II 

114TH CONGRESS 

1ST SESSION S. 1063 

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 

APRIL 22, 2015 

Mr. FRANKEN 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. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘American Energy Effi5 ciency Act’’. 


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1 SEC. 2. ENERGY EFFICIENCY RESOURCE STANDARD FOR 

2 RETAIL ELECTRICITY AND NATURAL GAS 

3 SUPPLIERS. 

4 (a) IN GENERAL.—Title VI of the Public Utility Reg5 ulatory Policies Act of 1978 (16 U.S.C. 2601 et seq.) is 

6 amended by adding at the end the following: 

7 ‘‘SEC. 610. FEDERAL ENERGY EFFICIENCY RESOURCE 

8 STANDARD FOR RETAIL ELECTRICITY AND 

9 NATURAL GAS SUPPLIERS. 

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

11 ‘‘(1) BASE QUANTITY.— 

12 ‘‘(A) IN GENERAL.—The term ‘base quan13 tity’, with respect to a retail electricity supplier 

14 or retail natural gas supplier, means, for each 

15 calendar year for which a performance standard 

16 is established under subsection (c), the average 

17 annual quantity of electricity or natural gas de18 livered by the retail electricity supplier or retail 

19 natural gas supplier to retail customers during 

20 the 3 calendar years immediately preceding the 

21 first year that compliance is required under 

22 subsection (c)(1). 

23 ‘‘(B) EXCLUSION.—The term ‘base quan24 tity’, with respect to a retail natural gas sup25 plier, does not include natural gas delivered for 

26 purposes of electricity generation. 


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1 ‘‘(2) CUSTOMER FACILITY SAVINGS.—The term 

2 ‘customer facility savings’ means a reduction in end3 use electricity or natural gas consumption (including 

4 waste heat energy savings) at a facility of an end5 use consumer of electricity or natural gas served by 

6 a retail electricity supplier or natural gas supplier, 

7 as compared to— 

8 ‘‘(A) in the case of a new facility, con9 sumption at a reference facility of average effi10 ciency; 

11 ‘‘(B) in the case of an existing facility, 

12 consumption at the facility during a base period 

13 of not less than 1 year; 

14 ‘‘(C) in the case of new equipment that re15 places existing equipment at the end of the use16 ful life of the existing equipment, consumption 

17 by new equipment of average efficiency of the 

18 same equipment type, except that customer sav19 ings under this subparagraph shall not be 

20 counted towards customer savings under sub21 paragraph (A) or (B); and 

22 ‘‘(D) in the case of new equipment that re23 places existing equipment with remaining useful 

24 life— 


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1 ‘‘(i) consumption of the existing 

2 equipment for the remaining useful life of 

3 the equipment; and 

4 ‘‘(ii) thereafter, consumption of new 

5 equipment of average efficiency. 

6 ‘‘(3) ELECTRICITY SAVINGS.—The term ‘elec7 tricity savings’ means reductions in electricity con8 sumption achieved through measures implemented 

9 after the date of enactment of this section, as deter10 mined in accordance with regulations promulgated 

11 by the Secretary, that are limited to— 

12 ‘‘(A) customer facility savings of elec13 tricity, adjusted to reflect any associated in14 crease in fuel consumption at the facility; 

15 ‘‘(B) reductions in distribution system 

16 losses of electricity achieved by a retail elec17 tricity supplier, as compared to losses attrib18 utable to new or replacement distribution sys19 tem equipment of average efficiency, as defined 

20 in regulations promulgated by the Secretary; 

21 ‘‘(C) CHP savings; 

22 ‘‘(D) codes and standards savings of elec23 tricity; and 

24 ‘‘(E) fuel switching energy savings that re25 sults in net savings of electricity. 


