HR1148-119

What This Bill Does

The SMARTER Act changes electric utility cost recovery for smart grid systems. It repeals the Public Utility Regulatory Policies Act provision that encouraged recovery of smart-grid investment costs and adds a new federal standard barring electric utilities from recovering capital, operating, or other smart-grid deployment costs from ratepayers. State regulatory authorities and nonregulated utilities must start consideration and hearing procedures within one year and complete their review within two years. The bill therefore shifts smart-grid cost risk from electricity customers to utilities, investors, or other non-ratepayer sources.

Who Benefits and How

Electric ratepayers benefit because utilities cannot pass smart-grid deployment costs through rates under the new standard. Consumer utility advocates benefit from a federal policy argument against charging customers for smart-meter and grid-modernization costs. Low-income electricity customers benefit if utility bills are shielded from smart-grid cost recovery. State utility commissioners benefit from a clear federal standard to consider in rate proceedings.

Who Bears the Burden and How

Electric utilities bear the burden because they lose a ratepayer recovery path for smart-grid capital and operating costs. Smart-grid vendors may lose utility demand if deployment becomes harder to finance through rates. State utility regulators must open consideration and hearing processes on the new standard. Nonregulated utilities must conduct their own consideration process within the statutory timeline.

Key Provisions

• Repeals the PURPA smart-grid cost-recovery provision.
• Prohibits electric utilities from recovering smart-grid deployment costs from ratepayers.
• Requires state regulatory authorities to consider the new federal standard within one year.
• Requires completion of state or nonregulated-utility consideration within two years.