[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 989 Introduced in Senate (IS)]

111th CONGRESS
  1st Session
                                 S. 989

To amend the Public Utility Regulatory Policies Act of 1978 to promote 
     energy independence, increase competition, democratize energy 
 generation, and provide for the connection of certain small electric 
           energy generation systems, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 6, 2009

 Mr. Menendez (for himself, Mr. Lieberman, and Mr. Sanders) introduced 
the following bill; which was read twice and referred to the Committee 
                    on Energy and Natural Resources

_______________________________________________________________________

                                 A BILL


 
To amend the Public Utility Regulatory Policies Act of 1978 to promote 
     energy independence, increase competition, democratize energy 
 generation, and provide for the connection of certain small electric 
           energy generation systems, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Grid Access Act of 2009''.

SEC. 2. DEFINITION OF COMBINED HEAT AND POWER FACILITY.

    Section 3 of the Public Utility Regulatory Policies Act of 1978 (16 
U.S.C. 2602) is amended by adding at the end the following:
            ``(22) Combined heat and power facility.--
                    ``(A) In general.--The term `combined heat and 
                power facility' means a facility that--
                            ``(i) uses the same energy source for the 
                        simultaneous or sequential generation of 
                        electrical power or 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) has--
                                    ``(I) an electrical capacity of not 
                                more than 10 megawatts;
                                    ``(II) a mechanical energy capacity 
                                of not more than 7,000 horsepower; or
                                    ``(III) an equivalent combination 
                                of electrical and mechanical energy 
                                capacities;
                            ``(iii) produces at least 20 percent of the 
                        total useful energy of the facility in the form 
                        of thermal energy that is not used to produce 
                        electrical or mechanical power, or both; and
                            ``(iv) achieves an energy efficiency of not 
                        less than 60 percent.
                    ``(B) Inclusions.--The term `combined heat and 
                power facility' includes--
                            ``(i) a recovered waste energy system that 
                        produces electricity from--
                                    ``(I) exhaust heat or flared gas 
                                from any industrial process;
                                    ``(II) waste gas or industrial tail 
                                gas that would otherwise be flared, 
                                incinerated, or vented; or
                                    ``(III) a pressure drop in any gas, 
                                other than any pressure drop to a 
                                condenser that subsequently vents the 
                                resulting heat; and
                            ``(ii) a facility that produces electricity 
                        from such other forms of waste energy, as are 
                        determined by the Secretary.''.

SEC. 3. NET METERING AND INTERCONNECTION STANDARDS.