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1 ‘‘(4) NATURAL GAS SAVINGS.—The term ‘nat2 ural gas savings’ means reductions in natural gas 

3 consumption from measures implemented after the 

4 date of enactment of this section, as determined in 

5 accordance with regulations promulgated by the Sec6 retary, that are limited to— 

7 ‘‘(A) customer facility savings of natural 

8 gas, adjusted to reflect any associated increase 

9 in electricity consumption or consumption of 

10 other fuels at the facility; 

11 ‘‘(B) reductions in leakage, operational 

12 losses, and consumption of natural gas fuel to 

13 operate a gas distribution system, achieved by 

14 a retail natural gas supplier, as compared to 

15 similar leakage, losses, and consumption during 

16 a base period of not less than 1 year; 

17 ‘‘(C) codes and standards savings of nat18 ural gas; and 

19 ‘‘(D) fuel switching energy savings that re20 sults in net savings of natural gas. 

21 ‘‘(5) RETAIL ELECTRICITY SUPPLIER.— 

22 ‘‘(A) IN GENERAL.—The term ‘retail elec23 tricity supplier’ means, for any given calendar 

24 year, an electric utility that sells not less than 

25 1,000,000 megawatt hours of electric energy to 


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1 electric consumers for purposes other than re2 sale during the preceding calendar year. 

3 ‘‘(B) INCLUSIONS AND LIMITATIONS.—For 

4 purposes of determining whether an electric 

5 utility qualifies as a retail electricity supplier 

6 under subparagraph (A)— 

7 ‘‘(i) deliveries by any affiliate of an 

8 electric utility to electric consumers for 

9 purposes other than resale shall be consid10 ered to be deliveries by the electric utility; 

11 and 

12 ‘‘(ii) deliveries by any electric utility 

13 to a lessee, tenant, or affiliate of the elec14 tric utility shall not be considered to be de15 liveries to electric consumers. 

16 ‘‘(6) RETAIL NATURAL GAS SUPPLIER.— 

17 ‘‘(A) IN GENERAL.—The term ‘retail nat18 ural gas supplier’ means, for any given calendar 

19 year, a local distribution company (as defined 

20 in section 2 of the Natural Gas Policy Act of 

21 1978 (15 U.S.C. 3301)), that delivered to nat22 ural gas consumers more than 5,000,000,000 

23 cubic feet of natural gas for purposes other 

24 than resale during the preceding calendar year. 


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1 ‘‘(B) INCLUSIONS AND LIMITATIONS.—For 

2 purposes of determining whether a person 

3 qualifies as a retail natural gas supplier under 

4 subparagraph (A)— 

5 ‘‘(i) deliveries of natural gas by any 

6 affiliate of a local distribution company to 

7 consumers for purposes other than resale 

8 shall be considered to be deliveries by the 

9 local distribution company; and 

10 ‘‘(ii) deliveries of natural gas to a les11 see, tenant, or affiliate of a local distribu12 tion company shall not be considered to be 

13 deliveries to natural gas consumers. 

14 ‘‘(b) ESTABLISHMENT OF PROGRAM.— 

15 ‘‘(1) REGULATIONS.—Not later than 1 year 

16 after the date of enactment of this section, the Sec17 retary shall, by regulation, establish a program to 

18 implement and enforce the requirements of this sec19 tion, including by— 

20 ‘‘(A) defining the terms ‘CHP savings’, 

21 ‘code and standards savings’, ‘combined heat 

22 and power system’, ‘cost-effective’, ‘fuel switch23 ing energy savings’, ‘reporting period’, ‘third24 party efficiency provider’, and ‘waste heat en25 ergy savings’; 


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1 ‘‘(B) establishing measurement and 

2 verification procedures and standards that 

3 count only measures and savings that are addi4 tional to business-as-usual customer purchase 

5 practices; 

6 ‘‘(C) establishing requirements under 

7 which retail electricity suppliers and retail nat8 ural gas suppliers shall— 

9 ‘‘(i) demonstrate, document, and re10 port the compliance of the retail electricity 

11 suppliers and retail natural gas suppliers 

12 with the performance standards under sub13 section (c); and 

14 ‘‘(ii) estimate the impact of the stand15 ards on current and future electricity and 

16 natural gas use in the service territories of 

17 the suppliers; 

18 ‘‘(D) establishing requirements governing 

19 applications for, and implementation of, dele20 gated State administration under subsection 

21 (e); and 

22 ‘‘(E) establishing rules to govern transfers 

23 of electricity or natural gas savings between 

24 suppliers and third-party efficiency providers 

25 serving the same State and between suppliers 


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1 and third-party efficiency providers serving dif2 ferent States. 

