I 

110TH CONGRESS 

1ST SESSION H. R. 2529 

To establish efficiency resource standards for retail electricity and natural 

gas distributors, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 24, 2007 

Mr. MARKEY introduced the following bill; which was referred to the 

Committee on Energy and Commerce 

A BILL 

To establish efficiency resource standards for retail electricity 

and natural gas distributors, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. RETAIL ELECTRIC AND GAS UTILITY EFFI4 CIENCY POLICIES. 

5 (a) IN GENERAL.—The Public Utility Regulatory 

6 Policies Act of 1978 is amended by adding the following 

7 after section 609: 


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1 ‘‘SEC. 610. EFFICIENCY RESOURCE STANDARDS FOR RE2 TAIL ELECTRICITY AND NATURAL GAS DIS3 TRIBUTORS. 

4 ‘‘(a) DEFINITIONS.—In this section: 

5 ‘‘(1) BASE QUANTITY.—The term ‘base quan6 tity’, with respect to a retail electricity or natural 

7 gas distributor, means the total quantity of electric 

8 energy or natural gas delivered by the retail elec9 tricity or natural gas distributor to retail customers 

10 during the most recent calendar year for which in11 formation is available. 

12 ‘‘(2) COMBINED HEAT AND POWER SYSTEM.— 

13 The terms ‘combined heat and power system’ and 

14 ‘CHP system’ mean a system that— 

15 ‘‘(A) uses the same energy source for the 

16 simultaneous or sequential generation of elec17 trical power, mechanical power, or both, in com18 bination with the generation of steam or other 

19 forms of useful thermal energy (including heat20 ing and cooling applications); 

21 ‘‘(B) produces at least 20 percent of its 

22 total useful energy in the form of thermal en23 ergy, and at least 15 percent of its total useful 

24 energy in the form of electrical or mechanical 

25 power (or a combination thereof); 


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1 ‘‘(C) except for systems designed for oper2 ation on cellulosic biomass fuel, has a marginal 

3 net heat rate of no more than 7,500 Btu/kWh, 

4 calculated on a higher heating value basis; 

5 ‘‘(D) is designed for continuous operation; 

6 and 

7 ‘‘(E) if generating electricity provides such 

8 electricity primarily for use for a facility or 

9 group of facilities located near the point where 

10 the electricity is generated, and from which net 

11 wholesale sales of electricity are not in excess of 

12 50 percent of total annual generation. 

13 ‘‘(3) CUSTOMER FACILITY.—The term ‘cus14 tomer facility’ means an end-use consumer of elec15 tricity or natural gas served by a retail electricity or 

16 natural gas distributor. 

17 ‘‘(4) DEEMED SAVINGS.—The term ‘deemed 

18 savings’ means an estimate of the average per unit 

19 savings from installation of specific common energy 

20 efficiency measures. Deemed savings estimates shall 

21 be based on field studies or billing analyses of sav22 ings at a sample of sites where the specific measure 

23 is installed. 

24 ‘‘(5) ELECTRIC AND NATURAL GAS SAVINGS

25 CORPORATION.—The term ‘Electric and Natural Gas 


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1 Savings Corporation’ means the corporation certified 

2 pursuant to subsection (d)(7)(C). 

3 ‘‘(6) ELECTRICITY.—(A) The term ‘electricity 

4 savings’ means any of the following: 

5 ‘‘(i) Reductions in end-use electricity con6 sumption achieved by a customer facility rel7 ative to— 

8 ‘‘(I) consumption at the same facility 

9 in a base year, as defined in rules issued 

10 by the Secretary; 

11 ‘‘(II) in the case of replacement of 

12 equipment at the end of its life or of new 

13 equipment that does not replace existing 

14 equipment, consumption of new equipment 

15 of average efficiency, as defined in rules 

16 issued by the Secretary; or 

17 ‘‘(III) in the case of a new facility, 

18 consumption at a reference facility, as de19 fined in rules issued by the Secretary. 

20 ‘‘(ii) Reductions in distribution system 

21 losses of electricity achieved by a retail elec22 tricity distributor relative to losses attributable 

23 to new or replacement distribution system 

24 equipment of average efficiency, as defined in 

25 rules issued by the Secretary. 


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1 ‘‘(iii) Any combination of the foregoing. 

