To reduce barriers to combined heat and power systems and waste heat to power systems.

SA 3292. Mr. REID (for Mrs. Shaheen) submitted an amendment intended
to be proposed to amendment SA 2953 proposed by Ms. Murkowski to the
bill S. 2012, to provide for the modernization of the energy policy of
the United States, and for other purposes; which was ordered to lie on
the table; as follows:

At the end of title II, add the following:

Subtitle F--Heat Efficiency Through Applied Technology

SEC. 2501. SHORT TITLE.

This subtitle may be cited as the ``Heat Efficiency through
Applied Technology Act'' or the ``HEAT Act''.

SEC. 2502. FINDINGS.

Congress finds that--
(1) combined heat and power technology, also known as
cogeneration, is a technology that efficiently produces
electricity and thermal energy at the point of use of the
technology;
(2) by combining the provision of both electricity and
thermal energy in a single step, combined heat and power
technology makes significantly more-efficient use of fuel, as
compared to separate generation of heat and power, which has
significant economic and environmental advantages;
(3) waste heat to power is a technology that captures heat
discarded by an existing industrial process and uses that
heat to generate power with no additional fuel and no
incremental emissions, reducing the need for electricity from
other sources and the grid, and any associated emissions;
(4) waste heat or waste heat to power is considered
renewable energy in 17 States;
(5)(A) a 2012 joint report by the Department of Energy and
the Environmental Protection Agency estimated that by
achieving the national goal outlined in Executive Order 13624
(77 Fed. Reg. 54779) (September 5, 2012) of deploying 40
gigawatts of new combined heat and power technology by 2020,
the United States would increase the total combined heat and
power capacity of the United States by 50 percent in less
than a decade; and
(B) additional efficiency would--
(i) save 1,000,000,000,000,000 BTUs of energy; and
(ii) reduce emissions by 150,000,000 metric tons of carbon
dioxide annually, a quantity equivalent to the emissions from
more than 25,000,000 cars;
(6) a 2012 report by the Environmental Protection Agency
estimated the amount of waste heat available at a temperature
high enough for power generation from industrial and
nonindustrial applications represents an additional 10
gigawatts of electric generating capacity on a national
basis;
(7) distributed energy generation, including through
combined heat and power technology and waste heat to power
technology, has ancillary benefits, such as--
(A) removing load from the electricity distribution grid;
and
(B) improving the overall reliability of the electricity
distribution system; and
(8)(A) a number of regulatory barriers impede broad
deployment of combined heat and power technology and waste
heat to power technology; and
(B) a 2008 study by Oak Ridge National Laboratory
identified interconnection issues, regulated fees and
tariffs, and environmental permitting as areas that could be
streamlined with respect to the provision of combined heat
and power technology and waste heat to power technology.

SEC. 2503. UPDATING OUTPUT-BASED EMISSIONS STANDARDS.

