I
107TH CONGRESS
1ST SESSION
H. R. 1045
To lower energy costs to consumers, increase electric system reliability and
provide environmental improvements, through the rapid deployment of
distributed energy resources, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 15, 2001
Mrs. WILSON (for herself, Mr. HUNTER, and Mr. ISSA) introduced the fol-
lowing bill; which was referred to the Committee on Energy and Com-
merce, and in addition to the Committees on Ways and Means, and
Science, for a period to be subsequently determined by the Speaker, in
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned
A BILL
To lower energy costs to consumers, increase electric system
reliability and provide environmental improvements,
through the rapid deployment of distributed energy re-
sources, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Energy Self-Suffi-
ciency Act for the 21st Century’’.
SEC. 2. FINDINGS AND PURPOSES.
(a) FINDINGS.—The Congress finds that:
(1) The greater deployment of distributed en-
ergy resources can help alleviate bottlenecks and de-
ficiencies in the nation’s energy production and de-
livery system, and improve power quality and reli-
ability, while bringing more efficient and environ-
mentally responsible energy resources into the main-
stream.
(2) The United States needs to ensure the
rapid deployment of new power generation tech-
nologies in order to meet the growing demand for
electricity in the ‘new economy,’ while at the same
time paying careful attention to improving energy ef-
ficiency and reducing pollution from energy produc-
tion.
(3) The United States is poised to be a world
leader in the design and manufacture of distributed
energy resources technology.
(4) The current regulatory environment serves
as a disincentive to the deployment of distributed en-
ergy resources in many parts of the country, due to
the lack of consistent policies and procedures for the
interconnection of distributed energy resources to
the local electric grid.
(5) Existing tax treatment of distributed energy
resources also creates difficulties for the installation
of these technologies.
(6) The Federal Government needs a more co-
ordinated program for research, development and
demonstration of distributed energy resources.
(b) PURPOSES.—The purposes of this Act are to
lower energy costs to consumers, increase electric system
reliability, create a more diverse and robust energy net-
work, and provide energy efficiency and environmental im-
provements, through the rapid development and deploy-
ment of distributed energy resources.
TITLE I—INTERCONNECTION OF
LOCAL DISTRIBUTION FACILI-
TIES
SEC. 101. INTERCONNECTION OF LOCAL DISTRIBUTION FA-
CILITIES.
Section 210 of the Federal Power Act is amended by
adding the following at the end thereof:
‘‘(f) SPECIAL RULE
FOR DISTRIBUTED GENERA-
TION.—
‘‘(1) DEFINITIONS.—As used in this subsection:
‘‘(A) UTILITY DISTRIBUTION COMPANY.—
The term ‘utility distribution company’ means
any entity which owns, controls, or operates, for
public use, local utility distribution facilities.
‘‘(B) LOCAL
UTILITY
DISTRIBUTION
FA-
CILITIES.—The term ‘local utility distribution
facilities’ means any facilities used for the local
distribution of electric energy. Such term does
not include any facilities determined by the
Commission to be transmission facilities subject
to the jurisdiction of the Commission under sec-
tion 201.
‘‘(C) DISTRIBUTED
GENERATION
FACIL-
ITY.—The term ‘distributed generation facility’
means an electric power generation facility that
is designed to serve retail electric consumers at
or near the facility site and interconnect with
local utility distribution facilities.
‘‘(2) INTERCONNECTION.—A utility distribution
company shall interconnect its local utility distribu-
tion facilities with, and provide service to, a distrib-
uted generation facility, if the distributed generation
facility owner or operator complies with the final
rule promulgated under paragraph (3) and pays the
costs directly related to such interconnection and
service, as determined by the Commission. The
costs, terms and conditions of such interconnection
and subsequent service shall be just, reasonable and
non-discriminatory, as determined by the Commis-
sion.
‘‘(3) RULES.—Within one year after the date of
enactment of this subsection, the Commission shall
promulgate a final rule to establish safety, reli-
ability, and power quality standards relating to dis-
tributed generation facilities. To the extent feasible,
the Commission shall develop the standards through
a process involving interested parties. For purposes
of developing such standards, the Commission shall
establish an advisory committee composed of quali-
fied experts to make recommendations to the Com-
mission.’’.
TITLE II—TAX INCENTIVES FOR
DISTRIBUTED 
ENERGY 
RE-
SOURCES
SEC. 201. TAX INCENTIVES FOR DISTRIBUTED ENERGY RE-
SOURCES.
(a) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this title an amend-
ment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provi-
sion of Internal Revenue Code of 1986.
(b) IN GENERAL.—Section 48(a)(3) of the Internal
Revenue Code of 1986 (defining energy property) is
amended by inserting before the last sentence the fol-
lowing: ‘‘The term ‘energy property’ includes distributed
power property or combined heat and power system prop-
erty, but only if the requirements of subparagraphs (B)
and (C) are met with respect to the property.’’.