    (a) In General.--Section 113 of the Public Utility Regulatory 
Policies Act of 1978 (16 U.S.C. 2623) is amended by adding at the end 
the following:
    ``(d) Net Metering.--
            ``(1) Definitions.--In this subsection and subsection (e):
                    ``(A) Customer-generator.--The term `customer-
                generator' means the owner or operator of a qualified 
                generation unit.
                    ``(B) Electric generation unit.--The term `electric 
                generation unit' means--
                            ``(i) a qualified generation unit; and
                            ``(ii) any electric generation unit that 
                        qualifies for net metering under a net metering 
                        tariff or rule approved by a State.
                    ``(C) Local distribution system.--The term `local 
                distribution system' means any system for the 
                distribution of electric energy to the ultimate 
                consumer of the electricity, whether or not the owner 
                or operator of the system is a retail electric 
                supplier.
                    ``(D) Net metering.--The term `net metering' means 
                the process of--
                            ``(i) measuring the difference between the 
                        electricity supplied to a customer-generator 
                        and the electricity generated by the customer-
                        generator that is delivered to a local 
                        distribution system at the same point of 
                        interconnection during an applicable billing 
                        period; and
                            ``(ii) providing an energy credit to the 
                        customer-generator based on the electricity 
                        produced by the customer-generator from a 
                        qualified generation unit.
                    ``(E) Qualified generation unit.--The term 
                `qualified generation unit' means an electric energy 
                generation unit that--
                            ``(i) is a fuel cell or microturbine or 
                        uses as the energy source of the unit solar 
                        energy, wind, biomass, geothermal energy, 
                        anaerobic digestion, or landfill gas, or a 
                        combination of the any of those sources;
                            ``(ii) has a generating capacity of not 
                        more than 10 megawatts;
                            ``(iii) is located on premises that are 
                        owned, operated, leased, or otherwise 
                        controlled by the customer-generator; and
                            ``(iv) is intended to offset all or part of 
                        the requirements of the customer-generator for 
                        electric energy.
                    ``(F) Retail electric supplier.--The term `retail 
                electric supplier' means any electric utility that 
                sells electric energy to the ultimate consumer of the 
                energy.
            ``(2) Adoption.--Not later than 1 year after the date of 
        enactment of this subsection, each State regulatory authority 
        (with respect to each electric utility for which the State 
        regulatory authority has ratemaking authority), and each 
        nonregulated electric utility, shall--
                    ``(A) provide public notice and conduct a hearing 
                with respect to the standards established under 
                paragraph (3); and
                    ``(B) on the basis of the hearing, adopt the net 
                metering standard.
            ``(3) Establishment of net metering standard.--
                    ``(A) In general.--Each retail electric supplier 
                shall offer to arrange (either directly or through a 
                local distribution company or other third party) to 
                make net metering available, on a first-come, first-
                served basis, to each of the retail customers of the 
                retail electric supplier in accordance with the 
                requirements described in subparagraph (B) and other 
                provisions of this subsection.
                    ``(B) Requirements.--The requirements referred to 
                in subparagraph (A) are, with respect to a retail 
                electric supplier, that--
                            ``(i) rates and charges and contract terms 
                        and conditions for the sale of electric energy 
                        to customer-generators shall be the same as the 
                        rates and charges and contract terms and 
                        conditions that would be applicable if the 
                        customer-generator did not own or operate a 
                        qualified generation unit and use a net 
                        metering system; and
                            ``(ii) each retail electric supplier shall 
                        notify all of the retail customers of the 
                        retail electric supplier of the standard 
                        established under this paragraph as soon as 
                        practicable after the adoption of the standard.
                    ``(C) Modifications.--Nothing in this subsection 
                prevents a retail electric supplier from petitioning 
                the Commission for modifications to a standard 
                established under this subsection to ensure that the 
                equipment, services, and system of the supplier 
                function in a safe and efficient manner.
            ``(4) Net energy measurement.--
                    ``(A) In general.--Each retail electric supplier 
                shall arrange to provide to customer-generators who 
                qualify for net metering under subsection (b) an 
                electrical energy meter capable of net metering and 
                measuring, to the maximum extent practicable, the flow 
                of electricity to or from the customer, using a single 
                meter and single register.
                    ``(B) Impracticability.--In a case in which it is 
                not practicable to provide a meter to a customer-
                generator under subparagraph (A), a retail electric 
                supplier (either directly or through a local 
