To amend the Public Utility Regulatory Policies Act of 1978 to promote energy independence and self-sufficiency by providing for the use of net metering by certain small electric energy generation systems, and for other purposes.

November 18, 2003

Mr. INSLEE (for himself, Mr. BARTLETT of Maryland, Mr. EHLERS, Mr. FROST, Mr. BOEHLERT, Mr. VAN HOLLEN, Mr. LEACH, Mr. LARSEN of Washington, Mr. UDALL of Colorado, Ms. BALDWIN, Mr. BLUMENAUER, Mrs. DAVIS of California, Mr. GUTIERREZ, Mr. HASTINGS of Washington, Mr. HINCHEY, Mrs. JONES of Ohio, Ms. KAPTUR, Ms. LEE, Mr. MCDERMOTT, Mr. SMITH of Washington, and Ms. WOOLSEY) introduced the following bill; which was referred to the Committee on Energy and Commerce

To amend the Public Utility Regulatory Policies Act of 1978 to promote energy independence and self-sufficiency by providing for the use of net metering by certain small electric energy generation systems, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Home Energy Generation Act'.

SEC. 2. FINDINGS.

The Congress finds that it is in the public interest to:

(1) Enable small businesses, residences, schools, churches, farms with small electric generation units, and other retail electric customers who generate electric energy to return or sell surplus electric energy on the open market.

(2) Encourage private investment in renewable and alternate energy resources.

(3) Stimulate the economic growth.

(4) Enhance the continued diversification section of energy resources used in the United States.

(5) Remove regulatory barriers for net metering.

SEC. 3. NET METERING.

Title II of the Public Utility Regulatory Policies Act of 1978 is amended by adding the following new section at the end thereof:

`SEC. 215. NET METERING.

`(a) DEFINITIONS- As used in this section:

`(1) The term `customer-generator' means the owner or operator of an electric generation unit qualified for net metering under this section.

`(2) The term `net metering' means measuring the difference between the electricity supplied to a customer-generator and the electricity generated by a customer-generator that is delivered to a local distribution section system at the same point of interconnection during an applicable billing period.

`(3) The terms `electric generation unit qualified for net metering' and `qualified generation unit' mean an electric energy generation unit that meets each of the following requirements:

`(A) The unit is a fuel cell or uses as its energy source either solar, wind, or biomass.

`(B) The unit has a generating capacity of not more than 100 kilowatts.

`(C) The unit is located on premises that are owned, operated, leased, or otherwise controlled by the customer-generator.

`(D) The unit operates in parallel with the retail electric supplier.

`(E) The unit is intended primarily to offset part or all of the customer-generator's requirements for electric energy.

`(4) The term `retail electric supplier' means any person that sells electric energy to the ultimate consumer thereof.

`(5) The term `local distribution system' means any system for the distribution section of electric energy to the ultimate consumer thereof, whether or not the owner or operator of such system is also a retail electric supplier.

`(b) ADOPTION- Not later than one year after the enactment of this section, subject to subsection (d), each retail electric supplier shall comply with each of the following requirements and notify all of its retail customers of such requirements not less frequently than quarterly:

`(1) The supplier shall offer to arrange (either directly or through a local distribution company or other third party) to make available, on a first-come-first-served basis, to each of its retail customers that has installed an energy generation unit that is intended for net metering and that notifies the supplier of its generating capacity an electric energy meter that is capable of net metering if the customer-generator's existing electrical meter cannot perform that function.

`(2) Rates and charges and contract terms and conditions for the sale of electric energy to customer-generators shall be the same as the rates and charges and contract terms and conditions that would be applicable if the customer-generator did not own or operate a qualified generation unit and use a net metering system.

Any retail electric supplier or local distribution company may, at its own expense, install one or more additional electric energy meters to monitor the flow of electricity in either direction or to reflect the time of generation or both. Whenever a customer-generator with a net metering system uses any energy generation system entitled to credits under a Federal minimum renewable energy generation requirement, the total amount of energy generated by that system shall be treated as generated by the retail electric supplier for purposes of such requirement.

`(c) NET ENERGY MEASUREMENT AND BILLING- Each retail electric supplier subject to subsection (b) shall calculate the net energy measurement for a customer using a net metering system in the following manner:

`(1) The retail electric supplier shall measure the net electricity produced or consumed during the billing period using the metering referred to in subsection (b).

`(2) If the electricity supplied by the retail electric supplier exceeds the electricity generated by the customer-generator during the billing period, the customer-generator shall be billed for the net electricity supplied by the retail electric supplier in accordance with normal metering practices.

`(3) If electricity generated by the customer-generator exceeds the electricity supplied by the retail electric supplier, the customer-generator--

`(A) shall be billed for the appropriate customer charges for that billing period;

`(B) shall be credited for the excess electric energy generated during the billing period, with this credit appearing on the bill for the following billing period (except for a billing period that ends in the next calendar year); and

`(C) shall not be charged for transmission losses.

If the customer-generator is using a meter that reflects the time of generation (a `real time meter'), the credit shall be based on the retail rates for sale by the retail electric supplier at the time of such generation. At the beginning of each calendar year, any remaining unused kilowatt-hour credit accumulated by a customer-generator during the previous year may be sold by the customer-generator to any electric supplier that agrees to purchase such credit. In the absence of any such purchase, the credit shall be assigned (at no cost) to the retail electric supplier that supplied electric energy to such customer-generator at the end of the previous year.

