[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5072 Introduced in House (IH)]
113th CONGRESS
2d Session
H. R. 5072
To amend title VI of the Public Utility Regulatory Policies Act of 1978
to establish a Federal renewable electricity standard for retail
electricity suppliers and a Federal energy efficiency resource standard
for electricity and natural gas suppliers, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 10, 2014
Mr. Welch (for himself and Mr. Ben Ray Lujan of New Mexico) introduced
the following bill; which was referred to the Committee on Energy and
Commerce
_______________________________________________________________________
A BILL
To amend title VI of the Public Utility Regulatory Policies Act of 1978
to establish a Federal renewable electricity standard for retail
electricity suppliers and a Federal energy efficiency resource standard
for electricity and natural gas suppliers, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``American Renewable Energy and
Efficiency Act''.
SEC. 2. FEDERAL RENEWABLE ELECTRICITY STANDARD.
Title VI of the Public Utility Regulatory Policies Act of 1978 (16
U.S.C. 2601 et seq.) is amended by adding after section 609 (7 U.S.C.
918c) the following:
``SEC. 610. FEDERAL RENEWABLE ELECTRICITY STANDARD.
``(a) Findings.--Congress finds that--
``(1) 118 countries have national goals for renewable
electricity production and 30 States and the District of
Columbia have enacted mandatory renewable electricity
standards;
``(2) the Federal renewable electricity standard
established by this section establishes a market-based policy
to create ongoing competition among renewable electricity
generators across the United States and provide the greatest
quantity of clean electricity for the lowest price; and
``(3) the United States has vast wind, solar, hydropower,
biomass, and geothermal resources that--
``(A) are renewable;
``(B) are dispersed widely across different regions
of the United States; and
``(C) can be harnessed to generate a significant
share of electricity in the United States.
``(b) Definitions.--In this section:
``(1) Brownfield site generation facility.--The term
`brownfield site generation facility' means a facility that--
``(A) generates renewable electricity; and
``(B) occupies a brownfield site (as that term is
defined in section 101 of the Comprehensive
Environmental Response, Compensation, and Liability Act
of 1980 (42 U.S.C. 9601)).
``(2) Distributed renewable generation facility.--The term
`distributed renewable generation facility' means a facility
that--
``(A) generates renewable electricity;
``(B) primarily serves one or more electric
consumers at or near the facility site; and
``(C) has not more than 2 megawatts in capacity.
``(3) Federal renewable electricity credit.--The term
`Federal renewable electricity credit' means a credit,
representing 1 megawatt hour of renewable electricity, issued
pursuant to subsection (f).
``(4) Indian land.--The term `Indian land' means--
``(A) any land within the limits of any Indian
reservation, pueblo, or rancheria;
``(B) any land not within the limits of any Indian
reservation, pueblo, or rancheria, title to which was
on the date of enactment of this section held by--
``(i) the United States for the benefit of
any Indian tribe or individual; or
``(ii) any Indian tribe or individual
subject to restriction by the United States
against alienation;
``(C) any dependent Indian community; or
``(D) any land conveyed under the Alaska Native
Claims Settlement Act (43 U.S.C. 1601 et seq.) to any
Native Corporation (as that term is defined in section
3 of that Act (43 U.S.C. 1602)).
``(5) Indian tribe.--The term `Indian tribe' means any
Indian tribe, band, nation, or other organized group or
community (including any Native village, Regional Corporation,
or Village Corporation (as those terms are defined in section 3
of the Alaska Native Claims Settlement Act (43 U.S.C. 1602)))
that is recognized as eligible for the special programs and
services provided by the United States to Indians because of
their status as Indians.
``(6) Qualified hydropower.--The term `qualified
hydropower' means--
``(A) energy produced from increased efficiency
achieved, or additions of capacity made, on or after
January 1, 2001, at a hydroelectric facility that--
``(i) was placed in service before that
date; and
``(ii) does not include additional energy
generated as a result of operational changes
not directly associated with efficiency
improvements or capacity additions; or
``(B) energy produced from generating capacity
added to a dam on or after January 1, 2001, if the
Commission certifies that--
``(i) the dam--
``(I) was placed in service before
the date of enactment of this section;
``(II) was operated for flood
control, navigation, or water supply
purposes; and
``(III) was not producing
hydroelectric power prior to the
addition of the capacity; and
``(ii) the hydroelectric project installed
on the dam--
``(I) is licensed or is exempt from
licensing by the Commission;
``(II) is in compliance with--
``(aa) the terms and
conditions of the license or
exemption; and
``(bb) other applicable
legal requirements for the
protection of environmental
quality, including applicable
fish passage requirements; and
``(III) is operated so that the
water surface elevation at any given
location and time that would have
occurred in the absence of the
hydroelectric project is maintained,
subject to any license or exemption
requirements that require changes in
water surface elevation for the purpose
of improving the environmental quality
of the affected waterway.
``(7) Qualified renewable biomass.--The term `qualified
renewable biomass' means renewable biomass that, when
combusted, yields, on a weighted-average basis, a 50-percent
reduction in lifecycle greenhouse gas emissions (as defined in
section 4(a) of the American Renewable Energy and Efficiency
Act) per unit of useful energy, as compared to the operation of
a combined cycle natural gas electric generating facility using
the most efficient commercially available technology, when
calculated over a 20-year life cycle.
``(8) Renewable biomass.--The term `renewable biomass'
means--
``(A) crops, crop byproducts, or crop residues
harvested from actively managed or fallow agricultural
land that is--
``(i) nonforested; and
``(ii) cleared prior to the date of
enactment of this section;
``(B) planted trees, brush, slash, and all residues
from an actively managed tree farm located on non-
Federal land cleared prior to the date of enactment of
this section;
``(C) precommercial-sized thinnings, slash, brush,
and residue from milled trees, from forested land that
is not--
``(i) old-growth or mature forest;
``(ii) identified under a State natural
heritage program as rare, imperiled, or
critically imperiled; or
``(iii) Federal land;
``(D) algae;
``(E) nonhazardous plant matter derived from
waste--
``(i) including separated yard waste,
landscape right-of-way trimmings, or food
waste; but
``(ii) not including municipal solid waste,
recyclable waste paper, painted, treated or
pressurized wood, or wood contaminated with
plastic or metals;
``(F) animal waste or animal byproducts, including
products of animal waste digesters;
``(G) vegetative matter removed from within 200
yards of any manmade structure or campground;
``(H) slash and precommercial-sized thinnings
harvested--
``(i) in environmentally sustainable
quantities, as determined by the appropriate
Federal land manager; and
``(ii) from National Forest System land or
public lands (as defined in section 103 of the
Federal Land Policy and Management Act of 1976
(43 U.S.C. 1702)), other than--
``(I) components of the National
Wilderness Preservation System
established under the Wilderness Act
(16 U.S.C. 1131 et seq.);
``(II) Wilderness Study Areas, as
identified by the Bureau of Land
Management;
``(III) inventoried roadless areas
and all unroaded areas of at least
5,000 acres;
``(IV) old growth and late seral
stands;
``(V) components of the National
Landscape Conservation System
administered by the Bureau of Land
Management; and
``(VI) national monuments; and
``(I) forest thinnings sourced as part of
catastrophic wildfire risk mitigation activities.