                distribution company or other third party) shall, at 
                the expense of the retail electric supplier, install 1 
                or more of those electric energy meters for the 
                customer-generators concerned that accomplishes what 
                the single meter described in subparagraph (A) would 
                accomplish.
            ``(5) Billing.--
                    ``(A) In general.--Each retail electric supplier 
                subject to subsection (b) shall calculate the electric 
                energy consumption for a customer using a net metering 
                system in accordance with subparagraphs (B) through 
                (D).
                    ``(B) Measurement of electricity.--The retail 
                electric supplier shall measure the net electricity 
                produced or consumed during the billing period using 
                the metering installed in accordance with paragraph 
                (4).
                    ``(C) Billing and crediting.--
                            ``(i) Billing.--If the electricity supplied 
                        by the retail electric supplier exceeds the 
                        electricity generated by the customer-generator 
                        during the billing period, the customer-
                        generator shall be billed for the net electric 
                        energy supplied by the retail electric supplier 
                        in accordance with normal billing practices.
                            ``(ii) Crediting.--
                                    ``(I) In general.--If electric 
                                energy generated by the customer-
                                generator exceeds the electric energy 
                                supplied by the retail electric 
                                supplier during the billing period, the 
                                customer-generator shall be billed for 
                                the appropriate customer charges for 
                                that billing period and credited for 
                                the excess electric energy generated 
                                during the billing period, with the 
                                credit appearing as a kilowatt-hour 
                                credit on the bill for the following 
                                billing period.
                                    ``(II) Application of credits.--Any 
                                kilowatt-hour credits provided to a 
                                customer-generator under this clause 
                                shall be applied to customer-generator 
                                electric energy consumption on the 
                                following billing period bill (except 
                                for a billing period that ends in the 
                                next calendar year).
                                    ``(III) Carryover of unused 
                                credits.--Not later than 180 days after 
                                the date of enactment of this 
                                subsection, the Commission shall 
                                promulgate a rule establishing 
                                procedures for carrying over unused 
                                credits from the preceding year.
                    ``(D) Use of time-differentiated rates.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), if a customer-generator is using a 
                        meter and retail billing arrangement that has 
                        time-differentiated rates--
                                    ``(I) the kilowatt-hour credit 
                                shall be based on the ratio 
                                representing the difference in retail 
                                rates for each time-of-use rate; or
                                    ``(II) the credits shall be 
                                reflected on the bill of the customer-
                                generator as a monetary credit 
                                reflecting retail rates at the time of 
                                generation of the electric energy by 
                                the customer-generator.
                            ``(ii) Different tariffs or services.--A 
                        retail electric supplier shall offer a 
                        customer-generator the choice of a time-
                        differentiated energy tariff rate or a nontime-
                        differentiated energy tariff rate, if the 
                        retail electric supplier offers the choice to 
                        customers in the same rate class as the 
                        customer-generator.
            ``(6) Percent limitation.--
                    ``(A) In general.--The standard established under 
                this subsection shall not apply for a calendar year in 
                the case of a customer-generator served by a local 
                distribution company if the total generating capacity 
                of all customer-generators with net metering systems 
                served by the local distribution company in the 
                calendar year is equal to or more than 4 percent of the 
                capacity necessary to meet the average forecasted 
                aggregate customer peak demand of the company for the 
                calendar year.
                    ``(B) Records and notice.--
                            ``(i) Records.--Each retail electric 
                        supplier shall maintain, and make available to 
                        the public, records of--
                                    ``(I) the total generating capacity 
                                of customer-generators of the system of 
                                the retail electric supplier that are 
                                using net metering; and
                                    ``(II) the type of generating 
                                systems and energy source used by the 
                                electric generating systems used by the 
                                customer-generators.
                            ``(ii) Notice.--Each such retail electric 
                        supplier shall notify the State regulatory 
                        authority and the Commission at each time at 