2 ‘‘(B) The reductions referred to in subpara3 graph (A) may be due to— 

4 ‘‘(i) energy efficiency measures, including 

5 demand response measures that result in im6 proved energy efficiency; 

7 ‘‘(ii) combined heat and power systems as 

8 calculated under subparagraph (D); 

9 ‘‘(iii) recycled energy; or 

10 ‘‘(iv) in the case of distribution system 

11 losses, upgraded distribution transformers, up12 graded electrical connectors, high temperature 

13 superconductors, or other measures to reduce 

14 such losses as specified in rules issued by the 

15 Secretary. 

16 ‘‘(C) The reductions in end-use electricity con17 sumption at a customer facility shall be reduced on 

18 a Btu basis by the Btu equivalent of any associated 

19 increases in fuel consumption at such facility. The 

20 conversion of any such fuel consumption increase to 

21 an equivalent amount of electricity on a Btu basis 

22 shall be determined by the Secretary based on the 

23 average heat rate of central station generation in the 

24 region (accounting for average transmission and disVerDate Aug 31 2005 23:06 Jun 04, 2007 Jkt 059200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2529.IH H2529

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1 tribution losses in the region), as determined in 

2 rules issued by the Secretary. 

3 ‘‘(D) For a combined heat and power (CHP) 

4 system, the electricity savings shall be the electricity 

5 and mechanical power generated by the CHP system 

6 net of fuel used by the system, where the fuel used 

7 is the product of— 

8 ‘‘(i) the electricity and mechanical power 

9 generated by the CHP system; 

10 ‘‘(ii) the net-effective heat rate for the 

11 CHP system; and 

12 ‘‘(iii) the inverse of the average heat rate 

13 of central station generation in the region, tak14 ing into consideration avoided transmission and 

15 distribution losses resulting from on-site gen16 eration as determined under subparagraph (C). 

17 ‘‘(7) NATURAL GAS SAVINGS.—(A) The term 

18 ‘natural gas savings’ means— 

19 ‘‘(i) reductions in end-use natural gas con20 sumption achieved by a customer facility rel21 ative to— 

22 ‘‘(I) consumption at the same facility 

23 in a base year, as defined in rules issued 

24 by the Secretary; 


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1 ‘‘(II) in the case of replacement of 

2 equipment at the end of its life or of new 

3 equipment that does not replace existing 

4 equipment, consumption of new equipment 

5 of average efficiency, as defined in rules 

6 issued by the Secretary; or 

7 ‘‘(III) in the case of a new facility, 

8 consumption at a reference facility, as de9 fined in rules issued by the Secretary; 

10 ‘‘(ii) reductions in leakage, operational 

11 losses, and gas fuel consumption in the oper12 ation of a gas distribution system achieved by 

13 a retail gas distributor relative to such losses in 

14 a base year, as defined in rules issued by the 

15 Secretary; or 

16 ‘‘(iii) any combination of the foregoing. 

17 ‘‘(B) The natural gas savings may be due to— 

18 ‘‘(i) energy efficiency measures; 

19 ‘‘(ii) recycled energy; or 

20 ‘‘(iii) in the case of gas distribution system 

21 losses, technologies and practices as specified in 

22 rules issued by the Secretary including meas23 ures recommended for gas distribution systems 

24 by the Natural Gas STAR Program adminis25 tered by the Environmental Protection Agency. 


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1 ‘‘(C) The reductions in natural gas consump2 tion shall be reduced on a Btu equivalent basis by 

3 any associated increases in the consumption of elec4 tricity or other substitute fuels by a customer facility 

5 or a natural gas distributor, as determined under 

6 rules issued by the Secretary. The conversion of any 

7 such increase in the consumption of electricity or 

8 other fuels to an equivalent amount of natural gas 

9 consumption on a Btu basis shall be determined by 

10 the Secretary based on the average heat rate of cen11 tral station electric generation in the region and av12 erage transmission and distribution losses in the re13 gion, as determined under rules issued by the Sec14 retary. 

15 ‘‘(8) NET EFFECTIVE HEAT RATE.—The term 

16 ‘net effective heat rate’ means a ratio, the numer17 ator of which is the higher heating value of the in18 crement of fuel required by a CHP system to 

19 produce electricity and mechanical power, over and 

20 above the fuel that would be required to produce the 

21 equivalent thermal output of the CHP system by a 

22 system without power generation, expressed in Brit23 ish thermal units, and the denominator of which is 

24 the power output of the CHP system, expressed in 

25 kilowatt-hours. 


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1 ‘‘(9) PERFORMANCE STANDARD.—The term 

2 ‘performance standard’ means the performance 

3 standard for energy savings established under sub4 section (b). 

