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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 4615 Introduced in Senate (IS)]

<DOC>

118th CONGRESS
  2d Session
                                S. 4615

To amend title VI of the Public Utility Regulatory Policies Act of 1978 
    to establish a Federal energy efficiency resource standard for 
     electricity and natural gas suppliers, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             June 20, 2024

Ms. Smith (for herself, Mr. Welch, Mr. Booker, Mr. Lujan, Mrs. Shaheen, 
and Mr. Van Hollen) introduced the following bill; which was read twice 
     and referred to the Committee on Energy and Natural Resources

_______________________________________________________________________

                                 A BILL

 
To amend title VI of the Public Utility Regulatory Policies Act of 1978 
    to establish 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 Energy Efficiency Act of 
2024''.

SEC. 2. 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 is amended by adding after section 609 (7 U.S.C. 918c) the 
following:

``SEC. 610. FEDERAL ENERGY EFFICIENCY RESOURCE STANDARD FOR RETAIL 
              ELECTRICITY AND NATURAL GAS SUPPLIERS.

    ``(a) Definitions.--In this section:
            ``(1) Affiliate.--The term `affiliate', when used in 
        relation to a person (including an electric utility and a local 
        distribution company), means another person that 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 Secretary.
            ``(2) ASHRAE; ANSI; 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 (c), 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 first year that compliance is 
                required under subsection (c)(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) Combined heat and power system.--The term `combined 
        heat and power system' means a system that uses the same energy 
        source 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 all applicable requirements 
                relating to efficiency and other operating 
                characteristics that the Secretary promulgates by 
                regulation; and
                    ``(B) the net quantity of electricity sold 
                wholesale by the facility using the system does not 
                exceed 50 percent of the total quantity of electricity 
                generated annually by the system.
            ``(7) Cost-effective.--The term `cost-effective' means, 
        with respect to an energy efficiency measure, that the measure 
        achieves, directly to the energy consumer and to the economy, a 
        net present value of economic benefits over the life of the 
        measure that is greater than the net present value of the cost 
        of the measure over the life of the measure, using a societal 
        benefit-cost test calculated using the lower of--
                    ``(A) a utility weighted average cost of capital; 
                or
                    ``(B) a social discount rate of 3 percent.
            ``(8) 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 retail 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 toward 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 by the existing equipment 
                        for the remaining useful life of the equipment; 
                        and
                            ``(ii) thereafter, consumption by new 
                        equipment of average efficiency of the same 
                        equipment type.
            ``(9) Electricity savings.--The term `electricity savings' 
        means reductions in electricity consumption or losses achieved 
        through measures implemented after the date of enactment of 
        this section, as determined in accordance with regulations 
        promulgated by the Secretary, that--
                    ``(A) occur in the service territory of the retail 
                electricity supplier claiming or transferring the 
                electricity savings; and
                    ``(B) are limited to--
                            ``(i) customer facility savings of 
                        electricity, adjusted to reflect any associated 
                        increase in fuel consumption at the facility;
                            ``(ii) 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;
                            ``(iii) CHP savings;
                            ``(iv) State and local codes and standards 
                        savings of electricity; and
                            ``(v) fuel-switching energy savings that 
                        result in net savings of source energy, as 
                        defined in regulations promulgated by the 
                        Secretary.
            ``(10) 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 new power plant, taking into account existing 
                        and planned renewable energy generators 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.
            ``(11) Local distribution company.--The term `local 
        distribution company' has the meaning given the term in section 
        2 of the Natural Gas Policy Act of 1978 (15 U.S.C. 3301).
            ``(12) Natural gas savings.--The term `natural gas savings' 
        means reductions in natural gas consumption, leakage, or 
        operational losses from measures implemented after the date of 
        enactment of this section, as determined in accordance with 
        regulations promulgated by the Secretary, that--
                    ``(A) occur in the service territory of the retail 
                natural gas supplier claiming or transferring the 
                natural gas savings; and
                    ``(B) are limited to--
                            ``(i) customer facility savings of natural 
                        gas, adjusted to reflect any associated 
                        increase in electricity consumption or 
                        consumption of other fuels at the facility;
                            ``(ii) 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;
                            ``(iii) State and local codes and standards 
                        savings of natural gas; and
                            ``(iv) fuel-switching energy savings that 
                        result in net savings of source energy, as 
                        defined in regulations promulgated by the 
                        Secretary.
            ``(13) Performance standard.--
                    ``(A) In general.--The term `performance standard' 
                means a standard established for a calendar year for 
                cumulative electricity savings or cumulative natural 
                gas savings that is expressed as a percentage of base 
                quantity.
                    ``(B) Calendar years 2025 through 2039.--For each 
                of calendar years 2025 through 2039, the term 
                `performance standard' means the percentage labeled as 
                cumulative electricity savings percentage or cumulative 