3 ‘‘(2) COORDINATION WITH STATE PROGRAMS.— 

4 In establishing and implementing this section, the 

5 Secretary shall, to the maximum extent practicable, 

6 preserve the integrity and incorporate best practices 

7 of existing State energy efficiency programs. 

8 ‘‘(c) PERFORMANCE STANDARDS.— 

9 ‘‘(1) COMPLIANCE OBLIGATION.—Not later 

10 than May 1 of the calendar year immediately fol11 lowing each reporting period— 

12 ‘‘(A) each retail electricity supplier shall 

13 submit to the Secretary a report, in accordance 

14 with regulations promulgated by the Secretary, 

15 demonstrating that the retail electricity supplier 

16 has achieved cumulative electricity savings (ad17 justed to account for any attrition of savings 

18 measures implemented in prior years) in each 

19 calendar year that are equal to the applicable 

20 percentage of the base quantity of the retail 

21 electricity supplier; and 

22 ‘‘(B) each retail natural gas supplier shall 

23 submit to the Secretary a report, in accordance 

24 with regulations promulgated by the Secretary, 

25 demonstrating that it has achieved cumulative 


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1 natural gas savings (adjusted to account for 

2 any attrition of savings measures implemented 

3 in prior years) in each calendar year that are 

4 equal to the applicable percentage of the base 

5 quantity of such retail natural gas supplier. 

6 ‘‘(2) STANDARDS FOR 2017 THROUGH 2030.— 

7 For each of calendar years 2017 through 2030, the 

8 applicable percentages are as follows: 

‘‘Calendar Year Cumulative Electricity 

Savings Percentage 

Cumulative Natural Gas 

Savings Percentage 

2017 1.00 0.50

2018 2.00 1.25

2019 3.00 2.00

2020 4.25 3.00

2021 5.50 4.00

2022 7.00 5.00

2023 8.50 6.00

2024 10.00 7.00

2025 11.50 8.00

2026 13.00 9.00

2027 14.75 10.00

2028 16.50 11.00

2029 18.25 12.00

2030 20.00 13.00. 

9 ‘‘(3) SUBSEQUENT YEARS.— 

10 ‘‘(A) CALENDAR YEARS 2031 THROUGH

11 2040.—Not later than December 31, 2028, the 

12 Secretary shall promulgate regulations estab13 lishing performance standards (expressed as apVerDate Sep 11 2014 07:06 May 05, 2015 Jkt 049200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1063.IS S1063

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1 plicable percentages of base quantity for both 

2 cumulative electricity savings and cumulative 

3 natural gas savings) for each of calendar years 

4 2031 through 2040. 

5 ‘‘(B) REQUIREMENTS.—The Secretary 

6 shall establish standards under this paragraph 

7 at levels reflecting the maximum achievable 

8 level of cost-effective energy efficiency potential, 

9 taking into account— 

10 ‘‘(i) cost-effective energy savings 

11 achieved by leading retail electricity sup12 pliers and retail natural gas suppliers; 

13 ‘‘(ii) opportunities for new codes and 

14 standard savings; 

15 ‘‘(iii) technology improvements; and 

16 ‘‘(iv) other indicators of cost-effective 

17 energy efficiency potential including dif18 ferences between States. 

19 ‘‘(C) MINIMUM PERCENTAGE.—In no case 

20 shall the applicable percentages for any cal21 endar year be less than the applicable percent22 ages for calendar year 2030. 

23 ‘‘(4) DELAY OF SUBMISSION FOR FIRST RE24 PORTING PERIOD.— 


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1 ‘‘(A) IN GENERAL.—Notwithstanding 

2 paragraphs (1) and (2), for the 2017 reporting 

3 period, the Secretary may accept a request from 

4 a retail electricity supplier or a retail natural 

5 gas supplier to delay the required submission of 

6 documentation of all or part of the required 

7 savings for up to 2 years. 

