HEAT Act

II 116TH CONGRESS 1ST SESSION S. 2706 To amend the Public Utility Regulatory Policies Act of 1978 to assist States in adopting updated interconnection procedures and tariff schedules and standards for supplemental, backup, and standby power fees for projects for combined heat and power technology and waste heat to power tech- nology, and for other purposes. IN THE SENATE OF THE UNITED STATES OCTOBER 24, 2019 Mrs. SHAHEEN 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 assist States in adopting updated interconnection pro- cedures and tariff schedules and standards for supple- mental, backup, and standby power fees for projects for combined heat and power technology and waste heat to power technology, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Heat Efficiency 4 through Applied Technology Act’’ or the ‘‘HEAT Act’’. 5 VerDate Sep 11 2014 17:19 Oct 27, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2706.IS S2706 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 2706 IS SEC. 2. FINDINGS. 1 Congress finds that— 2 (1) combined heat and power technology, also 3 known as cogeneration, is a technology that effi- 4 ciently produces electricity and thermal energy at 5 the point of use of the technology; 6 (2) by combining the provision of both elec- 7 tricity and thermal energy in a single step, combined 8 heat and power technology makes significantly more 9 efficient use of fuel compared to separate generation 10 of heat and power, which has significant economic 11 and environmental advantages; 12 (3) waste heat to power is a technology that 13 captures heat discarded by an existing industrial 14 process and uses that heat to generate power with 15 no additional fuel and no incremental emissions, re- 16 ducing the need for electricity from other sources 17 and the grid, and any associated emissions; 18 (4) waste heat or waste heat to power is consid- 19 ered renewable energy in 17 States; 20 (5)(A) a 2012 joint report by the Department 21 of Energy and the Environmental Protection Agency 22 estimated that by achieving the national goal out- 23 lined in Executive Order 13624 (77 Fed. Reg. 24 54779) (September 5, 2012) of deploying 40 25 gigawatts of new combined heat and power tech- 26 VerDate Sep 11 2014 17:19 Oct 27, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2706.IS S2706 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 2706 IS nology by 2020, the United States would increase 1 the total combined heat and power capacity of the 2 United States by 50 percent in less than a decade; 3 and 4 (B) additional efficiency would— 5 (i) save 1,000,000,000,000,000 BTUs of 6 energy; and 7 (ii) reduce emissions by 150,000,000 met- 8 ric tons of carbon dioxide annually, a quantity 9 equivalent to the emissions from more than 10 25,000,000 cars; 11 (6) a 2012 report by the Environmental Protec- 12 tion Agency estimated the amount of waste heat 13 available at a temperature high enough for power 14 generation from industrial and nonindustrial appli- 15 cations represents an additional 10 gigawatts of 16 electric generating capacity on a national basis; 17 (7) distributed energy generation, including 18 through combined heat and power technology and 19 waste heat to power technology, has ancillary bene- 20 fits, such as— 21 (A) removing load from the electricity dis- 22 tribution grid; and 23 (B) improving the overall reliability of the 24 electricity distribution system; and 25 VerDate Sep 11 2014 17:19 Oct 27, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2706.IS S2706 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 2706 IS (8)(A) a number of regulatory barriers impede 1 broad deployment of combined heat and power tech- 2 nology and waste heat to power technology; and 3 (B) a 2008 study by Oak Ridge National Lab- 4 oratory identified interconnection issues, regulated 5 fees and tariffs, and environmental permitting as 6 areas that could be streamlined with respect to the 7 provision of combined heat and power technology 8 and waste heat to power technology. 9 SEC. 3. DEFINITIONS. 10 (a) IN GENERAL.—In this Act: 11 (1) COMBINED HEAT AND POWER TECH- 12 NOLOGY.—The term ‘‘combined heat and power 13 technology’’ means the generation of electric energy 14 and heat in a single, integrated system that meets 15 the efficiency criteria in clauses (ii) and (iii) of sec- 16 tion 48(c)(3)(A) of the Internal Revenue Code of 17 1986, under which heat that is conventionally re- 18 jected is recovered and used to meet thermal energy 19 requirements. 20 (2) OUTPUT-BASED EMISSION STANDARD.—The 21 term ‘‘output-based emission standard’’ means a 22 standard that relates emissions to the electrical, 23 thermal, or mechanical productive output of a device 24 VerDate Sep 11 2014 17:19 Oct 27, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2706.IS S2706 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 2706 IS or process rather than the heat input of fuel burned 1 or pollutant concentration in the exhaust. 