59–006 

110TH CONGRESS REPT. 110–305 " ! HOUSE OF REPRESENTATIVES 1st Session Part 1 

SMART GRID FACILITATION ACT OF 2007 

AUGUST 3, 2007.—Ordered to be printed 

Mr. DINGELL, from the Committee on Energy and Commerce, 

submitted the following 

R E P O R T 

[To accompany H.R. 3237] 

The Committee on Energy and Commerce, to whom was referred 

the bill (H.R. 3237) to facilitate the transition to a smart electricity 

grid, having considered the same, report favorably thereon without 

amendment and recommend that the bill do pass. 

CONTENTS 

Page 

Purpose and Summary ............................................................................................ 1 

Background and Need for Legislation .................................................................... 2 

Hearings ................................................................................................................... 3 

Subcommitte Consideration .................................................................................... 4 

Committee Consideration ........................................................................................ 4 

Committee Votes ...................................................................................................... 4 

Committee Oversight Findings ............................................................................... 4 

Statement of General Performance Goals and Objectives .................................... 4 

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 5 

Earmarks and Tax and Tariff Benefits .................................................................. 5 

Committee Cost Estimate ....................................................................................... 5 

Congressional Budget Office Estimate ................................................................... 5 

Federal Mandates Statement ................................................................................. 5 

Advisory Committee Statement .............................................................................. 5 

Constitutional Authority Statement ...................................................................... 5 

Applicability to Legislative Branch ........................................................................ 6 

Section-by-Section Analysis of the Legislation ...................................................... 6 

Changes in Existing Law Made by the Bill, as Reported ..................................... 7 

PURPOSE AND SUMMARY

The purpose of H.R. 3237 is to facilitate and provide Federal 

leadership for the transition of the Nation’s electricity sector to a 

‘‘smart grid’’ and to encourage demand-response activities that support and improve the reliability of the grid. H.R. 3237 creates a 

Federal office in the Department of Energy (DOE) to serve as the 


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focal point for Federal efforts to facilitate this transition, creates a 

Federal program to provide grants matching one-fourth of qualifying ‘‘smart grid’’ investments made by private sector participants, 

and requires the States to consider adopting policies that will foster a ‘‘smart grid.’’ The bill contains provisions for review and encouragement of demand-response potential, including requiring 

Federal agencies to monitor and reduce their own peak demands 

for power through demand response. 

BACKGROUND AND NEED

Although the electric industry supplies the critical energy required for our highly-computerized society, the industry’s own operations are not highly computerized. Adoption of ‘‘smart grid’’ technologies will provide new options to the various participants in the 

electricity sector, permit remote and automatic controls to be programmed to respond to contingencies or opportunities, and make 

more detailed information concerning supply, demand, economics, 

and grid conditions available on a real-time basis. 

H.R. 3237 is intended to facilitate a transition toward a ‘‘smart 

grid’’ that participants in the electricity sector appear to agree 

would be beneficial and is likely inevitable. There is general recognition that the older analog and manual information and control 

systems on which the grid still relies eventually will be replaced 

with digital controls and information. 

To date, however, this evolution has encountered institutional, 

economic, and practical barriers that the Federal Government can 

help reduce. At present, electric utilities are slow to make expensive ‘‘smart grid’’ investments unless their customers are prepared 

to benefit from them. At the same time, consumers are slow to purchase ‘‘smart grid’’ capable equipment when the grid does not accommodate or reward such investments. Prompting and accelerating such a transition, while not directing it to predetermined 

results in technology or in regulatory structure, will serve the national interest by helping the United States achieve a more resilient, efficient, and reliable electricity grid. ‘‘Smart grid’’ technologies can provide signals about costs, availability, and the ability of given power plants to provide ancillary 

services to the grid, and can record the performance of these facilities in response to those signals. ‘‘Smart’’ sensors and monitors installed along the transmission and distribution systems can provide 

instant and pinpoint notice of a disruption or contingency that 

could threaten system reliability or operations. ‘‘Smart’’ meters can 

provide information about consumption at frequent intervals to 

utilities, supporting time-of-use pricing that reflects varying electricity value over time. Simultaneously, they can provide system information to electricity consumers and their equipment, to allow 

them to manage their own consumption in an economically optimum manner. For example, information provided through a smart 

grid can permit temporary suspension of operations at the utility’s 

request to assure continuity of service to more critical uses or enable consumers to schedule their operations when prices are lowest. 