5 ‘‘(10) RECYCLED ENERGY.—The term ‘recycled 

6 energy’ means electrical or mechanical power, or 

7 both, or thermal energy produced by modifying an 

8 industrial or commercial system that was in place 

9 prior to January 1, 2007, such that the modified 

10 system— 

11 ‘‘(A) recaptures energy that would other12 wise be wasted from sources, including— 

13 ‘‘(i) waste heat from industrial proc14 esses, natural gas compressor stations, and 

15 other sources; 

16 ‘‘(ii) pressure in a fluid or gas system 

17 including but not limited to steam, natural 

18 gas, and water; and 

19 ‘‘(iii) blast furnace, coke oven, carbon 

20 black, and petrochemical process waste 

21 gas, or pollution control projects, including 

22 thermal oxidizers and gas flares; and 

23 ‘‘(B) uses equipment and technologies in24 cluding— 


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1 ‘‘(i) back-pressure turbines in parallel 

2 with existing pressure-reducing valves in 

3 steam, water and gas systems; 

4 ‘‘(ii) organic Rankine, Stirling, or 

5 Kalina cycle heat engine systems driven by 

6 waste heat; or 

7 ‘‘(iii) heat recovery steam generators 

8 with steam turbine generators that recover 

9 waste heat. 

10 ‘‘(11) RETAIL ELECTRICITY OR NATURAL GAS

11 DISTRIBUTOR.—The term ‘retail electricity or nat12 ural gas distributor’ means a person (including a 

13 Federal, State, or local entity) that— 

14 ‘‘(A) distributes electric energy or natural 

15 gas to consumers in the United States for a cal16 endar year, including electricity or natural gas 

17 supplied by unregulated suppliers, regardless of 

18 whether such suppliers are affiliated or unaffili19 ated with the distributor; and 

20 ‘‘(B) sold not less than 800,000 megawatt21 hours of electric energy or 1 billion cubic feet 

22 of natural gas to consumers in the United 

23 States for purposes other than resale during the 

24 preceding calendar year. 


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1 For purposes of this paragraph, electricity or nat2 ural gas sold at wholesale to large end-use customers 

3 shall be included but natural gas sold to wholesale 

4 electric generators to generate electric power for re5 sale shall not be not included. 

6 ‘‘(b) PERFORMANCE STANDARD.— 

7 ‘‘(1) IN GENERAL.—Each retail electricity or 

8 natural gas distributor shall undertake electricity 

9 and natural gas savings measures in each calendar 

10 year beginning with 2009 that produce electricity 

11 and natural gas savings as a percentage of the dis12 tributor’s base quantity at the applicable rate speci13 fied in paragraph (5). 

14 ‘‘(2) SAVINGS.—The savings described in para15 graph (1) shall represent savings realized in the 

16 specified year from measures implemented in that 

17 year and all preceding years beginning with 2007. 

18 ‘‘(3) LIMITS.—Savings from combined heat and 

19 power systems, recycled energy, and electricity or 

20 natural gas distribution system measures may be 

21 used by a distributor to satisfy no more than 50 per22 cent of the applicable savings specified for any year 

23 in the table contained in paragraph (5). 

24 ‘‘(4) COMPLIANCE.—(A) Each retail electricity 

25 or natural gas distributor subject to this subsection 


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1 may use any electricity or natural gas savings meas2 ures available to the distributor to achieve compli3 ance with the performance standard established 

4 under this section, on the condition that the elec5 tricity and natural gas savings achieved by such 

6 measures are calculated and verified pursuant to the 

7 rules issued under subsection (c). 

8 ‘‘(B) A retail electricity or natural gas dis9 tributor may demonstrate compliance with the per10 formance standard through the accumulation of— 

11 ‘‘(i) electricity or natural gas savings cred12 its achieved by such electricity or natural gas 

13 distributor and certified under clause (i) of sub14 section (d)(2)(A); 

15 ‘‘(ii) electricity or natural gas savings cred16 its obtained by purchase under subsection 

17 (d)(6); 

18 ‘‘(iii) electricity or natural gas savings 

19 credits borrowed against future years under 

20 subsection (d)(7); or 

21 ‘‘(iv) any combination of credits described 

22 in clauses (i), (ii), and (iii). 

23 ‘‘(5) APPLICABLE RATES.—(A) The applicable 

24 rates referred to in paragraph (1) are as follows: 


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‘‘Year Electricity Savings (%) Natural Gas Savings 

(%) 

2009 0.25 0.20 

2010 0.75 0.50 

2011 1.50 0.80 

2012 2.25 1.15 

2013 3.00 1.50 

2014 4.00 2.00 

2015 5.00 2.50 

2016 6.00 3.00 

2017 7.00 3.50 

2018 8.00 4.00 

2019 9.00 4.50 

2020 10.00 5.00 

1 ‘‘(B) At least 2 years before the beginning of 

2 any year after 2020, the Secretary, after notice and 

3 opportunity for comment, shall set the applicable 

4 rate, taking into consideration the economic and en5 vironmental benefits of the energy savings and the 

6 cost of the savings measures. 

