II 

114TH CONGRESS 

1ST SESSION S. 1202 

To amend the Public Utility Regulatory Policies Act of 1978 to assist States 

in adopting updated interconnection procedures and tariff schedules and 

standards for supplemental, backup, and standby power fees for projects 

for combined heat and power technology and waste heat to power technology, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 6, 2015 

Mrs. SHAHEEN 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 1978 

to assist States in adopting updated interconnection procedures and tariff schedules and standards for supplemental, backup, and standby power fees for projects for 

combined heat and power technology and waste heat 

to power technology, 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 ‘‘Heat Efficiency 

5 through Applied Technology Act’’ or the ‘‘HEAT Act’’. 


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1 SEC. 2. FINDINGS. 

2 Congress finds that— 

3 (1) combined heat and power technology, also 

4 known as cogeneration, is a technology that effi5 ciently produces electricity and thermal energy at 

6 the point of use of the technology; 

7 (2) by combining the provision of both elec8 tricity and thermal energy in a single step, combined 

9 heat and power technology makes significantly more10 efficient use of fuel, as compared to separate genera11 tion of heat and power, which has significant eco12 nomic and environmental advantages; 

13 (3) waste heat to power is a technology that 

14 captures heat discarded by an existing industrial 

15 process and uses that heat to generate power with 

16 no additional fuel and no incremental emissions, re17 ducing the need for electricity from other sources 

18 and the grid, and any associated emissions; 

19 (4) waste heat or waste heat to power is consid20 ered renewable energy in 17 States; 

21 (5)(A) a 2012 joint report by the Department 

22 of Energy and the Environmental Protection Agency 

23 estimated that by achieving the national goal out24 lined in Executive Order 13624 (77 Fed. Reg. 

25 54779) (September 5, 2012) of deploying 40 

26 gigawatts of new combined heat and power techVerDate Sep 11 2014 07:07 May 13, 2015 Jkt 049200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1202.IS S1202

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1 nology by 2020, the United States would increase 

2 the total combined heat and power capacity of the 

3 United States by 50 percent in less than a decade; 

4 and 

5 (B) additional efficiency would— 

6 (i) save 1,000,000,000,000,000 BTUs of 

7 energy; and 

8 (ii) reduce emissions by 150,000,000 met9 ric tons of carbon dioxide annually, a quantity 

10 equivalent to the emissions from more than 

11 25,000,000 cars; 

12 (6) a 2012 report by the Environmental Protec13 tion Agency estimated the amount of waste heat 

14 available at a temperature high enough for power 

15 generation from industrial and nonindustrial appli16 cations represents an additional 10 gigawatts of 

17 electric generating capacity on a national basis; 

18 (7) distributed energy generation, including 

19 through combined heat and power technology and 

20 waste heat to power technology, has ancillary bene21 fits, such as— 

22 (A) removing load from the electricity dis23 tribution grid; and 

24 (B) improving the overall reliability of the 

25 electricity distribution system; and 


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1 (8)(A) a number of regulatory barriers impede 

2 broad deployment of combined heat and power tech3 nology and waste heat to power technology; and 

4 (B) a 2008 study by Oak Ridge National Lab5 oratory identified interconnection issues, regulated 

6 fees and tariffs, and environmental permitting as 

7 areas that could be streamlined with respect to the 

8 provision of combined heat and power technology 

9 and waste heat to power technology. 

10 SEC. 3. DEFINITIONS. 

11 (a) IN GENERAL.—In this Act: 

12 (1) COMBINED HEAT AND POWER TECH13 NOLOGY.—The term ‘‘combined heat and power 

14 technology’’ means the generation of electric energy 

15 and heat in a single, integrated system that meets 

16 the efficiency criteria in clauses (ii) and (iii) of sec17 tion 48(c)(3)(A) of the Internal Revenue Code of 

18 1986, under which heat that is conventionally re19 jected is recovered and used to meet thermal energy 

20 requirements. 