                        which the total generating capacity of the 
                        customer-generators of the retail electric 
                        supplier reaches a level that equals or 
                        exceeds--
                                    ``(I) 75 percent of the limitation 
                                specified in subparagraph (A); or
                                    ``(II) the limitation specified in 
                                subparagraph (A).
            ``(7) Ownership of credits.--
                    ``(A) In general.--For purposes of Federal and 
                State laws providing renewable energy credits or 
                greenhouse gas credits, a customer-generator with a 
                qualified generation unit and net metering shall be 
                treated as owning and having title to the renewable 
                energy attributes, renewable energy credits and 
                greenhouse gas emission credits relating to any 
                electricity produced by the qualified generation unit.
                    ``(B) Retail electric suppliers.--No retail 
                electric supplier shall claim title to or ownership of 
                any renewable energy attributes, renewable energy 
                credits, or greenhouse gas emission credits of a 
                customer-generator as a result of interconnecting the 
                customer-generator or providing or offering the 
                customer-generator net metering.
            ``(8) Safety and performance standards.--
                    ``(A) In general.--A qualified generation unit and 
                net metering system used by a customer-generator shall 
                meet all applicable safety and performance and 
                reliability standards established under the 
                interconnection standards required under subsection 
                (e).
                    ``(B) Additional charges.--After consultation with 
                State regulatory authorities and nonregulated local 
                distribution systems and notice and opportunity for 
                comment, the Commission shall prohibit by regulation 
                the imposition of additional charges by retail electric 
                suppliers and local distribution systems for equipment 
                or services for safety or performance that are in 
                addition to the charges required under subsection (e).
            ``(9) Determination of compliance.--
                    ``(A) In general.--Any State regulatory authority 
                (with respect to each electric utility for which the 
                authority has ratemaking authority), and each 
                nonregulated electric utility, may apply to the 
                Commission for a determination that any State net 
                metering requirement or regulations complies with this 
                subsection.
                    ``(B) Orders.--In the absence of a determination 
                under subparagraph (A), the Commission, on the motion 
                of the Commission or pursuant to the petition of any 
                interested person, may, after notice and opportunity 
                for a hearing on the record, issue an order requiring 
                against any retail electric supplier or local 
                distribution company to require compliance with this 
                subsection.
    ``(e) Interconnection Standards.--
            ``(1) Model standards.--
                    ``(A) In general.--Not later than 1 year after the 
                date of enactment of this subsection, the Commission 
                shall publish model standards for the physical 
                connection between local distribution systems and 
                qualified generation units and electric generation 
                units that are--
                            ``(i) qualified generation units (as 
                        defined in subsection (d)(1)(E) (other than 
                        clause (ii) of subsection (d)(1)(E))); or
                            ``(ii) combined heat and power facilities.
                    ``(B) Purposes.--The model standards shall be 
                designed to--
                            ``(i) encourage the use of qualified 
                        generation units and combined heat and power 
                        facilities; and
                            ``(ii) ensure the safety and reliability of 
                        the qualified generation units and the local 
                        distribution systems interconnected with the 
                        qualified generation units.
                    ``(C) Expedited procedures.--
                            ``(i) In general.--The model standards 
                        shall have separate expedited procedures, 
                        including--
                                    ``(I) a standard for 
                                interconnecting qualified generation 
                                units, and combined heat and power 
                                facilities, of not more than 15 
                                kilowatts;
                                    ``(II) a separate standard that 
                                expedites interconnection for qualified 
                                generation units, and combined heat and 
                                power facilities, of more than 15 
                                kilowatts but not more than 10 
                                megawatts; and
                                    ``(III) a separate standard that 
                                expedites interconnection for qualified 
                                generation units, and combined heat and 
                                power facilities, of more than 15 
                                kilowatts but not more than 10 
                                megawatts that do not export energy 
                                past the point of interconnection.
                            ``(ii) Best practices.--The expedited 
                        procedures shall be based on the best practices 
                        that have been used in States that have adopted 
                        interconnection standards.
                            ``(iii) Model rule.--
                                    ``(I) In general.--In designing the 
                                expedited procedures, the Commission 