`(d) PERCENT LIMITATIONS-

`(1) TWO PERCENT LIMITATION- A retail electric supplier shall not be required to provide local distribution service with respect to additional customer-generators after the date during any calendar year on which the total generating capacity of all customer-generators with qualified generation facilities and net metering systems served by that supplier is equal to or in excess of 2 percent of the capacity necessary to meet the supplier's average forecasted aggregate customer peak demand for that calendar year.

`(2) ONE PERCENT LIMITATION- A retail electric supplier shall not be required to provide local distribution service with respect to additional customer-generators using a single type of qualified energy generation system after the date during any calendar year on which the total generating capacity of all customer-generators with qualified generation facilities of that type and net metering systems served by that supplier is equal to or in excess of 1 percent of the capacity necessary to meet the supplier's average forecasted aggregate customer peak demand for that calendar year.

`(3) RECORDS AND NOTICE- Each retail electric supplier shall maintain, and make available to the public, records of the total generating capacity of customer-generators of such system that are using net metering, the type of generating systems and energy source used by the electric generating systems used by such customer-generators. Each such retail electric supplier shall notify the Commission when the total generating capacity of such customer-generators is equal to or in excess of 2 percent of the capacity necessary to meet the supplier's aggregate customer peak demand during the previous calendar year and when the total generating capacity of such customer-generators using a single type of qualified generation is equal to or in excess of 1 percent of such capacity.

`(e) SAFETY AND PERFORMANCE STANDARDS- (1) A qualified generation unit and net metering system used by a customer-generator shall meet all applicable safety and performance and reliability standards established by the national electrical code, the Institute of Electrical and Electronics Engineers, Underwriters Laboratories, or the American National Standards Institute.

`(2) The Commission, after consultation with State regulatory authorities and nonregulated local distribution systems and after notice and opportunity for comment, may adopt by regulation additional control and testing requirements for customer-generators that the Commission determines are necessary to protect public safety and system reliability.

`(3) The Commission shall, after consultation with State regulatory authorities and nonregulated local distribution systems and after notice and opportunity for comment, prohibit by regulation the imposition of additional charges by electric suppliers and local distribution systems for equipment or services for safety or performance that are additional to those necessary to meet the standards referred to in subparagraphs (A) and (B).

`(f) STATE AUTHORITY- Nothing in this section shall preclude a State from establishing or imposing additional incentives or requirements to encourage qualified generation and net metering additional to that required under this section.

`(g) INTERCONNECTION STANDARDS- (1) Within one year after the enactment of this section the Commission shall publish model standards for the physical connection between local distribution systems and qualified generation units and electric generation units that would be qualified generation units but for the fact that the unit has a generating capacity of more than 100 kilowatts (but not more than 250 kilowatts). Such model standards shall be designed to encourage the use of qualified generation units and to insure the safety and reliability of such units and the local distribution systems interconnected with such units. Within 2 years after the enactment of this section, each State shall adopt such model standards, with or without modification, and submit such standards to the Commission for approval. The Commission shall approve a modification of the model standards only if the Commission determines that such modification is consistent with the purpose of such standards and is required by reason of local conditions. If standards have not been approved under this paragraph by the Commission for any State within 2 years after the enactment of this section, the Commission shall, by rule or order, enforce the Commission's model standards in such State until such time as State standards are approved by the Commission.

`(2) The standards under this section shall establish such measures for the safety and reliability of the affected equipment and local distribution systems as may be appropriate. Such standards shall be consistent with all applicable safety and performance standards established by the national electrical code, the Institute of Electrical and Electronics Engineers, Underwriters Laboratories, or the American National Standards Institute and with such additional safety and reliability standards as the Commission shall, by rule, prescribe. Such standards shall ensure that generation units will automatically isolate themselves from the electrical system in the event of an electrical power outage. Such standards shall permit the owner or operator of the local distribution system to interrupt or reduce deliveries of available energy from the generation unit to the system when necessary in order to construct, install, maintain, repair, replace, remove, investigate, or inspect any of its equipment or part of its system; or if it determines that curtailment, interruption, or reduction is necessary because of emergencies, forced outages, force majeure, or compliance with prudent electrical practices.

`(3) The model standards under this subsection prohibit the imposition of additional charges by local distribution systems for equipment or services for interconnection that are additional to those necessary to meet such standards.

`(h) INTERCONNECTION- At the election of the owner or operator of the generation unit concerned, connections meeting the standards applicable under subsection (g) may be made--

`(1) by such owner or operator at such owner's or operator's expense, or

`(2) by the owner or operator of the local distribution system upon the request of the owner or operator of the generating unit and pursuant to an offer by the owner or operator of the generating unit to reimburse the local distribution system in an amount equal to the minimum cost of such connection, consistent with the procurement procedures of the State in which the unit is located, except that the work on all such connections shall be performed by qualified electrical personnel certified by a responsible body or licensed by a State or local government authority.

`(i) CONSUMER FRIENDLY CONTRACTS- The Commission shall promulgate regulations insuring that simplified contracts will be used for the interconnection of electric energy by electric energy transmission or distribution systems and generating facilities that have a power production capacity not greater than 250 kilowatts.

`(j) ENFORCEMENT- Any person who violates any requirement of this section shall be subject to civil penalties in the amount of $10,000 for each day that such violation continues. Such penalties may be assessed by the Commission, after notice and opportunity for hearing, in the same manner as penalties are assessed under section 31(d) of the Federal Power Act.'.

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