HR 3037 IH

To enhance the benefits of the national electric system by encouraging and supporting State programs for renewable energy sources, universal electric service, affordable electric service, and energy conservation and efficiency, and for other purposes.

October 4, 2001

Mr. PALLONE introduced the following bill; which was referred to the Committee on Energy and Commerce

To enhance the benefits of the national electric system by encouraging and supporting State programs for renewable energy sources, universal electric service, affordable electric service, and energy conservation and efficiency, 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 `Renewable Energy and Energy Efficiency Investment Act of 2001'.

SEC. 2. FINDINGS.

Congress finds that--

(1) the generation of electricity is unique in its combined influence on the security, environmental quality, and economic efficiency of the United States;

(2) the generation and sale of electricity has a direct and profound impact on interstate commerce;

(3) the Federal Government and the States have a joint responsibility for the maintenance of public purpose programs affected by the national electric system;

(4) notwithstanding the public's interest in and enthusiasm for programs that enhance the environment, encourage the efficient use of resources, and provide for affordable and universal service, the investments in those public purposes by existing means continues to decline;

(5) the dependence of the United States on foreign sources of fossil fuels is contrary to our national security;

(6) alternative, sustainable energy sources must be pursued;

(7) consumers have a right to certain information in order to make objective choices on their electric service providers; and

(8) net metering of small systems for self-generation of electricity is in the public interest in order to encourage private investment in renewable energy resources, stimulate economic growth, and enhance the continued diversification of the energy resources used in the United States.

SEC. 3. DEFINITIONS.

In this Act:

(1) ADMINISTRATOR- The term `Administrator' means the Administrator of the Environmental Protection Agency.

(2) BIOMASS- The term `biomass' means--

(A) organic material from a plant that is planted exclusively for the purpose of being used to produce electricity; and

(B) nonhazardous, cellulosic or agricultural animal waste material that is segregated from other waste materials and is derived from--

(i) a forest-related resource, including--

(I) mill and harvesting residue;

(II) precommercial thinnings;

(III) slash; and

(IV) brush;

(ii) an agricultural resource, including--

(I) orchard tree crops;

(II) vineyards;

(III) grain;

(IV) legumes;

(V) sugar; and

(VI) other crop by-products or residues;

(iii) miscellaneous waste such as--

(I) waste pallets;

(II) crates;

(III) dunnage; and

(IV) landscape or right-of-way tree trimmings, but not including municipal solid waste, recyclable postconsumer wastepaper, painted, treated, or pressurized wood, wood contaminated with plastic or metals, or tires; and

(iv) animal waste that is converted to a fuel rather than directly combusted, the residue of which is converted to biological fertilizer, oil, or activated carbon.

(3) BOARD- The term `Board' means the National Electric System Benefits Board established under section 4.

(4) COMMISSION- The term `Commission' means the Federal Energy Regulatory Commission.

(5) FUND- The term `Fund' means the National Electric System Benefits Fund established by section 5.

(6) LANDFILL GAS- The term `landfill gas' means gas generated from the decomposition of household solid waste, commercial solid waste, and industrial solid waste disposed of in a municipal solid waste landfill unit (as those terms are defined in regulations promulgated under subtitle D of the Solid Waste Disposal Act (42 U.S.C. 6941 et seq.)).

(7) POLLUTANT- The term `pollutant' means--

(A) carbon dioxide, mercury nitrous oxide, sulfur dioxide, or any other substance that the Administrator identifies by regulation as a substance that, when emitted into the air from a combustion device used in the generation of electricity, endangers public health or welfare (within the meaning of section 302(h) of the Clean Air Act (42 U.S.C. 7602(h));

(B) any substance discharged into water that is regulated under a National Pollutant Discharge Elimination System permit issued under section 402 of the Federal Water Pollution Control Act (33 U.S.C. 1342); and

(C) any substance disposed of in a solid or hazardous waste facility that is regulated under the Solid Waste Disposal Act (42 U.S.C. 6901 et seq.).