8 ‘‘(B) PLAN FOR COMPLIANCE.—The re9 quest for delay under subparagraph (A) shall 

10 include a plan for coming into full compliance 

11 by the end of the 2018–2019 reporting period. 

12 ‘‘(5) APPLYING UNUSED SAVINGS TO FUTURE

13 YEARS.—If savings achieved in a year exceed the 

14 performance standards specified in this subsection, 

15 any savings in excess of the performance standards 

16 may be applied toward performance standards speci17 fied for future years. 

18 ‘‘(d) ENFORCEMENT AND JUDICIAL REVIEW.— 

19 ‘‘(1) REVIEW OF RETAIL SUPPLIER REPORTS.— 

20 ‘‘(A) IN GENERAL.—The Secretary shall 

21 review each report submitted to the Secretary 

22 by a retail electricity supplier or retail natural 

23 gas supplier under subsection (c) to verify that 

24 the applicable performance standards under 

25 subsection (c) have been met. 


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1 ‘‘(B) EXCLUSION.—In determining compli2 ance with the applicable performance standards 

3 under subsection (c), the Secretary shall ex4 clude reported electricity savings or natural gas 

5 savings that are not adequately demonstrated 

6 and documented, in accordance with the regula7 tions promulgated under subsections (b) and 

8 (c). 

9 ‘‘(2) PENALTY FOR FAILURE TO DOCUMENT

10 ADEQUATE SAVINGS.—If a retail electricity supplier 

11 or a retail natural gas supplier fails to demonstrate 

12 compliance with an applicable performance standard 

13 under subsection (c), or to pay to the State an appli14 cable alternative compliance payment under sub15 section (e)(3), the Secretary shall assess against the 

16 retail electricity supplier or retail natural gas sup17 plier a civil penalty for each failure in an amount 

18 equal to, as adjusted for inflation in accordance with 

19 such regulations as the Secretary may promulgate— 

20 ‘‘(A) $100 per megawatt hour of electricity 

21 savings or alternative compliance payment that 

22 the retail electricity supplier failed to achieve or 

23 make, respectively; or 

24 ‘‘(B) $10 per million Btu of natural gas 

25 savings or alternative compliance payment that 


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1 the retail natural gas supplier failed to achieve 

2 or make, respectively. 

3 ‘‘(3) OFFSETTING STATE PENALTIES.—The 

4 Secretary shall reduce the amount of any penalty 

5 under paragraph (2) by the amount paid by the rel6 evant retail electricity supplier or retail natural gas 

7 supplier to a State for failure to comply with the re8 quirements of a State energy efficiency resource 

9 standard during the same compliance period. 

10 ‘‘(4) ENFORCEMENT PROCEDURES.—The Sec11 retary shall assess a civil penalty, as provided under 

12 paragraph (2), in accordance with the procedures 

13 described in section 333(d) of the Energy Policy and 

14 Conservation Act of 1954 (42 U.S.C. 6303). 

15 ‘‘(e) STATE ADMINISTRATION.— 

16 ‘‘(1) IN GENERAL.—Upon receipt of an applica17 tion from the Governor of a State (including the 

18 Mayor of the District of Columbia), the Secretary 

19 may delegate to the State responsibility for admin20 istering this section within the territory of the State 

21 if the Secretary determines that the State will imple22 ment an energy efficiency program that meets or ex23 ceeds the requirements of this section. 

24 ‘‘(2) SECRETARIAL DETERMINATION.—Not 

25 later than 180 days after the date on which a comVerDate Sep 11 2014 07:06 May 05, 2015 Jkt 049200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\S1063.IS S1063

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1 plete application is received by the Secretary, the 

2 Secretary shall make a substantive determination 

3 approving or disapproving a State application, after 

4 public notice and comment. 

