[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3237 Reported in House (RH)]






                                                 Union Calendar No. 192
110th CONGRESS
  1st Session
                                H. R. 3237

                      [Report No. 110-305, Part I]

       To facilitate the transition to a smart electricity grid.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 31, 2007

  Mr. Boucher (for himself and Mr. Dingell) introduced the following 
 bill; which was referred to the Committee on Energy and Commerce, and 
in addition to the Committee on Science and Technology, for a period to 
      be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

                             August 3, 2007

           Reported from the Committee on Energy and Commerce

                             August 3, 2007

   Committee on Science and Technology discharged; committed to the 
 Committee of the Whole House on the State of the Union and ordered to 
                               be printed

_______________________________________________________________________

                                 A BILL


 
       To facilitate the transition to a smart electricity grid.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Smart Grid 
Facilitation Act of 2007''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
                TITLE I--SMART GRID AND DEMAND RESPONSE

                         Subtitle A--Smart Grid

Sec. 101. Statement of policy on modernization of electricity grid.
Sec. 102. Grid Modernization Commission.
Sec. 103. Grid assessment and report.
Sec. 104. Federal matching fund for smart grid investment costs.
Sec. 105. Smart Grid technology deployment.
Sec. 106. Smart Grid Information Requirements.
Sec. 107. State consideration of incentives for Smart Grid.
Sec. 108. DOE study of security attributes of Smart Grid systems.
                      Subtitle B--Demand Response

Sec. 111. Electricity sector demand response.

                TITLE I--SMART GRID AND DEMAND RESPONSE

                         Subtitle A--Smart Grid

SEC. 101. STATEMENT OF POLICY ON MODERNIZATION OF ELECTRICITY GRID.

    (a) Smart Grid Characteristics.--It is the policy of the United 
States to support the modernization of the Nation's electricity 
transmission and distribution system to incorporate digital information 
and controls technology and to share real-time pricing information with 
electricity customers to achieve each of the following, which together 
characterize a smart grid:
            (1) Increased reliability, security and efficiency of the 
        electric grid.
            (2) Dynamic optimization of grid operations and resources, 
        with full cyber-security.
            (3) Deployment and integration of distributed resources and 
        generation.
            (4) Development and incorporation of demand response 
        demand-side resources, and energy efficiency resources.
            (5) Deployment of ``smart'' technologies for metering, 
        communications concerning grid operations and status, and 
        distribution automation.
            (6) Integration of ``smart'' appliances and consumer 
        devices.
            (7) Deployment and integration of renewable energy 
        resources, both to the grid and on the customer side of the 
        electric meter.
            (8) Deployment and integration of advanced electricity 
        storage and peak-sharing technologies, including plug-in 
        electric and hybrid electric vehicles, and thermal-storage air 
        conditioning.
            (9) Provision to consumers of new information and control 
        options.
            (10) Continual environmental improvement in electricity 
        production and distribution.
            (11) Enhanced capacity and efficiency of electricity 
        networks, reduction of line losses, and maintenance of power 
        quality.
    (b) Support.--The Secretary of Energy and the Federal Energy 
Regulatory Commission and other Federal agencies as appropriate shall 
undertake programs to support the development and demonstration of 
Smart Grid technologies and standards to maximize the achievement of 
these goals.
    (c) Barriers.--It is further the policy of the United States that 
no State, State agency, or local government or instrumentality thereof 
should prohibit, or erect unreasonable barriers to, the deployment of 
smart grid technologies on an electric utility's distribution 
facilities, or unreasonably limit the services that may be provided 
using such technologies.
    (d) Information.--It is further the policy of the United States 
that electricity purchasers are entitled to receive information about 
the varying value of electricity at different times and places, and 
that States shall not prohibit nor erect unreasonable barriers to the 
provision of such information flows to end users.

SEC. 102. GRID MODERNIZATION COMMISSION.