(8) RENEWABLE ENERGY- The term `renewable energy' means electricity generated from--

(A) a renewable energy source; or

(B) hydrogen that is produced from a renewable energy source.

(9) RENEWABLE ENERGY SOURCE- The term `renewable energy source' means--

(A) wind;

(B) biomass;

(C) landfill gas; or

(D) a geothermal, solar thermal, or photovoltaic source.

(10) RETAIL ELECTRIC SUPPLIER-

(A) IN GENERAL- The term `retail electric supplier' means a person or entity that sells retail electricity to consumers.

(B) INCLUSIONS- The term `retail electric supplier' includes--

(i) a regulated utility company (including affiliates or associates of such a company);

(ii) a company that is not affiliated or associated with a regulated utility company;

(iii) a municipal utility;

(iv) a cooperative utility;

(v) a local government; and

(vi) a special district.

(11) SECRETARY- The term `Secretary' means the Secretary of Energy.

SEC. 4. NATIONAL ELECTRIC SYSTEM PUBLIC BENEFITS BOARD.

(a) ESTABLISHMENT- The Secretary shall establish a National Electric System Public Benefits Board to carry out the functions and responsibilities described in this section.

(b) MEMBERSHIP- The Board shall be composed of--

(1) 1 representative of the Commission appointed by the Commission;

(2) 2 representatives of the Secretary appointed by the Secretary;

(3) 2 persons nominated by the national organization representing State regulatory commissioners and appointed by the Secretary;

(4) 1 person nominated by the national organization representing State utility consumer advocates and appointed by the Secretary;

(5) 1 person nominated by the national organization representing State energy offices and appointed by the Secretary;

(6) 1 person nominated by the national organization representing energy assistance directors and appointed by the Secretary; and

(7) 1 representative of the Environmental Protection Agency appointed by the Administrator.

(c) CHAIRPERSON- The Secretary shall select a member of the Board to serve as Chairperson of the Board.

(d) MANAGER-

(1) APPOINTMENT- The Board shall by contract appoint an electric systems public benefits manager for a term of not more than 3 years, which term may be renewed by the Board.

(2) COMPENSATION- The compensation and other terms and conditions of employment of the manager shall be determined by a contract between the Board and the individual or the other entity appointed as manager.

(3) FUNCTIONS- The manager shall--

(A) monitor the amounts in the Fund;

(B) receive, review, and make recommendations to the Board regarding applications from States under section 6(b); and

(C) perform such other functions as the Board may require to assist the Board in carrying out its duties under this Act.

SEC. 5. NATIONAL ELECTRIC SYSTEM PUBLIC BENEFITS FUND.

(a) ESTABLISHMENT-

(1) IN GENERAL- The Board shall establish an account or accounts at one or more financial institutions, which account or accounts shall be known as the `National Electric System Public Benefits Fund', consisting of amounts deposited in the fund under subsection (c).

(2) STATUS OF FUND- The wires charges collected under subsection (c) and deposited in the Fund--

(A) shall constitute electric system revenues and shall not constitute funds of the United States;

(B) shall be held in trust by the manager of the Fund solely for the purposes stated in subsection (b); and

(C) shall not be available to meet any obligations of the United States.

(b) USE OF FUND-

(1) FUNDING OF PUBLIC PURPOSE PROGRAMS- Amounts in the Fund shall be used by the Board to provide matching funds to States for the support of State public purpose programs relating to--

(A) renewable energy sources;

(B) universal electric service;

(C) affordable electric service;

(D) energy conservation and efficiency;

(E) research and development in areas described in subparagraphs (A) through (D), or

(F) disconnections during periods of extreme cold or heat.

(2) DISTRIBUTION-

(A) IN GENERAL- Except for amounts needed to pay costs of the Board in carrying

out its duties under this section, the Board shall instruct the manager of the Fund to distribute all amounts in the Fund to States to fund public purpose programs under paragraph (1).