These technologies may use varying modes of communication— such as wire-line, power-line, wireless, or internet. They may be 

owned and operated by various participants—utilities, customers, 

or third-parties. The technologies, however, should eventually comVerDate Aug 31 2005 11:15 Aug 06, 2007 Jkt 059006 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\HR305P1.XXX HR305P1

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plement each other and operate in harmony across the interconnected electricity system. H.R. 3237 establishes a Federal policy 

and role in fostering a common set of national standards or protocols to achieve such interoperability. 

The legislation is intended to help create the conditions for widespread innovation and creation of new value in the electricity sector, similar to the experience of recent decades in telecommunications, computer science, biotechnology, and other sectors. The 

Committee expects that electricity consumers and participants in 

the industry will all benefit from such innovation, but recognizes 

that it is likely there will be false starts, technological dead-ends, 

and competition among optional technologies. The Federal Government, however, should not try to direct or determine specific outcomes of this evolution. Similarly, the bill does not affect decisions 

by State regulators with respect to costs associated with smart grid 

investments. 

Demand response practices enable electricity consumers to become more active participants in power markets. Such programs 

provide incentives to consumers to curtail their own uses for the 

benefit of the broader system economics and reliability. As a major 

electricity consumer, the Federal Government itself has an opportunity and an obligation to be aware of its own peak power consumption and, wherever feasible, to reduce its peak demand or 

offer demand response. H.R. 3237 is intended to create better understanding of the potential for demand response and to foster demand response practices on the grid. Coupled with the ‘‘smart grid’’

technologies that will make such programs easy to administer and 

will make their market value more transparent, demand response 

practices will improve the economics and operation of the electricity 

infrastructure that, provides a vital basis for a modem economy 

and society. 

HEARINGS

There was one oversight hearing and one legislative hearing held 

by the Subcommittee on Energy and Air Quality, Committee on 

Energy and Commerce, in connection to the bill reported by the 

Committee. 

The Subcommittee on Energy and Air Quality held a hearing on 

‘‘Facilitating the Transition to a Smart Electric Grid: on Thursday, 

May 3, 2007. The Subcommittee received testimony from the following: Michael W. Howard, Ph.D., P.E., Senior Vice President, Research and Development, Electric Power Research Institute; Mr. 

Dean Kamen, President, DEKA Research and Development; Mr. 

Dan Delurey, Executive Director, Demand Response and Advanced 

Metering Coalition, Mr. Kurt Yeager, Executive Director, Galvin 

Electricity Initiative; Mr. Brad Gammons, Vice President, IBM 

Global Energy and Utilities Industry; Ms. Audrey A. Zibelman, 

Chief Operating Officer, PJM Interconnection; Mr. John Bryson, 

Chairman, CEO and President, Edison International; Mr. Kevin 

Kolevar, Director, Office of Energy Delivery and Electricity Reliability, U.S. Department of Energy; The Honorable Jon 

Wellinghoff, Commissioner, Federal Energy Regulatory Commission; The Honorable Robert F. Lieberman, Commissioner, Illinois 

Commerce Commission. 


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The Subcommittee held a legislative hearing entitled ‘‘Legislative 

Hearing on Discussion Drafts concerning Energy Efficiency, Smart 

Electricity Grid, Energy Policy Act of 2005 Title XVII Loan Guarantees, and Standby Loans for Coal-to-Liquids Projects.’’ The Subcommittee received testimony from the following: Mr. David Rogers, Deputy Assistant Secretary for Energy Efficiency, U.S. Department of Energy; Ms. Kateri Callahan, President, Alliance to Save 

Energy; Mr. Jay Birnbaum, Vice President and General Counsel, 

Current Group, LLC.; Ms. Katharine A. Fredriksen, Principal Deputy Assistant Secretary for Policy and International Affairs, U.S. 