    (a) Establishment and Mission.--
            (1) Establishment.--The President shall establish a Grid 
        Modernization Commission composed of 9 members. Three members 
        of the Commission shall be appointed by the President, and one 
        each shall be appointed by the Speaker and minority leader of 
        the United States House of Representatives and by the majority 
        leader and minority leader of the United States Senate. Two 
        members shall be appointed by the President from among persons 
        recommended by an association representing State utility 
        regulatory commissioners. The President shall designate one 
        Commissioner to serve as Chairperson.
            (2) Mission.--The mission of the Grid Modernization 
        Commission shall be to facilitate the adoption of Smart Grid 
        standards, technologies, and practices across the Nation's 
        electricity grid to the point of general adoption and ongoing 
        market support in the United States electric sector. The 
        Commission shall be responsible for monitoring developments, 
        encouraging progress toward common standards and protocols, 
        identifying barriers and proposing solutions, coordinating with 
        all Federal departments and agencies, and coordinating 
        approaches on smart grid implementation with States and local 
        governmental authorities.
    (b) Membership.--The members appointed to the Commission shall, 
collectively, have qualifications in electric utility operations and 
infrastructure, digital information and control technologies, security, 
market development, finance and utility regulation, energy efficiency, 
demand response, renewable energy, and consumer protection.
    (c) Authorities To Intervene.--The Commission shall have the 
authority to intervene and represent itself before the Federal Energy 
Regulatory Commission and other Federal and State agencies as it deems 
necessary to accomplish its mission.
    (d) Terms of Office.--The term of office of each Commissioner shall 
be 5 years, and any member may be reappointed for not more than one 
additional term of 5 years.
    (e) Termination.--Unless extended by Act of Congress, the 
Commission shall complete its work and cease its activities by January 
1, 2020, or on such earlier date that the Commission determines that 
the proliferation, evolution, and adaptation of Smart Grid technologies 
no longer require Federal leadership and assistance.
    (f) Compensation of Members.--Each member of the Commission who is 
not an officer or employee of the Federal Government shall be 
compensated at a rate equal to the daily equivalent of the annual rate 
of basic pay prescribed for level III of the Executive Schedule under 
section 5315 of title 5, United States Code, for each day (including 
travel time) during which such member is engaged in the performance of 
the duties of the Commission. All members of the Commission who are 
officers or employees of the United States shall serve without 
compensation in addition to that received for their services as 
officers or employees of the United States.
    (g) Travel Expenses.--The members of the Commission shall be 
allowed travel expenses, including per diem in lieu of subsistence, at 
rates authorized for employees of agencies under subchapter I of 
chapter 57 of title 5, United States Code, while away from their homes 
or regular places of business in the performance of services for the 
Commission.
    (h) Meetings.--The Commission shall meet at the call of the 
Chairman. Commission meetings shall be open to the public, but as many 
as three Commissioners may meet in private without constituting a 
meeting requiring public access.
    (i) Applicability of Federal Advisory Committee Act.--The Federal 
Advisory Committee Act (5 U.S.C. App. 1 et seq.) shall not apply to the 
Commission.
    (j) Offices and Staff.--The Secretary of Energy shall provide the 
Commission with offices in the Department of Energy and shall make 
available to the Commission the expertise and staff resources of both 
the Office of Electricity Delivery and Energy Reliability and the 
Office of Energy Efficiency and Renewable Energy.
    (k) Detail of Government Employees.--Any Federal Government 
employee may be detailed to the Commission without reimbursement, and 
such detail shall be without interruption or loss of civil service 
status or privilege.
    (l) Executive Director.--The Secretary of Energy shall appoint an 
officer of the Senior Executive Service to serve as Executive Director 
to the Commission.
    (m) Procurement of Temporary and Intermittent Services.--The 
Chairman of the Commission may procure temporary and intermittent 
services under section 3109(b) of title 5, United States Code, at rates 
for individuals which do not exceed the daily equivalent of the annual 
rate of basic pay prescribed for level V of the Executive Schedule 
under section 5316 of such title.
    (n) Information From Federal Agencies.--The Commission may secure 
directly from any Federal department or agency such information as the 
Commission considers necessary to carry out this Act. Upon request of 
the Chairman of the Commission, the head of such department or agency 
shall furnish such information to the Commission. The Commission shall 
maintain the same level of confidentiality for such information made 
available under this subsection as is required of the head of the 
department or agency from which the information was obtained.
    (o) Postal Services.--The Commission may use the United States 
mails in the same manner and under the same conditions as other 
departments and agencies of the Federal Government.

SEC. 103. GRID ASSESSMENT AND REPORT.