(B) FUND SHARE-

(i) IN GENERAL- Subject to clause (iii), the Fund share of a public purpose program funded under paragraph (1) shall be 50 percent.

(ii) PROPORTIONATE REDUCTION- To the extent that the amount of matching funds requested by States exceeds the maximum projected revenues of the Fund, the matching funds distributed to the States shall be reduced by an amount that is proportionate to each State's annual consumption of electricity compared to the Nation's aggregate annual consumption of electricity.

(iii) ADDITIONAL STATE FUNDING- A State may apply funds to public purpose programs in addition to the amount of funds applied for the purpose of matching the Fund share.

(3) PROGRAM CRITERIA- The Board shall recommend eligibility criteria for public benefits programs funded under this section for approval by the Secretary.

(4) APPLICATION- Not later than August 1 of each year beginning in 2000, a State seeking matching funds for the following year shall file with the Board, in such form as the Board may require, an application--

(A) certifying that the funds will be used for an eligible public purpose program; and

(B) stating the amount of State funds earmarked for the program.

(c) WIRES CHARGE-

(1) DETERMINATION OF NEEDED FUNDING- Not later than August 1 of each year, the Board shall determine and inform the Commission of the aggregate amount of wires charges that will be necessary to be paid into the Fund to pay matching funds to States and pay the operating costs of the Board in the following year.

(2) IMPOSITION OF WIRES CHARGE-

(A) IN GENERAL- Not later than December 15 of each year, the Commission shall impose a nonbypassable, competitively neutral wires charge to be paid directly into the Fund by the operator of the wire on electricity carried through the wire (measured as it exits the busbar at a generation facility) that affects interstate commerce.

(B) AMOUNT- The wires charge shall be set at a rate equal to the lesser of--

(i) 2.0 mills per kilowatt-hour; or

(ii) a rate that is estimated to result in the collection of an amount of wires charges that is as nearly as possible equal to the amount of needed funding determined under paragraph (1),

reduced by 50 percent of the amount of any wire charge imposed on such electricity under State law that is used by a State for State public purpose program described in subsection (b)(1).

(3) DEPOSIT IN THE FUND- The wires charge shall be paid by the operator of the wire directly into the Fund at the end of each month during the calendar year for distribution by the electric systems public benefits manager under section 5.

(4) PENALTIES- The Commission may assess against a wire operator that fails to pay a wires charge as required by this subsection a civil penalty in an amount equal to not more than the amount of the unpaid wires charge.

(d) AUDITING-

(1) IN GENERAL- The Fund shall be audited annually by a firm of independent certified public accountants in accordance with generally accepted auditing standards.

(2) ACCESS TO RECORDS- Representatives of the Secretary and the Commission shall have access to all books, accounts, reports, files, and other records pertaining to the Fund as necessary to facilitate and verify the audit.

(3) REPORTS-

(A) IN GENERAL- A report on each audit shall be submitted to the Secretary, the Commission, and the Secretary of the Treasury, who shall submit the report to the President and Congress not later than 180 days after the close of the fiscal year.

(B) REQUIREMENTS- An audit report shall--

(i) set forth the scope of the audit; and

(ii) include--

(I) a statement of assets and liabilities, capital; and surplus or deficit;

(II) a statement of surplus or deficit analysis;

(III) a statement of income and expenses;

(IV) any other information that may be considered necessary to keep the President and Congress informed of the operations and financial condition of the Fund; and

(V) any recommendations with respect to the Fund that the Secretary or the Commission may have.

SEC. 6. RENEWABLE ENERGY PORTFOLIO STANDARDS.

(a) MINIMUM RENEWABLE GENERATION REQUIREMENT- By April 1 of each calendar year after 2001, each retail electric supplier shall submit to the Secretary renewable energy credits in an amount equal to the required annual percentage of the supplier's total kilowatt-hour sales to end-use customers in the preceding calendar year.