Department of Energy; Mr. Don Maley, Vice President, Leucadia 

International Corporation; Daniel A. Lashof, Ph.D., Science Director, Climate Center, Natural Resources Defense Council. 

SUBCOMMITTEE CONSIDERATION

Prior to the introduction of H.R. 3237, its text was considered in 

the Committee as a Committee Print. 

On Wednesday, June 20, 2007, the Subcommittee on Energy and 

Air Quality met in open markup session and considered a Committee Print to facilitate the transition to a smart electricity grid. 

The Committee Print was favorably forwarded to the full Committee, without amendment, by a recorded vote of 16–10. The Committee Print forwarded by the Subcommittee was subsequently designated Committee Print #2 for full Committee consideration. 

COMMITTEE CONSIDERATION

On Wednesday, June 27, 2007, the full Committee met in open 

markup session and ordered the Committee Print favorably reported to the House, amended, by a voice vote. On July 31, 2007, 

a clean bill, H.R. 3237, was introduced with the approved language 

of the Committee Print, and was referred to the full Committee to 

be reported to the House without further consideration. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. Mr. Dingell moved 

that the Committee report the Committee Print, amended, favorably to the House. The motion to report the Committee Print favorably to the House was agreed to by a voice vote. There were no recorded votes on this legislation in the full Committee. 

COMMITTEE OVERSIGHT FINDINGS

Regarding clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the oversight findings of the Committee on the 

bill are reflected in this report. 

STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

The goals and objectives of H.R. 3237 are to facilitate the transition to a smart electricity grid, to establish a Grid Modernization 

Commission that will assess both progress towards a smart grid, 

to require development of protocols and standards for information 

management, to establish a smart grid investment grant program, 


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to require state regulatory authorities to consider ways to encourage Smart Grid implementation and energy efficiency to assess and 

achieve demand response potential, and to establish programs to 

reduce Federal peak electricity demand. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

Regarding compliance with clause 3(c)(2) of rule XIII of the Rules 

of the House of Representatives, the Committee finds that H.R. 

3237 would result in no new or increased budget authority, entitlement authority, or tax expenditures or revenues. 

EARMARKS AND TAX AND TARIFF BENEFITS

Regarding compliance with clause 9 of rule XXI of the Rules of 

the House of Representatives, H.R. 3237 does not contain any congressional earmarks, limited tax benefits, or limited tariff benefits 

as defined in clause 9(d), 9(e), or 9(f) of Rule XXI. 

COMMITTEE COST ESTIMATE

The Committee will adopt as its own the cost estimate prepared 

by the Director of the Congressional Budget Office pursuant to section 402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATE

Regarding clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, a cost estimate on H.R. 3237 by the Congressional Budget Office pursuant to section 402 of the Congressional 

Budget Act of 1974 was not available as of the time of the filing 

of this report by the committee. 

FEDERAL MANDATES STATEMENT

The Committe will adopt as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

ADVISORY COMMITTEE STATEMENT

Regarding section 5(b) of the Federal Advisory Committee Act, 

the bill does not establish any committee that is subject to such 

Act. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds that the Constitutional authority for this legislation is provided in Article I, section 8, clause 

3, which grants Congress the power to regulate commerce with foreign nations, among the several States, and with the Indian tribes, 

and in the provisions of Article I, section 8, clause 1, that relate 

to expending funds to provide for the general welfare of the United 

States. 


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APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

SUBTITLE A: SMART GRID FACILITATION

Section 101. Statement of Policy in Support of Modernization of 

Electricity Grid—Establishes Federal policy to support implementation of Smart Grid technologies. 

Section 102. Grid Modernization Commission—Establishes a 

Grid Modernization Commission (Commission) to lead the Federal 

effort to implement Smart Grid technologies and to work with 

States and utilities. 

Section 103. Grid Assessment and Report—Instructs the Commission to study barriers to compatible Smart Grid technology implementation and to recommend means to assure development of consistent national protocols and model standards for Smart Grid technologies. 