                                shall consider Interstate Renewable 
                                Energy Council Model Rule MR-I2005.
                                    ``(II) Other generators.--Nothing 
                                in this subsection precludes the 
                                Commission from adopting or enforcing 
                                interconnection requirements for 
                                generators that are not qualified 
                                generation units.
                    ``(D) Adoption of standards.--
                            ``(i) In general.--Not later than 2 years 
                        after the date of enactment of this subsection, 
                        each State shall--
                                    ``(I) adopt the model standards 
                                established under this paragraph, with 
                                or without modification; and
                                    ``(II) submit the standards to the 
                                Commission for approval.
                            ``(ii) Approval of modification.--The 
                        Commission shall approve a modification of the 
                        model standards only if the Commission 
                        determines that the modification is--
                                    ``(I) consistent with or superior 
                                to the purpose of the standards; and
                                    ``(II) required by reason of local 
                                conditions.
                    ``(E) Nonapproval of standards for a state.--If 
                standards have not been approved under this paragraph 
                by the Commission for any State during the 2-year 
                period beginning on the date of enactment of this 
                subsection, the Commission shall, by rule or order, 
                enforce the model standards of the Commission in the 
                State until such time as State standards are approved 
                by the Commission.
                    ``(F) Updates.--
                            ``(i) In general.--Not later than 2 years 
                        after the date of enactment of this subsection 
                        and after notice and opportunity for comment, 
                        the Commission shall publish an update of the 
                        model standards, after considering changes in 
                        the underlying standards and technologies.
                            ``(ii) Availability.--The updates shall be 
                        made available to State regulatory authorities 
                        for the consideration of the authorities.
            ``(2) Safety, reliability, performance, and cost.--
                    ``(A) In general.--The standards under this 
                subsection shall establish such measures for the safety 
                and reliability of the affected equipment and local 
                distribution systems as are appropriate.
                    ``(B) Administration.--The standards shall--
                            ``(i) be consistent with all applicable 
                        safety and performance standards established 
                        by--
                                    ``(I) the national electrical code;
                                    ``(II) the Institute of Electrical 
                                and Electronics Engineers;
                                    ``(III) Underwriters Laboratories; 
                                and
                                    ``(IV) the American National 
                                Standards Institute; and
                            ``(ii) impose not more than such minimum 
                        cost and technical burdens to the 
                        interconnecting customer generator as the 
                        Commission determines, by rule, are 
                        practicable.
            ``(3) Additional charges.--The model standards under this 
        subsection shall prohibit the imposition of additional charges 
        by local distribution systems for equipment or services for 
        interconnection that are in excess of--
                    ``(A) the charges necessary to meet the standards; 
                and
                    ``(B) the charges and equipment requirements 
                identified in the best practices of States with 
                interconnection standards.
            ``(4) Relationship to existing law regarding 
        interconnection.--Nothing in this subsection affects the 
        application of section 111(d)(15) relating to interconnection.
            ``(5) Consumer-friendly contracts.--
                    ``(A) In general.--The Commission shall--
                            ``(i) promulgate regulations that ensure 
                        that simplified contracts will be used for the 
                        interconnection of electric energy by electric 
                        energy transmission or local distribution 
                        systems and generating facilities that have a 
                        power production capacity of not greater than 
                        10 megawatts; and
                            ``(ii) consider the best practices for 
                        consumer-friendly contracts that are used by 
                        States or national associations of State 
                        regulators.
                    ``(B) Liability or insurance.--The contracts shall 
                not require liability or other insurance in excess of 
                the liability or insurance that is typically carried by 
                customer-generators for general liability.''.
    (b) Conforming Amendment.--Section 1262 of the Public Utility 
Holding Company Act of 2005 (42 U.S.C. 16451) is amended by striking 
paragraph (5) and inserting the following:
            ``(5) Electric utility company.--
                    ``(A) In general.--The term `electric utility 
                company' means any company that owns or operates 
                facilities used for the generation, transmission, or 
                distribution of electric energy for sale.
                    ``(B) Exclusion.--The term `electric utility 
                company' does not include an electric generation unit 
                (as defined in section 113(d) of the Public Utility 
                Regulatory Policies Act of 1978).''.