``(9) Renewable electricity.--The term `renewable
electricity' means electricity generated (including by means of
a fuel cell) from a renewable energy resource.
``(10) Renewable energy resource.--The term `renewable
energy resource' means each of the following:
``(A) Wind energy.
``(B) Solar energy.
``(C) Geothermal energy.
``(D) Qualified renewable biomass.
``(E) Biogas derived from qualified renewable
biomass.
``(F) Biofuels derived from qualified renewable
biomass.
``(G) Qualified hydropower.
``(H) Marine and hydrokinetic renewable energy (as
defined in section 632 of the Energy Independence and
Security Act of 2007 (42 U.S.C. 17211)).
``(I) Landfill gas.
``(11) Retail electric supplier.--
``(A) In general.--The term `retail electric
supplier' means, for any calendar year, an electric
utility that sells not fewer than 1,000,000 megawatt
hours of electric energy to electric consumers for
purposes other than resale during the preceding
calendar year.
``(B) Inclusions and limitations.--For purposes of
determining whether an electric utility qualifies as a
retail electric supplier under subparagraph (A)--
``(i) the sales made by any affiliate of
the electric utility to electric consumers,
other than sales to lessees or tenants of the
affiliate, for purposes other than resale shall
be considered to be sales made by the electric
utility; and
``(ii) sales made by the electric utility
to an affiliate, lessee, or tenant of the
electric utility shall not be treated as sales
to electric consumers.
``(C) Affiliate.--In this paragraph, the term
`affiliate' when used in relation to a person, means
another person that directly or indirectly owns or
controls, is owned or controlled by, or is under common
ownership or control with, that person, as determined
under regulations promulgated by the Commission.
``(12) Retail electric supplier's base quantity.--The term
`retail electric supplier's base quantity' means the total
quantity of electric energy sold by the retail electric
supplier, expressed in megawatt hours, to electric customers
for purposes other than resale during the relevant calendar
year, excluding--
``(A) electricity generated by a hydroelectric
facility, other than qualified hydropower; and
``(B) electricity generated by the combustion of
municipal solid waste.
``(13) Retire and retirement.--The terms `retire' and
`retirement' with respect to a Federal renewable electricity
credit, means to disqualify the credit for any subsequent use
under this section, regardless of whether the use is a sale,
transfer, exchange, or submission in satisfaction of a
compliance obligation.
``(c) Annual Compliance Obligation.--Except as otherwise provided
in subsection (g), for each of calendar years 2015 through 2040, not
later than March 31 of the following calendar year, each retail
electric supplier shall submit to the Commission a quantity of Federal
renewable electricity credits that is equal to at least the annual
target of the retail electric supplier under subsection (e).
``(d) Establishment of Program.--
``(1) In general.--Not later than 1 year after the date of
enactment of this section, the Commission shall promulgate
regulations to implement and enforce the requirements of this
section.
``(2) Considerations.--In promulgating regulations under
paragraph (1), the Commission shall, to the maximum extent
practicable--
``(A) preserve the integrity and incorporate best
practices of existing State and tribal renewable
electricity programs;
``(B) rely on existing and emerging State, tribal,
or regional tracking systems that issue and track non-
Federal renewable electricity credits; and
``(C) cooperate with States and Indian tribes--
``(i) to facilitate coordination between
State, tribal, and Federal renewable
electricity programs; and
``(ii) to minimize administrative burdens
and costs to retail electric suppliers.
``(e) Annual Compliance Requirement.--
``(1) Annual targets.--For each of calendar years 2015
through 2040, the annual target of a retail electric supplier
shall be equal to the product obtained by multiplying--
``(A) the required annual percentage for that
calendar year under paragraph (2); and
``(B) the retail electric supplier's base quantity
for that calendar year.
``(2) Required annual percentage.--
``(A) Calendar years 2015 through 2040.--Subject to
subparagraph (B), for each of calendar years 2015
through 2040, the required annual percentage shall be
as follows:
Required annual
``Year: percentage:
2015................................................... 6
2016................................................... 7
2017................................................... 9
2018................................................... 11
2019................................................... 13
2020................................................... 15
2021................................................... 17
2022................................................... 19
2023................................................... 21
2024................................................... 23
2025-2040.............................................. 25.
``(B) Increase authorized for calendar years 2026
through 2040.--The Commission may issue orders
increasing the required annual percentage amounts for
each of calendar years 2026 through 2040 to reflect the
maximum achievable level of renewable electricity
generation potential, taking into account regional
resource availability, economic feasibility, and
technological capability.
``(f) Federal Renewable Electricity Credits.--
``(1) In general.--
``(A) Issuance; tracking; verification.--The
regulations promulgated under this section shall
include provisions governing the issuance, tracking,
and verification of Federal renewable electricity
credits.
``(B) Credit ratio.--Except as provided in
paragraphs (2) through (4), the Commission shall issue
to each generator of renewable electricity, 1 Federal
renewable electricity credit for each megawatt hour of
renewable electricity generated by the generator after
December 31, 2014.
``(C) Serial number.--The Commission shall assign a
unique serial number to each Federal renewable
electricity credit.
``(2) Generation from certain state renewable electricity
programs.--
``(A) In general.--If renewable electricity is
generated with the support of payments from a retail
electric supplier pursuant to a State renewable
electricity program (whether through State alternative
compliance payments or through payments to a State
renewable electricity procurement fund or entity), the
Commission shall issue Federal renewable electricity
credits to the retail electric supplier for the portion
of the relevant renewable electricity generation that
is attributable to payments made by the retail electric
supplier, as determined pursuant to regulations
promulgated by the Commission.
``(B) Remaining portion.--For any remaining portion
of the relevant renewable electricity generation, the
Commission shall issue Federal renewable electricity
credits to the generator, as provided in paragraph (1),
except that not more than 1 Federal renewable
electricity credit shall be issued for the same
megawatt hour of electricity.
``(C) State guidance.--In determining how Federal
renewable electricity credits will be apportioned among
retail electric suppliers and generators under this
paragraph, the Commission shall consider information
and guidance issued by the applicable one or more
States.
``(3) Certain power sales contracts.--Except as otherwise
provided in paragraph (2), if a generator has sold renewable
electricity to a retail electric supplier under a contract for
power from a facility placed in service before the date of
enactment of this section, and the contract does not provide
for the determination of ownership of the Federal renewable
electricity credits associated with the generation, the
Commission shall issue the Federal renewable electricity
credits to the retail electric supplier for the duration of the
contract.
``(4) Credit multipliers.--
``(A) In general.--Except as provided in
subparagraph (B), the Commission shall issue--
``(i) not more than 3 Federal renewable
electricity credits for each megawatt hour of
renewable electricity generated by a
distributed renewable generation facility;
``(ii) not more than 2 Federal renewable
electricity credits for each megawatt hour of
renewable electricity generated on Indian land;
and
``(iii) not more than 2 Federal renewable
electricity credits for each megawatt hour of
renewable electricity generated by a brownfield
site generation facility.