7 ‘‘(c) DETERMINATION OF COMPLIANCE RULES.—Not 

8 later than 1 year after the date of enactment of this sec9 tion, the Secretary shall issue rules that describe the 

10 means to be used to calculate and verify compliance with 

11 the performance standard that include each of the fol12 lowing: 

13 ‘‘(1) Procedures and standards for defining and 

14 measuring electricity savings and natural gas sav15 ings from customer facility end-uses and from utility 


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1 distribution systems that occur in a calendar year 

2 (including measures implemented in previous cal3 endar years beginning in 2007). At a minimum, 

4 these procedures and standards shall— 

5 ‘‘(A) specify the types and categories of ef6 ficiency measures that will be eligible for certifi7 cation under subsection (d)(2); 

8 ‘‘(B) require that energy consumption esti9 mates for customer facilities or portions thereof 

10 in the base and current years be adjusted, when 

11 appropriate, to account for changes in weather, 

12 level of production, and building area; 

13 ‘‘(C) allow energy consumption estimates 

14 from discrete processes and equipment within 

15 industrial facilities in the base and current 

16 years to be adjusted for factors identified by 

17 rule that may be responsible for significant 

18 year-to-year changes; 

19 ‘‘(D) allow energy consumption estimates 

20 from discrete processes and equipment within 

21 industrial facilities in the base and current 

22 years to be adjusted for factors identified by 

23 rule that may be responsible for significant 

24 year-to-year changes; 


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1 ‘‘(E) account for the useful life of energy 

2 saving measures; 

3 ‘‘(F) include deemed savings values for 

4 commonly-used efficiency measures and make 

5 provision for such values to be periodically re6 viewed and revised; 

7 ‘‘(G) minimize the chances that more than 

8 one entity will claim credit for the same sav9 ings; and 

10 ‘‘(H) exclude savings that— 

11 ‘‘(i) are attributable to measures or 

12 systems installed before January 1, 2007, 

13 or to modifications of processes or systems 

14 undertaken prior to January 1, 2007; 

15 ‘‘(ii) are otherwise required by Fed16 eral, State, local, or Indian tribal law or 

17 regulation; 

18 ‘‘(iii) are achieved without the inter19 vention of the electricity or natural gas dis20 tributor or of any other entity seeking 

21 credits under paragraph (2)(A)(ii) of this 

22 Act, except as provided under subsection 

23 (e); 

24 ‘‘(iv) are attributable to Federal, 

25 State, or local tax incentives, grants, loans, 


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1 or other public financial support for energy 

2 efficiency measures; or 

3 ‘‘(v) have already been credited under 

4 this section to another entity. 

5 ‘‘(2) Procedures and standards for verification 

6 of electricity or natural gas savings reported by re7 tail electricity and natural gas distributors. At a 

8 minimum, such procedures and standards shall— 

9 ‘‘(A) provide for periodic spot checks on a 

10 sample of sites to verify that measures are in 

11 place and functioning; 

12 ‘‘(B) provide that savings estimates are 

13 calibrated with billing analysis or end-use me14 tering on a sample of sites where technically 

15 feasible and economically justified; and 

16 ‘‘(C) provide for the protection of cus17 tomers’ proprietary information against unwar18 ranted disclosure. 

19 ‘‘(3) Requirements for the content and format 

20 of a biennial report from each retail electricity or 

21 natural gas distributor demonstrating the compli22 ance of the distributor with the performance stand23 ard, including a detailed description of the calcula24 tion of electricity and natural gas savings to enable 

25 the appropriate regulatory authority to verify and 


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1 enforce compliance with the requirements of this sec2 tion (including regulations issued under this sec3 tion). 

4 ‘‘(4) Provision for reviewing and revising the 

5 electricity and natural gas consumption of reference 

6 facilities and of new equipment of average efficiency 

7 at intervals of not greater than 4 years. 

8 ‘‘(d) CREDIT AND TRADING SYSTEM.— 

9 ‘‘(1) ESTABLISHMENT.—Not later than one 

10 year after the date of enactment of this section, and 

11 after consultation with the Administrator of the En12 vironmental Protection Agency, the Secretary shall 

13 issue rules establishing a nationwide credit and cred14 it trading system for electricity and natural gas sav15 ings. 