Section 104. Federal Matching Fund for Smart Grid Investment 

Costs—Creates Federal matching grant program to reimburse onefourth of the costs of implementation of Smart Grid technologies 

where consumers, utilities, States or other participants contribute 

three-quarters of the costs. 

Section 105. Smart Grid Technology Deployment Program—Instructs DOE to develop programs to assist deployment of Smart 

Grid technologies and to perform cooperative demonstration 

projects with as many as five electric utilities. 

Section 106. Smart Grid Information Requirements—Instructs 

the Commission to work with States, utilities, and others to determine the information required by consumers to utilize Smart Grid 

technologies. 

Section 107. State Consideration of Incentives for Smart Grid—

Amends the Public Utility Regulatory Policies Act of 1978 (PURPA) 

to require States to consider regulatory standards that would (1) 

allow utilities to include Smart Grid investments in rates; (2) ‘‘decouple’’ utility profits from the volume of electricity throughput to 

consumers; and (3) require utilities to make time-sensitive supply, 

cost, price, and other information available to consumers to facilitate Smart Grid technologies and demand response. 

Section 108. DOE Study of Security Attributes of Smart Grid Systems—Requires DOE to study the effects of Smart Grid technologies on the security of the electricity grid and infrastructure. 

SUBTITLE B: DEMAND RESPONSE

Section 111. Electricity Sector Demand Response—Amends the 

National Energy Conservation Policy Act by adding three new sections: 

(1) Federal Electricity Peak Demand Reduction Standard—Requires Federal agencies to reduce their peak electricity consumption by 2 percent per year for a 10-year period, or make such deVerDate Aug 31 2005 11:15 Aug 06, 2007 Jkt 059006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\HR305P1.XXX HR305P1

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mand available as demand response, and include results in reports 

to Congress. 

National Action Plan for Demand Response—Requires the Commission to conduct an assessment of demand response potential 

and to prepare a plan to achieve that potential through assistance 

to States. 

(3) Environmental Attributes and Impacts of Demand Response 

and Smart Grid System—Requires an EPA Study of environmental 

effects of demand response and Smart Grid implementation. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

PUBLIC UTILITY REGULATORY POLICIES ACT OF 1978 

* * * * * * * 

TITLE I—RETAIL REGULATORY 

POLICIES FOR ELECTRIC UTILITIES 

* * * * * * * 

Subtitle B—Standards For Electric 

Utilities 

SEC. 111. CONSIDERATION AND DETERMINATION RESPECTING CERTAIN RATEMAKING STANDARDS. 

(a) * * * 

* * * * * * * 

(d) ESTABLISHMENT.—The following Federal standards are hereby 

established: 

(1) * * * 

* * * * * * * 

(16) UTILITY INVESTMENT IN SMART GRID INVESTMENTS.— 

Each electric utility shall prior to undertaking investments in 

non-advanced grid technologies demonstrate that alternative investments in advanced grid technologies have been considered, 

including from a standpoint of cost-effectiveness, where such 

cost-effectiveness considers costs and benefits on a life-cycle 

basis. 

(17) UTILITY COST OF SMART GRID INVESTMENTS.—Each electric utility shall be permitted to— 

(A) recover from ratepayers the capital and operating expenditures and other costs of the utility for qualified smart 

grid system, including a reasonable rate of return on the 

capital expenditures of the utility for a qualified smart grid 

system, and 


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(B) recover in a timely manner the remaining book-value 

costs of equipment rendered obsolete by the deployment of 

a qualified smart grid system, based on the remaining depreciable life of the obsolete equipment. 

(18) RATE DESIGN MODIFICATIONS TO PROMOTE ENERGY EFFI- CIENCY INVESTMENTS.— (A) IN GENERAL.—The rates allowed to be charged by any 

electric utility shall— (i) align utility incentives with the delivery of cost-effective energy efficiency; and 

(ii) promote energy efficiency investments. 