(2) Each retail electric supplier shall include the required annual percentage, as defined in subsection (b), in all products sold to end-use customers. Suppliers are prohibited from representing to any customer or prospective customer that any of its products contain more than the specified percentage of eligible resources where the additional amount of eligible resources is being used to satisfy the minimum renewable generation requirement.

(3) Nothing in this section shall be construed to prohibit any State from requiring additional renewable energy generation in that State under any program adopted by the State. A State may limit the benefits of any State renewable energy program to renewable energy generators located within the State's boundaries or other boundaries determined by the state.

(b) REQUIRED RENEWABLE ENERGY- Of the total amount of electricity sold by each retail electric supplier during a calendar year, the amount generated by renewable energy sources shall be not less than the following:

(1) 2.5 percent in 2002.

(2) 3.0 percent in 2003.

(3) 4.0 percent in 2004.

(4) 5.0 percent in 2005.

(5) 6.0 percent in 2006.

(6) 7.0 percent in 2007.

(7) 8.0 percent in 2008.

(8) 9.0 percent in 2009.

(9) 10.0 percent in 2010.

(10) 11.0 percent in 2011.

(11) 12.0 percent in 2012.

(12) 13.0 percent in 2013.

(13) 14.0 percent in 2014.

(14) 15.0 percent in 2015.

(15) 16.0 percent in 2016.

(16) 17.0 percent in 2017.

(17) 18.0 percent in 2018.

(18) 19.0 percent in 2019.

(19) 20.0 percent in 2020 and each year thereafter.

(c) SUBMISSION OF CREDITS- A retail electric supplier may satisfy the requirements of subsection (a) through the submission of any of the following:

(1) Renewable energy credits issued under subsection (d) for renewable energy generated by the retail electric supplier in the calendar year for which credits are being submitted or any previous calendar year.

(2) Renewable energy credits issued under subsection (d) to any renewable energy generator for renewable energy generated in the calendar year for which credits are being submitted or a previous calendar year and acquired by the retail electric supplier.

(3) Any combination of Credits under paragraphs (1) and (2).

(d) ISSUANCE OF CREDIT- (1) The Secretary shall establish, not later than 1 year after the date of enactment of this section, a program to issue, monitor the sale or exchange of, and track Renewable energy credits.

(2) Under the program, an entity that generates electric energy through the use of a renewable energy resource may apply to the Secretary for the issuance of renewable energy credits. The application shall indicate--

(A) the type of renewable energy resource used to produce the electricity,

(B) the State in which the electric energy was produced, and

(C) any other information the Secretary determines appropriate.

(3)(A) The Secretary shall issue to an entity one renewable energy credit for each kilowatt-hour of electric energy the entity generates through the use of a renewable energy resource in any State in 2001 and any succeeding year.

(B) To be eligible for a renewable energy credit, the unit of a electricity generated through the use of a renewable energy resource may be sold or may be used by the generator. If both a renewable energy resource and a nonrenewable energy resource are used to generate the electric energy, the Secretary shall issue credits based on the proportion of the renewable energy resource used. The Secretary shall identify renewable energy credits by type of generation and by the State in which the generating facility is located.

(4) In order to receive a renewable energy credit, the recipient of a renewable energy credit shall pay a fee, calculated by the Secretary, in an amount that is equal to the administrative costs of issuing, recording, monitoring the sale of exchange of, and tracking the credit or does not exceed five percent of the dollar value of the credit, whichever is lower. The Secretary shall retain the fee and use it to pay these administrative costs.

(e) SALE OR EXCHANGE- A renewable energy credit may be sold or exchanged by the entity to whom issued or by any other entity who acquires the credit.

(f) ENFORCEMENT-

(1) IN GENERAL- The Secretary may bring an action in the appropriate United States district court to impose a civil penalty on a retail electric supplier that does not comply with subsection (a).