    (a) In General.--The Grid Modernization Commission shall undertake, 
and update on a biannual basis, an assessment of the progress toward 
modernizing the electric system from generation to ultimate electricity 
consumption, including implementation of ``smart grid'' technologies. 
The Commission shall prepare this assessment with input from 
stakeholders including but not limited to electric utilities, other 
Federal offices, States, companies involved in developing related 
technologies, the National Electric Reliability Organization recognized 
by the Federal Energy Regulatory Commission, electricity customers, and 
persons with special related expertise. The assessment shall include 
each of the following:
            (1) An updated inventory of existing smart grid systems.
            (2) A description of the condition of existing grid 
        infrastructure and procedures for determining the need for new 
        infrastructure.
            (3) A description of any plans of States, utilities, or 
        others to introduce smart grid systems and technologies.
            (4) An assessment of constraints to deployment of smart 
        grid technology and most important opportunities for doing so, 
        including the readiness or lack thereof of enabling 
        technologies.
            (5) An assessment of remaining potential benefits resulting 
        from introduction of smart grid systems, including benefits 
        related to demand-side efficiencies, improved reliability, 
        improved security, reduced prices, and improved integration of 
        renewable resources.
            (6) Recommendations for legislative or regulatory changes 
        to remove barriers to and create incentives for smart grid 
        system implementation and to meet the policy goals of this 
        title.
            (7) An estimate of the potential costs required for 
        modernization of the electricity grid, with specificity 
        relative to geographic areas and components of the grid, 
        together with an assessment of whether the necessary funds 
        would be available to meet such costs, and the sources of such 
        funds.
            (8) An assessment of ancillary benefits to other economic 
        sectors or activities beyond the electricity sector, such as 
        potential broadband service over power lines.
            (9) An assessment of technologies, activities or 
        opportunities in energy end use devices, customer premises, 
        buildings, and power generation and storage devices that could 
        accelerate or expand the impact and effectiveness of smart grid 
        advances.
            (10) An assessment of potential risks to personal privacy, 
        corporate confidentiality, and grid security from the spread of 
        smart grid technologies, and if so what additional measures and 
        policies are needed to assure privacy and information 
        protection for electric customers and grid partners, and cyber-
        security protection for extended grid systems.
            (11) An assessment of the readiness of market forces to 
        drive further implementation and evolution of ``smart grid'' 
        technologies in the absence of government leadership.
            (12) Recommendations to the Secretary of Energy and other 
        Federal officers on actions they should take to assist.
The Commission may request electric utilities to provide information 
relating to deployment and planned deployment of smart grid systems and 
technologies. At the request of the utility, the Commission shall 
maintain the confidentiality of utility-specific or specific security-
related information. The Commission shall provide opportunities for 
input and comment by interested persons, including representatives of 
electricity consumers, Smart Grid technology service providers, the 
electric utility industry, and State and local government.
    (b) State and Regional Assessment and Report.--States or groups of 
States are encouraged to participate in the development of State or 
region-specific components of the assessment and report under 
subsection (a). Such State-specific components may address the 
assessment and reporting criteria above but also may include but not be 
limited to any of the following:
            (1) Assessment of types of security threats to electricity 
        delivery.
            (2) Energy assurance and response plans to address security 
        threats.
            (3) Plans for introduction of smart grid systems and 
        technologies over 3, 5, and 10 year planning horizons.
The Commission may make grants to States that begin development of a 
State or Regional Plan within 180 days after the enactment of this Act 
to offset up to one-half of the costs required to develop such plans.
    (c) Smart Grid Report.--Based on its completed initial assessment 
under subsection (a), the Commission shall submit a report to Congress 
and the President not later than 2 years after the date of enactment of 
this Act and subsequent reports every 2 years thereafter. Each report 
shall include recommendations to the President and to the Congress on 
actions necessary to modernize the electricity grid. The Commission 
shall annually update and revise its report and as well as conduct 
ongoing monitoring and evaluation activities.
    (d) Consultation and Public Input.--The Commission shall consult 
with the Secretary of Energy and the Federal Energy Regulatory 
Commission on technical issues associated with advanced electricity 
grid technologies. The Commission shall to the extent feasible provide 
for broad and frequent input from stakeholders and the general public
    (e) Interoperability Protocols and Model Standards for Information 
Management.--
            (1) In general.--The Grid Modernization Commission shall 
        work with Smart Grid stakeholders to lead towards the earliest 
        feasible development of flexible, uniform, and consensus 
        protocols or model standards for information management among 
        and interoperability of smart grid devices and systems. Such 
        protocols and model standards shall allow such devices to 
        communicate and function over multiple technologies, including 
        wireless, cable, satellite, broadband-over-power line, and 
        telephone. Such protocols and model standards should align 
        policy, business, and technology approaches in a way that 
        enables all electric resources, including demand side 
        resources, to contribute to an efficient, reliable electricity 
        network, on an automated basis, as appropriate.
            (2) Scope of protocols and model standards.--The protocols 
        and model standards shall accommodate centralized and 
        distributed generation, transmission and distribution 
        resources, including advanced technologies to improve the 
        efficiency and reliability of the electric power transmission 
        and distributions system, renewable generation, energy storage, 
        energy efficiency, and demand response and enabling devices and 
        systems.
            (3) Establishment of working group.--Not later than 90 days 
        after the date of enactment of this Act the Commission shall 
        establish a working group comprised of electric industry 
        experts, to be appointed by the Chairman, to assist in 
        developing the protocols and model standards described in this 
        subsection and guide the Federal participation in that process. 
        Members appointed to the working group shall represent the 
        various sectors of the electricity industry, including sectors 
        relating to the generation, transmission, distribution and end-
        user.
            (4) Development of protocols and model standards.--In 
        developing the protocols and model standards, the working group 
        shall consult with expert groups such as the Gridwise 
        Architecture Council, the Institute of Electrical and 
        Electronics Engineers, other electric industry groups, customer 
        and manufacturer groups, and any appropriate Federal and State 
        agencies. The proposed protocols and model standards shall be 
        made available in the public domain, except to the extent they 
        may allow or create threats to grid reliability and security.
            (5) Proposal for protocols and model standards.--
                    (A) In general.--Not later than 1 year after the 
                date of enactment of this Act, the working group shall 
                submit to the Commission recommendations concerning 
                development of proposed protocols and model standards 
                and recommendations for Federal support in the 
                implementation of such protocols and model standards.
                    (B) Review by the commission.--On receipt of the 
                recommendations under subparagraph (A), the Commission 
                shall take such action as necessary to encourage the 
                adoption of the protocols and model standards and their 
                implementation.
                    (C) Publication of protocols and model standards.--
                The Commission shall publish, not later than 3 years 
                after the date of the enactment of this Act, and every 
                two years thereafter, a report on the status of 
                interoperability of smart grid technologies, and the 
                availability of protocols and model standards to allow 
                such interoperability.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out the purposes of this section the sum of 
$25,000,000 for each of the fiscal years 2008 through 2012, and such 
sums as may be necessary thereafter through fiscal year 2018.

SEC. 104. FEDERAL MATCHING FUND FOR SMART GRID INVESTMENT COSTS.