21 (2) OUTPUT-BASED EMISSION STANDARD.—The 

22 term ‘‘output-based emission standard’’ means a 

23 standard that relates emissions to the electrical, 

24 thermal, or mechanical productive output of a device 


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1 or process rather than the heat input of fuel burned 

2 or pollutant concentration in the exhaust. 

3 (3) QUALIFIED WASTE HEAT RESOURCE.— 

4 (A) IN GENERAL.—The term ‘‘qualified 

5 waste heat resource’’ means— 

6 (i) exhaust heat or flared gas from 

7 any industrial process; 

8 (ii) waste gas or industrial tail gas 

9 that would otherwise be flared, incinerated, 

10 or vented; 

11 (iii) a pressure drop in any gas for an 

12 industrial or commercial process; or 

13 (iv) any other form of waste heat re14 source as the Secretary may determine. 

15 (B) EXCLUSION.—The term ‘‘qualified 

16 waste heat resource’’ does not include a heat re17 source from a process the primary purpose of 

18 which is the generation of electricity using a 

19 fossil fuel. 

20 (4) WASTE HEAT TO POWER TECHNOLOGY.— 

21 The term ‘‘waste heat to power technology’’ means 

22 a system that generates electricity through the re23 covery of a qualified waste heat resource. 


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1 (b) PURPA DEFINITIONS.—Section 3 of the Public 

2 Utility Regulatory Policies Act of 1978 (16 U.S.C. 2602) 

3 is amended by adding at the end the following: 

4 ‘‘(22) COMBINED HEAT AND POWER TECH5 NOLOGY.—The term ‘combined heat and power tech6 nology’ means the generation of electric energy and 

7 heat in a single, integrated system that meets the ef8 ficiency criteria in clauses (ii) and (iii) of section 

9 48(c)(3)(A) of the Internal Revenue Code of 1986, 

10 under which heat that is conventionally rejected is 

11 recovered and used to meet thermal energy require12 ments. 

13 ‘‘(23) QUALIFIED WASTE HEAT RESOURCE.— 

14 ‘‘(A) IN GENERAL.—The term ‘qualified 

15 waste heat resource’ means— 

16 ‘‘(i) exhaust heat or flared gas from 

17 any industrial process; 

18 ‘‘(ii) waste gas or industrial tail gas 

19 that would otherwise be flared, incinerated, 

20 or vented; 

21 ‘‘(iii) a pressure drop in any gas for 

22 an industrial or commercial process; or 

23 ‘‘(iv) any other form of waste heat re24 source as the Secretary may determine. 


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1 ‘‘(B) EXCLUSION.—The term ‘qualified 

2 waste heat resource’ does not include a heat re3 source from a process the primary purpose of 

4 which is the generation of electricity using a 

5 fossil fuel. 

6 ‘‘(24) WASTE HEAT TO POWER TECHNOLOGY.— 

7 The term ‘waste heat to power technology’ means a 

8 system that generates electricity through the recov9 ery of a qualified waste heat resource.’’. 

10 SEC. 4. UPDATED INTERCONNECTION PROCEDURES AND 

11 TARIFF SCHEDULE. 

12 (a) ADOPTION OF STANDARDS.—Section 111(d) of 

13 the Public Utility Regulatory Policies Act of 1978 (16 

14 U.S.C. 2621(d)) is amended by adding at the end the fol15 lowing: 

16 ‘‘(20) UPDATED INTERCONNECTION PROCE17 DURES AND TARIFF SCHEDULE.— 

18 ‘‘(A) IN GENERAL.—Not later than 1 year 

19 after the date of enactment of this paragraph, 

20 the Secretary, in consultation with the Commis21 sion and other appropriate agencies, shall es22 tablish, for generation with nameplate capacity 

23 up to 20 megawatts using all fuels— 

24 ‘‘(i) guidance for technical inter25 connection standards that ensure interVerDate Sep 11 2014 07:07 May 13, 2015 Jkt 049200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1202.IS S1202

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1 operability with existing Federal inter2 connection rules; 

3 ‘‘(ii) model interconnection proce4 dures, including appropriate fast track pro5 cedures; and 

6 ‘‘(iii) model rules for determining and 

7 assigning interconnection costs. 