16 ‘‘(2) CREDITS.— 

17 ‘‘(A) IN GENERAL.—In accordance with 

18 the rules issued under paragraph (1), the Sec19 retary— 

20 ‘‘(i) shall certify as credits, electricity 

21 and natural gas savings achieved by a re22 tail electricity or natural gas distributor in 

23 a given calendar year if the savings comply 

24 with the rules issued under subsection 

25 (c)(1); 


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1 ‘‘(ii) shall certify as credits, customer 

2 electricity and natural gas savings under3 taken by State agencies and other entities 

4 if— 

5 ‘‘(I) a retail electricity or natural 

6 gas distributor did not help finance 

7 measures to achieve these savings; 

8 and 

9 ‘‘(II) the savings comply with the 

10 rules issued under subsection (c); and 

11 ‘‘(iii) shall not award credits to any 

12 retail electricity or natural gas distributor 

13 subject to State administration and en14 forcement under subsection (g) unless the 

15 Secretary has determined that the adminis16 tration and enforcement are at least equiv17 alent to administration and enforcement by 

18 the Secretary. 

19 ‘‘(B) AMOUNT OF CREDITS.—A credit cer20 tified by the Secretary under this subsection— 

21 ‘‘(i) shall equal 1,000 kilowatt-hours, 

22 in the case of an electricity savings credit; 

23 or 

24 ‘‘(ii) shall equal 10 therms, in the 

25 case of a natural gas savings credit. 


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1 ‘‘(3) TREATMENT OF CREDITS.— 

2 ‘‘(A) USE OF CREDITS.—A credit may be 

3 counted toward compliance with the perform4 ance standard only once. 

5 ‘‘(B) PROPERTY RIGHTS.—An electricity or 

6 natural gas savings credit certified under this 

7 subsection shall not be considered to be a prop8 erty right. 

9 ‘‘(C) REDUCTION AND TERMINATION OF

10 CREDITS.—Nothing in this section or any other 

11 provision of the law limits the authority of the 

12 United States to reduce or terminate a credit 

13 certified under this subsection. 

14 ‘‘(4) FEE.— 

15 ‘‘(A) IN GENERAL.—To receive certifi16 cation of an electricity or natural gas savings 

17 credit under this section, the recipient of the 

18 credit shall pay a fee, calculated by the Sec19 retary, in an amount that is equal to the lesser 

20 of the following: 

21 ‘‘(i) The administrative costs of 

22 issuing, recording, monitoring the sale or 

23 exchange, and tracking, of the credit. 

24 ‘‘(ii) For the years 2009 and 2010, 5 

25 percent of the fair market value of the 


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1 credit, as determined by the Secretary, and 

2 for the years 2011 and thereafter, 3 per3 cent of the fair market value of the credit, 

4 as determined by the Secretary. 

5 ‘‘(B) USE OF FEES BY SECRETARY.—Sub6 ject to annual appropriation, the Secretary shall 

7 use amounts equivalent to the fees paid under 

8 this paragraph to pay administrative costs de9 scribed in subparagraph (A)(i). If receipts ex10 ceed the administrative costs incurred by the 

11 Secretary in any two consecutive fiscal years, 

12 the Secretary shall, not later than January 1 of 

13 the first fiscal year thereafter, reduce the fee 

14 accordingly. 

15 ‘‘(5) CREDIT SALE AND USE.— 

16 ‘‘(A) SALE.—A retail electric or natural 

17 gas distributor may sell a credit certified under 

18 this subsection to any other entity, and other 

19 entities may sell such credit to a retail electric 

20 or natural gas distributor or any other entity, 

21 in accordance with accounting and verification 

22 procedures contained in rules issued by the Sec23 retary under paragraph (1). 

24 ‘‘(B) USE.—A credit certified under this 

25 subsection and sold under subparagraph (A) 


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1 may be used by a purchasing retail electricity 

2 or natural gas distributor for purposes of com3 plying with the performance standard. 

4 ‘‘(C) DURATION OF VALIDITY.—A credit 

5 certified under this subsection may only be used 

6 for compliance with this section for 3 years 

7 from the date issued. 

8 ‘‘(6) CREDIT BORROWING.—(A) During the 

9 first year covered by the performance standard, a re10 tail electricity or natural gas distributor that has 

11 reason to believe that the distributor will not have 

12 sufficient electricity or natural gas savings credits to 

13 comply with the performance standard may— 

14 ‘‘(i) submit a plan to the Secretary 

15 demonstrating that the retail electricity or 

16 natural gas distributor will earn or acquire 

17 sufficient credits within the subsequent 2 

18 calendar years that would enable the retail 

19 electricity or natural gas distributor to 

20 meet the performance standard for all 

21 three calendar years; and 

22 ‘‘(ii) upon the approval of the plan by 

23 the Secretary, apply credits expected to be 

24 earned or acquired within the subsequent 2 


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1 calendar years to meet the performance 

2 standard for the applicable calendar year. 