    (a) Matching Fund.--The Secretary of Energy shall establish a Smart 
Grid Investment Matching Grant Program to provide reimbursement of one-
fourth of qualifying Smart Grid investments.
    (b) Qualifying Investments.--Qualifying Smart Grid investments may 
include any of the following made on or after the date of enactment of 
this Act:
            (1) In the case of appliances covered for purposes of 
        establishing energy conservation standards under part B of 
        title III of the Energy Policy and Conservation Act of 1975 (42 
        U.S.C. 6291 and following), the documented expenditures 
        incurred by a manufacturer of such appliances associated with 
        purchasing or designing, creating the ability to manufacture, 
        and manufacturing and installing for one calendar year, 
        internal devices that allow the appliance to engage in Smart 
        Grid functions.
            (2) In the case of specialized electricity-using equipment, 
        including motors and drivers, installed in industrial or 
        commercial applications, the documented expenditures incurred 
        by its owner or its manufacturer of installing devices or 
        modifying that equipment to engage in Smart Grid functions.
            (3) In the case of transmission and distribution equipment 
        fitted with monitoring and communications devices to enable 
        smart grid functions, the documented expenditures incurred by 
        the electric utility to purchase and install such monitoring 
        and communications devices.
            (4) In the case of metering devices, sensors, control 
        devices, and other devices integrated with and attached to an 
        electric utility system that are capable of engaging in Smart 
        Grid functions, the documented expenditures incurred by the 
        electric utility and its customers to purchase and install such 
        devices.
            (5) In the case of software that enables devices or 
        computers to engage in Smart Grid functions, the documented 
        purchase costs of the software.
            (6) In the case of entities that operate or coordinate 
        operations of regional electric grids, the documented 
        expenditures for purchasing and installing such equipment that 
        allows Smart Grid functions to operate and be combined or 
        coordinated among multiple electric utilities and between that 
        region and other regions.
            (7) In the case of persons or entities other than electric 
        utilities owning and operating a distributed electricity 
        generator, the documented expenditures of enabling that 
        generator to be monitored, controlled, or otherwise integrated 
        into grid operations and electricity flows on the grid 
        utilizing Smart Grid functions.
            (8) In the case of electric or hybrid-electric vehicles, 
        the documented expenses for devices that allow the vehicle to 
        engage in Smart Grid functions.
            (9) The documented expenditures related to purchasing and 
        implementing Smart Grid functions in such other cases as the 
        Secretary of Energy shall identify. In making such grants, the 
        Secretary shall seek to reward innovation and early adaptation, 
        even if success is not complete, rather than deployment of 
        proven and commercially viable technologies.
    (c) Investments Not Included.--Qualifying Smart Grid investments do 
not include any of the following:
            (1) Expenditures for electricity generation, transmission, 
        or distribution infrastructure or equipment not directly 
        related to enabling Smart Grid functions.
            (2) After the effective date of a standard under paragraph 
        (21) of section 111(d) of the Public Utility Regulatory 
        Policies Act of 1978 (relating to Smart Grid information), an 
        investment that is not in compliance with such standard.
            (3) After the development and publication by the Commission 
        of protocols and model standards for interoperability of smart 
        grid devices and technologies, an investment that fails to 
        incorporate any of such protocols or model standards.
            (4) Expenditures for physical interconnection of generators 
        or other devices to the grid except those that are directly 
        related to enabling Smart Grid functions.
            (5) Expenditures for ongoing salaries, benefits, or 
        personnel costs not incurred in the initial installation, 
        training, or start up of smart grid functions.
            (6) Expenditures for travel, lodging, meals or other 
        personal costs.
            (7) Ongoing or routine operation, billing, customer 
        relations, security, and maintenance expenditures.
            (8) Such other expenditures that the Secretary of Energy 
        determines not to be Qualifying Smart Grid Investments by 
        reason of the lack of the ability to perform smart grid 
        functions or lack of direct relationship to smart grid 
        functions.
    (d) Smart Grid Functions.--The term ``smart grid functions'' means 
any of the following:
            (1) The ability to develop, store, send and receive digital 
        information concerning electricity use, costs, prices, time of 
        use, nature of use, storage, or other information relevant to 
        device, grid, or utility operations, to or from or by means of 
        the electric utility system, through one or a combination of 
        devices and technologies.
            (2) The ability to develop, store, send and receive digital 
        information concerning electricity use, costs, prices, time or 
        use, nature of use, storage, or other information relevant to 
        device, grid, or utility operations to or from a computer or 
        other control device.
            (3) The ability to measure or monitor electricity use as a 
        function of time of day, power quality characteristics such as 
        voltage level, current, cycles per second, or source or type of 
        generation and to store, synthesize or report that information 
        by digital means.
            (4) The ability to sense and localize disruptions or 
        changes in power flows on the grid and communicate such 
        information instantaneously and automatically for purposes of 
        enabling automatic protective responses to sustain reliability 
        and security of grid operations.
            (5) The ability to detect, prevent, communicate with regard 
        to, respond to, or recover from system security threats, 
        including cyber-security threats and terrorism, using digital 
        information, media, and devices.
            (6) The ability of any appliance or machine to respond to 
        such signals, measurements, or communications automatically or 
        in a manner programmed by its owner or operator without 
        independent human intervention.
            (7) The ability to use digital information to operate 
        functionalities on the electric utility grid that were 
        previously electro-mechanical or manual.
            (8) The ability to use digital controls to manage and 
        modify electricity demand, enable congestion management, assist 
        in voltage control, provide operating reserves, and provide 
        frequency regulation.
            (9) Such other functions as the Secretary of Energy may 
        identify as being necessary or useful to the operation of a 
        Smart Grid.
    (e) Office.--The Secretary of Energy shall--
            (1) establish an Office to administer the Smart Grid 
        Investment Grant Program, assuring that expert resources from 
        the Commission on Grid Modernization, the Office of Energy 
        Distribution and Electricity Reliability, and the Office of 
        Energy Efficiency and Renewable Energy are fully available to 
        advise on its administration and actions;
            (2) appoint a Senior Executive Service officer to direct 
        the Office, together with such personnel as are required to 
        administer the Smart Grid Investment Grant program;
            (3) establish and publish in the Federal Register, within 
        180 days after the enactment of this Act procedures by which 
        applicants who have made qualifying Smart Grid investments can 
        seek and obtain reimbursement of one-fourth of their documented 
        expenditures;
            (4) establish procedures to assure that there is no 
        duplication or multiple reimbursement for the same investment 
        or costs, that the reimbursement goes to the party making the 
        actual expenditures for Qualifying Smart Grid Investments, and 
        that the grants made have significant effect in encouraging and 
        facilitating the development of a smart grid;
            (5) maintain public records of reimbursements made, 
        recipients, and qualifying Smart Grid investments which have 
        received reimbursements;
            (6) establish procedures to provide, in cases deemed by the 
        Secretary to be warranted, advance payment of moneys up to the 
        full amount of the projected eventual reimbursement, to 
        creditworthy applicants whose ability to make Qualifying Smart 
        Grid Investments may be hindered by lack of initial capital, in 
        lieu of any later reimbursement for which that applicant 
        qualifies, and subject to full return of the advance payment in 
        the event that the Qualifying Smart Grid investment is not 
        made;
            (7) establish procedures to provide, in the event 
        appropriated moneys in any year are insufficient to provide 
        reimbursements for qualifying Smart Grid investments, that such 
        reimbursement would be made in the next fiscal year or whenever 
        funds are again sufficient, with the condition that the 
        insufficiency of funds to reimburse Qualifying Smart Grid 
        Investments from moneys appropriated for that purpose does not 
        create a Federal obligation to that applicant; and
            (8) have and exercise the discretion to deny grants for 
        investments that do not qualify in the reasonable judgement of 
        the Secretary.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Energy the sums of--
            (1) $10,000,000 for each of fiscal years 2008 through 2012 
        to provide for administration of the Smart Grid Investment 
        Matching Fund; and
            (2) $250,000,000 for fiscal year 2008 and $500,000,000 for 
        each of fiscal years 2009 through 2012 to provide 
        reimbursements of one-fourth of Qualifying Smart Grid 
        Investments.

