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SCHEDULE 3—INTERCONNECTION PROCESS,TECHNICAL REQUIREMENTS,AND OPERATING PROCEDURES State of Minnesota Interconnection Process for Distributed Generation Systems Introduction This document has been prepared to explain the process established in the State of Minnesota, to interconnect a Generation System with the Area Electrical Power System (Area EPS). This document covers the interconnection process for all types of Generation Systems which are rated 10MW's or less of total generation Nameplate Capacity; are planned for interconnection with the Area EPS's Distribution System; are not intended for wholesale transactions and aren't anticipated to affect the transmission system. This document does not discuss the interconnection Technical Requirements, which are covered in the "State of Minnesota Distributed Generation Interconnection Requirements" document. This other interconnection requirements document also provides definitions and explanations of the terms utilized within this document. To interconnect a Generation System with the Area EPS, there are several steps that must be followed. This document outlines those steps and the Parties' responsibilities. At any point in the process, if there are questions, please contact the Generation Interconnection Coordinator at the Area EPS. Since this document has been developed to provide an interconnection process which covers a very diverse range of Generation Systems, the process appears to be very involved and cumbersome. For many Generation Systems the process is streamlined and provides an easy path for interconnection. The promulgation of interconnection standards for Generation Systems by the Minnesota Public Utilities Commission (MPUC) must be done in the context of a reasonable interpretation of the boundary between state and federal jurisdiction. The Federal Energy Regulatory Commission (FERC) has asserted authority in the area, at least as far as interconnection at the transmission level is concerned. This, however, leaves open the question of jurisdiction over interconnection at the distribution level. The Midwest Independent System Operator's (MISO) FERC Electric Tariff, (first revised volume 1, August 23,2001)Attachment R(Generator Interconnection Procedures and Agreement) states in section 2.1 that"Any existing or new generator connecting at transmission voltages, sub-transmission voltages, or distribution voltages, planning to engage in the sale for resale of wholesale energy, capacity, or ancillary services requiring transmission service under the Midwest ISO OATT must apply to the Midwest ISO for interconnection service". Further in section 2.4 it states that"A Generator not intending to engage in the sale of wholesale energy, capacity, or ancillary services under the Midwest ISO OATT, that proposes to interconnect a new generating facility to the distribution system of a Transmission Owner or local distribution utility interconnected with the Transmission System shall apply to the Transmission Owner or local distribution utility for interconnection". It goes on further to state"Where facilities under the control of the Midwest ISO are affected by such interconnection, such interconnections may be subject to the planning and operating protocols of the Midwest ISO...." Through discussions with MISO personnel and as a practical matter, if the Generation System Nameplate Capacity is not greater in size than the minimum expected load on the distribution substation, that is feeding the proposed Generation System, and Generation System's energy is not being sold on the wholesale market, then that installation may be considered as not "affecting"the transmission system and the interconnection may be considered as governed by this process. If the Generation System will be selling energy on the wholesale market or the Generation System's total Nameplate Capacity is greater than the expected distribution substation minimum load, then the Applicant shall contact MISO (Midwest Independent System Operator) and follow their procedures. Interconnection Process for Distributed Generates Systems