``(B) Adjustment.--Except as provided in
subparagraph (C), not later than January 1, 2017, and
not less frequently than every 4 years thereafter, the
Commission shall review the effect of this paragraph on
the aggregate quantity of renewable electricity
produced under the standard and shall, as necessary and
after providing 1 year of notice, reduce the number of
Federal renewable electricity credits per megawatt hour
issued under this paragraph for any given energy source
or facility, but not below one, to ensure that the
number is no higher than the Commission determines is
necessary--
``(i) to incentivize incremental renewable
energy generation on Indian land and brownfield
sites; and
``(ii) to make distributed renewable
generation facilities cost competitive with
other sources of renewable electricity
generation.
``(C) Facilities placed in service after
enactment.--
``(i) In general.--For any renewable
generation facility placed in service after the
date of enactment of this section, subparagraph
(B) shall not apply for the first 10 years
after the date on which the facility is placed
in service.
``(ii) Initial period.--For each year
during the 10-year period described in clause
(i), the Commission shall issue to the facility
the same number of Federal renewable
electricity credits per megawatt hour as are
issued to that facility in the year in which
the facility is placed in service.
``(iii) Subsequent period.--After the 10-
year period described in clause (i), the
Commission shall issue Federal renewable
electricity credits to the facility in
accordance with subparagraph (B).
``(5) Credits based on qualified hydropower.--For purposes
of this subsection, the number of Federal renewable electricity
credits issued for qualified hydropower shall be calculated--
``(A) based solely on the increase in average
annual generation directly resulting from the
efficiency improvements or capacity additions described
in subsection (a)(6)(A); and
``(B) using the same water flow information used to
determine a historic average annual generation baseline
for the hydroelectric facility, as certified by the
Commission.
``(6) Generation from mixed renewable and nonrenewable
resources.--If electricity is generated using both a renewable
energy resource and an energy source that is not a renewable
energy resource (such as cofiring of renewable biomass and
fossil fuel), the Commission shall issue Federal renewable
electricity credits based on the proportion of the electricity
that is attributable to the renewable energy resource.
``(7) Prohibition against double-counting.--The Commission
shall ensure that--
``(A) no Federal renewable electricity credit is
used more than once for compliance with this section;
and
``(B) except as provided in paragraph (4), not more
than 1 Federal renewable electricity credit is issued
for any megawatt hour of renewable electricity.
``(8) Trading.--The lawful holder of a Federal renewable
electricity credit may--
``(A) sell, exchange, or transfer the credit;
``(B) submit the credit for compliance under
subsection (c); or
``(C) submit the credit for retirement by the
Commission.
``(9) Banking.--
``(A) In general.--A Federal renewable electricity
credit may be submitted in satisfaction of the
compliance obligation under subsection (c) for the
compliance year in which the credit was issued or for
any of the 3 immediately subsequent compliance years.
``(B) Retirement.--The Commission shall retire any
Federal renewable electricity credit that has not been
retired by April 2 of the calendar year that is 3 years
after the calendar year during which the credit was
issued.
``(10) Retirement.--The Commission shall retire a Federal
renewable electricity credit immediately upon submission by the
lawful holder of the credit, whether in satisfaction of a
compliance obligation under subsection (c) or for another
reason.
``(g) Alternative Compliance Payments.--
``(1) In general.--A retail electric supplier may satisfy
the requirements of subsection (c) in whole or in part by
submitting in accordance with this subsection, in lieu of each
Federal renewable electricity credit that would otherwise be
due, a payment equal to $50, adjusted for inflation on January
1 of each year following calendar year 2015, in accordance with
regulations promulgated by the Commission.
``(2) Payment to state funds.--
``(A) In general.--Except as otherwise provided in
this paragraph, payments made under this subsection
shall be made directly to one or more States in which
the retail electric supplier sells electric energy, in
proportion to the portion of the retail electric
supplier's base quantity that is sold within each
applicable State, if--
``(i) the payments are deposited directly
into a fund of the State treasury established
for that purpose; and
``(ii) the State uses the funds in
accordance with paragraphs (3) and (4).
``(B) Noncompliance.--If the Commission determines
that a State is in substantial noncompliance with
paragraph (3) or (4), the Commission shall direct that
any future alternative compliance payments that would
otherwise be paid to the State under this subsection
shall instead be paid to the Commission and deposited
in the Treasury.
``(3) State use of funds.--As a condition of receipt of
alternative compliance payments under this subsection, a State
shall use the payments exclusively for--
``(A) deploying technologies that generate
electricity from renewable energy resources; or
``(B) implementing cost-effective energy efficiency
programs to achieve energy savings.
``(4) Reporting.--
``(A) In general.--As a condition of receipt of
alternative compliance payments pursuant to this
subsection, a State shall submit to the Commission an
annual report, in accordance with regulations
promulgated by the Commission, containing a full
accounting of the use of the payments, including a
detailed description of the activities funded by the
payments and demonstrating compliance with the
requirements of this subsection.
``(B) Deadline.--A State shall submit a report
under this paragraph--
``(i) not later than 1 year after the date
on which the first alternative compliance
payment is received; and
``(ii) every 1 year thereafter until all
alternative compliance payments are expended.
``(h) Information Collection.--
``(1) In general.--The Commission may require any retail
electric supplier, renewable electricity generator, or any
other entity that the Commission determines appropriate, to
provide any information the Commission determines appropriate
to carry out this section.
``(2) Failure to submit; false or misleading information.--
Any entity required to submit information under paragraph (1)
that fails to submit the information or submits false or
misleading information shall be in violation of this section.
``(i) Enforcement and Judicial Review.--
``(1) Failure to submit credits.--If any person fails to
comply with the requirements of subsection (c) or (g), the
person shall be liable to pay to the Commission a civil penalty
equal to the product obtained by multiplying--
``(A) double the alternative compliance payment
calculated under subsection (g)(1); and
``(B) the aggregate quantity of Federal renewable
electricity credits or equivalent alternative
compliance payments that the person failed to submit in
violation of the requirements of subsections (c) and
(g).
``(2) Enforcement.--The Commission shall assess a civil
penalty under paragraph (1) in accordance with the procedures
described in section 31(d) of the Federal Power Act (16 U.S.C.
823b(d)).
``(3) Violation of requirement of regulations or orders.--
``(A) In general.--Any person who violates or fails
or refuses to comply with any requirement of a
regulation promulgated or order issued under this
section shall be subject to a civil penalty under
section 316A(b) of the Federal Power Act (16 U.S.C.
825o-1(b)).
``(B) Assessment.--The penalty under subparagraph
(A) shall be assessed by the Commission in the same
manner as in the case of a violation referred to in
section 316A(b) of that Act.
``(4) Judicial review.--
``(A) In general.--Any person aggrieved by a final
action taken by the Commission under this section,
other than the assessment of a civil penalty under
paragraphs (1) through (3), may use the procedures for
review described in section 313 of the Federal Power
Act (16 U.S.C. 825l).