(c) DEFINITIONS.—Subsection (a) of section 48 of
the Internal Revenue Code of 1986 (related to the energy
credit) is amended by adding at the end the following new
paragraphs:
‘‘(6) DISTRIBUTED
POWER
PROPERTY.—The
term ‘distributed power property’ means property—
‘‘(A) which is used in the generation of
electricity for primary use—
‘‘(i) in nonresidential real or residen-
tial rental property used in the taxpayer’s
trade or business;
‘‘(ii) in the taxpayer’s industrial man-
ufacturing process or plant activity,
‘‘(B) which may also produce usable ther-
mal energy or mechanical power for use in heat-
ing or cooling application, but only if at least
40 percent of the total useful energy produced
consists of—
‘‘(i) with respect to assets described in
subparagraph 
(A)(i), 
electrical 
power
(whether sold or used by the taxpayer), or
‘‘(ii) with respect to assets described
in subparagraph (A)(ii), electrical power
(whether sold or used by the taxpayer) and
thermal or mechanical energy used in the
taxpayer’s industrial manufacturing proc-
ess or plant activity,
‘‘(C) which is not used to transport pri-
mary fuel to the generating facility or to dis-
tribute energy within or outside of the facility,
and
‘‘(D) if it is reasonably expected that not
more than 50 percent of the produced elec-
tricity will be sold to, or used by, unrelated per-
sons.
‘‘(7) COMBINED
HEAT
AND
POWER
SYSTEM
PROPERTY.—For purposes of this subsection—
‘‘(A) COMBINED HEAT AND POWER SYS-
TEM PROPERTY.—The term ‘combined heat and
power system property’ means property com-
prising a system—
‘‘(i) which uses the same energy
source for the simultaneous or sequential
generation of electrical power, mechanical
shaft power, or both, in combination with
the generation of steam or other forms of
useful thermal energy (including heating
and cooling applications),
‘‘(ii) which has an electrical capacity
of more than 50 kilowatts or a mechanical
energy capacity of more than 67 horse-
power or an equivalent combination of elec-
trical and mechanical energy capacities,
‘‘(iii) which produces—
‘‘(I) at least 20 percent of its
total useful energy in the form of
thermal energy, and
‘‘(II) at least 20 percent of its
total useful energy in the form of elec-
trical or mechanical power (or com-
bination thereof), and
‘‘(iv) the energy efficiency percentage
of which exceeds 60 percent (70 percent in
the case of a system with an electrical ca-
pacity in excess of 50 megawatts or a me-
chanical energy capacity in excess of
67,000 horsepower, or an equivalent com-
bination of electrical and mechanical en-
ergy capacities).
‘‘(B) SPECIAL RULES.—
‘‘(i) ENERGY
EFFICIENCY
PERCENT-
AGE.—For 
purposes 
of 
subparagraph
(A)(iv), the energy efficiency percentage of
a system is the fraction—
‘‘(I) the numerator of which is
the total useful electrical, thermal,
and mechanical power produced by
the system at normal operating rates,
and
‘‘(II) the denominator of which is
the lower heating value of the primary
fuel source for the system.
‘‘(ii) DETERMINATIONS MADE ON BTU
BASIS.—The energy efficiency percentage
and the percentages under subparagraph
(A)(iii) shall be determined on a Btu basis.
‘‘(iii) INPUT AND OUTPUT PROPERTY
NOT INCLUDED.—The term ‘combined heat
and power system property’ does not in-
clude property used to transport the en-
ergy source to the facility or to distribute
energy produced by the facility.
‘‘(iv) PUBLIC UTILITY PROPERTY.—
‘‘(I) ACCOUNTING
RULE
FOR
PUBLIC
UTILITY
PROPERTY.—If the
combined heat and power system
property is public utility property (as
defined in section 46(f)(5) as in effect
on the day before the date of enact-
ment of the Revenue Reconciliation
Act of 1990), the taxpayer may only
claim the credit under the subsection
if, with respect to such property, the
taxpayer uses a normalization method
of accounting.
‘‘(II) CERTAIN
EXCEPTION
NOT
TO APPLY.—The matter in paragraph
(3) which follows subparagraph (D)
shall not apply to combined heat and
power system property.’’.
(d) NO CARRYBACK OF ENERGY CREDIT BEFORE
EFFECTIVE DATE.—Subsection (d) of section 39 is
amended by adding at the end the following new para-
graph:
‘‘(10) NO CARRYBACK OF ENERGY CREDIT BE-
FORE EFFECTIVE DATE.—No portion of the unused
business credit for any taxable year which is attrib-
utable to the portion of the energy credit described
in paragraph (6) or (7) of section 48(a) may be car-
ried back to a taxable year ending before the date
of the enactment of this paragraph.’’.
(e) DEPRECIATION.—Subparagraph (C) of section
168(e)(3) (relating to classification of certain property as
7-year property) is amended by redesignating clause (ii)
as clause (iii) and by inserting after clause (i) the fol-
lowing new clause:
‘‘(ii) any distributed power property
(as defined in section 48(a)) or combined
heat and power system property (as de-
fined in such section), and’’.
(f) EFFECTIVE DATE.—The amendments made by
this title shall apply to property placed in service after
December 31, 2000.
