility becomes operational, the municipal, state or agricultural customer host shall provide written notice to the electric distribution company of its beneficial accounts. The municipal, state or agricultural customer host may change its list of beneficial accounts not more than once annually by providing another sixty days’ written notice. The municipal or state customer host shall not designate more than five beneficial accounts, except that such customer host may designate up to five additional nonstate or municipal beneficial accounts, provided such accounts are critical facilities, as defined in subdivision (2) of subsection (a) of § 16-243y, and connected to a microgrid. The agricultural customer host shall not designate more than ten beneficial accounts each of which shall (1) use electricity for the purpose of agriculture, as defined in subsection (q) of § 1-1, (2) be a municipality, or (3) be a noncommercial critical facility, as defined in subdivision (2) of subsection (a) of § 16-243y.

(e) (1) On or before October 1, 2013, the Public Utilities Regulatory Authority shall conduct a proceeding to develop the administrative processes and program specifications, including, but not limited to, a cap of twenty million dollars per year apportioned to each electric distribution company based on consumer load, for credits provided to beneficial accounts pursuant to subsection (b) of this section and payments made pursuant to subsection (c) of this section, provided the municipal, state and agricultural customer hosts, each in the aggregate, and the designated beneficial accounts of such customer hosts, shall receive not more than forty per cent of the dollar amount established pursuant to this subdivision.

(2) In addition to the provisions of subdivision (1) of this subsection, the authority shall authorize six million dollars per year for municipal customer hosts, apportioned to each electric distribution company based on consumer load, for credits provided to beneficial accounts pursuant to subsection (b) of this section and payments made pursuant to subsection (c) of this section where such municipal customer hosts have: (A) Submitted an interconnection application to an electric distribution company on or before April 13, 2016, and (B) submitted a virtual net metering application to an electric distribution company on or before April 13, 2016.

(3) In addition to the provisions of subdivisions (1) and (2) of this subsection, the authority shall authorize, apportioned to each electric distribution company based on consumer load for credits provided to beneficial accounts pursuant to subsection (b) of this section and payments made pursuant to subsection (c) of this section three million dollars per year for agricultural customer hosts, provided each agricultural customer host utilizes a virtual net metering facility that is an anaerobic digestion Class I renewable energy source and not less than fifty per cent of the dollar amount for such agricultural customer hosts established under this subparagraph is utilized by anaerobic digestion facilities located on dairy farms that complement such farms’ nutrient management plans, as certified by the Department of Agriculture, and that have a goal of utilizing one hundred per cent of the manure generated on such farm.

(f) On or before January 1, 2013, and annually thereafter, each electric distribution company shall report to the authority on the cost of its virtual net metering program pursuant to this section and the authority shall combine such information and report it annually, in accordance with the provisions of § 11-4a, to the joint standing committee of the General Assembly having cognizance of matters relating to energy.

(g) A municipal, state or agricultural customer host shall be allowed to aggregate all electric meters that are billable to such customer host.

(h) Where a virtual net metering facility or agricultural virtual net metering facility requires a permit from the Department of Energy and Environmental Protection under chapter 446c or chapter 446d and the municipal, state or agricultural customer host has submitted a virtual net metering application to the electric distribution company for such virtual net metering facility or agricultural virtual net metering facility on or before December 1, 2015, and the electric distribution company has accepted such virtual net metering application, such municipal, state or agricultural customer host shall have eighteen months from the date of the issuance of the final permit from the Department of Energy and Environmental Protection to cause such virtual net metering facility or agricultural virtual net metering facility to become operational.