2 (3) QUALIFIED WASTE HEAT RESOURCE.— 3 (A) IN GENERAL.—The term ‘‘qualified 4 waste heat resource’’ means— 5 (i) exhaust heat or flared gas from 6 any industrial or commercial process; 7 (ii) waste gas or industrial tail gas 8 that would otherwise be flared, incinerated, 9 or vented; 10 (iii) a pressure drop in any gas for an 11 industrial or commercial process; or 12 (iv) any other form of waste heat re- 13 source as the Secretary may determine. 14 (B) EXCLUSION.—The term ‘‘qualified 15 waste heat resource’’ does not include a heat re- 16 source from a process the primary purpose of 17 which is the generation of electricity using a 18 fossil fuel. 19 (4) WASTE HEAT TO POWER TECHNOLOGY.— 20 The term ‘‘waste heat to power technology’’ means 21 a system that generates electricity through the re- 22 covery of a qualified waste heat resource. 23 VerDate Sep 11 2014 17:19 Oct 27, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2706.IS S2706 pamtmann on DSKBC07HB2PROD with BILLS 6 •S 2706 IS (b) PURPA DEFINITIONS.—Section 3 of the Public 1 Utility Regulatory Policies Act of 1978 (16 U.S.C. 2602) 2 is amended by adding at the end the following: 3 ‘‘(22) COMBINED HEAT AND POWER TECH- 4 NOLOGY.—The term ‘combined heat and power tech- 5 nology’ means the generation of electric energy and 6 heat in a single, integrated system that meets the ef- 7 ficiency criteria in clauses (ii) and (iii) of section 8 48(c)(3)(A) of the Internal Revenue Code of 1986, 9 under which heat that is conventionally rejected is 10 recovered and used to meet thermal energy require- 11 ments. 12 ‘‘(23) QUALIFIED WASTE HEAT RESOURCE.— 13 ‘‘(A) IN GENERAL.—The term ‘qualified 14 waste heat resource’ means— 15 ‘‘(i) exhaust heat or flared gas from 16 any industrial process; 17 ‘‘(ii) waste gas or industrial tail gas 18 that would otherwise be flared, incinerated, 19 or vented; 20 ‘‘(iii) a pressure drop in any gas for 21 an industrial or commercial process; or 22 ‘‘(iv) any other form of waste heat re- 23 source as the Secretary may determine. 24 VerDate Sep 11 2014 17:19 Oct 27, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2706.IS S2706 pamtmann on DSKBC07HB2PROD with BILLS 7 •S 2706 IS ‘‘(B) EXCLUSION.—The term ‘qualified 1 waste heat resource’ does not include a heat re- 2 source from a process the primary purpose of 3 which is the generation of electricity using a 4 fossil fuel. 5 ‘‘(24) WASTE HEAT TO POWER TECHNOLOGY.— 6 The term ‘waste heat to power technology’ means a 7 system that generates electricity through the recov- 8 ery of a qualified waste heat resource.’’. 9 SEC. 4. UPDATED INTERCONNECTION PROCEDURES AND 10 TARIFF SCHEDULE. 11 (a) ADOPTION OF STANDARDS.—Section 111(d) of 12 the Public Utility Regulatory Policies Act of 1978 (16 13 U.S.C. 2621(d)) is amended by adding at the end the fol- 14 lowing: 15 ‘‘(20) UPDATED INTERCONNECTION PROCE- 16 DURES AND TARIFF SCHEDULE.— 17 ‘‘(A) IN GENERAL.—Not later than 1 year 18 after the date of enactment of this paragraph, 19 the Secretary, in consultation with the Commis- 20 sion and other appropriate agencies, shall es- 21 tablish, for generation with nameplate capacity 22 up to 20 megawatts using all fuels— 23 ‘‘(i) guidance for technical inter- 24 connection standards that ensure inter- 25 VerDate Sep 11 2014 17:19 Oct 27, 2019 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2706.IS S2706 pamtmann on DSKBC07HB2PROD with BILLS 8 •S 2706 IS operability with existing Federal inter- 1 connection rules; 2 ‘‘(ii) model interconnection proce- 3 dures, including appropriate fast track pro- 4 cedures; and 5 ‘‘(iii) model rules for determining and 6 assigning interconnection costs. 7 ‘‘(B) STANDARDS.—The standards estab- 8 lished under subparagraph (A) shall, to the 9 maximum extent practicable, reflect current 10 best practices (as demonstrated in model codes 11 and rules adopted by States) to encourage the 12 use of distributed generation (such as combined 13 heat and power technology and waste heat to 14 power technology) while ensuring the safety and 15 reliability of the interconnected units and the 16 distribution and transmission networks to which 17 the units connect. 18 ‘‘(C) VARIATIONS.—In establishing the 19 model standards under subparagraph (A), the 20 Secretary shall consider the appropriateness of 21 using standards or procedures that vary based 22 on unit size, fuel type, or other relevant charac- 23 teristics.’’. 24 (b) COMPLIANCE.— 25 VerDate Sep 11 2014 17:19 Oct 27, 2019 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2706.IS S2706 pamtmann on DSKBC07HB2PROD with BILLS 9 •S 2706 IS (1) TIME LIMITATIONS.