                natural gas savings percentage, as applicable, in the 
                table in subsection (c)(2) for the applicable calendar 
                year.
            ``(14) Power pool.--
                    ``(A) In general.--The term `power pool' means an 
                association of 2 or more interconnected electric 
                systems that have entered into an agreement to 
                coordinate operations and planning for improved 
                reliability and efficiencies, as determined by the 
                Secretary.
                    ``(B) Inclusions.--The term `power pool' includes a 
                Regional Transmission Organization (as defined in 
                section 3 of the Federal Power Act (16 U.S.C. 796)) and 
                an Independent System Operator (as defined in that 
                section).
            ``(15) Reporting period.--The term `reporting period' 
        means--
                    ``(A) calendar year 2025; and
                    ``(B) each successive 2-calendar-year period 
                thereafter.
            ``(16) Retail electricity supplier.--
                    ``(A) In general.--The term `retail electricity 
                supplier' means, for any given calendar year, an 
                electric utility that delivers not less than 2,000,000 
                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 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.
            ``(17) Retail natural gas supplier.--
                    ``(A) In general.--The term `retail natural gas 
                supplier' means, for any given calendar year, a local 
                distribution company 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 an entity 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.
            ``(18) State and local codes and standards savings.--
                    ``(A) In general.--The term `State and local codes 
                and standards savings' means a reduction, due to 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, in--
                            ``(i) end-use electricity consumption for a 
                        retail electricity supplier; or
                            ``(ii) natural gas consumption in the 
                        service territory of a retail natural gas 
                        supplier.
                    ``(B) Baselines.--In calculating State and local 
                codes and standards savings under subparagraph (A)--
                            ``(i) the baseline for calculating savings 
                        from a new or revised building code shall be 
                        the more stringent of--
                                    ``(I)(aa) the 2021 International 
                                Energy Conservation Code for 
                                residential buildings; or
                                    ``(bb) the ASHRAE/ANSI/IESNA 
                                Standard 90.1-2019 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 a new or revised appliance standard shall 
                        be the estimated average efficiency of new 
                        appliances in the applicable 1 or more 
                        categories during the 1-year period preceding 
                        the date on which the new or revised standard 
                        is adopted.
            ``(19) 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 any procedures, standards, and rules 
        established by the Secretary under subsections (b)(1)(D) and 
        (e).
            ``(20) Waste heat energy savings.--The term `waste heat 
        energy savings' means a reduction in the mechanical or thermal 
        energy used at a facility or the electric output of a facility, 
        adjusted to reflect any associated increase in fuel 
        consumption, that results from a modification of an industrial, 
        commercial, or institutional 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, such as through exhaust or dissipation to 
        the environment, and productively use that recaptured energy, 
        represented as a reduction in net electricity or natural gas 
        consumption, as determined in accordance with regulations 
        promulgated by the Secretary.
    ``(b) 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--
                    ``(A) by establishing evaluation, measurement, and 
                verification procedures and standards under subsection 
                (e);
                    ``(B) by 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 (c); and
                            ``(ii) estimate the impact of the standards 
                        on current and future electricity and natural 
                        gas use in the service territories of the 
                        suppliers;
                    ``(C) by establishing requirements governing 
                applications for, and implementation of, delegated 
                State administration under subsection (g); and
                    ``(D) by establishing rules to govern transfers of 
                electricity savings and natural gas savings--
                            ``(i) between suppliers and third-party 
                        efficiency providers serving the same State; 
                        and
                            ``(ii) between suppliers and third-party 
                        efficiency providers serving different States.
            ``(2) National Academy of Sciences study.--In establishing 
        and implementing the program under this section, the Secretary 
        shall take into consideration a report published under 
        subsection (e)(2)(C).
            ``(3) Coordination with State programs.--In establishing 
        and implementing the program under this section, the Secretary 
        shall, to the maximum extent practicable, preserve the 
        integrity and incorporate best practices of existing State 
        energy efficiency programs.
            ``(4) Savings programs for low-income customers.--In 
        implementing this section, the Secretary shall encourage retail 
        electricity suppliers and retail natural gas suppliers to 
        ensure that a portion of the customer facility savings achieved 
        for a calendar year shall result from programs that target 
        households that are at or below 200 percent of the poverty line 
        (as defined in section 673 of the Community Services Block 
        Grant Act (42 U.S.C. 9902)).
    ``(c) 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 
                cumulative consistent 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 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 the retail natural gas supplier has achieved 
                cumulative consistent 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 of the base 
                quantity of the retail natural gas supplier.
            ``(2) Standards for 2025 through 2039.--For each of 
        calendar years 2025 through 2039, the applicable percentages 
        are as follows:

------------------------------------------------------------------------
                          Cumulative Electricity  Cumulative Natural Gas
    ``Calendar Year         Savings Percentage       Savings Percentage
------------------------------------------------------------------------
                 2025                     1.00                    0.50
------------------------------------------------------------------------
                 2026                     2.00                    1.25
------------------------------------------------------------------------
                 2027                     3.00                    2.00
------------------------------------------------------------------------
                 2028                     4.25                    3.00
------------------------------------------------------------------------
                 2029                     5.50                    4.00
------------------------------------------------------------------------
                 2030                     7.00                    5.00
------------------------------------------------------------------------
                 2031                     8.50                    6.00
------------------------------------------------------------------------
                 2032                    10.00                    7.00
------------------------------------------------------------------------
                 2033                    11.50                    8.00
------------------------------------------------------------------------
                 2034                    13.00                    9.00
------------------------------------------------------------------------
                 2035                    14.75                   10.00
------------------------------------------------------------------------
                 2036                    16.50                   11.00
------------------------------------------------------------------------
                 2037                    18.25                   12.00
------------------------------------------------------------------------
                 2038                    20.00                   13.00
------------------------------------------------------------------------
                 2039                    22.00                   14.00
------------------------------------------------------------------------

            ``(3) Subsequent years.--
                    ``(A) Calendar years 2040 through 2049.--Not later 
                than December 31, 2034, 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 2040 
                through 2049.
                    ``(B) 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 State and 
                        local codes and standards savings;
                            ``(iii) technology improvements; and
                            ``(iv) other indicators of cost-effective 
                        energy efficiency potential, including 
                        differences between States.
                    ``(C) Minimum percentage.--In no case shall the 
                applicable percentages for any calendar year after 
                calendar year 2039 be less than the applicable 
                percentages for calendar year 2039.
            ``(4) Midcourse review and adjustment of performance 
        standards.--
                    ``(A) In general.--Not later than December 31, 
                2033, and at 10-year intervals thereafter, the 
                Secretary shall--
                            ``(i) review the most recent performance 
                        standards established under paragraph (2) or 
                        (3), as applicable; and
                            ``(ii) increase the performance standards 
                        by regulation if the Secretary determines that 
                        additional cost-effective energy efficiency 
                        potential is achievable, taking into account 
                        the requirement described in paragraph (3)(C).
                    ``(B) Lead time.--If the Secretary revises 
                performance standards under this paragraph, the 
                applicable regulations shall provide adequate lead time 
                to ensure that compliance with the increased 
                performance standards is feasible.
            ``(5) Delay of submission for first reporting period.--
                    ``(A) In general.--Notwithstanding paragraphs (1) 
                and (2), for the first reporting period after the date 
                of enactment of this section, 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 second reporting 
                period after the date of enactment of this section.
            ``(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 the first 3 years following the year in which the excess 
        savings are achieved.
    ``(d) Transfers of Electricity Savings and 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 (c).
            ``(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 (e);
                    ``(B) reported in accordance with subsection (c); 
                and
                    ``(C) achieved within the same power pool as is 
                served by the applicable retail electricity supplier or 
                retail natural gas supplier.
            ``(3) 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 subsection.
            ``(4) Limitations.--To optimize the achievement of cost-
        effective energy 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 supplier or retail natural 
        gas supplier under the applicable performance standards under 
        subsection (c) that may be met using electricity savings or 
        natural gas savings that are purchased under this subsection.
    ``(e) Evaluation, Measurement, and Verification of Savings.--
            ``(1) Regulations.--The regulations promulgated pursuant to 
        subsection (b) shall--
                    ``(A) be based on--
                            ``(i) the Uniform Methods Project of the 
                        Department of Energy;
                            ``(ii) the National Standard Practice 
                        Manual for Assessing the Cost-Effectiveness of 
                        Energy Efficiency Resources, developed by the 
                        National Efficiency Screening Project; and
                            ``(iii) other best practices recognized in 
                        the energy efficiency industry; and
                    ``(B) include--
                            ``(i) procedures and standards for 