(B) POLICY OPTIONS.—In complying with subparagraph 

(A), each State regulatory authority and each nonregulated 

utility shall consider—

(i) removing the throughput incentive and other regulatory and management disincentives to energy efficiency; 

(ii) providing utility incentives for the successful 

management of energy efficiency programs; 

(iii) including the impact on adoption of energy efficiency as 1 of the goals of retail rate design, recognizing that energy efficiency must be balanced with 

other objectives; 

(iv) adopting rate designs that encourage energy efficiency for each customer class; and 

(v) allowing timely recovery of energy efficiency-related costs. 

(19) SMART GRID INFORMATION.— (A) STANDARD.—All electricity purchasers shall be provided direct access, both in written and electronic machinereadable form, to information from their electricity provider 

as provided in subparagraph (B). 

(B) INFORMATION.—Information provided under this section shall conform to the standardized rules issued by the 

Commission on Grid Modernization under section 106(b) of 

the [SHORT TITLE Act of 2007] and shall include: 

(i) PRICES.—Purchasers and other interested persons 

shall be provided with information on: 

(I) Time-based electricity prices in the wholesale 

electricity market; and 

(II) Time-based electricity retail prices or rates 

that are available to the purchasers. 

(ii) USAGE.—Purchasers shall be provided with the 

number of electricity units, expressed in kwh, purchased by them 

(iii) INTERVALS AND PROJECTIONS.—Updates of information on prices and usage shall be offered on not less 

than a daily basis, shall include hourly price and use 

information, where available, and shall include a dayahead projection of such price information to the extent 

available. 

(iv) SOURCES.—Purchasers and other interested person shall be provided with written information on the 

sources of the power provided by the utility, to the extent it can be determined, by type of generation, includVerDate Aug 31 2005 11:15 Aug 06, 2007 Jkt 059006 PO 00000 Frm 00008 Fmt 6659 Sfmt 6603 E:\HR\OC\HR305P1.XXX HR305P1

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ing greenhouse gas emissions and criteria pollutants 

associated each type of generation, for intervals during 

which such information is available on a cost-effective 

basis, but not less than monthly. 

(C) ACCESS.—Purchasers shall be able to access their 

own information at any time through the internet and on 

other means of communication elected by that utility for 

Smart Grid applications. Other interested persons shall be 

able to access information not specific to any purchaser 

through the Internet. Information specific to any purchaser 

shall be provided solely to that purchaser. 

SEC. 112. OBLIGATIONS TO CONSIDER AND DETERMINE. 

(a) * * * 

(b) TIME LIMITATIONS.—(1) * * * 

* * * * * * * 

(6)(A) Not later than 1 year after the enactment of this paragraph, 

but not less than 3 years after the conclusion of any prior review 

of such standards, each State regulatory authority (with respect to 

each electric utility for which it has ratemaking authority) and each 

nonregulated utility shall commence the consideration referred to in 

section 111, or set a hearing date for consideration, with respect to 

the standards established by paragraphs (16) through (19) of section 

111(d). Not later than 6 months after the promulgation of rules by 

the Commission on Grid Modernization under section 106(b) of the 

[SHORT TITLE Act of 2007], each State regulatory authority (with 

respect to each electric utility for which it has ratemaking authority) 

and each nonregulated utility shall commence the consideration referred to in section 111, or set a hearing date for consideration, with 

respect to the standard established by paragraph (19) of section 

111(d). 

(B) Not later than 2 years after the date of the enactment of the 

this paragraph, but not less than 4 years after the conclusion of any 

prior review of such standard, each State regulatory authority (with 

respect to each electric utility for which it has ratemaking authority), and each nonregulated electric utility, shall complete the consideration, and shall make the determination, referred to in section 

111 with respect to each standard established by paragraphs (16) 

through (18) of section 111(d). Not later than 18 months after the 

promulgation of rules by the Commission on Grid Modernization 

under section 106(b) of the [SHORT TITLE Act of 2007] each State 

regulatory authority (with respect to each electric utility for which 

it has ratemaking authority), and each nonregulated electric utility, 

shall complete the consideration, and shall make the determination, 

referred to in section 111 with respect to each standard established 

by paragraph (19) of section 111(d). 