``(B) Reference.--For purposes of this paragraph,
references to an order in section 313 of that Act shall
be considered to refer also to all other final actions
of the Commission under this section other than the
assessment of a civil penalty under paragraphs (1)
through (3).
``(j) Administration.--Nothing in this section--
``(1) diminishes or qualifies any authority of a State, a
political subdivision of a State, or an Indian tribe--
``(A) to adopt or enforce any law or regulation
respecting renewable electricity, including any law or
regulation establishing requirements that are more
stringent than those established by this section,
provided that no such law or regulation may relieve any
person of any requirement otherwise applicable under
this section; or
``(B) to regulate the acquisition and disposition
of Federal renewable electricity credits by retail
electric suppliers within the jurisdiction of the
State, political subdivision, or Indian tribe,
including the authority to require the retail electric
supplier to acquire and submit to the Commission for
retirement Federal renewable electricity credits in
excess of those submitted under this section; or
``(2) affects the application of or the responsibility for
compliance with any other provision of law or regulation,
including environmental and licensing requirements.
``(k) Sunset.--The authority provided by this section expires on
December 31, 2041.''.
SEC. 3. CLARIFYING STATE AUTHORITY TO ADOPT RENEWABLE ENERGY
INCENTIVES.
Section 210 of the Public Utility Regulatory Policies Act of 1978
(16 U.S.C. 824a-3) is amended by adding at the end the following:
``(o) Clarification of State Authority To Adopt Renewable Energy
Incentives.--
``(1) Definition of state-approved production incentive
program.--In this subsection, the term `State-approved
production incentive program' means a requirement imposed
pursuant to State law or by a State regulatory authority acting
within its authority under State law that an electric utility
purchase renewable energy (as defined in section 609(a)) at a
specified rate.
``(2) State authority to adopt renewable energy
incentives.--Notwithstanding any other provision of this Act or
the Federal Power Act (16 U.S.C. 791a et seq.), a State
legislature or regulatory authority may set the rates for a
sale of electric energy by a facility generating electric
energy from renewable energy sources pursuant to a State-
approved production incentive program under which the facility
voluntarily participates in the State-approved production
incentive program.''.
SEC. 4. GUIDELINES FOR DETERMINING QUALIFIED RENEWABLE BIOMASS.
(a) Definitions.--In this section:
(1) Administrator.--The term ``Administrator'' means the
Administrator of the Environmental Protection Agency.
(2) Lifecycle greenhouse gas emissions.--
(A) In general.--The term ``lifecycle greenhouse
gas emissions'' means the aggregate quantity of
greenhouse gas emissions, adjusted to account for the
relative global warming potential of the emissions
relative to all greenhouse gas emissions.
(B) Inclusions.--For purposes of subparagraph (A),
the term ``greenhouse gas emissions'' includes--
(i) direct emissions; and
(ii) significant indirect emissions,
including from--
(I) land use changes and temporal
changes in forest carbon sequestration;
(II) biomass harvests, regrowth,
and avoided decomposition related to
the full fuel lifecycle, including all
stages of fuel and feedstock production
and distribution; and
(III) feedstock generation or
extraction through the distribution and
delivery of the finished fuel to the
ultimate consumer.
(b) Guidelines.--Not later than 1 year after the date of enactment
of this Act, the Administrator shall, recognizing the recommendations
of and coordinating with the Scientific Advisory Board of the
Environmental Protection Agency regarding the accounting of biogenic
carbon dioxide emissions and after notice and public comment, issue
guidelines for calculating lifecycle greenhouse gas emissions for
renewable biomass (as that term is defined in section 610(b) of the
Public Utility Regulatory Policies Act of 1978).
SEC. 5. ENERGY EFFICIENCY RESOURCE STANDARD FOR RETAIL ELECTRICITY AND
NATURAL GAS SUPPLIERS.
(a) In General.--Title VI of the Public Utility Regulatory Policies
Act of 1978 (16 U.S.C. 2601 et seq.) (as amended by section 2) is
amended by adding after section 610 the following:
``SEC. 611. FEDERAL ENERGY EFFICIENCY RESOURCE STANDARD FOR RETAIL
ELECTRICITY AND NATURAL GAS SUPPLIERS.
``(a) Findings.--Congress finds that--
``(1) the Federal energy efficiency resource standard
established by this section--
``(A) establishes nationwide minimum levels of
electricity and natural gas savings to be achieved
through utility efficiency programs, building energy
codes, appliance standards, and related efficiency
measures; and
``(B) rewards energy-saving improvements achieved
through--
``(i) end-use energy efficiency upgrades;
``(ii) reduced losses in transmission and
distribution of energy; and
``(iii) fuel-switching, to the extent that
the switching results in reduced primary energy
use; and
``(2) in light of the cost-effective energy efficiency
opportunities that exist across the United States in every
sector of the economy, retail electricity suppliers, retail
natural gas suppliers, and States should--
``(A) consider energy efficiency as a resource in
utility planning and procurement activities; and
``(B) seek to achieve all energy efficiency that is
available at lower cost than other energy supply
options.
``(b) Definitions.--In this section:
``(1) Affiliate.--The term `affiliate' when used in
relation to a person, means another person that owns or
controls, is owned or controlled by, or is under common
ownership control with, that person, as determined under
regulations promulgated by the Secretary.
``(2) ASHRAE, ansi, and iesna.--The terms `ASHRAE', `ANSI',
and `IESNA' mean the American Society of Heating, Refrigerating
and Air Conditioning Engineers, the American National Standards
Institute, and the Illuminating Engineering Society of North
America, respectively.
``(3) Base quantity.--
``(A) In general.--The term `base quantity', with
respect to a retail electricity supplier or retail
natural gas supplier, means, for each calendar year for
which a performance standard is established under
subsection (d), the average annual quantity of
electricity or natural gas delivered by the retail
electricity supplier or retail natural gas supplier to
retail customers during the 3 calendar years
immediately preceding the year that compliance is
required under subsection (d)(1).
``(B) Exclusion.--The term `base quantity', with
respect to a retail natural gas supplier, does not
include natural gas delivered for purposes of
electricity generation.
``(4) CHP savings.--The term `CHP savings' means--
``(A) CHP system savings from a combined heat and
power system that commences operation after the date of
enactment of this section; and
``(B) the increase in CHP system savings from
upgrading or replacing, after the date of enactment of
this section, a combined heat and power system that
commenced operation on or before the date of enactment
of this section.
``(5) CHP system savings.--The term `CHP system savings'
means the electric output, and the electricity saved due to the
mechanical output, of a combined heat and power system,
adjusted to reflect any increase in fuel consumption by that
system as compared to the fuel that would have been required to
produce an equivalent useful thermal energy output in a
separate thermal-only system, as determined in accordance with
regulations promulgated by the Secretary.
``(6) Codes and standards savings.--
``(A) In general.--The term `codes and standards
savings' means a reduction in end-use electricity or
natural gas consumption by a retail electricity
supplier or in the service territory of a retail
natural gas supplier as a result of the adoption and
implementation, after the date of enactment of this
section, of new or revised appliance and equipment
efficiency standards or building energy codes.