(2) AMOUNT OF PENALTY- A retail electric supplier who does not submit the required number of renewable energy credits under subsection (a)

shall be subject to a civil penalty of not more than 3 times the estimated national average market value (as determined by the Secretary) for the calendar year concerned of that quantity of renewable energy credits.

(g) INFORMATION COLLECTION- The Secretary may collect the information necessary to verify and audit each of the following:

(1) The annual electric energy generation and renewable energy generation of any entity applying for renewable energy credits under this section.

(2) The validity of renewable energy credits submitted by a retail electric supplier to the Secretary.

(3) The quantity of electricity sales of all retail electric suppliers.

SEC. 7. NET METERING.

(a) AMENDMENT OF PURPA- The Public Utility Regulatory Polices Act of 1978 is amended by adding the following new section after section 214:

`SEC. 215. NET METERING.

`(a) DEFINITIONS- For purposes of this section--

`(1) The term `eligible on-site generating facility' means a facility on the site of a residential electric consumer with a maximum generating capacity of 100 kilowatts or less that is fueled by solar or wind energy or a facility on the site of a commercial electric consumer with a maximum generating capacity of 250 kilowatts or less that is fueled solely by a renewable energy resource.

`(2) The term `renewable energy resource' means solar energy, wind energy, biomass, and fuel cells.

`(3) The term `net metering service' means service to an electric consumer under which electricity generated by that consumer from an eligible on-site generating facility and delivered to the distribution system through the same meter through which purchased electricity is received may be used to offset the cost of electricity provided by the retail electric supplier to the electric consumer during the applicable billing period so that an electric consumer is billed only for the net electricity consumed during the billing period, but in no event shall the net be less than zero during any calendar year.

`(b) REQUIREMENT TO PROVIDE NET METERING SERVICE- Each retail electric supplier shall make available upon request net metering service to any retail electric consumer that the supplier currently serves or solicits for service.

`(c) RATES AND CHARGES-

`(1) IDENTICAL CHARGES- A retail electric supplier--

`(A) shall charge the owner or operator of an on-site generating facility rates and charges that are identical to those that would be charged other retail electric customers of the electric company in the same rate class; and

`(B) shall not charge the owner or operator of an on-site generating facility any additional standby, capacity, interconnection, or other rate or charge.

`(2) MEASUREMENT- A retail electric supplier that supplies electricity to the owner or operator of an on-site generating facility shall measure the quantity of electricity produced by the on-site facility and the quantity of electricity consumed by the owner or operator of an on-site generating facility during a billing period in accordance with normal metering practices.

`(3) ELECTRICITY SUPPLIED EXCEEDING ELECTRICITY GENERATED- If the quantity of electricity supplied by a retail electric supplier during a billing period exceeds the quantity of electricity generated by an on-site generating facility and fed back to the electric distribution system during the billing period, the supplier may bill the owner or operator for the net quantity of electricity supplied by the retail electric supplier, in accordance with normal metering practices.

`(4) ELECTRICITY GENERATED EXCEEDING ELECTRICITY SUPPLIED- If the quantity of electricity generated by an on-site generating facility during a billing period exceeds the quantity of electricity supplied by the retail electric supplier during the billing period--

`(A) the retail electric supplier may bill the owner or operator of the on-site generating facility for the appropriate charges for the billing period in accordance with paragraph (2); and

`(B) the owner or operator of the on-site generating facility shall be credited for the excess kilowatt-hours generated during the billing period, with the kilowatt-hour credit appearing on the bill for the following billing period.

`(5) UNUSED CREDITS- At the beginning of each calendar year, any unused kilowatt-hour credits accumulated by an owner or operator of an on-site generating facility during the previous calendar year shall expire without compensation to the owner or operator of an on-site generating facility.

`(d) SAFETY AND PERFORMANCE STANDARDS- (1) An eligible on-site generating facility and net metering system used by a retail electric consumer shall meet all applicable safety, performance, reliability, and interconnection standards established by the National Electrical Code, the Institute of Electrical and Electronics Engineers, and Underwriters Laboratories.