(c) FAILURE TO COMPLY.—Each State regulatory authority (with 

respect to each electric utility for which it has ratemaking authority) and each nonregulated electric utility shall undertake the consideration, and make the determination, referred to in section 111 

with respect to each standard established by section 111(d) in the 

first rate proceeding commenced after the date three years after 

the date of enactment of this Act respecting the rates of such utility if such State regulatory authority or nonregulated electric utility has not, before such date, complied with subsection (b)(2) with 


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respect to such standard. In the case of each standard established 

by paragraphs (11) through (13) of section 111(d), the reference 

contained in this subsection to the date of enactment of this Act 

shall be deemed to be a reference to the date of enactment of such 

paragraphs (11) through (13). In the case of the standard established by paragraph (14) of section 111(d), the reference contained 

in this subsection to the date of enactment of this Act shall be 

deemed to be a reference to the date of enactment of such paragraph (14). In the case of the standard established by paragraph 

(15), the reference contained in this subsection to the date of enactment of this Act shall be deemed to be a reference to the date of 

enactment of paragraph (15). In the case of the standards established by paragraphs (16) through (19) of section 111(d), the reference contained in this subsection to the date of enactment of this 

Act shall be deemed to be a reference to the date of enactment of 

such paragraphs. 

(d) PRIOR STATE ACTIONS.—Subsections (b) and (c) of this section 

shall not apply to the standards established by paragraphs (11) 

through (13) and paragraphs (16) through (18) of section 111(d) in 

the case of any electric utility in a State if, before the enactment 

of this subsection—

(1) * * * 

* * * * * * * 

(g) RECONSIDERATION OF PRIOR TIME-OF-DAY AND COMMUNICA- TION STANDARDS.—Not later than 1 year after the enactment of this 

subsection, each State regulatory authority (with respect to each 

electric utility for which it has ratemaking authority) and each nonregulated utility shall commence a reconsideration under section 

111, or set a hearing date for reconsideration, with respect to the 

standards established by paragraphs (3) and (14) of section 111(d) 

to take into account Smart Grid technologies. Not later than 2 years 

after the date of the enactment of this subsection, each State regulatory authority (with respect to each electric utility for which it has 

ratemaking authority), and each nonregulated electric utility, shall 

complete the reconsideration, and shall make the determination, referred to in section 111 with respect to the standards established by 

paragraphs (3) and (14) of section 111(d). 

* * * * * * * 

NATIONAL ENERGY CONSERVATION POLICY ACT 

* * * * * * * 

TITLE I—GENERAL PROVISIONS 

SEC. 101. SHORT TITLE AND TABLE OF CONTENTS. 

(a) * * * 

(b) TABLE OF CONTENTS.—

TITLE I—GENERAL PROVISIONS 

Sec. 101. Short title and table of contents. 

Sec. 102. Findings and statement of purposes. 

* * * * * * * 


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TITLE V—FEDERAL ENERGY INITIATIVES 

PART 1—EXECUTIVE AGENCY CONSERVATION PLAN

Sec. 501. Conservation plan authorization. 

* * * * * * * 

PART 5—PEAK DEMAND REDUCTION

Sec. 571. Definitions. 

Sec. 572. Federal Electricity Peak Demand Reduction Standard. 

Sec. 573. National action plan for demand response. 

Sec. 574. Report on environmental attributes and impacts of demand response and 

smart grid systems. 

* * * * * * * 

TITLE V—FEDERAL ENERGY INITIATIVE 

* * * * * * * 

PART 5—PEAK DEMAND REDUCTION 

SEC. 571. DEFINITIONS 

(a) SECRETARY.—As used in this part, the term ‘‘Secretary’’ means 

the Secretary of Energy. 

(b) FEDERAL AGENCY.—As used in this part, the term ‘‘Federal 

agency’’ has the same meaning as provided by section 551 of this 

Act. 

SEC. 572. FEDERAL ELECTRICITY PEAK DEMAND REDUCTION STANDARD 

(a) 2008 AGENCY ANNUAL ENERGY PLAN.—Each Federal agency 

shall prepare, and include in its annual report under section 548(a) 

of this Act, each of the following: 

(1) A determination of the agency’s aggregate electricity demand during the system peak hours for the utilities providing 

electricity service to its facilities during 2006 and 2007. 