5 ‘‘(3) ALTERNATIVE COMPLIANCE PAYMENTS.— 

6 ‘‘(A) IN GENERAL.—As part of an applica7 tion submitted under paragraph (1), a State 

8 may permit retail electricity suppliers or retail 

9 natural gas suppliers to pay to the State, by 

10 not later than May 1 of the calendar year im11 mediately following the applicable reporting pe12 riod, an alternative compliance payment in an 

13 amount equal to, as adjusted for inflation in ac14 cordance with such regulations as the Secretary 

15 may promulgate, not less than— 

16 ‘‘(i) $50 per megawatt hour of elec17 tricity savings needed to make up any def18 icit with regard to a compliance obligation 

19 under the applicable performance stand20 ard; or 

21 ‘‘(ii) $5 per million Btu of natural gas 

22 savings needed to make up any deficit with 

23 regard to a compliance obligation under 

24 the applicable performance standard. 


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1 ‘‘(B) USE OF PAYMENTS.—Alternative 

2 compliance payments collected by a State under 

3 subparagraph (A) shall be used by the State to 

4 administer the delegated authority of the State 

5 under this section and to implement cost-effec6 tive energy efficiency programs that— 

7 ‘‘(i) to the maximum extent prac8 ticable, achieve electricity savings and nat9 ural gas savings in the State sufficient to 

10 make up the deficit associated with the al11 ternative compliance payments; and 

12 ‘‘(ii) can be measured and verified in 

13 accordance with the applicable procedures 

14 and standards under subsection (b)(1)(B). 

15 ‘‘(4) REVIEW OF STATE IMPLEMENTATION.— 

16 ‘‘(A) PERIODIC REVIEW.—Every 2 years, 

17 the Secretary shall review State implementation 

18 of this section for conformance with the requirements of this section in approximately 1 19 ⁄2

20 of the States that have received approval under 

21 this subsection to administer the program, so 

22 that each State shall be reviewed at least every 

23 4 years. 

24 ‘‘(B) REPORT.—To facilitate the review 

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1 quire the State to submit a report dem2 onstrating the conformance of the State with 

3 the requirements of this section. 

4 ‘‘(C) DEFICIENCIES.— 

5 ‘‘(i) IN GENERAL.—In completing a 

6 review under this paragraph, if the Sec7 retary finds deficiencies, the Secretary 

8 shall— 

9 ‘‘(I) notify the State of the defi10 ciencies; 

11 ‘‘(II) direct the State to correct 

12 the deficiencies; and 

13 ‘‘(III) require the State to report 

14 to the Secretary on progress made by 

15 not later than 180 days after the date 

16 on which the State receives notice 

17 under subclause (I). 

18 ‘‘(ii) SUBSTANTIAL DEFICIENCIES.—If 

19 the deficiencies are substantial, the Sec20 retary shall— 

21 ‘‘(I) disallow the reported elec22 tricity savings or natural gas savings 

23 that the Secretary determines are not 

24 credible due to deficiencies; 


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1 ‘‘(II) re-review the State not 

2 later than 2 years after the date on 

3 which the original review was com4 pleted; and 

5 ‘‘(III) if substantial deficiencies 

6 remain uncorrected after the review 

7 provided for under subclause (II), re8 voke the authority of the State to ad9 minister the program established 

10 under this section. 

11 ‘‘(f) INFORMATION AND REPORTS.—In accordance 

12 with section 13 of the Federal Energy Administration Act 

13 of 1974 (15 U.S.C. 772), the Secretary may require any 

14 retail electricity supplier, retail natural gas supplier, third15 party efficiency provider, or any other entity that the Sec16 retary determines appropriate, to provide any information 

17 the Secretary determines appropriate to carry out this sec18 tion. 

19 ‘‘(g) STATE LAW.—Nothing in this section dimin20 ishes or qualifies any authority of a State or political sub21 division of a State to adopt or enforce any law or regula22 tion respecting electricity savings or natural gas savings, 

23 including any law or regulation establishing energy effi24 ciency requirements that are more stringent than those 

25 under this section, except that no State law or regulation 


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1 shall relieve any person of any requirement otherwise ap2 plicable under this section.’’. 

3 (b) CONFORMING AMENDMENT.—The table of con4 tents of the Public Utility Regulatory Policies Act of 1978 

5 (16 U.S.C. prec. 2601) is amended by adding at the end 

6 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.’’. 

Æ 


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