II TH CONGRESS ST SESSION S. To amend the Public Utility Regulatory Policies Act of and the Federal Power Act to facilitate the free market for distributed energy resources. IN THE SENATE OF THE UNITED STATES MAY, Mr. KING introduced the following bill; which was read twice and referred to the Committee on Energy and Natural Resources A BILL To amend the Public Utility Regulatory Policies Act of and the Federal Power Act to facilitate the free market for distributed energy resources. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION. SHORT TITLE. This Act may be cited as the Free Market Energy Act of. SEC.. FINDINGS. Congress finds that it is in the public interest ebenthall on DSKSPTVNPROD with BILLS () to enhance personal freedom and national security by reinforcing the right to sovereignty over 0 personal energy choices; and VerDate Sep : May, Jkt 00 PO 00000 Frm 0000 Fmt Sfmt E:\BILLS\S.IS S
() to enhance the diversity of the electricity supply and energy independence of the United States by ensuring that there is a free market for distributed energy resources by providing for the nondiscriminatory interconnection of distributed en- ergy resources. 0 SEC.. DEFINITION OF DISTRIBUTED ENERGY RESOURCE. Section of the Federal Power Act ( U.S.C. ) is amended by adding at the end the following: (0) DISTRIBUTED ENERGY RESOURCE. The term distributed energy resource is a resource on the electricity distribution system that includes (A) distributed fossil generation; (B) renewable generation (including biomass, solar photovoltaics, geothermal, and hydropower); (C) fuel cells; (D) combined heat and power systems; (E) energy storage; (F) demand response; (G) efficiency resources; (H) microgrids; and (I) any combination of the resources described in this paragraph.. VerDate Sep : May, Jkt 00 PO 00000 Frm 0000 Fmt Sfmt E:\BILLS\S.IS S
0 VerDate Sep : May, Jkt 00 PO 00000 Frm 0000 Fmt Sfmt E:\BILLS\S.IS S SEC.. GENERAL RIGHT TO NEUTRALITY OF INTER- CONNECTION. The Public Utility Regulatory Policies Act of is amended by inserting after section ( U.S.C. ) the following: SEC.. GENERAL RIGHT TO NEUTRALITY OF INTER- CONNECTION. (a) IN GENERAL. Distributed energy resources (as defined in section of the Federal Power Act ( U.S.C. )) shall have a general right of interconnection under this Act. (b) RATES AND FEES. All rates and fees for interconnection of distributed energy resources under this Act, regardless of whether the distributed energy resource is a qualifying facility, shall () be just and reasonable; () provide for the -way benefit for the distributed energy resource and the electricity grid; () shall not exceed the actual cost of service; and () shall not be punitive. (c) TIMEFRAMES. Timeframes for interconnection of distributed energy resources under this Act, regardless of whether the distributed energy resource is a qualifying facility, shall be well-defined, expeditious, and not unduly protracted..