TITLE III—RESEARCH AND DE-
VELOPMENT 
OF 
NEW 
DIS-
TRIBUTED 
ENERGY 
RE-
SOURCE TECHNOLOGIES
SEC. 301. RESEARCH AND DEVELOPMENT OF NEW DISTRIB-
UTED ENERGY RESOURCE TECHNOLOGIES.
(a) IN GENERAL.—The Secretary of Energy shall de-
velop and implement an accelerated comprehensive and co-
operative program of research and development to ensure
the reliability, efficiency and environmental responsibility
of Distributed Energy Resources (hereafter in this section
referred to as ‘‘DER’’). This research and development
program shall include Advanced Energy Technologies De-
velopment, Advanced Energy Systems Development, Ad-
vanced Grid Reliability Technologies development and
Technology Transfer and Education.
(b) PURPOSES.—The cooperative research program
shall promote and accelerate research and development for
the following purposes:
(1) Ensure long-term safety, reliability, and
service for DER.
(2) Expand the capability of DER to be safely,
reliably, and with integrity connected to the distribu-
tion electric grid.
(3) Improve the non-renewable technologies
ability to reduce fossil fuel consumption.
(4) Minimize the environmental impact of DER
technologies.
(5) Provide highly secure interface systems for
command, control, and communication of DER tech-
nologies with the electrical grid.
(6) Develop technologies that advance and en-
hance the electrical transmission and distribution
grid.
(7) Develop integration techniques and meth-
odologies that enhance the electric grid’s perform-
ance.
(c) AREAS.—(1) In carrying out this act, the Sec-
retary of Energy shall consider research and development
on DER, Advanced Systems Development, and Advanced
Electrical Grid reliability for each of the following:
(A) Significant advancement in efficiency for
Distributed Power Prime Movers.
(B) Significant advancement in efficiency for
thermally activated technologies.
(C) Significant advancement in reduction of en-
vironmental impact deploying pollution prevention
enabling technologies
(2) The program should include the following areas:
(A) Interconnection standards, protocols, and
equipment.
(B) Microturbines.
(C) Fuel cells.
(D) Combined heat and power systems.
(E) Advanced internal combustion engine gen-
erators.
(F) Advanced natural gas turbines.
(G) Energy storage devices.
(H) Ancillary equipment for dispatch and con-
trol.
(d) POINTS OF CONTACT.—
(1) IN
GENERAL.—To coordinate and imple-
ment the research and development programs and
activities authorized under this Act—
(A) the Secretary of Energy shall des-
ignate, as the point of contact for the Depart-
ment of Energy, an officer of the Department
of Energy who has been appointed by the Presi-
dent and confirmed by the Senate; and
(B) the Administrator of the Environ-
mental Protection Agency shall designate, as
the point of contact for the Environmental Pro-
tection Agency, an officer of the Environmental
Protection Agency.
(2) DUTIES.—The point of contact for the De-
partment of Energy shall have the primary responsi-
bility for coordinating and overseeing the implemen-
tation of the research, development, and field evalua-
tion program plan. The point of contact for the En-
vironment Protection Agency shall have the respon-
sibility for coordinating the Environmental Protec-
tion Agency’s input to the research, development
and field evaluation of those elements of the pro-
gram that impact the directive of the Agency under
the Clean Air Act. The primary point of contact
shall be responsible in arranging cooperative agree-
ments for research, development and Field evalua-
tion involving respective departments, national lab-
oratories, universities, industry research organiza-
tions and industry.
(3) RESEARCH AND DEVELOPMENT PROGRAM
PLAN.—Within 120 days after the date of enactment
of this Act, the Secretary of Energy shall prepare
and submit to Congress a 6-year program plan to
guide activities under this Act. In preparing the pro-
gram plan, the Secretary shall consult with appro-
priate representatives of the DER industry to select
and prioritize appropriate project proposals. The
Secretary may also seek the advice of utilities, en-
ergy services providers, manufacturers, institutions
of higher learning, Federal agencies, national labora-
tories, State energy officials, State regulatory offi-
cials, environmental organizations, and professional
and technical societies. In order to ensure that tech-
nologies are readily adopted by private entities, the
Secretary shall create cost-sharing programs with
private entities.
(e) IMPLEMENTATION.—
(1) REPORT TO CONGRESS.—Two years after
the enactment of this Act and at two year intervals
thereafter, the Secretary, jointly with the Adminis-
trator of the Environmental Protection Agency, shall
submit a report to Congress describing the progress
made to achieve the purposes of this Act and identi-
fying any additional resources needed to continue
the rapid development and deployment of DER.
(2) AUTHORIZATION OF APPROPRIATIONS.—
(A) There are authorized to be appro-
priated to the Secretary of Energy for carrying
out this Act $236,000,000, for each of the fis-
cal years 2002 through 2007.
(B) There are authorized to be appro-
priated to the Administrator of the Environ-
mental Protection Agency for carrying out this
Act such sums as may be necessary for each of
the fiscal years 2002 through 2007.
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