                        evaluating, measuring, and verifying 
                        electricity savings and natural gas savings 
                        that count toward the performance standards 
                        established under subsection (c) that--
                                    ``(I) specify the types of energy 
                                efficiency and energy conservation 
                                measures that may be counted;
                                    ``(II) 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, seasonal patterns, and 
                                building area;
                                    ``(III) for new customer 
                                facilities, establish a standardized 
                                method for calculating average 
                                efficiency that accounts for factors 
                                such as weather, level of production, 
                                seasonal patterns, and building area;
                                    ``(IV) do not prevent overall load 
                                growth due to beneficial 
                                electrification;
                                    ``(V) account for the useful life 
                                of energy efficiency and energy 
                                conservation measures;
                                    ``(VI) allow for savings from a 
                                program to be estimated based on 
                                extrapolation from a representative 
                                sample of participating customers;
                                    ``(VII) include procedures for 
                                calculating and documenting CHP 
                                savings, fuel-switching energy savings, 
                                and waste heat energy savings;
                                    ``(VIII) establish methods for 
                                calculating State and local codes and 
                                standards savings, including the use of 
                                verified compliance rates;
                                    ``(IX) include procedures for 
                                calculating and documenting--
                                            ``(aa) 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), or the siting of new 
                                        generation capacity closer to 
                                        the end-use customer; and
                                            ``(bb) reductions in 
                                        natural gas distribution system 
                                        losses attributable to pipeline 
                                        repair and replacement 
                                        programs;
                                    ``(X) count only measures and 
                                savings that are additional to 
                                business-as-usual customer purchase 
                                practices;
                                    ``(XI) ensure that the retail 
                                electricity supplier or retail natural 
                                gas supplier claiming the electricity 
                                savings or natural gas savings, 
                                including State and local codes and 
                                standards savings, has 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);
                                    ``(XII) avoid double-counting of 
                                savings used for compliance with this 
                                section, including transferred savings;
                                    ``(XIII) include electricity 
                                savings or natural gas savings from 
                                programs administered by retail 
                                electricity suppliers or retail natural 
                                gas suppliers that are funded by 
                                Federal, State, or other sources, 
                                unless the funding source specifies 
                                otherwise;
                                    ``(XIV) credit large customer self-
                                directed electricity savings or natural 
                                gas savings to the retail electricity 
                                supplier or retail natural gas supplier 
                                if the large customer receives 
                                incentives or rate reductions from the 
                                retail electricity supplier or retail 
                                natural gas supplier for self-directed 
                                energy efficiency improvements;
                                    ``(XV) include guidance, as 
                                appropriate, for additional alternative 
                                approaches to evaluate electricity 
                                savings and natural gas savings for 
                                large commercial and industrial 
                                customers in energy-intensive 
                                industries that are subject to 
                                international competition;
                                    ``(XVI) include procedures for 
                                counting electricity savings and 
                                natural gas savings achieved by solar 
                                heating and cooling technologies, solar 
                                light pipe technology, geothermal heat 
                                pumps, and other technologies utilizing 
                                renewable resources that do not produce 
                                electricity or gaseous fuel and reduce 
                                on-site energy use;
                                    ``(XVII) include procedures for 
                                counting electricity savings and 
                                natural gas savings achieved by 
                                weatherization measures, such as 
                                installing mechanical insulation, 
                                repairing or replacing heating and 
                                cooling systems, repairing or replacing 
                                windows and doors, performing air 
                                sealing, and replacing lights and 
                                appliances with more energy efficient 