`(2) The Commission, after consultation with State regulatory authorities and nonregulated local distribution systems and after notice and opportunity for comment, may adopt, by rule, additional control and testing requirements for on-site generating facilities and net metering systems that the Commission determines are necessary to protect public safety and system reliability.

`(e) INTERCONNECTION STANDARDS- (1) The Commission shall promulgate regulations requiring that the owners or operators of eligible on-site generating facilities and net metering systems comply with uniform national standards, consistent with this section, for the physical connection between such facilities and systems and local distribution systems. At the election of the owner or operator of the generation facility concerned connections meeting such standards may be made--

`(A) by such owner or operator at such owner's or operator's expense, or

`(B) by the owner or operator of the local distribution system upon the request of the owner or operator of the generating facility and pursuant to an offer by the owner or operator of the generating facility to reimburse the local distribution system in an amount equal to the minimum cost of such connection, consistent with the procurement procedures of the State in which the facility is located.

Such standards shall be consistent with all applicable safety and performance standards established by the national electrical code, the Institute of Electrical and Electronics Engineers, or Underwriters Laboratories and with such additional safety and reliability standards as the Commission shall, by rule, prescribe.

`(2) The regulations under this section shall establish such measures for the safety and reliability of the affected equipment and local distribution systems as may be appropriate.

`(f) STATE AUTHORITY- This section does not preclude a State from imposing additional requirements consistent with the requirements in this section, including the imposition of a cap limiting the amount of net metering available in the State. Nothing in this Act or any other Federal law preempts or otherwise affects authority under State law to require a retail electric supplier to make available net metering service to a retail electric consumer which the supplier serves or offers to serve.'.

(c) TABLE OF CONTENTS- The table of contents for title II of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 and following) is amended by adding the following at the end thereof:

SEC. 8. DISCLOSURE REQUIREMENTS.

(a) DEFINITIONS- In this section:

(1) EMISSIONS DATA- The term `emissions data' means the type and amount of each pollutant emitted or released by a generation facility in generating electricity.

(2) GENERATION DATA- The term `generation data' means the type of fuel (such as coal, oil, nuclear energy, or solar power) used by a generation facility to generate electricity.

(b) DISCLOSURE SYSTEM- The Secretary shall establish a system of disclosure that--

(1) enables retail consumers to knowledgeably compare retail electric service offerings, including comparisons based on generation source portfolios, emissions data, and price terms; and

(2) considers such factors as--

(A) cost of implementation;

(B) confidentiality of information; and

(C) flexibility.

(c) REGULATION- Not later than March 1, 2002, the Secretary, in consultation with the Board, and with the assistance of a Federal interagency task force that includes representatives of the Commission, the Federal Trade Commission, the Food and Drug Administration, and the Environmental Protection Agency, shall promulgate a regulation prescribing--

(1) the form, content, and frequency of disclosure of emissions data and generation data of electricity by generation facilities to electricity wholesalers or retail companies and by wholesalers to retail companies;

(2) the form, content, and frequency of disclosure of emissions data, generation data, and the price of electricity by retail companies to ultimate consumers; and

(3) the form, content, and frequency of disclosure of emissions data, generation data, and the price of electricity by generation facilities selling directly to ultimate consumers.

(d) ACCESS TO RECORDS- The Secretary shall have full access to the records of all generation facilities, electricity wholesalers, and retail companies to obtain any information necessary to administer and enforce this section.

(e) FAILURE TO DISCLOSE- The failure of a retail company to accurately disclose information as required by this section shall be treated as a deceptive act in commerce under section 5 of the Federal Trade Commission Act (15 U.S.C. 45).

(f) REGULATIONS- The Secretary may promulgate such regulations, conduct such investigations, and take such other actions as are necessary or appropriate to implement and obtain compliance with this section and regulations promulgated under this section.

END