A bill to amend the Public Utility Regulatory Policies Act of 1978 to provide for the safe and reliable interconnection of distributed resources and to provide for the examination of the effects of net metering.

SECTION 1. RELIABILITY AND DISTRIBUTED RESOURCES.

    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:
            ``(20) Consideration of safe and reliable interconnection 
        of distributed resources.--
                    ``(A) Definitions.--In this paragraph:
                            ``(i) Ancillary service.--The term 
                        `ancillary service' includes--
                                    ``(I) reactive supply;
                                    ``(II) regulation and frequency 
                                response;
                                    ``(III) energy imbalance;
                                    ``(IV) operating reserves;
                                    ``(V) generation imbalance; and
                                    ``(VI) flexibility and ramping 
                                services.
                            ``(ii) Distributed resource.--The term 
                        `distributed resource' means an electric power 
                        source connected directly to the distribution 
                        network or on the customer side of the meter.
                    ``(B) Requirement for proceedings related to 
                distributed resources.--Each State regulatory authority 
                shall--
                            ``(i) establish proceedings to examine the 
                        degree to which distributed resources 
                        contribute ancillary services; and
                            ``(ii) prescribe appropriate measures to 
                        ensure adequate ancillary services so that grid 
                        interconnection for distributed resources is 
                        safe, reliable, and efficient.''.

SEC. 2. NET METERING EFFECTS.

    Section 111(d) of the Public Utility Regulatory Policies Act of 
1978 (16 U.S.C. 2621(d)) (as amended by section 1) is amended by adding 
at the end the following:
            ``(21) Net metering effects.--Each State regulatory 
        authority shall--
                    ``(A) establish proceedings to examine the effects 
                of net metering and customer-owned distributed 
                generation on resource planning of each electric 
                utility, including--
                            ``(i) the effects on resource utilization, 
                        fuel diversity, grid security, and shifting of 
                        grid costs to customers who do not use net 
                        metering or customer-owned distributed 
                        generation; and
                            ``(ii) the impact on--
                                    ``(I) the financial health of the 
                                entity providing distribution services; 
                                and
                                    ``(II) the ability of the entity to 
                                attract investment in light of net 
                                metering and customer-owned distributed 
                                generation within the State; and
                    ``(B) establish proceedings to determine whether 
                electricity rates established for net metering service 
                are just and reasonable and not unduly preferential or 
                discriminatory, in accordance with State law.''.

SEC. 3. COMPLIANCE.

    (a) 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:
            ``(7)(A) Not later than 1 year after the date of enactment 
        of this paragraph, each State regulatory authority (with 
        respect to each electric utility for which the authority has 
        ratemaking authority) and each nonregulated electric utility 
        shall, with respect to the standard established by paragraphs 
        (20) and (21) of section 111(d)--
                    ``(i) commence the consideration required under 
                those paragraphs; or
                    ``(ii) set a hearing date for such consideration, 
                with respect to the standard established by paragraphs 
                (20) and (21) of section 111(d).
            ``(B) Not later than 2 years after the date of enactment of 
        this paragraph, each State regulatory authority (with respect 
        to each electric utility for which the authority has ratemaking 
        authority) and each nonregulated electric utility shall, with 
        respect to the standards established by paragraphs (20) and 
        (21) of section 111(d)--
                    ``(i) complete the consideration required under 
                those paragraphs; and
                    ``(ii) make the determination referred to in 
                section 111 with respect to the standards established 
                by those paragraphs.''.
    (b) 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 the standard 
established by paragraphs (20) and (21) 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 those 
paragraphs.''.

Summary: This bill amends the Public Utility Regulatory Policies Act of 1978 to define &quot;distributed resource&quot; as an electric power source connected directly to the distribution network or on the customer side of the meter. State regulatory authorities shall by certain deadlines:  establish proceedings to examine the degree to which distributed resources contribute specified ancillary services, such as reactive supply, energy imbalance, and flexibility and ramping services, among others;  prescribe measures to ensure adequate ancillary services so that grid interconnection for distributed resources is safe, reliable, and efficient; examine the effects of net metering and customer-owned distributed generation on resource planning of each electric utility, and  determine whether electricity rates established for net metering service are just and reasonable and not unduly preferential or discriminatory.