SEC. 105. SMART GRID TECHNOLOGY DEPLOYMENT.

    (a) Power Grid Digital Information Technology.--The Secretary of 
Energy shall conduct programs to--
            (1) deploy advanced techniques for measuring peak load 
        reductions and energy efficiency savings on customer premises 
        from smart metering, demand response, distributed generation 
        and electricity storage systems;
            (2) implement means for demand response, distributed 
        generation, and storage to provide ancillary services;
            (3) advance the use of wide-area measurement networks 
        including data mining, visualization, advanced computing, and 
        secure and dependable communications in a highly distributed 
        environment; and
            (4) implement reliability technologies in a grid control 
        room environment against a representative set of local outage 
        and wide area blackout scenarios.
    (b) Smart Grid Regional Demonstration Program.--
            (1) Establishment of program.--The Secretary of Energy 
        shall establish a program of demonstration projects 
        specifically focused on advanced technologies for power grid 
        sensing, communications, analysis, and power flow control, 
        including the integration of demand-side resources into grid 
        management. The goals of this program shall be to--
                    (A) demonstrate the potential benefits of 
                concentrated investments in advanced grid technologies 
                on a regional grid;
                    (B) facilitate the commercial transition from the 
                current power transmission and distribution system 
                technologies to advanced technologies; and
                    (C) facilitate the integration of advanced 
                technologies in existing electric networks to improve 
                system performance, power flow control and reliability.
            (2) Demonstration projects.--The Secretary shall establish 
        Smart Grid demonstration projects for not more than 5 electric 
        utility systems of various types and sizes under this 
        subsection. Such demonstration projects shall be undertaken in 
        cooperation with the electric utility. Under such demonstration 
        projects, financial assistance shall be available to cover not 
        more than one-half of the qualifying Smart Grid technology 
        investments made by the electric utility. Any project receiving 
        financial assistance under this section shall not be eligible 
        to receive financial assistance (including loan guarantees) 
        under any other Federal program.
    (c) Authorization.--
            (1) Power grid digital information technology programs.--
        There are authorized to be appropriated to carry out subsection 
        (a) such sums as are necessary for each of the fiscal years 
        2008 through 2012.
            (2) Smart grid regional demonstration program.--There is 
        authorized to be appropriated to carry out subsection (b) 
        $20,000,000 for each of the fiscal years 2008 through 2012.

SEC. 106. SMART GRID INFORMATION REQUIREMENTS.

    (a) Findings.--Congress finds that Smart Grid technologies will 
require, for their optimum use by electricity consumers, that such 
consumers have access to information on prices, use, and other factors 
in possession of their utilities or electricity suppliers, in order to 
assist the customers in optimizing their electricity use and limiting 
the associated environmental impacts.
    (b) Development of Rules.--The Commission on Grid Modernization 
shall within one year of its initial meeting develop and declare a 
standard for the collection, presentation and delivery of information 
to electricity purchasers as required by the standard under section 
111(d)(21) of the Public Utility Regulatory Policies Act of 1978. Such 
standard shall provide purchasers with different access options for 
such information. Such standard shall be developed with input from the 
Secretary of Energy, the Federal Energy Regulatory Commission, the 
Administrator of the Environmental Protection Agency, States, and 
stakeholders representing, but not limited to, electric utilities, 
energy efficiency and demand response experts, environmental 
organizations and consumer organizations.
    (c) Application of Smart Grid Information Standard to Federal 
Entities and Wholesale Markets.--Within 60 days of the declaration of 
the standard under subsection (b), the Federal Energy Regulatory 
Commission shall propose a rule under which all public utilities, with 
respect to federally jurisdictional sales for resale of electricity in 
interstate commerce, and all approved regional transmission 
organizations subject to its jurisdiction, will implement those 
elements of the Smart Grid information standard developed pursuant to 
this section that the Commission determines to be relevant and to add 
value for purchasers of wholesale power or those utilizing interstate 
transmission. The Tennessee Valley Authority, Bonneville Power 
Administration, and Federal power administrations shall, within 90 days 
of the adoption of a final rule by the Commission, adopt it for their 
own sales or transmission of electricity.

SEC. 107. STATE CONSIDERATION OF INCENTIVES FOR SMART GRID.

