I 

108TH CONGRESS 

1ST SESSION H. R. 3509

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. 

IN THE HOUSE OF REPRESENTATIVES 

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 

A BILL

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.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Home Energy Genera3 tion Act’’. 

4 SEC. 2. FINDINGS. 

5 The Congress finds that it is in the public interest 

6 to: 

7 (1) Enable small businesses, residences, schools, 

8 churches, farms with small electric generation units, 

9 and other retail electric customers who generate 

10 electric energy to return or sell surplus electric en11 ergy on the open market. 

12 (2) Encourage private investment in renewable 

13 and alternate energy resources. 

14 (3) Stimulate the economic growth. 

15 (4) Enhance the continued diversification sec16 tion of energy resources used in the United States. 

17 (5) Remove regulatory barriers for net meter18 ing. 

19 SEC. 3. NET METERING. 

20 Title II of the Public Utility Regulatory Policies Act 

21 of 1978 is amended by adding the following new section 

22 at the end thereof: 

23 ‘‘SEC. 215. NET METERING. 

24 ‘‘(a) DEFINITIONS.—As used in this section: 
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1 ‘‘(1) The term ‘customer-generator’ means the 

2 owner or operator of an electric generation unit 

3 qualified for net metering under this section. 

4 ‘‘(2) The term ‘net metering’ means measuring 

5 the difference between the electricity supplied to a 

6 customer-generator and the electricity generated by 

7 a customer-generator that is delivered to a local dis8 tribution section system at the same point of inter9 connection during an applicable billing period. 

10 ‘‘(3) The terms ‘electric generation unit quali11 fied for net metering’ and ‘qualified generation unit’ 

12 mean an electric energy generation unit that meets 

13 each of the following requirements: 

14 ‘‘(A) The unit is a fuel cell or uses as its 

15 energy source either solar, wind, or biomass. 

16 ‘‘(B) The unit has a generating capacity of 

17 not more than 100 kilowatts. 

18 ‘‘(C) The unit is located on premises that 

19 are owned, operated, leased, or otherwise con20 trolled by the customer-generator. 

21 ‘‘(D) The unit operates in parallel with the 

22 retail electric supplier. 

23 ‘‘(E) The unit is intended primarily to off24 set part or all of the customer-generator’s re25 quirements for electric energy. 
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1 ‘‘(4) The term ‘retail electric supplier’ means 

2 any person that sells electric energy to the ultimate 

3 consumer thereof. 

4 ‘‘(5) The term ‘local distribution system’ means 

5 any system for the distribution section of electric en6 ergy to the ultimate consumer thereof, whether or 

7 not the owner or operator of such system is also a 

8 retail electric supplier. 

9 ‘‘(b) ADOPTION.—Not later than one year after the 

10 enactment of this section, subject to subsection (d), each 

11 retail electric supplier shall comply with each of the fol12 lowing requirements and notify all of its retail customers 

13 of such requirements not less frequently than quarterly: 

14 ‘‘(1) The supplier shall offer to arrange (either 

15 directly or through a local distribution company or 

16 other third party) to make available, on a first-come17 first-served basis, to each of its retail customers that 

18 has installed an energy generation unit that is in19 tended for net metering and that notifies the sup20 plier of its generating capacity an electric energy 

21 meter that is capable of net metering if the cus22 tomer-generator’s existing electrical meter cannot 

23 perform that function. 

24 ‘‘(2) Rates and charges and contract terms and 

25 conditions for the sale of electric energy to cus-
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1 tomer-generators shall be the same as the rates and 

2 charges and contract terms and conditions that 

3 would be applicable if the customer-generator did 

4 not own or operate a qualified generation unit and 

5 use a net metering system. 

6 Any retail electric supplier or local distribution company 

7 may, at its own expense, install one or more additional 

8 electric energy meters to monitor the flow of electricity 

9 in either direction or to reflect the time of generation or 

10 both. Whenever a customer-generator with a net metering 

11 system uses any energy generation system entitled to cred12 its under a Federal minimum renewable energy generation 

13 requirement, the total amount of energy generated by that 

14 system shall be treated as generated by the retail electric 

15 supplier for purposes of such requirement. 

16 ‘‘(c) NET ENERGY MEASUREMENT AND BILLING.—

17 Each retail electric supplier subject to subsection (b) shall 

18 calculate the net energy measurement for a customer 

19 using a net metering system in the following manner: 

20 ‘‘(1) The retail electric supplier shall measure 

21 the net electricity produced or consumed during the 

22 billing period using the metering referred to in sub23 section (b). 