(2) A forecast for each year through 2018 of the projected 

growth in such peak demand in light of projected growth of facilities, staff, activities, electric intensity of activities, and other 

relevant factors. 

(b) FEDERAL ELECTRICITY PEAK DEMAND REDUCTION STANDARD.—

(1) IN GENERAL.—Except as provided in paragraph (2), for 

calendar year 2009 and each calendar year thereafter, each 

Federal agency shall reduce its aggregate peak electricity demand or make such amounts of electricity demand available in 

the form of demand response, by the percentage amount specified in the Federal Electricity Peak Demand Reduction Standard set forth in the following table: 

FEDERAL ELECTRICITY PEAK DEMAND REDUCTION STANDARD

Calendar Year Reduction of Peak Demand Forecast 

2009 ........................................ 2 percent of the peak demand forecast for calendar year 2009 

2010 ........................................ 4 percent of the peak demand forecast for calendar year 2010 

2011 ........................................ 6 percent of the peak demand forecast for calendar year 2011 

2012 ........................................ 8 percent of the peak demand forecast for calendar year 2012 

2013 ........................................ 10 percent of the peak demand forecast for calendar year 2013 

2014 ........................................ 12 percent of the peak demand forecast for calendar year 2014 

2015 ........................................ 14 percent of the peak demand forecast for calendar year 2015 

2016 ........................................ 16 percent of the peak demand forecast for calendar year 2016 


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FEDERAL ELECTRICITY PEAK DEMAND REDUCTION STANDARD—

CONTINUED

Calendar Year Reduction of Peak Demand Forecast 

2017 ........................................ 18 percent of the peak demand forecast for calendar year 2017 

2018 and each calendar year 

thereafter.

20 percent of the peak demand forecast for the applicable calendar year 

In the table above, the term ‘‘forecast’’ refers to the forecast set 

forth in the 2008 report under section 548(a) of this Act as updated in accordance with subsection in (c)(1)(C). 

(2) EXCEPTION.—The standard under this subsection shall 

not apply to any activity of a Federal agency relating to defense 

or national security if compliance with the standard would 

have an adverse mission impact on the activity, as determined 

by the Secretary of Defense or the Secretary of Homeland Security. 

(c) IMPLEMENTATION OF STANDARD.— (1) IN GENERAL.—Not later than January 1, 2010, and each 

calendar year thereafter, each Federal agency shall include in 

the annual energy plan of the Federal agency each of the following: 

(A) An assessment of whether the Federal agency was in 

compliance with the standard under subsection (b) for the 

preceding year. 

(B) A description of— (i) the method by which the Federal agency proposes 

to comply with the standard for the following calendar 

year; and 

(ii) the factors relied on by the head of the Federal 

agency in determining whether to participate in demand response programs offered by an electric utility 

or others during the preceding calendar year; and 

(iii) if the Federal agency did not participate in a demand response program offered by each utility providing electric service to facilities of the agency during 

the preceding calendar year, an explanation for the decision by the head of the Federal agency to not participate. 

(C) An update of the agency’s prior forecast for the remaining years in the period until 2018. 

(2) AVAILABILITY TO PUBLIC.—Not later than January 1, 

2010, and each calendar year thereafter, the head of each Federal agency shall make available to the public a description of 

each provision included in the annual energy plan of the Federal agency described in subparagraphs (A) through (C) of 

paragraph (1). 

(d) MODIFICATIONS TO FEDERAL ENERGY MANAGEMENT PROGRAM.—The Secretary shall make any modification to the Federal 

Energy Management Program of the Department of Energy that the 

Secretary determines to be necessary to 

(1) incorporate the standard established under subsection (b) 

into the Federal Energy Management Program; 

(2) assist any Federal agency to comply with the standard established under subsection (b) through any appropriate means, 

including conducting 1 or more demonstration projects at Federal facilities. 