                                models;
                                    ``(XVIII) include procedures for 
                                counting electricity savings and 
                                natural gas savings achieved from 
                                increased utilization of mechanical 
                                insulation for new, retrofit, and 
                                maintenance construction for 
                                commercial, industrial, public, and 
                                nonprofit buildings and facilities;
                                    ``(XIX) in any State in which the 
                                State regulatory authority has 
                                designated 1 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 those 
                                programs shall be distributed 
                                proportionally among retail electricity 
                                suppliers and retail natural gas 
                                suppliers;
                                    ``(XX) include guidance for retail 
                                electricity suppliers and retail 
                                natural gas suppliers to calculate and 
                                document business-as-usual consumption 
                                projections;
                                    ``(XXI) include guidance for 
                                estimating savings using information 
                                from the database established under 
                                paragraph (3) based on similar measures 
                                and programs in other settings with 
                                appropriate adjustments, as necessary; 
                                and
                                    ``(XXII) incorporate advances in 
                                the science of policy evaluation, such 
                                as the use of--
                                            ``(aa) randomized control 
                                        trials;
                                            ``(bb) other experimental 
                                        and quasi-experimental 
                                        approaches; and
                                            ``(cc) large data sets and 
                                        machine learning techniques; 
                                        and
                            ``(ii) procedures and standards for third-
                        party verification of reported electricity 
                        savings or natural gas savings.
            ``(2) National Academy of Sciences study.--Not later than 
        180 days after the date of enactment of this section, the 
        Secretary shall seek to enter into an agreement with the 
        National Academy of Sciences, under which the Academy shall--
                    ``(A) evaluate existing state-of-the-art methods 
                for evaluating energy efficiency policies and measures;
                    ``(B) identify approaches in program evaluation 
                literature that may be brought into the energy 
                efficiency domain, including--
                            ``(i) randomized control trials and other 
                        experimental or quasi-experimental approaches;
                            ``(ii) control of confounding factors;
                            ``(iii) longitudinal studies;
                            ``(iv) assessments by neutral arbiters; and
                            ``(v) disclosure of data for replication; 
                        and
                    ``(C) not later than 18 months after the date of 
                enactment of this section, publish a report that 
                includes--
                            ``(i) a description of the evaluation under 
                        subparagraph (A);
                            ``(ii) a description of the approaches 
                        identified under subparagraph (B); and
                            ``(iii) recommendations for advancing and 
                        adopting rigorous state-of-the-art methods for 
                        evaluating energy efficiency policies and 
                        measures.
            ``(3) Energy efficiency program evaluation database.--
                    ``(A) In general.--The Secretary shall establish 
                and maintain a searchable public database, accessible 
                on the website of the Department of Energy, that 
                contains a list of randomized control trials and other 
                experimental or quasi-experimental evaluations of 
                energy efficiency programs.
                    ``(B) Requirements.--Each trial or evaluation on 
                the list described in subparagraph (A) shall include, 
                at a minimum--
                            ``(i) the State in which the trial or 
                        evaluation was conducted;
                            ``(ii) the type of trial or evaluation 
                        conducted;
                            ``(iii) the type of program evaluated;
                            ``(iv) an abstract or summary of the 
                        program evaluated;
                            ``(v) a summary of the trial or evaluation 
                        methodology;
                            ``(vi) the revealed energy savings from the 
                        trial or evaluation; and
                            ``(vii) to the extent practicable, the 
                        underlying data used to conduct the trial or 
                        evaluation.
    ``(f) 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 (c) to verify that the applicable 
                performance standards under subsection (c) have been 
                met.
                    ``(B) Exclusion.--In determining compliance with 
                the applicable performance standards under subsection 
                (c), 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 (b) and (c).
            ``(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 (c), or to pay to the State an 
        applicable alternative compliance payment under subsection 
        (g)(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.
            ``(4) Use of payments.--
                    ``(A) Definition of covered rate.--In this 
                paragraph, the term `covered rate' means the proportion 
                that--
                            ``(i) the amount of penalty payments made 