24 ‘‘(2) If the electricity supplied by the retail elec25 tric supplier exceeds the electricity generated by the 
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1 customer-generator during the billing period, the 

2 customer-generator shall be billed for the net elec3 tricity supplied by the retail electric supplier in ac4 cordance with normal metering practices. 

5 ‘‘(3) If electricity generated by the customer6 generator exceeds the electricity supplied by the re7 tail electric supplier, the customer-generator—

8 ‘‘(A) shall be billed for the appropriate 

9 customer charges for that billing period; 

10 ‘‘(B) shall be credited for the excess elec11 tric energy generated during the billing period, 

12 with this credit appearing on the bill for the fol13 lowing billing period (except for a billing period 

14 that ends in the next calendar year); and 

15 ‘‘(C) shall not be charged for transmission 

16 losses. 

17 If the customer-generator is using a meter that re18 flects the time of generation (a ‘real time meter’), 

19 the credit shall be based on the retail rates for sale 

20 by the retail electric supplier at the time of such 

21 generation. At the beginning of each calendar year, 

22 any remaining unused kilowatt-hour credit accumu23 lated by a customer-generator during the previous 

24 year may be sold by the customer-generator to any 

25 electric supplier that agrees to purchase such credit. 
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1 In the absence of any such purchase, the credit shall 

2 be assigned (at no cost) to the retail electric supplier 

3 that supplied electric energy to such customer-gener4 ator at the end of the previous year.

5 ‘‘(d) PERCENT LIMITATIONS.—

6 ‘‘(1) TWO PERCENT LIMITATION.—A retail elec7 tric supplier shall not be required to provide local 

8 distribution service with respect to additional cus9 tomer-generators after the date during any calendar 

10 year on which the total generating capacity of all 

11 customer-generators with qualified generation facili12 ties and net metering systems served by that sup13 plier is equal to or in excess of 2 percent of the ca14 pacity necessary to meet the supplier’s average fore15 casted aggregate customer peak demand for that 

16 calendar year. 

17 ‘‘(2) ONE PERCENT LIMITATION.—A retail elec18 tric supplier shall not be required to provide local 

19 distribution service with respect to additional cus20 tomer-generators using a single type of qualified en21 ergy generation system after the date during any 

22 calendar year on which the total generating capacity 

23 of all customer-generators with qualified generation 

24 facilities of that type and net metering systems 

25 served by that supplier is equal to or in excess of 1 
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1 percent of the capacity necessary to meet the sup2 plier’s average forecasted aggregate customer peak 

3 demand for that calendar year. 

4 ‘‘(3) RECORDS AND NOTICE.—Each retail elec5 tric supplier shall maintain, and make available to 

6 the public, records of the total generating capacity 

7 of customer-generators of such system that are 

8 using net metering, the type of generating systems 

9 and energy source used by the electric generating 

10 systems used by such customer-generators. Each 

11 such retail electric supplier shall notify the Commis12 sion when the total generating capacity of such cus13 tomer-generators is equal to or in excess of 2 per14 cent of the capacity necessary to meet the supplier’s 

15 aggregate customer peak demand during the pre16 vious calendar year and when the total generating 

17 capacity of such customer-generators using a single 

18 type of qualified generation is equal to or in excess 

19 of 1 percent of such capacity. 

20 ‘‘(e) SAFETY AND PERFORMANCE STANDARDS.—(1) 

21 A qualified generation unit and net metering system used 

22 by a customer-generator shall meet all applicable safety 

23 and performance and reliability standards established by 

24 the national electrical code, the Institute of Electrical and 
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1 Electronics Engineers, Underwriters Laboratories, or the 

2 American National Standards Institute. 

3 ‘‘(2) The Commission, after consultation with State 

4 regulatory authorities and nonregulated local distribution 

5 systems and after notice and opportunity for comment, 

6 may adopt by regulation additional control and testing re7 quirements for customer-generators that the Commission 

8 determines are necessary to protect public safety and sys9 tem reliability. 

10 ‘‘(3) The Commission shall, after consultation with 

11 State regulatory authorities and nonregulated local dis12 tribution systems and after notice and opportunity for 

13 comment, prohibit by regulation the imposition of addi14 tional charges by electric suppliers and local distribution 

15 systems for equipment or services for safety or perform16 ance that are additional to those necessary to meet the 

17 standards referred to in subparagraphs (A) and (B). 