3 ‘‘(B) Any retail electricity or natural gas dis4 tributor that has submitted such a plan shall, by 

5 March 31 of the fourth calendar year, submit to the 

6 Secretary the credits necessary to repay all credits 

7 borrowed. 

8 ‘‘(7) BUYOUT OPTION.— 

9 ‘‘(A) IN GENERAL.—An electricity or nat10 ural gas distributor may elect to comply with 

11 this section for any calendar year by paying to 

12 the certified Electric and Natural Gas Savings 

13 Corporation not later than March 31 of the fol14 lowing year, a fee of 5 cents per kilowatt-hour 

15 or 50 cents per therm, for any portion of the 

16 electricity or natural gas savings credit the dis17 tributor would otherwise be obligated to achieve 

18 for the year. 

19 ‘‘(B) USE OF BUYOUT FEES.—The Electric 

20 and Natural Gas Savings Corporation shall— 

21 ‘‘(i) deposit fees received under sub22 paragraph (A) in an escrow account estab23 lished by the Corporation; and 

24 ‘‘(ii) periodically distribute amounts in 

25 the escrow account to States requesting 


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1 such funds for use in creating electricity or 

2 natural gas savings at customer facilities. 

3 States requesting funds from the account estab4 lished by the Corporation shall submit specific 

5 program proposals, including funds requested, 

6 estimated savings and measure lifetime(s), and 

7 estimated cost per kWh or therm saved. The 

8 Corporation shall develop guidelines for these 

9 submissions. The Corporation shall distribute 

10 funds based on the following criteria: Estimated 

11 savings per dollar of funds provided from the 

12 escrow account, maximizing consumer opportu13 nities to participate across all States, and, be14 ginning in year 3, past history of each State in 

15 meeting energy savings and cost-effectiveness 

16 targets. 

17 ‘‘(C) ELECTRIC AND NATURAL GAS SAV18 INGS CORPORATION.— 

19 ‘‘(i) ESTABLISHMENT AND CERTIFI20 CATION.—Any person may submit an ap21 plication to the Secretary for the establish22 ment and certification of a not-for-profit 

23 corporation, to be known as the Electric 

24 and Natural Gas Savings Corporation, to 

25 carry out this paragraph. The Secretary 


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1 shall certify the corporation if the Sec2 retary determines that the corporation has 

3 submitted the most qualified application 

4 indicating capability to carry out this para5 graph. The Secretary may revoke such cer6 tification at any time for good cause, and 

7 in any such case, the Secretary may accept 

8 applications from other persons and certify 

9 another person as the Electric and Natural 

10 Gas Savings Corporation. 

11 ‘‘(ii) AUTHORITY OF CORPORATION.— 

12 No person may distribute more than 

13 800,000 megawatt-hours of electric energy 

14 or more than 1 billion cubic feet of natural 

15 gas to consumers in the United States for 

16 purposes other than resale in any calendar 

17 year, including electricity or natural gas 

18 supplied by unregulated suppliers, regard19 less of whether such suppliers are affiliated 

20 or unaffiliated with the distributor unless 

21 such person complies with requirements es22 tablished by the Corporation for the pay23 ment of fees under this paragraph. 

24 ‘‘(iii) STATUS OF CORPORATION.—The 

25 Corporation shall not be treated as a deVerDate Aug 31 2005 23:06 Jun 04, 2007 Jkt 059200 PO 00000 Frm 00024 Fmt 6652 Sfmt 6201 E:\BILLS\H2529.IH H2529

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1 partment, agency, or instrumentality of the 

2 United States for any purpose. 

3 ‘‘(iv) BOOKS AND RECORDS.—The 

4 books and records of the Corporation shall 

5 be available to the public at reasonable 

6 hours and under reasonable conditions, 

7 without charge. 

8 ‘‘(v) PENALTY.—Any person who vio9 lates clause (ii) of this subparagraph shall 

10 be subject to a civil penalty to be assessed 

11 and collected by the Secretary in the 

12 amount equal to three times the total of 

13 the fees which are due and payable to the 

14 corporation under this paragraph. 