``(B) Baselines.--In calculating codes and
standards savings under subparagraph (A)--
``(i) the baseline for calculating savings
from building codes shall be the more stringent
of--
``(I)(aa) the 2009 International
Energy Conservation Code for
residential buildings; or
``(bb) the ASHRAE/ANSI/IESNA
Standard 90.1-2007 for commercial
buildings; or
``(II) the applicable State building code
in effect on the date of enactment of this
section; and
``(ii) the baseline for calculating savings
from appliance standards shall be the average
efficiency of new appliances in the applicable
one or more categories prior to the adoption
and implementation of the new standard.
``(7) Combined heat and power system.--The term `combined
heat and power system' means a system that uses the same energy
source both for the generation of electrical or mechanical
power and the production of steam or another form of useful
thermal energy, if--
``(A) the system meets any requirements relating to
efficiency and other operating characteristics that the
Secretary promulgates by regulation; and
``(B) the net wholesale sales of electricity by a
facility does not exceed 50 percent of total annual
electric generation by the facility.
``(8) Cost-effective.--The term `cost-effective', with
respect to an energy efficiency measure, means that the measure
achieves a net present value of economic benefits over the life
of the measure, both directly to the energy consumer and to the
economy, that is greater than the net present value of the cost
of the measure over the life of the measure, both directly to
the energy consumer and to the economy, using the societal
benefit-cost test calculated using the weighted average utility
cost of capital as the discount rate.
``(9) Customer facility savings.--The term `customer
facility savings' means a reduction in end-use electricity or
natural gas consumption (including waste heat energy savings)
at a facility of an end-use consumer of electricity or natural
gas served by a retail electricity supplier or natural gas
supplier, as compared to--
``(A) in the case of a new facility, consumption at
a reference facility of average efficiency;
``(B) in the case of an existing facility,
consumption at the facility during a base period of not
less than 1 year;
``(C) in the case of new equipment that replaces
existing equipment at the end of the useful life of the
existing equipment, consumption by new equipment of
average efficiency of the same equipment type, except
that customer savings under this subparagraph shall not
be counted towards customer savings under subparagraph
(A) or (B); and
``(D) in the case of new equipment that replaces
existing equipment with remaining useful life--
``(i) consumption of the existing equipment
for the remaining useful life of the equipment;
and
``(ii) thereafter, consumption of new
equipment of average efficiency.
``(10) Electricity savings.--The term `electricity savings'
means reductions in electricity consumption achieved through
measures implemented after the date of enactment of this
section, as determined in accordance with regulations
promulgated by the Secretary, that are limited to--
``(A) customer facility savings of electricity,
adjusted to reflect any associated increase in fuel
consumption at the facility;
``(B) reductions in distribution system losses of
electricity achieved by a retail electricity supplier,
as compared to losses attributable to new or
replacement distribution system equipment of average
efficiency, as defined in regulations promulgated by
the Secretary;
``(C) CHP savings;
``(D) codes and standards savings of electricity;
and
``(E) fuel switching energy savings that results in
net savings of electricity.
``(11) Fuel switching energy savings.--
``(A) In general.--The term `fuel-switching energy
savings' means net energy savings, calculated in
accordance with subparagraph (B), from end-user
switches from 1 energy source to another, as determined
in accordance with regulations promulgated by the
Secretary.
``(B) Calculation.--For purposes of calculating
fuel-switching net energy savings--
``(i) electricity use shall be evaluated
based on the average quantity of fuel burned at
a power plant to provide each kilowatt hour of
electricity;
``(ii) electricity and natural gas use
shall include losses in the transmission and
distribution system; and
``(iii) fuel-switching that is not cost-
effective to the end-user shall not be counted.
``(12) Natural gas savings.--The term `natural gas savings'
means reductions in natural gas consumption from measures
implemented after the date of enactment of this section, as
determined in accordance with regulations promulgated by the
Secretary, that are limited to--
``(A) customer facility savings of natural gas,
adjusted to reflect any associated increase in
electricity consumption or consumption of other fuels
at the facility;
``(B) reductions in leakage, operational losses,
and consumption of natural gas fuel to operate a gas
distribution system, achieved by a retail natural gas
supplier, as compared to similar leakage, losses, and
consumption during a base period of not less than 1
year;
``(C) codes and standards savings of natural gas;
and
``(D) fuel switching energy savings that results in
net savings of natural gas.
``(13) Power pool.--The term `power pool' means an
association of two or more interconnected electric systems that
have entered into an agreement to coordinate operations and
planning for improved reliability and efficiencies, including a
Regional Transmission Organization or an Independent System
Operator, as determined by the Secretary.
``(14) Reporting period.--The term `reporting period'
means--
``(A) calendar year 2015; and
``(B) each successive 2-calendar-year period
thereafter.
``(15) Retail electricity supplier.--
``(A) In general.--The term `retail electricity
supplier' means, for any given calendar year, an
electric utility that sells not less than 1,000,000
megawatt hours of electric energy to electric consumers
for purposes other than resale during the preceding
calendar.
``(B) Inclusions and limitations.--For purposes of
determining whether an electric utility qualifies as a
retail electricity supplier under subparagraph (A)--
``(i) deliveries by any affiliate of an
electric utility to electric consumers for
purposes other than resale shall be considered
to be deliveries by the electric utility; and
``(ii) deliveries by any electric utility
to a lessee, tenant, or affiliate of the
electric utility shall not be considered to be
deliveries to electric consumers.
``(16) Retail natural gas supplier.--
``(A) In general.--The term `retail natural gas
supplier' means, for any given calendar year, a local
distribution company (as defined in section 2 of the
Natural Gas Policy Act of 1978 (15 U.S.C. 3301)), that
delivered to natural gas consumers more than
5,000,000,000 cubic feet of natural gas for purposes
other than resale during the preceding calendar year.
``(B) Inclusions and limitations.--For purposes of
determining whether a person qualifies as a retail
natural gas supplier under subparagraph (A)--
``(i) deliveries of natural gas by any
affiliate of a local distribution company to
consumers for purposes other than resale shall
be considered to be deliveries by the local
distribution company; and
``(ii) deliveries of natural gas to a
lessee, tenant, or affiliate of a local
distribution company shall not be considered to
be deliveries to natural gas consumers.
``(17) Third-party efficiency provider.--The term `third-
party efficiency provider' means any retailer, building owner,
energy service company, financial institution or other
commercial, industrial or nonprofit entity that is capable of
providing electricity savings or natural gas savings in
accordance with subsections (e) and (f).
``(18) Waste heat energy savings.--
``(A) In general.--The term `waste heat energy
savings' means a reduction in electricity or natural
gas consumption that results from a modification of an
industrial or commercial system that commenced
operation before the date of enactment of this section,
in order to recapture electrical, mechanical, or
thermal energy that would otherwise be wasted, as
determined in accordance with regulations promulgated
by the Secretary.
``(B) Inclusion.--Such savings shall be included as
part of customer facility savings.
