The Act would further amend PURPA by directing states to designate “smart grid coordinators” or “distribution system operators” – a regulated utility, other party or combination of the two – to manage DERs, and for state regulatory authorities to consider nontransmission alternatives when a transmission upgrade is proposed. To reduce ratepayer costs of potential transmission upgrades, the Act would allow nontransmission alternatives to “receive the avoided cost of the transmission upgrade, minus a reasonable discount, as determined by the State regulatory authority.” Also, if the non-transmission alternative alleviates the need for a reliability-based transmission upgrade, its cost can be recovered in the rate base.
In support of the Act, Sen. King highlights various concerns in background and fact sheets, such as expensive grid-connection fees and “simplistic” net metering formulas that “do not properly compensate grid owners,” thus discouraging “consumers from pursuing newer technologies.” Instead, Sen. King states, “[e]lectricity rate structures must account for the value of the grid and the value of DER and send rational and more sophisticated price signals to the market.”
If passed, the Act would enhance the groundwork already laid for DERs in states such as California, New York and Massachusetts, and it could encourage further investment in DERs. The Act is presently under review by the Senate Committee on Energy and Natural Resources.