18 ‘‘(f) STATE AUTHORITY.—Nothing in this section 

19 shall preclude a State from establishing or imposing addi20 tional incentives or requirements to encourage qualified 

21 generation and net metering additional to that required 

22 under this section. 

23 ‘‘(g) INTERCONNECTION STANDARDS.—(1) Within 

24 one year after the enactment of this section the Commis25 sion shall publish model standards for the physical connec-
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1 tion between local distribution systems and qualified gen2 eration units and electric generation units that would be 

3 qualified generation units but for the fact that the unit 

4 has a generating capacity of more than 100 kilowatts (but 

5 not more than 250 kilowatts). Such model standards shall 

6 be designed to encourage the use of qualified generation 

7 units and to insure the safety and reliability of such units 

8 and the local distribution systems interconnected with 

9 such units. Within 2 years after the enactment of this sec10 tion, each State shall adopt such model standards, with 

11 or without modification, and submit such standards to the 

12 Commission for approval. The Commission shall approve 

13 a modification of the model standards only if the Commis14 sion determines that such modification is consistent with 

15 the purpose of such standards and is required by reason 

16 of local conditions. If standards have not been approved 

17 under this paragraph by the Commission for any State 

18 within 2 years after the enactment of this section, the 

19 Commission shall, by rule or order, enforce the Commis20 sion’s model standards in such State until such time as 

21 State standards are approved by the Commission. 

22 ‘‘(2) The standards under this section shall establish 

23 such measures for the safety and reliability of the affected 

24 equipment and local distribution systems as may be appro25 priate. Such standards shall be consistent with all applica-
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1 ble safety and performance standards established by the 

2 national electrical code, the Institute of Electrical and 

3 Electronics Engineers, Underwriters Laboratories, or the 

4 American National Standards Institute and with such ad5 ditional safety and reliability standards as the Commission 

6 shall, by rule, prescribe. Such standards shall ensure that 

7 generation units will automatically isolate themselves from 

8 the electrical system in the event of an electrical power 

9 outage. Such standards shall permit the owner or operator 

10 of the local distribution system to interrupt or reduce de11 liveries of available energy from the generation unit to the 

12 system when necessary in order to construct, install, main13 tain, repair, replace, remove, investigate, or inspect any 

14 of its equipment or part of its system; or if it determines 

15 that curtailment, interruption, or reduction is necessary 

16 because of emergencies, forced outages, force majeure, or 

17 compliance with prudent electrical practices. 

18 ‘‘(3) The model standards under this subsection pro19 hibit the imposition of additional charges by local distribu20 tion systems for equipment or services for interconnection 

21 that are additional to those necessary to meet such stand22 ards. 

23 ‘‘(h) INTERCONNECTION.—At the election of the 

24 owner or operator of the generation unit concerned, con-
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1 nections meeting the standards applicable under sub2 section (g) may be made—

3 ‘‘(1) by such owner or operator at such owner’s 

4 or operator’s expense, or 

5 ‘‘(2) by the owner or operator of the local dis6 tribution system upon the request of the owner or 

7 operator of the generating unit and pursuant to an 

8 offer by the owner or operator of the generating unit 

9 to reimburse the local distribution system in an 

10 amount equal to the minimum cost of such connec11 tion, consistent with the procurement procedures of 

12 the State in which the unit is located, except that 

13 the work on all such connections shall be performed 

14 by qualified electrical personnel certified by a re15 sponsible body or licensed by a State or local govern16 ment authority. 

17 ‘‘(i) CONSUMER FRIENDLY CONTRACTS.—The Com18 mission shall promulgate regulations insuring that sim19 plified contracts will be used for the interconnection of 

20 electric energy by electric energy transmission or distribu21 tion systems and generating facilities that have a power 

22 production capacity not greater than 250 kilowatts. 

23 ‘‘(j) ENFORCEMENT.—Any person who violates any 

24 requirement of this section shall be subject to civil pen25 alties in the amount of $10,000 for each day that such 
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1 violation continues. Such penalties may be assessed by the 

2 Commission, after notice and opportunity for hearing, in 

3 the same manner as penalties are assessed under section 

4 31(d) of the Federal Power Act.’’.

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