(a) Definitions.--In this section:
(1) Administrator.--The term ``Administrator'' means the
Administrator of the Environmental Protection Agency.
(2) Combined heat and power technology.--The term
``combined heat and power technology'' means the generation
of electric energy and heat in a single, integrated system
that meets the efficiency criteria in clauses (ii) and (iii)
of section 48(c)(3)(A) of the Internal Revenue Code of 1986,
under which heat that is conventionally rejected is recovered
and used to meet thermal energy requirements.
(3) Output-based emission standard.--The term ``output-
based emission standard'' means a standard that relates
emissions to the electrical, thermal, or mechanical
productive output of a device or process rather than the heat
input of fuel burned or pollutant concentration in the
exhaust.
(4) Qualified waste heat resource.--
(A) In general.--The term ``qualified waste heat resource''
means--
(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;
(iii) a pressure drop in any gas for an industrial or
commercial process; or
(iv) any other form of waste heat resource as the Secretary
may determine.
(B) Exclusion.--The term ``qualified waste heat resource''
does not include a heat resource from a process the primary
purpose of which is the generation of electricity using a
fossil fuel.
(5) State.--The term ``State'' has the meaning given that
term in section 302 of the Clean Air Act (42 U.S.C. 7602).
(6) Waste heat to power technology.--The term ``waste heat
to power technology'' means a system that generates
electricity through the recovery of a qualified waste heat
resource.
(b) Establishment of Program.--The Administrator shall
establish a program under which the Administrator shall
provide to each State that elects to participate and that
submits an application under subsection (c) a grant for use
by the State in accordance with subsection (d).
(c) Application.--To be eligible to receive a grant under
this section, a State shall submit to the Administrator an
application at such time, in such manner, and containing such
information as the Administrator may require.
(d) Use of Funds.--
(1) In general.--A State shall use a grant provided under
this section--
(A) to update any applicable State or local air permitting
regulations under this subtitle to incorporate environmental
regulations relating to output-based emissions in accordance
with relevant guidelines developed by the Administrator under
paragraph (2); or
(B) if the State has already updated all applicable State
and local permitting regulations to incorporate those output-
based emissions environmental regulations, to expedite the
processing of relevant power generation permit applications
under this subtitle.
(2) Guidelines.--As soon as practicable after the date of
enactment of this Act, the Administrator shall publish
guidelines for updating State and local permitting
regulations under this subtitle that--
(A) provide credit, in the calculation of the emission rate
of the facility, for any thermal energy produced by combined
heat and power technology or waste heat to power technology;
and
(B) apply only to generation units that produce 5 megawatts
of electrical energy or less.

[[Page S707]]

(e) Maximum Amount.--The amount of a grant provided under
this section shall not exceed $100,000.
(f) Authorization of Appropriations.--There is authorized
to be appropriated to the Administrator to carry out this
section $5,000,000.

SEC. 2504. UPDATED INTERCONNECTION PROCEDURES AND TARIFF
SCHEDULE; SUPPLEMENTAL, BACKUP, AND STANDBY
POWER FEES OR RATES.

Section 205(a) of the Federal Power Act (16 U.S.C. 824d(a))
is amended--
(1) by striking ``(a) All rates'' and inserting the
following:
``(a) Rates and Charges.--
``(1) In general.--All rates''; and
(2) by adding at the end the following:
``(2) Establishment of certain guidance and standards.--
``(A) Definitions.--In this paragraph:
``(i) Nonregulated electric utility.--The term
`nonregulated electric utility' means any electric utility
other than a State-regulated electric utility.
``(ii) State regulatory authority.--The term `State
regulatory authority' means--

``(I) any State agency that has ratemaking authority with
respect to the sale of electric energy by any electric
utility (other than the State agency); and
``(II) in the case of an electric utility with respect to
which the Tennessee Valley Authority has ratemaking
authority, the Tennessee Valley Authority.

``(iii) Secretary.--The term `Secretary' means the
Secretary of Energy.
``(iv) Other terms.--The terms `combined heat and power
technology' and `waste heat to power technology' have the
meanings given those terms in section 2503(a) of the Heat
Efficiency through Applied Technology Act.
``(B) Guidance and standards.--
``(i) Establishment.--Not later than 1 year after the date
of enactment of this paragraph, the Secretary, in
consultation with the Commission and other appropriate
agencies, shall establish--

``(I) for generation with nameplate capacity up to 20
megawatts using all fuels--

``(aa) guidance for technical interconnection standards
that ensure interoperability with existing Federal
interconnection rules;
``(bb) model interconnection procedures, including
appropriate fast-track procedures; and
``(cc) model rules for determining and assigning
interconnection costs; and

``(II) model rules and procedures for determining fees or
rates for supplementary power, backup or standby power,
maintenance power, and interruptible power supplied to
facilities that operate combined heat and power technology
and waste heat to power technology that appropriately allow
for adequate cost recovery by an electric utility but are not
excessive.