                        by retail electricity suppliers and retail 
                        natural gas suppliers in a State under 
                        paragraph (2); bears to
                            ``(ii) the total amount of penalty payments 
                        collected by the Secretary under that 
                        paragraph.
                    ``(B) Use of payments.--Penalty payments collected 
                under paragraph (2) by the Secretary shall be--
                            ``(i) provided to each State at the covered 
                        rate for the State; and
                            ``(ii) used by the State 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 penalty payments; 
                                and
                                    ``(II) can be measured and verified 
                                in accordance with the applicable 
                                procedures and standards established 
                                under subsection (e).
            ``(5) 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)).
            ``(6) 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) References.--For purposes of subparagraph 
                (A)--
                            ``(i) any reference in section 336(b) of 
                        the Energy Policy and Conservation Act (42 
                        U.S.C. 6306(b)) to a rule shall be considered 
                        to be a reference to a final action taken by 
                        the Secretary under this section (including the 
                        promulgation of a regulation, if applicable), 
                        other than the assessment of a civil penalty; 
                        and
                            ``(ii) any reference in that section to the 
                        date on which a rule is prescribed shall be 
                        considered to be a reference to the date on 
                        which the applicable final action was taken.
    ``(g) State Administration.--
            ``(1) In general.--On 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.
            ``(2) Secretarial determination.--Not later than 180 days 
        after the date on which a complete application described in 
        paragraph (1) is received by the Secretary, the Secretary shall 
        make a substantive determination approving or disapproving the 
        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 to the 
        procedures and standards described in subsection (e), 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 that subsection.
            ``(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 May 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 subsection 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 established under subsection (e).
            ``(5) Review of State administration.--
                    ``(A) Periodic review.--Every 2 years, the 
                Secretary shall review State administration 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 
                this section, so that each State shall be reviewed not 
                less frequently than once 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 requirements;
                            ``(ii) the impact of applicable 
                        requirements on projected electricity and 
                        natural gas demand in 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 on petition.--Notwithstanding 
                subparagraph (A), on receipt of a public petition 
                containing a credible allegation of a substantial 
                deficiency of a State energy efficiency program 
                authorized under this subsection, the Secretary shall 
                promptly re-review the State energy efficiency program.
                    ``(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 this section.
            ``(6) Calls for revision of state applications.--As a 
        condition of maintaining the delegated authority to administer 
        this section, the Secretary may require a State to submit a 
        revised application under paragraph (1) if the Secretary has--
                    ``(A) established new or revised performance 
                standards under subsection (c);
                    ``(B) promulgated new or substantially revised 
                measurement and verification procedures and standards 
                under subsection (e); or
                    ``(C) otherwise substantially revised the Federal 
                program established under this section.
            ``(7) Cost recovery, fixed cost recovery, and shareholder 
        incentives.--The Secretary shall encourage State utility 
        regulatory commissions to review the rules and regulations of 
        the Commission to ensure that utilities under the jurisdiction 
        of the Commission may--
                    ``(A) recover the direct costs of energy efficiency 
                programs;
                    ``(B)(i) fully recover authorized fixed costs from 
                customers, including recovery of revenue associated 
                with fixed costs that was lost due to annual sales that 
                were lower than forecasted; but
                    ``(ii) return to customers the revenue associated 
                with fixed costs collected in excess of the authorized 
                amount under clause (i); and
                    ``(C) earn a performance-based incentive for 
                shareholders for the achievement of energy efficiency 
                standards.
            ``(8) Evaluation, measurement, and verification 
        incentives.--The Secretary shall encourage States that have 
        delegated authority to administer this section to provide 
        incentives to retail electricity suppliers, retail natural gas 
        suppliers, and third-party efficiency providers to use 
        randomized control trials and other experimental or quasi-
        experimental approaches to evaluate energy efficiency measures 
        and programs within the State.
    ``(h) 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.
    ``(i) 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.''.
    (b) Conforming Amendment.--The table of contents in section 1(b) of 
the Public Utility Regulatory Policies Act of 1978 (Public Law 95-617; 
92 Stat. 3118) 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 energy efficiency resource standard for retail 
                            electricity and natural gas suppliers.''.
                                 <all>
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