    (a) Consideration of Additional 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:
            ``(18) Utility investment in smart grid investments.--Each 
        electric utility shall prior to undertaking investments in non-
        advanced grid technologies demonstrate that alternative 
        investments in advanced grid technologies have been considered, 
        including from a standpoint of cost-effectiveness, where such 
        cost-effectiveness considers costs and benefits on a life-cycle 
        basis.
            ``(19) Utility cost of smart grid investments.--Each 
        electric utility shall be permitted to--
                    ``(A) recover from ratepayers the capital and 
                operating expenditures and other costs of the utility 
                for qualified smart grid system, including a reasonable 
                rate of return on the capital expenditures of the 
                utility for a qualified smart grid system, and
                    ``(B) recover in a timely manner the remaining 
                book-value costs of equipment rendered obsolete by the 
                deployment of a qualified smart grid system, based on 
                the remaining depreciable life of the obsolete 
                equipment.
            ``(20) Rate design modifications to promote energy 
        efficiency investments.--
                    ``(A) In general.--The rates allowed to be charged 
                by any electric utility shall--
                            ``(i) align utility incentives with the 
                        delivery of cost-effective energy efficiency; 
                        and
                            ``(ii) promote energy efficiency 
                        investments.
                    ``(B) Policy options.--In complying with 
                subparagraph (A), each State regulatory authority and 
                each nonregulated utility shall consider--
                            ``(i) removing the throughput incentive and 
                        other regulatory and management disincentives 
                        to energy efficiency;
                            ``(ii) providing utility incentives for the 
                        successful management of energy efficiency 
                        programs;
                            ``(iii) including the impact on adoption of 
                        energy efficiency as 1 of the goals of retail 
                        rate design, recognizing that energy efficiency 
                        must be balanced with other objectives;
                            ``(iv) adopting rate designs that encourage 
                        energy efficiency for each customer class; and
                            ``(v) allowing timely recovery of energy 
                        efficiency-related costs.
            ``(21) Smart grid information.--
                    ``(A) Standard.--All electricity purchasers shall 
                be provided direct access, both in written and 
                electronic machine-readable form, to information from 
                their electricity provider as provided in subparagraph 
                (B).
                    ``(B) Information.--Information provided under this 
                section shall conform to the standardized rules issued 
                by the Commission on Grid Modernization under section 
                106(b) of the Smart Grid Facilitation Act of 2007 and 
                shall include:
                            ``(i) Prices.--Purchasers and other 
                        interested persons shall be provided with 
                        information on--
                                    ``(I) time-based electricity prices 
                                in the wholesale electricity market; 
                                and
                                    ``(II) time-based electricity 
                                retail prices or rates that are 
                                available to the purchasers.
                            ``(ii) Usage.--Purchasers shall be provided 
                        with the number of electricity units, expressed 
                        in kwh, purchased by them
                            ``(iii) Intervals and projections.--Updates 
                        of information on prices and usage shall be 
                        offered on not less than a daily basis, shall 
                        include hourly price and use information, where 
                        available, and shall include a day-ahead 
                        projection of such price information to the 
                        extent available.
                            ``(iv) Sources.--Purchasers and other 
                        interested person shall be provided with 
                        written information on the sources of the power 
                        provided by the utility, to the extent it can 
                        be determined, by type of generation, including 
                        greenhouse gas emissions and criteria 
                        pollutants associated each type of generation, 
                        for intervals during which such information is 
                        available on a cost-effective basis, but not 
                        less than monthly.
                    ``(C) Access.--Purchasers shall be able to access 
                their own information at any time through the internet 
                and on other means of communication elected by that 
                utility for Smart Grid applications. Other interested 
                persons shall be able to access information not 
                specific to any purchaser through the Internet. 
                Information specific to any purchaser shall be provided 
                solely to that purchaser.''.
    (b) Reconsideration of Certain Standards.--Section 112 of the 
Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2622) is 
amended by adding the following at the end thereof:
    ``(g) Reconsideration of Prior Time-of-Day and Communication 
Standards.--Not later than 1 year after the enactment of this 
subsection, each State regulatory authority (with respect to each 
electric utility for which it has ratemaking authority) and each 
nonregulated utility shall commence a reconsideration under section 
111, or set a hearing date for reconsideration, with respect to the 
standards established by paragraphs (3) and (14) of section 111(d) to 
take into account Smart Grid technologies. Not later than 2 years after 
the date of the enactment of this subsection, each State regulatory 
authority (with respect to each electric utility for which it has 
ratemaking authority), and each nonregulated electric utility, shall 
complete the reconsideration, and shall make the determination, 
referred to in section 111 with respect to the standards established by 
paragraphs (3) and (14) of section 111(d).''.
    (c) 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 the following at the end thereof:
            ``(6)(A) Not later than 1 year after the enactment of this 
        paragraph, but not less than 3 years after the conclusion of 
        any prior review of such standards, each State regulatory 
        authority (with respect to each electric utility for which it 
        has ratemaking authority) and each nonregulated utility shall 
        commence the consideration referred to in section 111, or set a 
        hearing date for consideration, with respect to the standards 
        established by paragraphs (18) through (20) of section 111(d). 
        Not later than 6 months after the promulgation of rules by the 
        Commission on Grid Modernization under section 106(b) of the 
        Smart Grid Facilitation Act of 2007, each State regulatory 
        authority (with respect to each electric utility for which it 
        has ratemaking authority) and each nonregulated utility shall 
        commence the consideration referred to in section 111, or set a 
        hearing date for consideration, with respect to the standard 
        established by paragraph (21) of section 111(d).
            ``(B) Not later than 2 years after the date of the 
        enactment of the this paragraph, but not less than 4 years 
        after the conclusion of any prior review of such standard, each 
        State regulatory authority (with respect to each electric 
        utility for which it has ratemaking authority), and each 
        nonregulated electric utility, shall complete the 
        consideration, and shall make the determination, referred to in 
        section 111 with respect to each standard established by 
        paragraphs (18) through (20) of section 111(d). Not later than 
        18 months after the promulgation of rules by the Commission on 
        Grid Modernization under section 106(b) of the Smart Grid 
        Facilitation Act of 2007 each State regulatory authority (with 
        respect to each electric utility for which it has ratemaking 
        authority), and each nonregulated electric utility, shall 
        complete the consideration, and shall make the determination, 
        referred to in section 111 with respect to each standard 
        established by paragraph (21) of section 111(d).''.
            (2) Failure to comply.--Section 112(c) of such Act is 
        amended by adding the following at the end: ``In the case of 
        the standards established by paragraphs (18) through (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 such paragraphs.''.
            (3) Prior state actions.--Section 112(d) of such Act is 
        amended by inserting ``and paragraphs (18) through (20)'' 
        before ``of such 111(d)''.

