II

107TH CONGRESS

1ST SESSION S. 1403

To amend the Federal Power Act to promote energy independence and diversity by providing for the use of net metering by certain small electric

energy generation systems, and for other purposes.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 5, 2001

Ms. CANTWELL introduced the following bill; which was read twice and

referred to the Committee on Energy and Natural Resources

A BILL

To amend the Federal Power Act to promote energy independence and diversity 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,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Home Energy Genera5 tion Act’’.

6 SEC. 2. FINDINGS.

7 The Congress finds that it is in the public interest

8 to:
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1 (1) Enable small businesses, residences, schools,

2 churches, farms with small electric generation units,

3 and other retail electric customers who generate

4 electric energy to return or sell surplus electric en5 ergy on the open market.

6 (2) Promote diversification of energy resources

7 used in the United States to reduce over reliance on

8 any one resource, and to mitigate our nation’s de9 pendence on imported fuels.

10 (3) Encourage private investment and stimulate

11 economic growth in renewable and alternate energy

12 resources.

13 (4) Remove regulatory barriers for net meter14 ing.

15 (5) Provide uniform, national technical stand16 ards for the interconnection of distributed electricity

17 generating facilities.

18 SEC. 3. NET METERING.

19 Part II of the Federal Power Act is amended by add20 ing the following new section at the end thereof:

21 ‘‘SEC. 215. NET METERING.

22 ‘‘(a) DEFINITIONS.—As used in this section:

23 ‘‘(1) The term ‘customer-generator’ means the

24 owner or operator of an electric generation unit

25 qualified for net metering under this section.
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1 ‘‘(2) The term ‘net metering’ means measuring

2 the difference between the electricity supplied to a

3 customer-generator and the electricity generated by

4 a customer-generator that is delivered to a local dis5 tribution section system at the same point of inter6 connection during an applicable billing period.

7 ‘‘(3) The terms ‘electric generation unit quali8 fied for net metering’ and ‘qualified generation unit’

9 mean an electric energy generation unit that meets

10 the requirements of paragraph (5) and each of the

11 following requirements:

12 ‘‘(A) The unit is a fuel cell or produces

13 electricity using solar, wind, biomass, or geo14 thermal as its energy source.

15 ‘‘(B) The unit on the site of a residential

16 electric consumer has a generating capacity of

17 not more than 100 kilowatts.

18 ‘‘(C) The unit on the site of a commercial

19 electric consumer has a generating capacity of

20 not more than 250 kilowatts.

21 ‘‘(D) The unit is located on premises that

22 are owned, operated, leased, or otherwise con23 trolled by the customer-generator.

24 ‘‘(E) The unit operates in parallel with the

25 retail electric supplier.
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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 ‘‘(6) The term ‘Commission’ means the Federal

10 Energy Regulatory Commission.

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

12 enactment of this section, each retail electric supplier shall

13 comply with each of the following requirements and notify

14 all of its retail customers of such requirements not less

15 frequently than quarterly:

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

17 directly or through a local distribution company or

18 other third party) to make available, on a first-come19 first-served basis, to each of its retail customers that

20 has installed an energy generation unit that is in21 tended for net metering, and that notifies the sup22 plier of its generating capacity, an electric energy

23 meter that is capable of net metering if the cus24 tomer-generator’s existing electrical meter cannot

25 perform that function.
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1 ‘‘(2) Rates and charges and contract terms and

2 conditions for the sale of electric energy to cus3 tomer-generators shall be the same as the rates and

4 charges and contract terms and conditions that

5 would be applicable if the customer-generator did

6 not own or operate a qualified generation unit and

7 use a net metering system.

8 Any retail electric supplier or local distribution company

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

10 electric energy meters to monitor the flow of electricity

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

12 both.

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

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

15 calculate the net energy measurement for a customer

16 using a net metering system in the following manner:

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

18 the net electricity produced or consumed during the

19 billing period using the metering referred to in para20 graph (1) or (2) of subsection (b).