8 ‘‘(B) STANDARDS.—The standards estab9 lished under subparagraph (A) shall, to the 

10 maximum extent practicable, reflect current 

11 best practices (as demonstrated in model codes 

12 and rules adopted by States) to encourage the 

13 use of distributed generation (such as combined 

14 heat and power technology and waste heat to 

15 power technology) while ensuring the safety and 

16 reliability of the interconnected units and the 

17 distribution and transmission networks to which 

18 the units connect. 

19 ‘‘(C) VARIATIONS.—In establishing the 

20 model standards under subparagraph (A), the 

21 Secretary shall consider the appropriateness of 

22 using standards or procedures that vary based 

23 on unit size, fuel type, or other relevant charac24 teristics.’’. 

25 (b) COMPLIANCE.— 


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1 (1) TIME LIMITATIONS.—Section 112(b) of the 

2 Public Utility Regulatory Policies Act of 1978 (16 

3 U.S.C. 2622(b)) is amended by adding at the end 

4 the following: 

5 ‘‘(7)(A) Not later than 90 days after the date 

6 on which the Secretary completes the standards re7 quired under section 111(d)(20), each State regu8 latory authority (with respect to each electric utility 

9 for which the authority has ratemaking authority) 

10 and each nonregulated electric utility shall com11 mence the consideration referred to in that section, 

12 or set a hearing date for such consideration, with re13 spect to each standard. 

14 ‘‘(B) Not later than 2 years after the date on 

15 which the Secretary completes the standards re16 quired under section 111(d)(20), each State regu17 latory authority (with respect to each electric utility 

18 for which the authority has ratemaking authority) 

19 and each nonregulated electric utility shall— 

20 ‘‘(i) complete the consideration under sub21 paragraph (A); 

22 ‘‘(ii) make the determination referred to in 

23 section 111 with respect to each standard es24 tablished under section 111(d)(20); and 


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1 ‘‘(iii) submit to the Secretary and the 

2 Commission a report detailing the updated 

3 plans of the State regulatory authority for 

4 interconnection procedures and tariff schedules 

5 that reflect best practices to encourage the use 

6 of distributed generation.’’. 

7 (2) FAILURE TO COMPLY.—Section 112(c) of 

8 the Public Utility Regulatory Policies Act of 1978 

9 (16 U.S.C. 2622(c)) is amended by adding at the 

10 end the following: ‘‘In the case of each standard es11 tablished under paragraph (20) of section 111(d), 

12 the reference contained in this subsection to the date 

13 of enactment of this Act shall be deemed to be a ref14 erence to the date of enactment of that paragraph 

15 (20).’’. 

16 (3) PRIOR STATE ACTIONS.— 

17 (A) IN GENERAL.—Section 112 of the 

18 Public Utility Regulatory Policies Act of 1978 

19 (16 U.S.C. 2622) is amended by adding at the 

20 end the following: 

21 ‘‘(g) PRIOR STATE ACTIONS.—Subsections (b) and 

22 (c) shall not apply to a standard established under para23 graph (20) of section 111(d) in the case of any electric 

24 utility in a State if, before the date of enactment of this 

25 subsection— 


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1 ‘‘(1) the State has implemented for the electric 

2 utility the standard (or a comparable standard); 

3 ‘‘(2) the State regulatory authority for the 

4 State, or the relevant nonregulated electric utility, 

5 has conducted a proceeding after December 31, 

6 2013, to consider implementation of the standard 

7 (or a comparable standard) for the electric utility; or 

8 ‘‘(3) the State legislature has voted on the im9 plementation of the standard (or a comparable 

10 standard) for the electric utility.’’. 

11 (B) CROSS-REFERENCE.—Section 124 of 

12 the Public Utility Regulatory Policies Act of 

13 1978 (16 U.S.C. 2634) is amended by adding 

14 at the end the following: ‘‘In the case of each 

15 standard established under paragraph (20) of 

16 section 111(d), the reference contained in this 

17 subsection to the date of enactment of this Act 

18 shall be deemed to be a reference to the date 

19 of enactment of that paragraph (20).’’. 