``(c) Establishment of Program.--
``(1) Regulations.--Not later than 1 year after the date of
enactment of this section, the Secretary shall, by regulation,
establish a program to implement and enforce the requirements
of this section, including by--
``(A) establishing measurement and verification
procedures and standards under subsection (f);
``(B) establishing requirements under which retail
electricity suppliers and retail natural gas suppliers
shall--
``(i) demonstrate, document, and report the
compliance of the retail electricity suppliers
and retail natural gas suppliers with the
performance standards under subsection (d); and
``(ii) estimate the impact of the standards
on current and future electricity and natural
gas use in the service territories of the
suppliers; and
``(C) establishing requirements governing
applications for, and implementation of, delegated
State administration under subsection (h).
``(2) Coordination with state programs.--In establishing
and implementing this section, the Secretary shall, to the
maximum extent practicable, preserve the integrity and
incorporate best practices of existing State energy efficiency
programs.
``(d) Performance Standards.--
``(1) Compliance obligation.--Not later than May 1 of the
calendar year immediately following each reporting period--
``(A) each retail electricity supplier shall submit
to the Secretary a report, in accordance with
regulations promulgated by the Secretary, demonstrating
that the retail electricity supplier has achieved
annual electricity savings (adjusted to account for any
attrition of savings measures implemented in prior
years) in each calendar year that are equal to the
applicable percentage, established under paragraph (2),
(3), or (4), of the base quantity of the retail
electricity supplier; and
``(B) each retail natural gas supplier shall submit
to the Secretary a report, in accordance with
regulations promulgated by the Secretary, demonstrating
that it has achieved cumulative natural gas savings
(adjusted to account for any attrition of savings
measures implemented in prior years) in each calendar
year that are equal to the applicable percentage,
established under paragraph (2), (3), or (4), of the
base quantity of such retail natural gas supplier,
subject to business-as-usual consumption projections
calculated in accordance with subsection (f)(1)(P).
``(2) Standards for 2015 through 2025.--For each of
calendar years 2015 through 2025, the applicable percentages
are as follows:
------------------------------------------------------------------------
Cumulative Electricity Cumulative Natural Gas
``Calendar Year Savings Percentage Savings Percentage
------------------------------------------------------------------------
2015 1.00 0.50
------------------------------------------------------------------------
2016 2.00 1.25
------------------------------------------------------------------------
2017 3.00 2.00
------------------------------------------------------------------------
2018 4.25 3.00
------------------------------------------------------------------------
2019 5.50 4.00
------------------------------------------------------------------------
2020 7.00 5.00
------------------------------------------------------------------------
2021 8.50 6.00
------------------------------------------------------------------------
2022 10.00 7.00
------------------------------------------------------------------------
2023 11.50 8.00
------------------------------------------------------------------------
2024 13.25 9.00
------------------------------------------------------------------------
2025 15.00 10.00.
------------------------------------------------------------------------
``(3) Subsequent years.--
``(A) Calendar years 2026 through 2040.--Not later
than December 31, 2023, the Secretary shall promulgate
regulations establishing performance standards
(expressed as applicable percentages of base quantity
for both cumulative electricity savings and cumulative
natural gas savings) for each of calendar years 2026
through 2040.
``(B) Subsequent extensions.--Except as provided in
subparagraph (A), not later than December 31 of the
penultimate reporting period for which performance
standards have been established under this paragraph,
the Secretary shall promulgate regulations establishing
performance standards (expressed as applicable
percentages of base quantity for both cumulative
electricity savings and cumulative natural gas savings)
for the 10-calendar-year period following the last
calendar year for which performance standards
previously were established.
``(C) Requirements.--The Secretary shall establish
standards under this paragraph at levels reflecting the
maximum achievable level of cost-effective energy
efficiency potential, taking into account--
``(i) cost-effective energy savings
achieved by leading retail electricity
suppliers and retail natural gas suppliers;
``(ii) opportunities for new codes and
standard savings;
``(iii) technology improvements; and
``(iv) other indicators of cost-effective
energy efficiency potential.
``(D) Minimum percentage.--In no case shall the
applicable percentages for any calendar year be less
than the applicable percentages for calendar year 2025
(including any increase in the standard for calendar
year 2025 established pursuant to paragraph (4)).
``(4) Midcourse review and adjustment of standards.--
``(A) In general.--Not later than December 31,
2020, and at 10-year intervals thereafter, the
Secretary shall--
``(i) review the most recent standards
established under paragraph (2) or (3); and
``(ii) increase the standards by regulation
if the Secretary determines that additional
cost-effective energy efficiency potential is
achievable, taking into account the
requirements described in paragraph (3)(C).
``(B) Lead time.--If the Secretary revises
standards under this paragraph, the regulations shall
provide adequate lead time to ensure that compliance
with the increased standards is feasible.
``(5) Delay of submission for first reporting period.--
``(A) In general.--Notwithstanding paragraphs (1)
and (2), for the 2015 reporting period, the Secretary
may accept a request from a retail electricity supplier
or a retail natural gas supplier to delay the required
submission of documentation of all or part of the
required savings for up to 2 years.
``(B) Plan for compliance.--The request for delay
under subparagraph (A) shall include a plan for coming
into full compliance by the end of the 2016-2017
reporting period.
``(6) Applying unused savings to future years.--If savings
achieved in a year exceed the performance standards specified
in this subsection, any savings in excess of the performance
standards may be applied toward performance standards specified
for future years.
``(e) Transfers of Electricity or Natural Gas Savings.--
``(1) Bilateral contracts for savings transfers.--Subject
to the limitations of this subsection, a retail electricity
supplier or retail natural gas supplier may use electricity
savings or natural gas savings purchased pursuant to a
bilateral contract from another retail electricity supplier or
retail natural gas supplier, a State, or a third-party
efficiency provider to meet the applicable performance standard
under subsection (d).
``(2) Requirements.--Electricity savings or natural gas
savings purchased and used for compliance under this subsection
shall be--
``(A) measured and verified in accordance with
subsection (f);
``(B) reported in accordance with subsection (d);
and
``(C) achieved within the same State as is served
by the retail electricity supplier or retail natural
gas supplier.
``(3) Exception.--Notwithstanding paragraph (2)(C), a State
regulatory authority may authorize a retail electricity
supplier or a retail natural gas supplier regulated by the
State regulatory authority to purchase savings achieved in a
different State, if--
``(A) the savings are achieved within the same
power pool; and
``(B) the State regulatory authority that regulates
the purchaser oversees the measurement and verification
of the savings pursuant to the procedures and standards
applicable in the State in which the purchaser is
located.
``(4) Regulatory approval.--Nothing in this subsection
limits or affects the authority of a State regulatory authority
to require a retail electricity supplier or retail natural gas
supplier that is regulated by the State regulatory authority to
obtain the authorization or approval of the State regulatory
authority of a contract for transfer of electricity savings or
natural gas savings under this paragraph.