``(ii) Requirement.--The standards established under clause
(i)(I) shall reflect, to the maximum extent practicable,
current best practices (as demonstrated in model codes and
rules adopted by States) to encourage the use of distributed
generation (such as combined heat and power technology and
waste heat to power technology) while ensuring the safety and
reliability of the interconnected units and the distribution
and transmission networks to which the units connect.
``(iii) Factors for consideration.--In establishing model
standards, rules, and procedures under clause (i), the
Secretary shall take into consideration--

``(I) for the model standards established under clause
(i)(I), the appropriateness of using standards or procedures
that vary based on unit size, fuel type, or other relevant
characteristics; and
``(II) for the model rules and procedures established under
clause (i)(II)--

``(aa) the best practices that are used to model outage
assumptions and contingencies to determine the fees or rates;
``(bb) the appropriate duration, magnitude, or usage of
demand charge ratchets;
``(cc) the benefits to the utility and ratepayers, such as
increased reliability, fuel diversification, enhanced power
quality, and reduced electric losses from the use of combined
heat and power technology and waste heat to power technology
by a qualifying facility; and
``(dd) alternative arrangements to the purchase of
supplementary, backup, or standby power by the owner of
combined heat and power technology and waste heat to power
technology generating units if the alternative arrangements
do not compromise system reliability and are nondiscretionary
and nonpreferential.
``(C) Determination by states and utilities.--
``(i) In general.--Not later than 90 days after the date on
which the Secretary completes the standards required under
subparagraph (B), each State regulatory authority (with
respect to each electric utility for which it has ratemaking
authority) and each nonregulated electric utility shall--

``(I)(aa) take into consideration each standard established
by subparagraph (B); and
``(bb) make a determination concerning whether it is
appropriate to implement that standard; or
``(II) set a hearing date for consideration under subclause
(I).

``(ii) Procedural requirements.--

``(I) Consideration.--The consideration under clause (i)
shall be made after public notice and hearing.
``(II) Determination.--A determination under clause
(i)(I)(bb) shall be made--

``(aa) in writing;
``(bb) based on findings included in the determination and
evidence presented at an applicable hearing; and
``(cc) available to the public.
``(iii) Deadline for compliance.--Not later than 2 years
after the date on which the Secretary completes the standards
required under subparagraph (B), each State regulatory
authority (with respect to each electric utility for which
the authority has ratemaking authority) and each nonregulated
electric utility shall--

``(I) complete the consideration under clause (i);
``(II) make the determination referred to in clause
(i)(I)(bb) with respect to each standard established under
subparagraph (B); and
``(III) submit to the Secretary and the Commission a report
describing the updated plans of the State regulatory
authority regarding, as applicable--

``(aa) interconnection procedures and tariff schedules that
reflect best practices to encourage the use of distributed
generation; or
``(bb) supplemental, backup, and standby power fees that
reflect best practices to encourage the use of distributed
generation.
``(iv) Effect of paragraph.--Nothing in this paragraph
prohibits any State regulatory authority or nonregulated
electric utility from making a determination pursuant to this
subparagraph that it is not appropriate to implement a
standard or any other applicable State law.
``(D) Implementation.--
``(i) In general.--The State regulatory authority (with
respect to each electric utility for which the authority has
ratemaking authority) or nonregulated electric utility, to
the extent consistent with otherwise applicable State law,
may--

``(I) implement any standard determined under subparagraph
(C) to be appropriate; or
``(II) decline to implement any such standard.

``(ii) Decision not to implement.--If a State regulatory
authority (with respect to each electric utility for which
the authority has ratemaking authority) or nonregulated
electric utility declines to implement a standard pursuant to
clause (i)(II), the authority or nonregulated electric
utility shall publish a notice describing the reasons for
that decision.
``(iii) Prior state actions.--Clause (ii) and subparagraph
(C)(ii) shall not apply to a standard established under
subparagraph (B) in the case of any electric utility in a
State if, before the date of enactment of this paragraph--

``(I) the State has implemented for the electric utility
the standard (or a comparable standard);
``(II) the State regulatory authority for the State, or the
relevant nonregulated electric utility, has conducted a
proceeding after December 31, 2013, to consider
implementation of the standard (or a comparable standard) for
the electric utility; or
``(III) the State legislature has voted on the
implementation of the standard (or a comparable standard) for
the electric utility.''.

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