21 ‘‘(2) If the quantity of electricity supplied by a

22 retail electric suppler during a billing period exceeds

23 the quantity of electricity generated by an on-site

24 generating facility and fed back to the electric dis25 tribution system during the billing period, the sup-
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1 plier may bill the owner or operator for the net

2 quantity of electricity supplied by the retail electric

3 supplier, in accordance with normal metering prac4 tices.

5 ‘‘(3) If the quantity of electricity generated by

6 an on-site generating facility during a billing period

7 exceeds the quantity of electricity supplied by the re8 tail electric supplier during the billing period—

9 ‘‘(A) the retail electric supplier may only

10 bill the owner or operator of the on-site gener11 ating facility for charges that would be applica12 ble if the customer-generator did not own or op13 erate a qualified generation unit and use a net

14 metering system.

15 ‘‘(B) the owner or operator of the on-site

16 generating facility shall be credited for the ex17 cess kilowatt-hours generated during the billing

18 period, with the kilowatt-hour credit appearing

19 on the bill during the following billing period.

20 If the customer-generator is using a meter that re21 flects the time of generation (a ‘real time meter’ or

22 ‘smart meter’), the credit shall be based on the retail

23 rates for sale by the retail electric supplier at the

24 time of such generation.
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1 After a customer-generator has participated in a net-me2 tering arrangement with a retail electric supplier for at

3 least one-consecutive year, the customer-generator may re4 quest that any remaining unused kilowatt-hour credits ac5 cumulated by a customer-generator during the previous

6 year be sold by the customer-generator to any electric sup7 plier that agrees to purchase such credit. In the absence

8 of any such purchase, the customer-generator may request

9 that the retail electric supplier that supplied electric en10 ergy to such customer-generator during the previous year

11 purchase the credit at the avoided cost of electricity. If

12 no action is requested by the customer-generator, any

13 credit earned by the customer-generator will continue to

14 accumulate.

15 ‘‘(d) PERCENT LIMITATIONS.—

16 ‘‘(1) FIVE PERCENT LIMITATION.—A local dis17 tribution company retail electric supplier shall not be

18 required to provide local distribution service with re19 spect to additional customer-generators after the

20 date during any calendar year on which the total

21 generating capacity of all customer-generators with

22 qualified generation facilities and net metering sys23 tems served by that local distribution company is

24 equal to or in excess of 5 percent of the capacity

25 necessary to meet the company’s average forecasted
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1 aggregate customer peak demand for that calendar

2 year.

3 ‘‘(2) TWO AND A HALF PERCENT LIMITA4 TION.—A local distribution company retail electric

5 supplier shall not be required to provide local dis6 tribution service with respect to additional customer7 generators using a single type of qualified energy

8 generation system after the date during any cal9 endar year on which the total generating capacity of

10 all customer-generators with qualified generation fa11 cilities of that type and net metering systems served

12 by that local distribution company is equal to or in

13 excess of 2.5 percent of the capacity necessary to

14 meet the company’s average forecasted aggregate

15 customer peak demand for that calendar year.

16 ‘‘(3) RECORDS AND NOTICE.—Each retail elec17 tric supplier shall maintain, and make available to

18 the public, records of the total generating capacity

19 of customer-generators of such system that are

20 using net metering, the type of generating systems

21 and energy source used by the electric generating

22 systems used by such customer-generators. Each

23 such retail electric supplier shall notify the Commis24 sion when the total generating capacity of such cus25 tomer-generators is equal to or in excess of 2 per-
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1 cent of the capacity necessary to meet the supplier’s

2 aggregate customer peak demand during the pre3 vious calendar year and when the total generating

4 capacity of such customer-generators using a single

5 type of qualified generation is equal to or in excess

6 of 1 percent of such capacity.

7 ‘‘(e) SAFETY AND PERFORMANCE STANDARDS.—

8 ‘‘(1) A qualified generation unit and net meter9 ing system used by a customer-generator shall meet

10 all applicable safety and performance and reliability

11 standards established by the national electrical code,

12 the Institute of Electrical and Electronics Engineers,

13 Underwriters Laboratories, or the American Na14 tional Standards Institute.

15 ‘‘(2) The Commission, after consultation with

16 State regulatory authorities and nonregulated local

17 distribution systems and after notice and oppor18 tunity for comment, may adopt by regulation addi19 tional control and testing requirements for customer20 generators that the Commission determines are nec21 essary to protect public safety and system reliability.