SEC. 4. IMPROVED SITING FOR COMBINED HEAT AND POWER FACILITIES.

    (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:
            ``(20) Improved siting for combined heat and power 
        facilities.--
                    ``(A) Distribution lines.--Notwithstanding any 
                State or local law (including regulations) that 
                restrict independent power producers from siting 
                private power lines (including a law that allows only a 
                regulated electric utility company to site electric 
                power lines across public rights-of-way), each electric 
                utility shall allow a combined heat and power facility 
                to site distribution lines on and across public rights-
                of-way for the purpose of interconnecting with 
                contiguous end use customers.
                    ``(B) Contiguous end use customers.--For purposes 
                of this paragraph, an end use customer shall be 
                considered to be contiguous to a combined heat and 
                power facility if the end use customer--
                            ``(i) is located on--
                                    ``(I) the same property as the 
                                combined heat and power facility; or
                                    ``(II) property immediately 
                                adjacent to the combined heat and power 
                                facility; or
                            ``(ii) in the case of an end-use customer 
                        that purchases useful thermal output from the 
                        combined heat and power facility, is otherwise 
                        separated by an easement, public thoroughfare, 
                        or transportation or utility-owned right-of-
                        way.''.
    (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:
            ``(7) Improved siting for combined heat and power 
        facilities.--
                    ``(A) Commencement.--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 State regulatory authority has 
                ratemaking authority) and each nonregulated electric 
                utility shall commence the consideration referred to in 
                section 111, or set a hearing date for the 
                consideration, with respect to each standard 
                established by paragraph (20) of section 111(d).
                    ``(B) Completion.--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 State regulatory authority 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 (20) 
                of section 111(d).''.
            (2) Failure to comply.--
                    (A) In general.--Section 112(c) of the Public 
                Utility Regulatory Policies Act of 1978 (16 U.S.C. 
                2622(c)) is amended--
                            (i) by designating the first through fifth 
                        sentences as paragraphs (1) through (5), 
                        respectively; and
                            (ii) by adding at the end the following:
            ``(6) Improved siting for combined heat and power 
        facilities.--In the case of each standard established by 
        paragraph (20) of section 111(d), the reference in paragraph 
        (1) to the date of enactment of this Act shall be considered to 
        be a reference to the date of enactment of that paragraph 
        (20).''.
                    (B) Technical correction.--
                            (i) In general.--Section 1254(b)(2) of the 
                        Energy Policy Act of 2005 (Public Law 109-58; 
                        119 Stat. 971) is amended by striking ``Section 
                        112(d)'' and inserting ``Section 112(c)''.
                            (ii) Effective date.--The amendment made by 
                        clause (i) takes effect on August 8, 2005.
            (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:
    ``(g) Prior State Actions for Improved Siting for Combined Heat and 
Power Facilities.--Subsections (b) and (c) shall not apply to the 
standards established by paragraph (20) of section 111(d) in the case 
of any electric utility in a State if, before the date of enactment of 
this subsection--
            ``(1) the State has implemented for the electric utility 
        the standard concerned (or a comparable standard);
            ``(2) the State regulatory authority for the State or 
        relevant nonregulated electric utility has conducted a 
        proceeding to consider implementation of the standard concerned 
        (or a comparable standard) for the electric utility; or
            ``(3) the State legislature has voted on the implementation 
        of the standard (or a comparable standard) for the electric 
        utility.''.
                    (B) Cross-reference.--Section 124 of the Public 
                Utility Regulatory Policies Act of 1978 (16 U.S.C. 
                2634) is amended--
                            (i) by designating the first through fifth 
                        sentences as subsections (a) through (e), 
                        respectively; and
                            (ii) by adding at the end the following:
    ``(f) Improved Siting for Combined Heat and Power Facilities.--In 
the case of each standard established by paragraph (20) of section 
111(d), each reference in subsections (a) and (b) to the date of 
enactment of this Act shall be considered to be a reference to the date 
of enactment of that paragraph (20).''.

