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‘‘(1) firm transmission rights described in subsection (a); 
or 
‘‘(2) firm transmission rights obtained by exercising con-
tract or tariff rights associated with the firm transmission 
rights described in subsection (a).’’. 
SEC. 1236. SENSE OF CONGRESS REGARDING LOCATIONAL INSTALLED 
CAPACITY MECHANISM. 
(a) FINDINGS.—Congress finds that— 
(1) in regard to a proposal to develop and implement a 
specific type of locational installed capacity mechanism in New 
England pending before the Federal Energy Regulatory 
Commission; and 
(2) the Governors of the States have objected to the pro-
posed mechanism, arguing that the mechanism— 
(A) would not provide adequate assurance that nec-
essary electric generation capacity or reliability will be 
provided; and 
(B) would impose a high cost on consumers and have 
a significant negative economic impact. 
(b) SENSE OF CONGRESS.—Congress— 
(1) notes the concerns of the New England States to the 
proposed mechanism; and 
(2) declares that it is the sense of Congress that the Federal 
Energy Regulatory Commission should carefully consider the 
States’ objections. 
Subtitle D—Transmission Rate Reform 
SEC. 1241. TRANSMISSION INFRASTRUCTURE INVESTMENT. 
Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is 
amended by adding at the end the following: 
‘‘SEC. 219. TRANSMISSION INFRASTRUCTURE INVESTMENT. 
‘‘(a) RULEMAKING REQUIREMENT.—Not later than 1 year after 
the date of enactment of this section, the Commission shall estab-
lish, by rule, incentive-based (including performance-based) rate 
treatments for the transmission of electric energy in interstate 
commerce by public utilities for the purpose of benefitting con-
sumers by ensuring reliability and reducing the cost of delivered 
power by reducing transmission congestion. 
‘‘(b) CONTENTS.—The rule shall— 
‘‘(1) promote reliable and economically efficient trans-
mission and generation of electricity by promoting capital 
investment in the enlargement, improvement, maintenance, 
and operation of all facilities for the transmission of electric 
energy in interstate commerce, regardless of the ownership 
of the facilities; 
‘‘(2) provide a return on equity that attracts new investment 
in transmission facilities (including related transmission tech-
nologies); 
‘‘(3) encourage deployment of transmission technologies and 
other measures to increase the capacity and efficiency of 
existing transmission facilities and improve the operation of 
the facilities; and 
‘‘(4) allow recovery of—
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‘‘(A) all prudently incurred costs necessary to comply 
with mandatory reliability standards issued pursuant to 
section 215; and 
‘‘(B) all prudently incurred costs related to trans-
mission infrastructure development pursuant to section 
216. 
‘‘(c) INCENTIVES.—In the rule issued under this section, the 
Commission shall, to the extent within its jurisdiction, provide 
for incentives to each transmitting utility or electric utility that 
joins a Transmission Organization. The Commission shall ensure 
that any costs recoverable pursuant to this subsection may be 
recovered by such utility through the transmission rates charged 
by such utility or through the transmission rates charged by the 
Transmission Organization that provides transmission service to 
such utility. 
‘‘(d) JUST AND REASONABLE RATES.—All rates approved under 
the rules adopted pursuant to this section, including any revisions 
to the rules, are subject to the requirements of sections 205 and 
206 that all rates, charges, terms, and conditions be just and 
reasonable and not unduly discriminatory or preferential.’’. 
SEC. 1242. FUNDING NEW INTERCONNECTION AND TRANSMISSION 
UPGRADES. 
The Commission may approve a participant funding plan that 
allocates costs related to transmission upgrades or new generator 
interconnection, without regard to whether an applicant is a 
member of a Commission-approved Transmission Organization, if 
the plan results in rates that— 
(1) are just and reasonable; 
(2) are not unduly discriminatory or preferential; and 
(3) are otherwise consistent with sections 205 and 206 
of the Federal Power Act (16 U.S.C. 824d, 824e). 
Subtitle E—Amendments to PURPA 
SEC. 1251. NET METERING AND ADDITIONAL STANDARDS. 