15 ‘‘(e) ENFORCEMENT OF COMPLIANCE.— 

16 ‘‘(1) IN GENERAL.—If a State regulatory au17 thority with jurisdiction over a retail electricity or 

18 natural gas distributor notifies the Secretary that 

19 the State regulatory authority will enforce compli20 ance by the distributor with the performance stand21 ard under this section, the State regulatory author22 ity shall have the authority to administer and en23 force the performance standard for the distributor 

24 under State law. 


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1 ‘‘(2) AUTHORITY OF SECRETARY.—The Sec2 retary shall administer and enforce the performance 

3 standard for all electricity and natural gas distribu4 tors for which a State regulatory authority described 

5 in paragraph (1) has not notified the Secretary as 

6 described in that paragraph. 

7 ‘‘(3) COMPLIANCE REPORT.—Not later that 

8 July 1, 2010, and every 2 years thereafter, each re9 tail electricity and natural gas distributor shall sub10 mit a compliance report conforming to the provisions 

11 of the rule described in subsection (c)(3) to either— 

12 ‘‘(A) the appropriate State regulatory au13 thority, if the authority has notified the Sec14 retary as described in paragraph (1); or 

15 ‘‘(B) the Secretary. 

16 ‘‘(4) FAILURE TO COMPLY.— 

17 ‘‘(A) IN GENERAL.—In the case of any re18 tail electricity or natural gas distributor for 

19 which the Secretary is enforcing compliance 

20 with the standards under this section, if the 

21 distributor fails to comply with the performance 

22 standard for more than one calendar year, the 

23 Secretary shall— 

24 ‘‘(i) determine the number of kilowatt25 hours of electricity savings, or therms of 


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1 natural gas savings, by which the dis2 tributor has fallen short of meeting the 

3 performance standard; and 

4 ‘‘(ii) by order, require the distributor, 

5 after notice and opportunity for hearing, to 

6 deposit in the escrow account established 

7 under paragraph (8)(B) of subsection (e) 

8 an amount equal to 6.0 cents per kilowatt9 hour for each such kilowatt hour, and 60 

10 cents per therm for each such therm. 

11 ‘‘(B) JUDICIAL REVIEW OF ORDERS.— 

12 ‘‘(i) IN GENERAL.—A retail electricity 

13 or natural gas distributor ordered to make 

14 a payment under subparagraph (A)(ii) 

15 may, not later than 60 days after the date 

16 of issuance of the order, bring a civil ac17 tion in the United States Court of Appeals 

18 for the District of Columbia for judicial re19 view of the order. 

20 ‘‘(ii) REMEDIES.—The court specified 

21 in clause (i) shall have jurisdiction to enter 

22 a judgment affirming, modifying, or set23 ting aside an order that is the subject of 

24 a civil action brought under that clause, or 


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1 remanding the order, in whole or in part, 

2 to the Secretary. 

3 ‘‘(f) INFORMATION COLLECTION.—The Secretary 

4 may collect any information necessary to verify and audit 

5 each of the following: 

6 ‘‘(1) The annual electric energy sales, natural 

7 gas sales, electricity savings, and natural gas savings 

8 of any entity applying for electricity or natural gas 

9 savings credits under this section. 

10 ‘‘(2) The validity of electricity or natural gas 

11 savings credits submitted by a retail electricity or 

12 natural gas distributor to the Secretary. 

13 ‘‘(3) The quantity of electricity and natural gas 

14 sales of all retail electricity and natural gas distribu15 tors. 

16 ‘‘(g) STATE LAW.— 

17 ‘‘(1) IN GENERAL.—Nothing in this section su18 persedes or otherwise affects any State or local law 

19 or regulation requiring or otherwise relating to elec20 tricity or natural gas savings to the extent that the 

21 State or local law or regulation contains more strin22 gent savings requirements or has different proce23 dures for buyout or penalties than those contained 

24 in this section. 


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1 ‘‘(2) SITE-SPECIFIC SAVINGS.—A State may re2 quire the performance standard for electricity or 

3 natural gas savings of any distributor within its ju4 risdiction to be achieved by measures undertaken— 

5 ‘‘(A) within the State; 

6 ‘‘(B) within the service territory of any re7 gional transmission organization serving the 

8 State; 

9 ‘‘(C) within any group of States partici10 pating in a regional program for the control of 

11 green house gas emissions; or 

12 ‘‘(D) within any airshed designated by the 

13 State. 

14 ‘‘(3) TREATMENT UNDER STATE LAW.—A retail 

15 electricity or natural gas distributor that achieves 

16 electricity or natural gas savings under this section 

17 in accordance with any State or local savings re18 quirement specifically applicable to such distributor 

19 shall be entitled to full credit under this section for 

20 the savings to the extent that the savings meet the 

21 requirements of this section (including regulations 

22 issued under this section), including measurement, 

23 verification, and monitoring requirements. 

