SMARTER Act

Bill Number

H.R. 1148

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Energy

Status

Introduced

Latest Action

2025-02-07: Referred to the House Committee on Energy and Commerce.

Last Updated

2025-03-11T18:04:26Z

AI-Generated Summary

Purpose

The SMARTER Act (H.R. 1148) aims to protect electricity customers, known as ratepayers, from having to pay for the costs of smart grid projects through their utility bills. It modifies federal rules to prohibit electric utilities from recovering these expenses from customers, emphasizing fiscal responsibility in utility investments. A smart grid refers to modernized electrical systems that use digital technology for better efficiency, reliability, and integration of renewable energy sources.

Key Provisions

• Repeal of Existing Standard: Removes a prior rule (Section 111(d)(18)(B) of the Public Utility Regulatory Policies Act of 1978, or PURPA) that encouraged states to allow utilities to recover smart grid costs from ratepayers.
• New Prohibition on Cost Recovery: Adds a new standard (Section 111(d)(22) of PURPA) stating that no electric utility can charge ratepayers for capital costs, operating expenses, or other costs related to deploying smart grid systems.
• State Review Requirements:
• State regulatory authorities (bodies that oversee utility rates) and nonregulated utilities (those not subject to full state oversight) must begin reviewing this new standard within 1 year of the bill's enactment and complete their determination within 2 years.
• If a state fails to act, the federal prohibition applies automatically.
• Exceptions for Prior Actions: States are exempt from new reviews if they have already implemented a similar prohibition, held proceedings on it, or had their legislature vote on it in the 3 years before enactment.
• Handling of Ongoing Proceedings: Adjusts rules to ensure prior or pending state processes align with the new federal timeline.

Significant Changes to Existing Law

• Shifts PURPA from promoting smart grid investments (by allowing cost recovery) to outright banning recovery of those costs from ratepayers, reversing a 2005 amendment that supported such recoveries to encourage grid modernization.
• Introduces strict federal timelines for state action, with automatic enforcement if states do not comply, strengthening federal oversight of state utility regulation.
• Provides limited exemptions based on prior state efforts, preserving some state flexibility while ensuring nationwide consistency.

Potential Impacts

• On Citizens (Ratepayers): Could lower electricity bills by preventing utilities from passing smart grid costs onto customers, potentially saving households money but possibly delaying benefits like improved grid reliability or outage prevention.
• On Government Agencies: State regulatory authorities will face new mandates to review and enforce the prohibition, increasing administrative workload. The Federal Energy Regulatory Commission (FERC) may indirectly oversee compliance through PURPA enforcement.
• On Utilities: Electric utilities, including investor-owned and nonregulated ones, may face financial barriers to smart grid upgrades, potentially slowing deployment of advanced technologies and affecting energy efficiency or renewable integration.
• On International Relations: Minimal direct impact, though reduced smart grid adoption could indirectly affect U.S. competitiveness in global clean energy markets or collaborations on energy infrastructure.

Main Stakeholders Affected

• Electric Utilities: Bear the brunt of the cost recovery ban, which could limit their ability to fund infrastructure upgrades without alternative financing.
• Ratepayers and Consumers: Primary beneficiaries through potential bill reductions, but may experience trade-offs in service quality if smart grid projects stall.
• State Regulatory Authorities: Responsible for implementing and enforcing the changes, affecting their role in balancing utility costs and consumer protections.
• Nonregulated Utilities: Such as rural electric cooperatives or municipal utilities, which must also comply despite less oversight.
• Environmental and Energy Advocates: Could oppose the bill if it hinders progress toward modern, sustainable grids.

Notable Legal, Constitutional, or Political Implications

• Legal: Reinforces PURPA's framework for federal-state utility regulation but may invite challenges under the Tenth Amendment (which reserves powers to states) if seen as unduly interfering with state ratemaking authority. The bill's automatic enforcement clause could lead to litigation over compliance failures.
• Constitutional: Balances federal preemption (overriding state allowances for cost recovery) with deference to prior state actions, respecting federalism principles while imposing national standards.
• Political: Highlights debates over consumer protection versus energy innovation; as an introduced bill in the 119th Congress (2025), it reflects partisan divides on utility spending and infrastructure funding, potentially influencing broader energy policy discussions.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Van Drew, Jefferson [R-NJ-2]

Recent Actions

• 2025-02-07: Referred to the House Committee on Energy and Commerce.
• 2025-02-07: Introduced in House
• 2025-02-07: Introduced in House

Bill Versions

• Stop Misappropriating Ratepayer Tariffs for Excessive Resources Act — issued 2025-02-07 — PDF (4 pages)