0 VerDate Sep : May, Jkt 00 PO 00000 Frm 0000 Fmt Sfmt E:\BILLS\S.IS S SEC.. ENERGY AND RATE TREATMENTS FOR DISTRIB- UTED ENERGY RESOURCES. Section (d) of the Public Utility Regulatory Policies Act of ( U.S.C. (d)) is amended by adding at the end the following: () DISTRIBUTED ENERGY RESOURCES. Each State regulatory authority shall consider requiring that distributed energy resources (as defined in section of the Federal Power Act ( U.S.C. )) be eligible to receive just and reasonable energy and rate treatment for (A) time-of-use pricing, which may account for locational benefit, to be provided on an unbundled basis, after accounting for the - way valuation of time-of-use rates, and progressing to real-time pricing, for (i) energy sold to an electric utility; and (ii) energy purchased from an electric utility; (B) capacity; (C) energy conservation; (D) demand-side management or demand response; (E) peak monthly demand; (F) the provision of ancillary services;
(G) the societal value of distributed en- ergy resources; and (H) any other benefits that the State reg- ulatory authority considers to be appropriate.. 0 SEC.. QUALIFYING FACILITY; IMPROVED INTERCONNEC- TION STANDARDS FOR DISTRIBUTED ENERGY RESOURCES. (a) DEFINITION OF QUALIFYING FACILITIES. Sec- tion of the Federal Power Act ( U.S.C. ) is amended () in paragraph ()(C) (A) by indenting appropriately; and (B) by inserting (including a distributed energy resource in any State in which a State regulatory authority or nonregulated electric utility determines not to establish standards in accordance with paragraph () of section (d) of the Public Utility Regulatory Policies Act of ( U.S.C. (d))) before that the Commission determines ; and () in paragraph ()(B) (A) by indenting appropriately; and (B) by inserting (including a distributed energy resource in any State in which a State regulatory authority or nonregulated electric VerDate Sep : May, Jkt 00 PO 00000 Frm 0000 Fmt Sfmt E:\BILLS\S.IS S
utility determines not to establish standards in accordance with paragraph () of section (d) of the Public Utility Regulatory Policies Act of ( U.S.C. (d))) before that the Commission determines. 0 (b) IMPROVED INTERCONNECTION STANDARDS FOR DISTRIBUTED ENERGY RESOURCES. Section (d) of the Public Utility Regulatory Policies Act of ( U.S.C. (d)) (as amended by section ) is amended by adding at the end the following: () IMPROVED INTERCONNECTIONS STAND- ARDS FOR DISTRIBUTED ENERGY RESOURCES. Each State regulatory authority or nonregulated electric utility, acting under State authority in a State that has determined not to establish standards under paragraph (), shall consider (A) setting rates that exceed the incremental cost of alternative electric energy for purchases from any distributed energy resource (as defined in section of the Federal Power Act ( U.S.C. )) that is a qualifying facility for electricity generated, demand reduced, or service provided by the qualifying facility interconnected under this Act, with VerDate Sep : May, Jkt 00 PO 00000 Frm 0000 Fmt Sfmt E:\BILLS\S.IS S
(i) the rates to be established at the full retail rate; and (ii) fixed monthly charges for resi- dential electricity bills to be established at a charge of not more than 0 dollars per month, with optional reevaluations of the amount of charge to be considered on a periodic basis; (B) making any distributed energy re- 0 source project exempt from filing requirements with the Commission; (C) ensuring that any requirements con- sidered under this paragraph would not affect the purchase obligation under section for distributed energy resource facilities; and (D) requiring that all rates and fees for interconnection of distributed generation facili- ties (i) shall be just and reasonable; (ii) shall provide for the benefit of the distributed energy resource to the elec- tricity grid and benefit of the electricity grid to the distributed energy resource; and VerDate Sep : May, Jkt 00 PO 00000 Frm 0000 Fmt Sfmt E:\BILLS\S.IS S
(iii) not exceed the actual cost of service.. 0 SEC.. DESIGNATION OF SMART GRID COORDINATOR OR DISTRIBUTION SYSTEM OPERATOR. Section (d) of the Public Utility Regulatory Policies Act of ( U.S.C. (d)) (as amended by section (b)) is amended by adding at the end the following: () DESIGNATION OF SMART GRID COORDI- NATOR OR DISTRIBUTION SYSTEM OPERATOR. Each State regulatory authority shall consider designating, through a competitive process, a regulated utility, other party, or a combination of regulated utilities and other parties to be a smart grid coordinator or distribution system operator for the State.. SEC.. CONSIDERATION OF NONTRANSMISSION ALTER- NATIVES. Section (d) of the Public Utility Regulatory Policies Act of ( U.S.C. (d)) (as amended by section ) is amended by adding at the end the following: () NONTRANSMISSION ALTERNATIVES. (A) IN GENERAL. Each State regulatory authority shall consider nontransmission alternatives in instances in which a regulated utility proposes transmission projects. VerDate Sep : May, Jkt 00 PO 00000 Frm 0000 Fmt Sfmt E:\BILLS\S.IS S