``(5) Limitations.--To optimize the achievement of cost-
effective efficiency potential, the Secretary may prescribe
such limitations as the Secretary determines appropriate with
respect to the proportion of the compliance obligation of a
retail electricity or natural gas supplier under the applicable
performance standards under subsection (d) that may be met
using electricity savings or natural gas savings that are
purchased under this subsection.
``(f) Measurement and Verification of Savings.--The regulations
promulgated pursuant to subsection (c) shall include--
``(1) procedures and standards for defining and measuring
electricity savings and natural gas savings that can be counted
towards the performance standards established under subsection
(d), that shall--
``(A) specify the types of energy efficiency and
energy conservation measures that can be counted;
``(B) require that energy consumption estimates for
customer facilities or portions of facilities in the
applicable base and current years be adjusted, as
appropriate, to account for changes in weather, level
of production, and building area;
``(C) account for the useful life of measures;
``(D) include assigned savings values for specific,
commonly used measures;
``(E) allow for savings from a program to be
estimated based on extrapolation from a representative
sample of participating customers;
``(F) include procedures for calculating and
documenting CHP savings, fuel-switching energy savings,
and waste heat energy savings;
``(G) establish methods for calculating codes and
standards energy savings, including the use of verified
compliance rates;
``(H) include procedures for calculating and
documenting--
``(i) customer facility savings and
reductions in distribution system losses of
electricity and natural gas that are achieved
as a result of smart grid deployment, as
described in section 1301 of the Energy
Independence and Security Act of 2007 (42
U.S.C. 17381); and
``(ii) reductions in natural gas
distribution system losses attributable to
pipeline repair and replacement programs;
``(I) count only measures and savings that are
additional to business-as-usual customer purchase
practices;
``(J) ensure that the retail electricity supplier
or retail natural gas supplier claiming the electricity
savings or natural gas savings, including codes and
standards savings, played a significant role in
achieving the savings (including through the activities
of a designated agent of the supplier or through the
purchase of transferred electricity savings or natural
gas savings);
``(K) avoid double-counting of savings used for
compliance with this section, including transferred
savings;
``(L) include electricity savings or natural gas
savings from programs administered by the retail
electric supplier or natural gas supplier that are
funded by Federal, State, or other sources;
``(M) credit large customer self-directed
electricity savings or natural gas savings to the
retail electricity supplier or the retail natural gas
supplier if the large customers receive incentives or
rate reductions from the retail supplier for self-
directed energy efficiency improvements;
``(N) include procedures for counting electricity
savings and natural gas savings achieved by solar water
heating, solar light pipe technology, geothermal heat
pumps, and other technologies utilizing renewable
resources that reduce on-site energy use;
``(O) in any State in which the State regulatory
authority has designated one or more entities to
administer electric ratepayer-funded efficiency
programs approved by the State regulatory authority,
provide that electricity savings and natural gas
savings achieved through the programs shall be
distributed proportionally among retail electric
suppliers and retail natural gas suppliers; and
``(P) include guidance for utilities to calculate
and document business-as-usual consumption projections;
and
``(2) procedures and standards for third-party verification
of reported electricity savings or natural gas savings.
``(g) Enforcement and Judicial Review.--
``(1) Review of retail supplier reports.--
``(A) In general.--The Secretary shall review each
report submitted to the Secretary by a retail
electricity supplier or retail natural gas supplier
under subsection (d) to verify that the applicable
performance standards under subsection (d) have been
met.
``(B) Exclusion.--In determining compliance with
the applicable performance standards under subsection
(d), the Secretary shall exclude reported electricity
savings or natural gas savings that are not adequately
demonstrated and documented, in accordance with the
regulations promulgated under subsections (d), (e), and
(f).
``(2) Penalty for failure to document adequate savings.--If
a retail electricity supplier or a retail natural gas supplier
fails to demonstrate compliance with an applicable performance
standard under subsection (d), or to pay to the State an
applicable alternative compliance payment under subsection
(h)(4), the Secretary shall assess against the retail
electricity supplier or retail natural gas supplier a civil
penalty for each failure in an amount equal to, as adjusted for
inflation in accordance with such regulations as the Secretary
may promulgate--
``(A) $100 per megawatt hour of electricity savings
or alternative compliance payment that the retail
electricity supplier failed to achieve or make,
respectively; or
``(B) $10 per million Btu of natural gas savings or
alternative compliance payment that the retail natural
gas supplier failed to achieve or make, respectively.
``(3) Offsetting state penalties.--The Secretary shall
reduce the amount of any penalty under paragraph (2) by the
amount paid by the relevant retail electricity supplier or
retail natural gas supplier to a State for failure to comply
with the requirements of a State energy efficiency resource
standard during the same compliance period, if the State
standard--
``(A) is comparable in type to the Federal standard
established under this section; and
``(B) is more stringent than the applicable
performance standards under subsection (d).
``(4) Enforcement procedures.--The Secretary shall assess a
civil penalty, as provided under paragraph (2), in accordance
with the procedures described in section 333(d) of the Energy
Policy and Conservation Act (42 U.S.C. 6303(d)).
``(5) Judicial review.--
``(A) In general.--Any person adversely affected by
a final action taken by the Secretary under this
section, other than the assessment of a civil penalty,
may use the procedures for review described in section
336(b) of the Energy Policy and Conservation Act (42
U.S.C. 6306(b)).
``(B) Reference.--In this paragraph, references to
a rule in section 336(b) of the Energy Policy and
Conservation Act (42 U.S.C. 6306(b)) shall be
considered to refer also to all other final actions of
the Secretary under this section other than the
assessment of a civil penalty.
``(h) State Administration.--
``(1) In general.--Upon receipt of an application from the
Governor of a State (including the Mayor of the District of
Columbia), the Secretary may delegate to the State
responsibility for administering this section within the
territory of the State if the Secretary determines that the
State will implement an energy efficiency program that meets or
exceeds the requirements of this section, including--
``(A) achieving electricity savings and natural gas
savings that are at least as great as those required
under the applicable performance standards established
under subsection (d);
``(B) reviewing reports and verifying electricity
savings and natural gas savings achieved in the State
(including savings transferred from outside the State);
and
``(C) collecting any alternative compliance
payments under paragraph (4) and using the payments to
implement cost-effective efficiency programs.
``(2) Secretarial determination.--Not later than 180 days
after the date on which a complete application is received by
the Secretary, the Secretary shall make a substantive
determination approving or disapproving a State application,
after public notice and comment.
``(3) Alternative measurement and verification procedures
and standards.--As part of an application submitted under
paragraph (1), a State may request to use alternative
measurement and verification procedures and standards from the
procedures and standards described in subsection (f), if the
State demonstrates that the alternative procedures and
standards provide a level of accuracy of measurement and
verification that are at least equivalent to the Federal
procedures and standards under subsection (f).
``(4) Alternative compliance payments.--
``(A) In general.--As part of an application
submitted under paragraph (1), a State may permit
retail electricity suppliers or retail natural gas
suppliers to pay to the State, by not later than April
1 of the calendar year immediately following the
applicable reporting period, an alternative compliance
payment in an amount equal to, as adjusted for
inflation in accordance with such regulations as the
Secretary may promulgate, not less than--
``(i) $50 per megawatt hour of electricity
savings needed to make up any deficit with
regard to a compliance obligation under the
applicable performance standard; or
``(ii) $5 per million Btu of natural gas
savings needed to make up any deficit with
regard to a compliance obligation under the
applicable performance standard.
