II 

114TH CONGRESS 

1ST SESSION S. 2003 

To facilitate the free market for distributed energy resources. 

IN THE SENATE OF THE UNITED STATES 

AUGUST 6, 2015 

Mr. KING introduced the following bill; which was read twice and referred to 

the Committee on Energy and Natural Resources 

A BILL 

To facilitate the free market for distributed energy resources. 

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 ‘‘Free Market Energy 

5 Act’’. 

6 SEC. 2. DEFINITION OF DISTRIBUTED ENERGY RESOURCE. 

7 Section 3 of the Federal Power Act (16 U.S.C. 796) 

8 is amended by adding at the end the following: 

9 ‘‘(30) DISTRIBUTED ENERGY RESOURCE.—The 

10 term ‘distributed energy resource’ means a resource, 

11 technology, or service interconnected to the elecVerDate Sep 11 2014 03:51 Aug 13, 2015 Jkt 049200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2003.IS S2003

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1 tricity distribution system that generates, manages, 

2 or reduces energy use.’’. 

3 SEC. 3. GENERAL RIGHT TO NEUTRALITY OF INTER4 CONNECTION. 

5 The Public Utility Regulatory Policies Act of 1978 

6 is amended by inserting after section 4 (16 U.S.C. 2603) 

7 the following: 

8 ‘‘SEC. 5. GENERAL RIGHT TO NEUTRALITY OF INTER9 CONNECTION. 

10 ‘‘(a) IN GENERAL.—Distributed energy resources (as 

11 defined in section 3 of the Federal Power Act (16 U.S.C. 

12 796)) shall have a general right of interconnection under 

13 this Act. 

14 ‘‘(b) RATES AND FEES.—States shall ensure that 

15 electric distribution grid operators adopt standards, condi16 tions, and requirements for rates and fees for interconnec17 tion of distributed energy resources under this Act, that— 

18 ‘‘(1) are just and reasonable; 

19 ‘‘(2) provide for the 2-way benefit for the dis20 tributed energy resource and the electricity grid; and 

21 ‘‘(3) shall not be punitive. 

22 ‘‘(c) TIMEFRAMES.— 

23 ‘‘(1) IN GENERAL.—Timeframes for inter24 connection of distributed energy resources under this 


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1 Act shall be well-defined, expeditious, and not un2 duly protracted. 

3 ‘‘(2) DELAYS OR DENIAL.—An interconnection 

4 of distributed energy resources under this Act shall 

5 not be delayed or denied unless the electric utility 

6 demonstrates that the interconnection is unsafe or 

7 impracticable.’’. 

8 SEC. 4. ENERGY AND RATE TREATMENTS FOR DISTRIB9 UTED ENERGY RESOURCES. 

10 Section 111(d) of the Public Utility Regulatory Poli11 cies Act of 1978 (16 U.S.C. 2621(d)) is amended by add12 ing at the end the following: 

13 ‘‘(20) DISTRIBUTED ENERGY RESOURCES.— 

14 ‘‘(A) IN GENERAL.—If a State regulatory 

15 authority considers, through a rate proceeding 

16 or another mechanism (such as consideration of 

17 fixed or minimum charges), modifying the 

18 treatment of net energy metering customers, 

19 the State regulatory authority shall consider re20 quiring that distributed energy resources (as 

21 defined in section 3 of the Federal Power Act 

22 (16 U.S.C. 796)) be eligible to receive just and 

23 reasonable energy and rate treatment using dy24 namic pricing, which may account for locational 

25 benefit, to be provided on an unbundled basis, 


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1 after accounting for the 2-way valuation of dy2 namic rates, for services provided to or provided 

3 by the grid, including the considerations with 

4 respect to the use of dynamic pricing described 

5 in subparagraph (B). 

6 ‘‘(B) CONSIDERATIONS.—The consider7 ations for the use of dynamic pricing referred 

8 to in subparagraph (A) include— 

9 ‘‘(i)(I) pricing for energy sold to an 

10 electric utility; and 

11 ‘‘(II) pricing for energy purchased 

12 from an electric utility; 

13 ‘‘(ii) capacity; 

14 ‘‘(iii) the provision of ancillary serv15 ices; 

16 ‘‘(iv) the societal value of distributed 

17 energy resources; 

18 ‘‘(v) transmission and distribution 

19 losses; and 

20 ‘‘(vi) any other benefits that the State 

21 regulatory authority considers to be appro22 priate.’’. 


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1 SEC. 5. CONSIDERATION OF NONTRANSMISSION ALTER2 NATIVES. 

3 Section 111(d) of the Public Utility Regulatory Poli4 cies Act of 1978 (16 U.S.C. 2621(d)) (as amended by sec5 tion 4) is amended by adding at the end the following: 

6 ‘‘(21) NONTRANSMISSION ALTERNATIVES.— 

7 ‘‘(A) IN GENERAL.—Each State regulatory 

8 authority or applicable Regional Transmission 

9 Organization or Independent System Operator 

10 shall consider nontransmission alternatives in 

11 instances in which an entity proposes trans12 mission projects seeking cost-of-service rate re13 covery. 

14 ‘‘(B) COST.—To reduce the cost to the 

15 ratepayer of a potential transmission upgrade, a 

16 nontransmission alternative considered under 

17 subparagraph (A), the cost of the nontrans18 mission alternative shall be recovered from the 

19 ratebase or regional recovery mechanism in the 

20 same manner as the transmission upgrade 

21 would have been.’’. 

22 SEC. 6. PRIOR STATE ACTIONS. 

23 (a) IN GENERAL.—Section 112 of the Public Utility 

24 Regulatory Policies Act of 1978 (16 U.S.C. 2622) is 

25 amended by adding at the end the following: 


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

2 (c) shall not apply to a standard established under para3 graphs (20) and (21) of section 111(d) in the case of any 

4 electric utility in a State if, before the date of enactment 

5 of this subsection— 

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

7 utility the standard (or a comparable standard); 

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

9 State, or the relevant nonregulated electric utility, 

10 has conducted a proceeding to consider implementa11 tion of the standard (or a comparable standard) for 

12 the electric utility; or 

13 ‘‘(3) the State legislature has voted on the im14 plementation of the standard (or a comparable 

15 standard) for the electric utility.’’. 

16 (b) CROSS-REFERENCE.—Section 124 of the Public 

17 Utility Regulatory Policies Act of 1978 (16 U.S.C. 2634) 

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

19 case of each standard established under paragraphs (20) 

20 and (21) of section 111(d), the reference contained in this 

21 subsection to the date of enactment of this Act shall be 

22 deemed to be a reference to the date of enactment of those 

23 paragraphs.’’. 


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1 SEC. 7. EFFECT. 

2 Nothing in this Act (or an amendment made by this 

3 Act) shall apply to distributed energy resource contracts 

4 in effect on the date of enactment of this Act. 

Æ 


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