20 SEC. 5. SUPPLEMENTAL, BACKUP, AND STANDBY POWER 

21 FEES OR RATES. 

22 (a) ADOPTION OF STANDARDS.—Section 111(d) of 

23 the Public Utility Regulatory Policies Act of 1978 (16 

24 U.S.C. 2621(d)) (as amended by section 4(a)) is amended 

25 by adding at the end the following: 


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1 ‘‘(21) SUPPLEMENTAL, BACKUP, AND STANDBY

2 POWER FEES OR RATES.— 

3 ‘‘(A) IN GENERAL.—Not later than 1 year 

4 after the date of enactment of this paragraph, 

5 the Secretary, in consultation with the Commis6 sion and other appropriate agencies, shall es7 tablish model rules and procedures for deter8 mining fees or rates for supplementary power, 

9 backup or standby power, maintenance power, 

10 and interruptible power supplied to facilities 

11 that operate combined heat and power tech12 nology and waste heat to power technology that 

13 appropriately allow for adequate cost recovery 

14 by an electric utility but are not excessive. 

15 ‘‘(B) FACTORS.—In establishing model 

16 rules and procedures for determining fees or 

17 rates described in subparagraph (A), the Sec18 retary shall consider— 

19 ‘‘(i) the best practices that are used to 

20 model outage assumptions and contin21 gencies to determine the fees or rates; 

22 ‘‘(ii) the appropriate duration, mag23 nitude, or usage of demand charge ratch24 ets; 


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1 ‘‘(iii) the benefits to the utility and 

2 ratepayers, such as increased reliability, 

3 fuel diversification, enhanced power qual4 ity, and reduced electric losses from the 

5 use of combined heat and power technology 

6 and waste heat to power technology by a 

7 qualifying facility; and 

8 ‘‘(iv) alternative arrangements to the 

9 purchase of supplementary, backup, or 

10 standby power by the owner of combined 

11 heat and power technology and waste heat 

12 to power technology generating units if the 

13 alternative arrangements— 

14 ‘‘(I) do not compromise system 

15 reliability; and 

16 ‘‘(II) are nondiscretionary and 

17 nonpreferential.’’. 

18 (b) COMPLIANCE.— 

19 (1) TIME LIMITATIONS.—Section 112(b) of the 

20 Public Utility Regulatory Policies Act of 1978 (16 

21 U.S.C. 2622(b)) (as amended by section 4(b)(1)) is 

22 amended by adding at the end the following: 

23 ‘‘(8)(A) Not later than 90 days after the date 

24 on which the Secretary completes the standards re25 quired under section 111(d)(21), each State reguVerDate Sep 11 2014 07:07 May 13, 2015 Jkt 049200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\S1202.IS S1202

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1 latory authority (with respect to each electric utility 

2 for which the authority has ratemaking authority) 

3 and each nonregulated electric utility shall com4 mence the consideration referred to in that section, 

5 or set a hearing date for such consideration, with re6 spect to each standard. 

7 ‘‘(B) Not later than 2 years after the date on 

8 which the Secretary completes the standards re9 quired under section 111(d)(21), each State regu10 latory authority (with respect to each electric utility 

11 for which the authority has ratemaking authority) 

12 and each nonregulated electric utility shall— 

13 ‘‘(i) complete the consideration under sub14 paragraph (A); 

15 ‘‘(ii) make the determination referred to in 

16 section 111 with respect to each standard es17 tablished under section 111(d)(21); and 

18 ‘‘(iii) submit to the Secretary and the 

19 Commission a report detailing the updated 

20 plans of the State regulatory authority for sup21 plemental, backup, and standby power fees that 

22 reflect best practices to encourage the use of 

23 distributed generation.’’. 