``(B) Use of payments.--Alternative compliance
payments collected by a State under subparagraph (A)
shall be used by the State to administer the delegated
authority of the State under this section and to
implement cost-effective energy efficiency programs
that--
``(i) to the maximum extent practicable,
achieve electricity savings and natural gas
savings in the State sufficient to make up the
deficit associated with the alternative
compliance payments; and
``(ii) can be measured and verified in
accordance with the applicable procedures and
standards under subsection (f) or paragraph
(3), as applicable.
``(5) Review of state implementation.--
``(A) Periodic review.--Every 2 years, the
Secretary shall review State implementation of this
section for conformance with the requirements of this
section in approximately \1/2\ of the States that have
received approval under this subsection to administer
the program, so that each State shall be reviewed at
least every 4 years.
``(B) Report.--To facilitate the review under
subparagraph (A), the Secretary may require the State
to submit a report demonstrating the conformance of the
State with the requirements of this section,
including--
``(i) reports submitted by retail
electricity suppliers and retail natural gas
suppliers to the State demonstrating compliance
with applicable performance standards;
``(ii) the impact of the standards on
projected electricity and natural gas demand
within the State;
``(iii) an accounting of the use of
alternative compliance payments by the State
and the resulting electricity savings and
natural gas savings achieved; and
``(iv) any other information that the
Secretary determines appropriate.
``(C) Review upon petition.--Notwithstanding
subparagraph (A), upon receipt of a public petition
containing credible allegation of substantial
deficiencies, the Secretary shall promptly review the
State implementation of delegated authority under this
section.
``(D) Deficiencies.--
``(i) In general.--In completing a review
under this paragraph, if the Secretary finds
deficiencies, the Secretary shall--
``(I) notify the State of the
deficiencies;
``(II) direct the State to correct
the deficiencies; and
``(III) require the State to report
to the Secretary on progress made by
not later than 180 days after the date
on which the State receives notice
under subclause (I).
``(ii) Substantial deficiencies.--If the
deficiencies are substantial, the Secretary
shall--
``(I) disallow the reported
electricity savings or natural gas
savings that the Secretary determines
are not credible due to deficiencies;
``(II) re-review the State not
later than 2 years after the date on
which the original review was
completed; and
``(III) if substantial deficiencies
remain uncorrected after the review
provided for under subclause (II),
revoke the authority of the State to
administer the program established
under this section.
``(6) Calls for revision of state applications.--As a
condition of maintaining the delegated authority of a State to
administer this section, the Secretary may require a State to
submit a revised application under paragraph (1) if the
Secretary has--
``(A) promulgated new or revised performance
standards under subsection (d);
``(B) promulgated new or substantially revised
measurement and verification procedures and standards
under subsection (f); or
``(C) otherwise substantially revised the program
established under this section.
``(7) Cost recovery, fixed cost recovery and shareholder
incentives.--State utility regulatory commissions are
encouraged to review the rules and regulations of the
commission to ensure that utilities under the jurisdiction of
the commission can--
``(A) recover the direct costs of energy efficiency
programs;
``(B) fully recover authorized fixed costs,
including lost margins from lower annual sales due to
energy efficiency programs; and
``(C) earn an incentive for shareholders if the
energy efficiency standards are achieved.
``(i) Information and Reports.--In accordance with section 13 of
the Federal Energy Administration Act of 1974 (15 U.S.C. 772), the
Secretary may require any retail electricity supplier, retail natural
gas supplier, third-party efficiency provider, or any other entity that
the Secretary determines appropriate, to provide any information the
Secretary determines appropriate to carry out this section.
``(j) State Law.--Nothing in this section diminishes or qualifies
any authority of a State or political subdivision of a State to adopt
or enforce any law or regulation respecting electricity savings or
natural gas savings, including any law or regulation establishing
energy efficiency requirements that are more stringent than those under
this section, except that no State law or regulation shall relieve any
person of any requirement otherwise applicable under this section.''.
SEC. 6. PROGRAM REVIEW.
(a) National Academy of Sciences Review.--The Secretary of Energy
shall enter into a contract with the National Academy of Sciences under
which the Academy shall, not later than July 1, 2019, and every 10
years thereafter, submit to Congress, the Federal Energy Regulatory
Commission, and the Secretary of Energy a comprehensive evaluation of
all aspects of the programs established under this Act and under
sections 610 and 611 of the Public Utility Regulatory Policies Act of
1978 (as added by this Act), including--
(1) an evaluation of the effectiveness of the programs,
including the specific design elements of the programs, in
increasing the efficiency of retail natural gas and electricity
distribution and consumption and increasing the deployment of
renewable electricity capacity;
(2) the opportunities for additional technologies and
sources of efficiency and renewable electricity that have
emerged since the date of enactment of this Act;
(3) the impact of the programs on the reliability of
electricity and natural gas supply;
(4) the net benefits or costs of the programs to the United
States and the States, including--
(A) the effects on electricity and natural gas
demand and prices;
(B) the economic development benefits of
investment;
(C) environmental costs and benefits;
(D) the impacts on public health and health care
costs; and
(E) avoided costs related to environmental and
congestion mitigation investments that otherwise would
have been required;
(5) an assessment of the benefits and costs of increasing
the performance standards established under section 611(d) of
the Public Utility Regulatory Policies Act of 1978 (as added by
this Act);
(6) the feasibility, advantages, and disadvantages of
alternative models for demonstrating compliance with a Federal
energy efficiency resource standard, including--
(A) establishing a national trading system for
energy efficiency credits; or
(B) demonstrating compliance through actual
reductions in delivery or sales of electricity and
natural gas, rather than on program savings; and
(7) recommendations regarding potential changes to this
section, to regulations and procedures for implementing this
section, or to related public policies.
(b) Recommendations to Congress.--Not later than January 1, 2020,
and every 10 years thereafter, the Secretary of Energy shall submit to
the Committee on Energy and Commerce of the House of Representatives
and the Committee on Energy and Natural Resources of the Senate a
report making recommendations for modifications and improvements to the
programs established under this Act and under sections 610 and 611 of
the Public Utility Regulatory Policies Act of 1978 (as added by this
Act), including an explanation of the inconsistencies, if any, between
the recommendations of the Secretary of Energy and the recommendations
included in the evaluation of the National Academy of Sciences under
paragraph (1).
SEC. 7. CONFORMING AMENDMENT.
The table of contents of the Public Utility Regulatory Policies Act
of 1978 (16 U.S.C. prec. 2601) is amended by adding at the end of the
items relating to title VI the following:
``Sec. 609. Rural and remote communities electrification grants.
``Sec. 610. Federal renewable electricity standard.
``Sec. 611. Federal energy efficiency resource standard for retail
electricity and natural gas suppliers.''.
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