SEC. 5. ENERGY TARIFFS.

    (a) In General.--Subtitle B of title I of the Public Utility 
Regulatory Policies Act of 1978 (16 U.S.C. 2621 et seq.) is amended by 
adding at the end the following:

``SEC. 118. ENERGY TARIFFS.

    ``(a) Definitions.--In this section:
            ``(1) Clean distributed energy resource.--
                    ``(A) In general.--The term `clean distributed 
                energy resource' means a combined heat and power 
                facility or a qualified generation unit (as defined in 
                section 113(d)(1)) that is used by a facility to 
                generate electricity.
                    ``(B) Inclusions.--The term `clean distributed 
                energy resource' includes a renewable energy system 
                that is not eligible for net metering under section 
                113.
            ``(2) Covered facility.--The term `covered facility' means 
        a customer facility that uses electricity produced from a clean 
        distributed energy resource.
            ``(3) Electric utility regulatory entity.--
                    ``(A) In general.--The term `electric utility 
                regulatory entity' means a State or local governing 
                body that is responsible for the regulation of electric 
                utilities that provide retail electrical power.
                    ``(B) Inclusions.--The term `electric utility 
                regulatory entity' includes--
                            ``(i) an investor-owned utility;
                            ``(ii) a municipal utility;
                            ``(iii) an electric membership cooperative; 
                        and
                            ``(iv) a State power authority.
            ``(4) Excess power.--The term `excess power' means the 
        quantity of electricity produced by a clean distributed energy 
        resource that is in excess of the electrical requirements of a 
        covered facility.
            ``(5) Supplemental power.--The term `supplemental power' 
        mean the quantity of electricity required by a covered facility 
        that exceeds the quantity of electricity produced by clean 
        distributed energy resources that is available to the covered 
        facility.
    ``(b) Establishment of Tariffs.--Not later than 2 years after the 
date of enactment of this section, each electric utility regulatory 
entity shall establish a tariff for electricity produced by clean 
distributed energy resources that provides for the efficient and 
effective use of clean distributed energy resources by covered 
facilities in accordance with this section.
    ``(c) Tariff Requirements.--
            ``(1) Supplemental power.--The tariffs shall establish 
        rates for supplemental power provided to covered facilities 
        that are consistent with the rates charged for supplemental 
        power by customer facilities that do not use clean distributed 
        energy resources.
            ``(2) Backup power.--
                    ``(A) In general.--The tariffs shall establish 
                rates for backup power provided to covered facilities 
                that reflect the actual cost of providing backup power 
                to the covered facilities.
                    ``(B) Applicability.--Subparagraph (A) shall not 
                apply to a case in which backup power is available 
                through a wholesale market tariff.
            ``(3) Standby power.--
                    ``(A) In general.--The tariffs shall establish 
                rates for standby power provided to covered facilities 
                that reflect the actual cost of providing standby power 
                to the covered facilities.
                    ``(B) Existing standby power rules.--If a Regional 
                Transmission Organization or Independent System 
                Operator has standby power rules in effect on the date 
                of enactment of this section and the clean distributed 
                energy resource has access to standby power, the rules 
                shall apply in the event of a conflict with this 
                section.
                    ``(C) Firm backup service.--Standby power provided 
                under this paragraph shall reserve capacity on 
                transmission and distribution systems for the delivery 
                of firm backup service to covered facilities.
            ``(4) Firm backup service.--The tariffs shall ensure that 
        covered facilities are provided with a right to purchase a firm 
        supply of electrical power and energy if the generating 
        facilities of the covered facilities are not in operation or 
        are operating at less than full capacity.
            ``(5) Excess power.--
                    ``(A) In general.--The tariffs shall require 
                electric utilities to purchase excess power produced by 
                covered facilities at a rate that is equal to at least 
                85 percent of the cost of electrical power to the 
                electric utilities from the most efficient electric-
                only power plants.
                    ``(B) Existing excess power rules.--If a Regional 
                Transmission Organization or Independent System 
                Operators has excess power rules in effect on the date 
                of enactment of this section, the rules shall apply in 
                the event of a conflict with this section.
            ``(6) Public availability.--An electric utility shall make 
        the tariffs available to the customers of the utility and the 
        public.
    ``(d) Bilateral Tariff Agreements.--Nothing in this section--
            ``(1) restricts an electric utility from entering into a 
        bilateral tariff agreement with a customer; or
            ``(2) requires that any tariffs provided under the 
        agreement be made public.
    ``(e) Reports.--Each electric utility regulatory entity shall 
submit to the Secretary--
            ``(1) a report on the establishment of tariffs in 
        accordance with this section; and
            ``(2) annual reports that include a description of--
                    ``(A) the number of customers that make use of the 
                tariffs; and
                    ``(B) the quantity of excess power that is sold to 
                electric utilities under the tariffs.
    ``(f) Regulations.--Not later than 120 days after the date of 
enactment of this section, the Secretary shall promulgate such 
regulations as are necessary to carry out this section.''.

SEC. 6. RELATIONSHIP TO STATE LAW.

    Section 117(b) of the Public Utility Regulatory Policies Act of 
1978 (16 U.S.C. 2627(b)) is amended--
            (1) by striking ``Nothing'' and inserting the following:
            ``(1) In general.--Except as provided in paragraph (2), 
        nothing''; and
            (2) by adding at the end the following:
            ``(2) Net metering and interconnection standards.--
                    ``(A) In general.--Subject to subparagraph (B), no 
                State or nonregulated utility may adopt or enforce any 
                standard or requirement concerning net metering or 
                interconnection that restricts access to the electric 
                power transmission or local distribution system by 
                qualified generators beyond those standards and 
                requirements established under section 113.
                    ``(B) Equivalent or greater access.--Nothing in 
                this Act precludes a State from adopting or enforcing 
                incentives or requirements to encourage qualified 
                generation and net metering that--
                            ``(i) are in addition to or equivalent to 
                        incentives or requirements under section 113; 
                        or
                            ``(ii) afford greater access to the 
                        electric power transmission and local 
                        distribution systems by qualified generation 
                        units (as defined in section 113(d)(1)) or 
                        afford greater compensation or credit for 
                        electricity generated by the qualified 
                        generation units.''.
                                 <all>