SEC. 108. DOE STUDY OF SECURITY ATTRIBUTES OF SMART GRID SYSTEMS.

    (a) DOE Study.--The Secretary of Energy shall, within 6 months 
after the Grid Modernization Commission completes its first biennial 
assessment and report under section 103 of the Smart Grid Facilitation 
Act of 2007, submit a report to Congress that provides a quantitative 
assessment and determination of the existing and potential impacts of 
the deployment of Smart Grid systems on improving the security of the 
Nation's electricity infrastructure and operating capability. The 
report shall include but not be limited to specific recommendations on 
each of the following:
            (1) How smart grid systems can help in making the Nation's 
        electricity system less vulnerable to disruptions due to 
        intentional acts against the system.
            (2) How smart grid systems can help in restoring the 
        integrity of the Nation's electricity system subsequent to 
        disruptions.
            (3) How smart grid systems can facilitate emergency 
        communications and control of the Nation's electricity system 
        during times of localized or nationwide emergency.
    (b) Consultation.--The Secretary shall consult with other Federal 
agencies in the development of the report under this section, including 
but not limited to the Secretary of Homeland Security, the Federal 
Energy Regulatory Commission and the Electric Reliability Organization 
certified by the Commission under section 215(c) of the Federal Power 
Act (16 U.S.C. 824 o) as added by section 1211 of the Energy Policy Act 
of 2005 (Public Law 109-58; 119 Stat. 941)
    (c) Funding.--The Secretary shall fund demonstration projects for 
the purpose of demonstrating the findings of the report under this 
section. Not more than $10,000,000 are authorized to be appropriated 
for such projects.

                      Subtitle B--Demand Response

SEC. 111. ELECTRICITY SECTOR DEMAND RESPONSE.

    (a) Amendment of NECPA.--Title V of the National Energy 
Conservation Policy Act (42 U.S.C. 8201 and following) is amended by 
adding the following new part at the end thereof:

                    ``PART 5--PEAK DEMAND REDUCTION

``SEC. 571. DEFINITIONS.

    ``(a) Secretary.--As used in this part, the term `Secretary' means 
the Secretary of Energy.
    ``(b) Federal Agency.--As used in this part, the term `Federal 
agency' has the same meaning as provided by section 551 of this Act.

``SEC. 572. FEDERAL ELECTRICITY PEAK DEMAND REDUCTION STANDARD.

    ``(a) 2008 Agency Annual Energy Plan.--Each Federal agency shall 
prepare, and include in its annual report under section 548(a) of this 
Act, each of the following:
            ``(1) A determination of the agency's aggregate electricity 
        demand during the system peak hours for the utilities providing 
        electricity service to its facilities during 2006 and 2007.
            ``(2) A forecast for each year through 2018 of the 
        projected growth in such peak demand in light of projected 
        growth of facilities, staff, activities, electric intensity of 
        activities, and other relevant factors.
    ``(b) Federal Electricity Peak Demand Reduction Standard.--
            ``(1) In general.--Except as provided in paragraph (2), for 
        calendar year 2009 and each calendar year thereafter, each 
        Federal agency shall reduce its aggregate peak electricity 
        demand or make such amounts of electricity demand available in 
        the form of demand response, by the percentage amount specified 
        in the Federal Electricity Peak Demand Reduction Standard set 
        forth in the following table:


          ``Federal Electricity Peak Demand Reduction Standard
------------------------------------------------------------------------
        Calendar Year              Reduction of Peak Demand Forecast
------------------------------------------------------------------------
2009.........................   2 percent of the peak demand forecast
                                for calendar year 2009
2010.........................   4 percent of the peak demand forecast
                                for calendar year 2010
2011.........................   6 percent of the peak demand forecast
                                for calendar year 2011
2012.........................   8 percent of the peak demand forecast
                                for calendar year 2012
2013.........................   10 percent of the peak demand forecast
                                for calendar year 2013
2014.........................   12 percent of the peak demand forecast
                                for calendar year 2014
2015.........................  14 percent of the peak demand forecast
                                for calendar year 2015
2016.........................  16 percent of the peak demand forecast
                                for calendar year 2016
2017.........................  18 percent of the peak demand forecast
                                for calendar year 2017
2018 and each calendar year    20 percent of the peak demand forecast
 thereafter.                    for the applicable calendar year
------------------------------------------------------------------------

        In the table above, the term `forecast' refers to the forecast 
        set forth in the 2008 report under section 548(a) of this Act 
        as updated in accordance with subsection in (c)(1)(C).
            ``(2) Exception.--The standard under this subsection shall 
        not apply to any activity of a Federal agency relating to 
        defense or national security if compliance with the standard 
        would have an adverse mission impact on the activity, as 
        determined by the Secretary of Defense or the Secretary of 
        Homeland Security.
    ``(c) Implementation of Standard.--
            ``(1) In general.--Not later than January 1, 2010, and each 
        calendar year thereafter, each Federal agency shall include in 
        the annual energy plan of the Federal agency each of the 
        following:
                    ``(A) An assessment of whether the Federal agency 
                was in compliance with the standard under subsection 
                (b) for the preceding year.
                    ``(B) A description of--
                            ``(i) the method by which the Federal 
                        agency proposes to comply with the standard for 
                        the following calendar year;
                            ``(ii) the factors relied on by the head of 
                        the Federal agency in determining whether to 
                        participate in demand response programs offered 
                        by an electric utility or others during the 
                        preceding calendar year; and
                            ``(iii) if the Federal agency did not 
                        participate in a demand response program 
                        offered by each utility providing electric 
                        service to facilities of the agency during the 
                        preceding calendar year, an explanation for the 
                        decision by the head of the Federal agency to 
                        not participate.
                    ``(C) An update of the agency's prior forecast for 
                the remaining years in the period until 2018.
            ``(2) Availability to public.--Not later than January 1, 
        2010, and each calendar year thereafter, the head of each 
        Federal agency shall make available to the public a description 
        of each provision included in the annual energy plan of the 
        Federal agency described in subparagraphs (A) through (C) of 
        paragraph (1).
    ``(d) Modifications to Federal Energy Management Program.--The 
Secretary shall make any modification to the Federal Energy Management 
Program of the Department of Energy that the Secretary determines to be 
necessary to--
            ``(1) incorporate the standard established under subsection 
        (b) into the Federal Energy Management Program;
            ``(2) assist any Federal agency to comply with the standard 
        established under subsection (b) through any appropriate means, 
        including conducting 1 or more demonstration projects at 
        Federal facilities.
    ``(e) Annual Report.--Not later than March 1, 2010, and annually 
thereafter, the Secretary shall submit to Congress a report that 
evaluates the success of agencies in meeting the standard established 
under subsection (b) and the success of the Federal Energy Management 
Program in assisting agencies with meeting the standard, and the costs 
and benefits of such participation.

