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Repeals paragraph (18)(B) of section 111(d) of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)(18)(B)).
Adds a new paragraph (22) to subsection (d) prohibiting electric utilities from recovering from ratepayers any capital, operating expenditure, or other costs relating to deployment of any smart grid system.
Adds at the end of section 112(b) a new paragraph (8) establishing time limits specific to the standard in paragraph (22) of section 111(d): commence consideration or set a hearing date within 1 year of enactment of the paragraph; complete consideration and make the determination within 2 years of enactment of the paragraph.
Adds language to section 112(c) specifying that, for the standard established by paragraph (22) of section 111(d), references in that subsection to 'the date of enactment of this Act' shall be deemed references to the date of enactment of paragraph (22).
Amends section 124 to provide that, for the standard established by paragraph (22) of section 111(d), references in that section to 'the date of enactment of this Act' shall be deemed references to the date of enactment of paragraph (22).
Prohibits electric utilities from billing customers for costs tied to installing or operating smart grid systems. It also changes the Public Utility Regulatory Policies Act (PURPA) references to reflect that prohibition and requires state regulators and nonregulated utilities to review existing rules: start within 1 year and complete within 2 years (with limited exceptions for states that already acted). The bill updates enactment-date references for enforcement and pending proceedings.
Repeals Section 111(d)(18)(B) of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)(18)(B)).
Adds paragraph (22) to section 111(d) of PURPA (16 U.S.C. 2621(d)) to prohibit any electric utility from recovering from ratepayers any capital, operating, or other costs related to deploying any smart grid system.
Requires each State regulatory authority and each nonregulated electric utility to commence consideration under section 111, or set a hearing date for consideration, regarding the new paragraph (22) within 1 year after the date of enactment.
Requires each State regulatory authority and each nonregulated electric utility to complete consideration and make the determination under section 111 with respect to paragraph (22) within 2 years after the date of enactment.
Amends section 112(c) of PURPA (16 U.S.C. 2622(c)) so that references to the date of enactment of this Act are treated as references to the date of enactment of paragraph (22) for purposes of failure-to-comply provisions.
Who is affected and how:
Electric utilities: Directly affected because they can no longer include smart grid installation or operation costs on customer bills. Utilities must revise rate cases, tariff language, and cost-recovery proposals; they may shift costs to shareholders, seek state or federal grants, or reallocate existing approved expenditures. Some utilities may delay or redesign projects if alternative funding is not available.
Electricity customers (residential, commercial, industrial): Likely to see no new line-item charges for smart grid deployments; in the short term this prevents direct customer surcharges tied to smart grid rollout. Indirect effects depend on how utilities recover costs — if utilities shift recovery to other rates or reduce investment, customers could experience different long-term reliability or modernization outcomes.
State public utility commissions and regulators: Must conduct timely rule reviews and may need to reopen or revise prior orders, adjudications, or pending rate proceedings to conform with the prohibition. This creates administrative workload and potential rulemaking or contested-case activity within the 1–2 year timetable.
Nonregulated utilities and retail providers: Subject to the same review requirement; must confirm tariffs and contractual terms comply and amend practices if they currently pass smart grid costs to customers.
Smart grid technology vendors and contractors (private industry): May face market uncertainty or delayed sales if utilities cannot recover costs through customer billing; vendors may need to seek alternative contracting models (e.g., performance contracts, utility-shared-risk agreements) or pursue state/federal incentives.
Grid modernization and reliability outcomes: Pace and character of investments could change. Some jurisdictions may accelerate grant-funded upgrades; others may slow deployments where utilities lack acceptable recovery mechanisms. This could affect grid resilience, integration of distributed resources, and adoption of advanced metering/management technologies.
Legal and regulatory landscape: Pending cost-recovery proceedings that depend on customer charges may need modification; utilities or other stakeholders could pursue litigation or seek legislative/regulatory clarifications in some states.
Overall, the law shifts the financing question for smart grid investments away from direct customer surcharges, increases regulatory review work for state commissions and nonregulated utilities, and creates uncertainty about how modernization projects will be funded and paced without explicit new funding streams.
Expand sections to see detailed analysis
Referred to the House Committee on Energy and Commerce.
Introduced February 7, 2025 by Jefferson Van Drew · Last progress February 7, 2025
Referred to the House Committee on Energy and Commerce.
Introduced in House