24 ‘‘(h) DEVELOPMENT OF MODEL PROVISIONS.—Not 

25 later than 18 months after the date of enactment of this 


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1 section, the Federal Energy Regulatory Commission shall, 

2 following public notice and comment, develop and publish 

3 model provisions for adoption by State utility regulatory 

4 commissions regarding each of the following: 

5 ‘‘(1) REVENUE STABILITY AND INCENTIVES

6 FOR DISTRIBUTORS.—Policies for rate-setting and 

7 return on investment for State-regulated electricity 

8 and natural gas distributors that participate in suc9 cessful, cost-effective energy efficiency programs. 

10 Such model language shall include provisions for de11 coupling the earnings of such regulated entities from 

12 full dependence on the volume of electricity or nat13 ural gas distributed by them to customer facilities. 

14 Such model language shall also include provisions 

15 for policies for cost recovery and other financial in16 centives, such that electric and gas utility investors 

17 are rewarded similarly for similar levels of invest18 ment in customer energy efficiency and in conven19 tional utility assets and that regulated utilities are 

20 encouraged to include end-use efficiency measures 

21 and utility-owned, customer-owned, or third party22 owned CHP systems in electric capacity and trans23 mission and distribution plans. 

24 ‘‘(2) NONDISCRIMINATORY IDENTIFICATION OF

25 COST-EFFECTIVE SAVINGS OPPORTUNITIES.—EstabVerDate Aug 31 2005 23:06 Jun 04, 2007 Jkt 059200 PO 00000 Frm 00030 Fmt 6652 Sfmt 6201 E:\BILLS\H2529.IH H2529

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1 lishing a public, nondiscriminatory bidding process 

2 open to customers and demand side management 

3 service providers to identify cost-effective electricity 

4 or natural gas savings opportunities within a retail 

5 electricity or natural gas distributor’s service area. 

6 The model bidding plan shall provide for a dis7 tributor to procure all or a portion of its proposed 

8 savings measures, including measures proposed by 

9 the distributor or its affiliates, in cost-effective rank 

10 order. The model plan shall also address the process 

11 that will be used by the distributor to identify and 

12 obtain further electricity or natural gas savings in 

13 the event that insufficient savings are procured 

14 through the bid process. 

15 ‘‘(3) DEVELOPMENT OF MODEL LANGUAGE ON

16 REVENUE DECOUPLING AND SHAREHOLDER INCEN17 TIVES IN RATEMAKING POLICIES.—Rate-setting and 

18 earnings for State-regulated electricity and natural 

19 gas distributors that participate in successful, cost20 effective energy efficiency programs. Such model 

21 language shall include, but not be limited to, rec22 ommendations for decoupling the earnings of such 

23 regulated entities from full dependence on the vol24 ume of electricity or natural gas distributed by them 

25 to customer facilities. Such model language shall 


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1 also include recommendations for policies for cost re2 covery and shareholder incentives, such that electric 

3 and gas utility investors are rewarded similarly for 

4 similar levels of investment in customer energy effi5 ciency and in conventional utility assets. 

6 ‘‘(i) STATE ADOPTION OF FERC MODEL PROVI7 SIONS.—Each State utility regulatory authority shall 

8 adopt the model provisions referred to in subsection (h) 

9 in the same manner and subject to the same rules and 

10 review as apply in the case of standards referred to in 

11 section 113(b) and 303(b). For purposes of any provision 

12 of title I or III of this Act, the model provisions referred 

13 to in subsection (h) shall be treated as standards under 

14 section 113(b) (in the case of State regulated electricity 

15 distributors) or 303(b) (in the case of natural gas distribu16 tors), except that in the case of such model provisions, 

17 any reference contained in this Act to the date of enact18 ment of this Act shall be deemed to be a reference to the 

19 date of enactment of this section. Each such State utility 

20 regulatory authority shall shall adopt the model provisions 

21 not later than 24 months after the date of enactment of 

22 this section in the case of paragraphs (1) and (2) of sub23 section (h) or 42 months after such date of enactment in 

24 the case of paragraph (3) of subsection (h).’’. 


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1 (b) TABLE OF CONTENTS.—The table of contents for 

2 title VI of such Act is amended by adding the following 

3 new items at the end thereof: 

‘‘Sec. 609. Rural and remote communities electrification grants. 

‘‘Sec. 610. Efficiency resource standard for retail electricity and natural gas 

distributors.’’. 

Æ 


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