``SEC. 573. NATIONAL ACTION PLAN FOR DEMAND RESPONSE.

    ``(a) National Assessment and Report.--The Grid Modernization 
Commission established under subtitle A of the Smart Grid Facilitation 
Act of 2007 shall conduct a National Assessment of Demand Response. The 
Commission shall, within 18 months of the date on which the full 
Commission first meets, submit a Report to Congress that includes each 
of the following:
            ``(1) Estimation of nationwide demand response potential in 
        5 and 10 year horizons, including data on a State-by-State 
        basis, and a methodology for updates of such estimates on an 
        annual basis.
            ``(2) Estimation of how much of this potential can be 
        achieved within 5 and 10 years after the enactment of this Act 
        accompanied by specific policy recommendations that if 
        implemented can achieve the estimated potential. Such 
        recommendations shall include options for funding and/or 
        incentives for the development of demand response resources. 
        The Commission shall seek to take advantage of preexisting 
        research and ongoing work, and shall assume that there is no 
        duplication of effort. The Commission shall further note any 
        barriers to demand response programs that are flexible , non-
        discriminatory, and fairly compensatory for the services and 
        benefits made available and shall provide recommendations for 
        overcoming such barriers.
    ``(b) National Action Plan on Demand Response.--The Grid 
Modernization Commission shall further develop and implement a National 
Action Plan on Demand Response. Such Plan shall be completed within one 
year after the completion of the National Assessment of Demand 
Response, and shall meet each of the following objectives:
            ``(1) Provision of adequate technical assistance to States 
        to allow them to maximize the amount of demand response 
        resources that can be developed and deployed.
            ``(2) Implementation of a national communications program 
        that includes broad-based customer education and support.
            ``(3) Development and dissemination of tools, information 
        and other support mechanisms for use by customers, states, 
        utilities and demand response providers.
    ``(c) Authorization.--There are authorized to be appropriated to 
carry out this section not more than $10,000,000 for each of the fiscal 
years 2008 and 2009 and $20,000,000 for each of the fiscal years 2010 
through 2020.

``SEC. 574. REPORT ON ENVIRONMENTAL ATTRIBUTES AND IMPACTS OF DEMAND 
              RESPONSE AND SMART GRID SYSTEMS.

    ``(a) Report.--The Administrator of the Environmental Protection 
Agency shall solicit public input and, within 6 months after completion 
of the National Assessment of Demand Response required by section 573, 
submit a report to Congress that addresses each of the following:
            ``(1) A quantitative assessment and determination of the 
        existing and potential impacts of demand response and `smart 
        grid' systems on air emissions and air quality, including but 
        not limited to carbon dioxide, oxides of nitrogen and oxides of 
        sulfur.
            ``(2) An assessment and determination of the existing and 
        potential impacts of demand response and `smart grid' systems 
        on environmental parameters other than emissions and air 
        quality, including but not limited to:
                    ``(A) Land use.
                    ``(B) Water use.
                    ``(C) Use of renewable energy.
                    ``(D) Effect on energy sources other than 
                electricity.
            ``(3) A detailed plan for how Energy Efficiency and Clean 
        Energy programs administered by the Agency, including the 
        Energy Star Program, will incorporate and encourage end-use 
        efficiency, demand response and `smart grid' systems and 
        technologies, including but not limited to each of the 
        following:
                    ``(A) Requirements that appliances and other 
                equipment are capable of manually and automatically 
                receiving and acting upon pricing and control 
                information and or instructions provided by the 
                customer, a load serving entity or a third-party 
                designated by the customer.
                    ``(B) Requirements for time-based valuation of 
                kilowatt hour reductions in planning and evaluation of 
                energy efficiency programs.
                    ``(C) Education and communication, including to 
                state energy officials and state regulators, that build 
                awareness of demand response and smart grid systems and 
                technologies and their existing and potential 
                relationship to such Agency programs.
    ``(b) Funding.--There are authorized to be appropriated to carry 
out this section for fiscal year 2010, to remain available until 
expended.''.
    (b) Table of Contents.--The table of contents for such Act is 
amended by adding the following after the items relating to part 4 of 
title V:

                    ``Part 5--Peak Demand Reduction

``Sec. 571. Definitions.
``Sec. 572. Federal Electricity Peak Demand Reduction Standard.
``Sec. 573. National action plan for demand response.
``Sec. 574. Study of environmental attributes and impacts of demand 
                            response and smart grid systems.''.
                                                 Union Calendar No. 192

110th CONGRESS

  1st Session

                               H. R. 3237

                      [Report No. 110-305, Part I]

_______________________________________________________________________

                                 A BILL

       To facilitate the transition to a smart electricity grid.

_______________________________________________________________________

                             August 3, 2007

   Committee on Science and Technology discharged; committed to the 
 Committee of the Whole House on the State of the Union and ordered to 
                               be printed