—Section 112(b) of the 1 Public Utility Regulatory Policies Act of 1978 (16 2 U.S.C. 2622(b)) is amended by adding at the end 3 the following: 4 ‘‘(7)(A) Not later than 90 days after the date 5 on which the Secretary completes the standards re- 6 quired under section 111(d)(20), each State regu- 7 latory authority (with respect to each electric utility 8 for which the authority has ratemaking authority) 9 shall commence the consideration referred to in that 10 section, or set a hearing date for such consideration, 11 with respect to each standard. 12 ‘‘(B) Not later than 2 years after the date on 13 which the Secretary completes the standards re- 14 quired under section 111(d)(20), each State regu- 15 latory authority (with respect to each electric utility 16 for which the authority has ratemaking authority) 17 shall— 18 ‘‘(i) complete the consideration under sub- 19 paragraph (A); 20 ‘‘(ii) make the determination referred to in 21 section 111 with respect to each standard es- 22 tablished under section 111(d)(20); and 23 ‘‘(iii) submit to the Secretary and the 24 Commission a report detailing the updated 25 VerDate Sep 11 2014 17:19 Oct 27, 2019 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S2706.IS S2706 pamtmann on DSKBC07HB2PROD with BILLS 10 •S 2706 IS plans of the State regulatory authority for 1 interconnection procedures and tariff schedules 2 that reflect best practices to encourage the use 3 of distributed generation.’’. 4 (2) FAILURE TO COMPLY.—Section 112(c) of 5 the Public Utility Regulatory Policies Act of 1978 6 (16 U.S.C. 2622(c)) is amended by adding at the 7 end the following: ‘‘In the case of each standard es- 8 tablished under paragraph (20) of section 111(d), 9 the reference contained in this subsection to the date 10 of enactment of this Act shall be deemed to be a ref- 11 erence to the date of enactment of that paragraph.’’. 12 (3) PRIOR STATE ACTIONS.— 13 (A) IN GENERAL.—Section 112 of the 14 Public Utility Regulatory Policies Act of 1978 15 (16 U.S.C. 2622) is amended by adding at the 16 end the following: 17 ‘‘(g) PRIOR STATE ACTIONS.—Subsections (b) and 18 (c) shall not apply to a standard established under para- 19 graph (20) of section 111(d) in the case of any electric 20 utility in a State if, before the date of enactment of this 21 subsection— 22 ‘‘(1) the State has implemented for the electric 23 utility the standard (or a comparable standard); 24 VerDate Sep 11 2014 17:19 Oct 27, 2019 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2706.IS S2706 pamtmann on DSKBC07HB2PROD with BILLS 11 •S 2706 IS ‘‘(2) the State regulatory authority for the 1 State has conducted a proceeding after December 2 31, 2016, to consider implementation of the stand- 3 ard (or a comparable standard) for the electric util- 4 ity; or 5 ‘‘(3) the State legislature has voted on the im- 6 plementation of the standard (or a comparable 7 standard) for the electric utility.’’. 8 (B) CROSS-REFERENCE.—Section 124 of 9 the Public Utility Regulatory Policies Act of 10 1978 (16 U.S.C. 2634) is amended by adding 11 at the end the following: ‘‘In the case of each 12 standard established under paragraph (20) of 13 section 111(d), the reference contained in this 14 subsection to the date of enactment of this Act 15 shall be deemed to be a reference to the date 16 of enactment of that paragraph.’’. 17 SEC. 5. SUPPLEMENTAL, BACKUP, AND STANDBY POWER 18 FEES OR RATES. 19 (a) ADOPTION OF STANDARDS.—Section 111(d) of 20 the Public Utility Regulatory Policies Act of 1978 (16 21 U.S.C. 2621(d)) (as amended by section 4(a)) is amended 22 by adding at the end the following: 23 ‘‘(21) SUPPLEMENTAL, BACKUP, AND STANDBY 24 POWER FEES OR RATES.— 25 VerDate Sep 11 2014 17:19 Oct 27, 2019 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S2706.IS S2706 pamtmann on DSKBC07HB2PROD with BILLS 12 •S 2706 IS ‘‘(A) IN GENERAL.—Not later than 1 year 1 after the date of enactment of this paragraph, 2 the Secretary, in consultation with the Commis- 3 sion and other appropriate agencies, shall es- 4 tablish model rules and procedures for deter- 5 mining fees or rates for supplementary power, 6 backup or standby power, maintenance power, 7 and interruptible power supplied to facilities 8 that operate combined heat and power tech- 9 nology and waste heat to power technology that 10 appropriately allow for adequate cost recovery 11 by an electric utility but are not excessive. 12 ‘‘(B) FACTORS.—In establishing model 13 rules and procedures for determining fees or 14 rates described in subparagraph (A), the Sec- 15 retary shall consider— 16 ‘‘(i) the best practices that are used to 17 model outage assumptions and contin- 18 gencies to determine the fees or rates; 19 ‘‘(ii) the appropriate duration, ma [Text truncated for display. 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