24 (2) FAILURE TO COMPLY.—Section 112(c) of 

25 the Public Utility Regulatory Policies Act of 1978 


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1 (16 U.S.C. 2622(c)) (as amended by section 4(b)(2)) 

2 is amended by adding at the end the following: ‘‘In 

3 the case of each standard established under para4 graph (21) of section 111(d), the reference con5 tained in this subsection to the date of enactment of 

6 this Act shall be deemed to be a reference to the 

7 date of enactment of that paragraph (21).’’. 

8 (3) PRIOR STATE ACTIONS.— 

9 (A) IN GENERAL.—Section 112 of the 

10 Public Utility Regulatory Policies Act of 1978 

11 (16 U.S.C. 2622) (as amended by section 

12 4(b)(3)(A)) is amended by adding at the end 

13 the following: 

14 ‘‘(h) PRIOR STATE ACTIONS.—Subsections (b) and 

15 (c) shall not apply to a standard established under para16 graph (21) of section 111(d) in the case of any electric 

17 utility in a State if, before the date of enactment of this 

18 subsection— 

19 ‘‘(1) the State has implemented for the electric 

20 utility the standard (or a comparable standard); 

21 ‘‘(2) the State regulatory authority for the 

22 State, or the relevant nonregulated electric utility, 

23 has conducted a proceeding after December 31, 

24 2013, to consider implementation of the standard 

25 (or a comparable standard) for the electric utility; or 


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1 ‘‘(3) the State legislature has voted on the im2 plementation of the standard (or a comparable 

3 standard) for the electric utility.’’. 

4 (B) CROSS-REFERENCE.—Section 124 of 

5 the Public Utility Regulatory Policies Act of 

6 1978 (16 U.S.C. 2634) (as amended by section 

7 4(b)(3)(B)) is amended by adding at the end 

8 the following: ‘‘In the case of each standard es9 tablished under paragraph (21) of section 

10 111(d), the reference contained in this sub11 section to the date of enactment of this Act 

12 shall be deemed to be a reference to the date 

13 of enactment of that paragraph (21).’’. 

14 SEC. 6. UPDATING OUTPUT-BASED EMISSIONS STANDARDS. 

15 (a) ESTABLISHMENT.—The Administrator of the En16 vironmental Protection Agency (referred to in this section 

17 as the ‘‘Administrator’’) shall establish a program under 

18 which the Administrator shall provide to each State (as 

19 defined in section 302 of the Clean Air Act (42 U.S.C. 

20 7602)) that elects to participate and that submits an ap21 plication under subsection (b) a grant for use by the State 

22 in accordance with subsection (c). 

23 (b) APPLICATION.—To be eligible to receive a grant 

24 under this section, a State shall submit to the Adminis25 trator an application at such time, in such manner, and 


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1 containing such information as the Administrator may re2 quire. 

3 (c) USE OF FUNDS.— 

4 (1) IN GENERAL.—A State shall use a grant 

5 provided under this section— 

6 (A) to update any applicable State or local 

7 air permitting regulations under this title to in8 corporate environmental regulations relating to 

9 output-based emissions in accordance with rel10 evant guidelines developed by the Administrator 

11 under paragraph (2); or 

12 (B) if the State has already updated all 

13 applicable State and local permitting regula14 tions to incorporate those output-based emis15 sions environmental regulations, to expedite the 

16 processing of relevant power generation permit 

17 applications under this title. 

18 (2) GUIDELINES.—As soon as practicable after 

19 the date of enactment of this Act, the Administrator 

20 shall publish guidelines for updating State and local 

21 permitting regulations under this Act that— 

22 (A) provide credit, in the calculation of the 

23 emission rate of the facility, for any thermal en24 ergy produced by combined heat and power 


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1 technology or waste heat to power technology; 

2 and 

3 (B) apply only to generation units that 

4 produce 5 megawatts of electrical energy or 

5 less. 

6 (d) MAXIMUM AMOUNT.—The amount of a grant pro7 vided under this section shall not exceed $100,000. 

8 (e) AUTHORIZATION OF APPROPRIATIONS.—There is 

9 authorized to be appropriated to the Administrator to 

10 carry out this section $5,000,000. 

Æ 


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