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(e) ANNUAL REPORT.—Not later than March 1, 2010, and annually thereafter, the Secretary shall submit to Congress a report that 

evaluates the success of agencies in meeting the standard established under subsection (b) and the success of the Federal Energy 

Management Program in assisting agencies with meeting the standard, and the costs and benefits of such participation. 

SEC. 573. NATIONAL ACTION PLAN FOR DEMAND RESPONSE 

(a) NATIONAL ASSESSMENT AND REPORT.—The Grid Modernization Commission established under subtitle A of title III of the 

[SHORT TITLE Act of 2007] shall conduct a National Assessment 

of Demand Response. The Commission shall, within 18 months of 

the date on which the full Commission first meets, submit a Report 

to Congress that includes each of the following: 

(1) Estimation of nationwide demand response potential in 5 

and 10 year horizons, including data on a State-by-State basis, 

and a methodology for updates of such estimates on an annual 

basis. 

(2) Estimation of how much of this potential can be achieved 

within 5 and 10 years after the enactment of this Act accompanied by specific policy recommendations that if implemented 

can achieve the estimated potential. Such recommendations 

shall include options for funding and/or incentives for the development of demand response resources. The Commission shall 

seek to take advantage of preexisting research and ongoing 

work, and shall assume that there is no duplication of effort. 

The Commission shall further note any barriers to demand response programs that are flexible, non-discriminatory, and fairly compensatory for the services and benefits made available 

and shall provide recommendations for overcoming such barriers. 

(b) NATIONAL ACTION PLAN ON DEMAND RESPONSE.—The Grid 

Modernization Commission shall further develop and implement a 

National Action Plan on Demand Response. Such Plan shall be 

completed within one year after the completion of the National Assessment of Demand Response, and shall meet each of the following 

objectives: 

(1) Provision of adequate technical assistance to States to 

allow them to maximize the amount of demand response resources that can be developed and deployed. 

(2) Implementation of a national communications program 

that includes broad-based customer education and support. 

(3) Development and dissemination of tools, information and 

other support mechanisms for use by customers, states, utilities 

and demand response providers. 

(c) AUTHORIZATION.—There are authorized to be appropriated to 

carry out this section not more than $10,000,000 for each of the fiscal years 2008 and 2009 and $20,000,000 for each of the fiscal years 

2010 through 2020. 

SEC. 574. REPORT ON ENVIRONMENTAL ATTRIBUTES AND IMPACTS OF 

DEMAND RESPONSE AND SMART GRID SYSTEMS 

(a) REPORT.—The Administrator of the Environmental Protection 

Agency shall solicit public input and, within 6 months after completion of the National Assessment of Demand Response required by 


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section 573, submit a report to Congress that addresses each of the 

following: 

(1) A quantitative assessment and determination of the existing and potential impacts of demand response and ‘‘smart grid’’ systems on air emissions and air quality, including but not limited to carbon dioxide, oxides of nitrogen and oxides of sulfur. 

(2) An assessment and determination of the existing and potential impacts of demand response and ‘‘smart grid’’ systems 

on environmental parameters other than emissions and air 

quality, including but not limited to: 

(A) Land use. 

(B) Water use. 

(C) Use of renewable energy. 

(D) Effect on energy sources other than electricity. 

(3) A detailed plan for how Energy Efficiency and Clean Energy programs administered by the Agency, including the Energy Star Program, will incorporate and encourage end-use efficiency, demand response and ‘‘smart grid’’ systems and technologies, including but not limited to each of the following: 

(A) Requirements that appliances and other equipment 

are capable of manually and automatically receiving and 

acting upon pricing and control information and or instructions provided by the customer, a load serving entity 

or a third-party designated by the customer. 

(B) Requirements for time-based valuation of kilowatt 

hour reductions in planning and evaluation of energy efficiency programs. 

(C) Education and communication, including to state energy officials and state regulators, that build awareness of 

demand response and smart grid systems and technologies 

and their existing and potential relationship to such Agency 

programs. 

(b) FUNDING.—There are authorized to be appropriated to carry 

out this section such sums as may be necessary for fiscal year 2010, 

to remain available until expended. 

* * * * * * * 

Æ 


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