22 ‘‘(3) The Commission shall, after consultation

23 with State regulatory authorities and nonregulated

24 local distribution systems and after notice and op25 portunity for comment, prohibit by regulation the
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1 imposition of additional charges by electric suppliers

2 and local distribution systems for equipment or serv3 ices for safety or performance that are additional to

4 those necessary to meet the standards referred to in

5 subparagraphs (A) and (B).

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

7 shall preclude a State from establishing or imposing addi8 tional incentives or requirements to encourage qualified

9 generation and net metering additional to that required

10 under this section.

11 ‘‘(g) INTERCONNECTION STANDARDS.—

12 ‘‘(1) Within 6 months after the enactment of

13 this section the Commission shall publish model

14 standards for the physical connection between local

15 distribution systems and qualified generation units

16 and electric generation units that would be qualified

17 generation units but for the fact that the unit has

18 a generating capacity of more than 100 kilowatts

19 (but not more than 250 kilowatts). Such model

20 standards shall be designed to encourage the use of

21 qualified generation units and to insure the safety

22 and reliability of such units and the local distribu23 tion systems interconnected with such units. Within

24 1 year after the enactment of this section, each

25 State shall adopt such model standards, with or
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1 without modification, and submit such standards to

2 the Commission for approval. The Commission shall

3 approve a modification of the model standards only

4 if the Commission determines that such modification

5 is consistent with the purpose of such standards and

6 is required by reason of local conditions. If stand7 ards have not been approved under this paragraph

8 by the Commission for any State within 1 year after

9 the enactment of this section, the Commission shall,

10 by rule or order, enforce the Commission’s model

11 standards in such State until such time as State

12 standards are approved by the Commission.

13 ‘‘(2) The standards under this section shall es14 tablish such measures for the safety and reliability

15 of the affected equipment and local distribution sys16 tems as may be appropriate. Such standards shall be

17 consistent with all applicable safety and performance

18 standards established by the national electrical code,

19 the Institute of Electrical and Electronics Engineers,

20 Underwriters Laboratories, or the American Na21 tional Standards Institute and with such additional

22 safety and reliability standards as the Commission

23 shall, by rule, prescribe. Such standards shall ensure

24 that generation units will automatically isolate them25 selves from the electrical system in the event of an
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1 electrical power outage. Such standards shall permit

2 the owner or operator of the local distribution sys3 tem to interrupt or reduce deliveries of available en4 ergy from the generation unit to the system when

5 necessary in order to construct, install, maintain, re6 pair, replace, remove, investigate, or inspect any of

7 its equipment or part of its system; or if it deter8 mines that curtailment, interruption, or reduction is

9 necessary because of emergencies, forced outages,

10 force majeure, or compliance with prudent electrical

11 practices.

12 ‘‘(3) The model standards under this subsection

13 prohibit the imposition of additional charges by local

14 distribution systems for equipment or services for

15 interconnection that are additional to those nec16 essary to meet such standards.

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

18 owner or operator of the generation unit concerned, con19 nections meeting the standards applicable under sub20 section (g) may be made—

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

22 or operator’s expense, or

23 ‘‘(2) by the owner or operator of the local dis24 tribution system upon the request of the owner or

25 operator of the generating unit and pursuant to an
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1 offer by the owner or operator of the generating unit

2 to reimburse the local distribution system in an

3 amount equal to the minimum cost of such connec4 tion, consistent with the procurement procedures of

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

6 the work on all such connections shall be performed

7 by qualified electrical personnel certified by a re8 sponsible body or licensed by a State or local govern9 ment authority.

10 ‘‘(i) CONSUMER FRIENDLY CONTRACTS.—The Com11 mission shall promulgate regulations insuring that sim12 plified contracts will be used for the interconnection of

13 electric energy by electric energy transmission or distribu14 tion systems and generating facilities that have a power

15 production capacity not greater than 250 kilowatts.’’.

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