(B) COST. To reduce the cost to the ratepayer of a potential transmission upgrade, a nontransmission alternative considered under subparagraph (A), shall receive the avoided cost of the transmission upgrade, minus a reason- able discount, as determined by the State regu- latory authority. (C) RECOVERY. If a nontransmission al- ternative proposed under subparagraph (A) ob- 0 viates the need for a reliability-based trans- mission upgrade, the cost of the nontrans- mission alternative shall be recovered from the ratebase in the same manner as the trans- mission upgrade would have been.. SEC.. COMPLIANCE. (a) TIME LIMITATIONS. Section (b) of the Public Utility Regulatory Policies Act of ( U.S.C. (b)) is amended by adding at the end the following: ()(A) Not later than year after the date of enactment of this paragraph, each State regulatory authority (with respect to each electric utility for which the authority has ratemaking authority) and each nonregulated utility shall, with respect to the standards established by paragraphs (), (), and () of section (d) VerDate Sep : May, Jkt 00 PO 00000 Frm 0000 Fmt Sfmt E:\BILLS\S.IS S
0 (i) commence the consideration required under those paragraphs; or (ii) set a hearing date for the consider- ation. (B) Not later than years after the date of enactment of this paragraph, each State regulatory authority (with respect to each electric utility for which the authority has ratemaking authority) and each nonregulated electric utility, shall, with respect 0 to the standards established by paragraphs (), (), and () of section (d) (i) complete the consideration under sub- paragraph (A); and (ii) make the determination referred to in section with respect to the standards estab- lished by those paragraphs. ()(A) Not later than years after the date of enactment of this paragraph, each State regu- latory authority (with respect to each electric utility for which the authority has ratemaking authority) and each nonregulated utility shall, with respect to the standards established by section (d)() (i) commence the consideration required under that paragraph; or VerDate Sep : May, Jkt 00 PO 00000 Frm 0000 Fmt Sfmt E:\BILLS\S.IS S
(ii) set a hearing date for the consider- ation. (B) Not later than years after the date of enactment of this paragraph, each State regulatory authority (with respect to each electric utility for which the authority has ratemaking authority) and each nonregulated electric utility, shall, with respect to the standards established by section (d)() (i) complete the consideration required 0 under that paragraph; and (ii) make the determination referred to in section with respect to the standards estab- lished by section (d)().. (b) FAILURE TO COMPLY. Section (c) of the Public Utility Regulatory Policies Act of ( U.S.C. (c)) is amended by adding at the end the following: () In the case of the standards established by paragraphs () through () of section (d), the reference contained in this subsection to the date of enactment of this Act shall be deemed to be a ref- erence to the date of enactment of those para- graphs.. (c) PRIOR STATE ACTIONS. () IN GENERAL. Section of the Public Utility Regulatory Policies Act of ( U.S.C. VerDate Sep : May, Jkt 00 PO 00000 Frm 000 Fmt Sfmt E:\BILLS\S.IS S
) is amended by adding at the end the fol- lowing: (g) PRIOR STATE ACTIONS. Subsections (b) and (c) shall not apply to a standard established under para- graphs () through () of section (d) in the case of any electric utility in a State if, before the date of enact- ment of this subsection () the State has implemented for the electric utility the standard (or a comparable standard); 0 () the State regulatory authority for the State, or the relevant nonregulated electric utility, has conducted a proceeding to consider implementa- tion of the standard (or a comparable standard) for the electric utility; or () the State legislature has voted on the im- plementation of the standard (or a comparable standard) for the electric utility.. () CROSS-REFERENCE. Section of the Public Utility Regulatory Policies Act of ( U.S.C. ) is amended by adding at the end the following: In the case of each standard established under paragraphs () through () of section (d), the reference contained in this subsection to the date of enactment of this Act shall be deemed VerDate Sep : May, Jkt 00 PO 00000 Frm 000 Fmt Sfmt E:\BILLS\S.IS S
to be a reference to the date of enactment of those paragraphs.. SEC. 0. EFFECT OF ACT. Nothing in this Act (or an amendment made by this Act) shall apply to distributed energy resource contracts in effect on the date of enactment of this Act. Æ ebenthall on DSKSPTVNPROD with BILLS VerDate Sep : May, Jkt 00 PO 00000 Frm 000 Fmt Sfmt 0 E:\BILLS\S.IS S