(a) ADOPTION
OF STANDARDS.—Section 111(d) of the Public 
Utility Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)) is 
amended by adding at the end the following: 
‘‘(11) NET
METERING.—Each electric utility shall make 
available upon request net metering service to any electric 
consumer that the electric utility serves. For purposes of this 
paragraph, the term ‘net metering service’ means service to 
an electric consumer under which electric energy generated 
by that electric consumer from an eligible on-site generating 
facility and delivered to the local distribution facilities may 
be used to offset electric energy provided by the electric utility 
to the electric consumer during the applicable billing period. 
‘‘(12) FUEL SOURCES.—Each electric utility shall develop 
a plan to minimize dependence on 1 fuel source and to ensure 
that the electric energy it sells to consumers is generated 
using a diverse range of fuels and technologies, including renew-
able technologies. 
‘‘(13) FOSSIL FUEL GENERATION EFFICIENCY.—Each electric 
utility shall develop and implement a 10-year plan to increase 
the efficiency of its fossil fuel generation.’’.
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(b) COMPLIANCE.— 
(1) TIME LIMITATIONS.—Section 112(b) of the Public Utility 
Regulatory Policies Act of 1978 (16 U.S.C. 2622(b)) is amended 
by adding at the end the following: 
‘‘(3)(A) Not later than 2 years after the enactment of this 
paragraph, each State regulatory authority (with respect to each 
electric utility for which it has ratemaking authority) and each 
nonregulated electric utility shall commence the consideration 
referred to in section 111, or set a hearing date for such consider-
ation, with respect to each standard established by paragraphs 
(11) through (13) of section 111(d). 
‘‘(B) Not later than 3 years after the date of the enactment 
of this paragraph, each State regulatory authority (with respect 
to each electric utility for which it has ratemaking authority), 
and each nonregulated electric utility, shall complete the consider-
ation, and shall make the determination, referred to in section 
111 with respect to each standard established by paragraphs (11) 
through (13) of section 111(d).’’. 
(2) FAILURE
TO
COMPLY.—Section 112(c) of the Public 
Utility Regulatory Policies Act of 1978 (16 U.S.C. 2622(c)) is 
amended by adding at the end the following: ‘‘In the case 
of each standard established by paragraphs (11) through (13) 
of section 111(d), the reference contained in this subsection 
to the date of enactment of this Act shall be deemed to be 
a reference to the date of enactment of such paragraphs (11) 
through (13).’’. 
(3) PRIOR STATE ACTIONS.— 
(A) IN
GENERAL.—Section 112 of the Public Utility 
Regulatory Policies Act of 1978 (16 U.S.C. 2622) is amended 
by adding at the end the following: 
‘‘(d) PRIOR STATE ACTIONS.—Subsections (b) and (c) of this 
section shall not apply to the standards established by paragraphs 
(11) through (13) of section 111(d) in the case of any electric utility 
in a State if, before the enactment of this subsection— 
‘‘(1) the State has implemented for such utility the standard 
concerned (or a comparable standard); 
‘‘(2) the State regulatory authority for such State or rel-
evant nonregulated electric utility has conducted a proceeding 
to consider implementation of the standard concerned (or a 
comparable standard) for such utility; or 
‘‘(3) the State legislature has voted on the implementation 
of such standard (or a comparable standard) for such utility.’’. 
(B) CROSS REFERENCE.—Section 124 of such Act (16 
U.S.C. 2634) is amended by adding the following at the 
end thereof: ‘‘In the case of each standard established by 
paragraphs (11) through (13) of section 111(d), the reference 
contained in this subsection to the date of enactment of 
this Act shall be deemed to be a reference to the date 
of enactment of such paragraphs (11) through (13).’’. 
SEC. 1252. SMART METERING. 
(a) IN GENERAL.—Section 111(d) of the Public Utility Regulatory 
Policies Act of 1978 (16 U.S.C. 2621(d)) is amended by adding 
at the end the following: 
‘‘(14) TIME-BASED
METERING
AND
COMMUNICATIONS.—(A) 
Not later than 18 months after the date of enactment of this 
paragraph, each electric utility shall offer each of its customer