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[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3426 Introduced in House (IH)]

114th CONGRESS
  1st Session
                                H. R. 3426

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

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             July 29, 2015

Mr. Welch (for himself and Mr. Ben Ray Lujan of New Mexico) introduced 
 the following bill; which was referred to the Committee on Energy and 
                                Commerce

_______________________________________________________________________

                                 A BILL

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

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``American Renewable Energy and 
Efficiency Act''.

SEC. 2. FEDERAL RENEWABLE ELECTRICITY STANDARD.

    Title VI of the Public Utility Regulatory Policies Act of 1978 (16 
U.S.C. 2601 et seq.) is amended by adding after section 609 (7 U.S.C. 
918c) the following:

``SEC. 610. FEDERAL RENEWABLE ELECTRICITY STANDARD.

    ``(a) Findings.--Congress finds that--
            ``(1) the Federal renewable electricity standard 
        established by this section establishes a market-based policy 
        to create ongoing competition among renewable electricity 
        generators across the United States and provide the greatest 
        quantity of clean electricity for the lowest price; and
            ``(2) the United States has vast wind, solar, hydropower, 
        biomass, and geothermal resources that--
                    ``(A) are renewable;
                    ``(B) are dispersed widely across different regions 
                of the United States; and
                    ``(C) can be harnessed to generate a significant 
                share of electricity in the United States.
    ``(b) Definitions.--In this section:
            ``(1) Brownfield site generation facility.--The term 
        `brownfield site generation facility' means a facility that--
                    ``(A) generates renewable electricity; and
                    ``(B) occupies a brownfield site (as that term is 
                defined in section 101 of the Comprehensive 
                Environmental Response, Compensation, and Liability Act 
                of 1980 (42 U.S.C. 9601)).
            ``(2) Distributed renewable generation facility.--The term 
        `distributed renewable generation facility' means a facility 
        that--
                    ``(A) generates renewable electricity;
                    ``(B) primarily serves one or more electric 
                consumers at or near the facility site; and
                    ``(C) has not more than 2 megawatts in capacity.
            ``(3) Federal renewable electricity credit.--The term 
        `Federal renewable electricity credit' means a credit, 
        representing 1 megawatt hour of renewable electricity, issued 
        pursuant to subsection (f).
            ``(4) Indian land.--The term `Indian land' means--
                    ``(A) any land within the limits of any Indian 
                reservation, pueblo, or rancheria;
                    ``(B) any land not within the limits of any Indian 
                reservation, pueblo, or rancheria, title to which was 
                on the date of enactment of this section held by--
                            ``(i) the United States for the benefit of 
                        any Indian tribe or individual; or
                            ``(ii) any Indian tribe or individual 
                        subject to restriction by the United States 
                        against alienation;
                    ``(C) any dependent Indian community; or
                    ``(D) any land conveyed under the Alaska Native 
                Claims Settlement Act (43 U.S.C. 1601 et seq.) to any 
                Native Corporation (as that term is defined in section 
                3 of that Act (43 U.S.C. 1602)).
            ``(5) Indian tribe.--The term `Indian tribe' means any 
        Indian tribe, band, nation, or other organized group or 
        community (including any Native village, Regional Corporation, 
        or Village Corporation (as those terms are defined in section 3 
        of the Alaska Native Claims Settlement Act (43 U.S.C. 1602))) 
        that is recognized as eligible for the special programs and 
        services provided by the United States to Indians because of 
        their status as Indians.
            ``(6) Qualified hydropower.--The term `qualified 
        hydropower' means--
                    ``(A) energy produced from increased efficiency 
                achieved, or additions of capacity made, on or after 
                January 1, 2001, at a hydroelectric facility that--
                            ``(i) was placed in service before that 
                        date; and
                            ``(ii) does not include additional energy 
                        generated as a result of operational changes 
                        not directly associated with efficiency 
                        improvements or capacity additions; or
                    ``(B) energy produced from generating capacity 
                added to a dam on or after January 1, 2001, if the 
                Commission certifies that--
                            ``(i) the dam--
                                    ``(I) was placed in service before 
                                the date of enactment of this section;
                                    ``(II) was operated for flood 
                                control, navigation, or water supply 
                                purposes; and
                                    ``(III) was not producing 
                                hydroelectric power prior to the 
                                addition of the capacity; and
                            ``(ii) the hydroelectric project installed 
                        on the dam--
                                    ``(I) is licensed or is exempt from 
                                licensing by the Commission;
                                    ``(II) is in compliance with--
                                            ``(aa) the terms and 
                                        conditions of the license or 
                                        exemption; and
                                            ``(bb) other applicable 
                                        legal requirements for the 
                                        protection of environmental 
                                        quality, including applicable 
                                        fish passage requirements; and
                                    ``(III) is operated so that the 
                                water surface elevation at any given 
                                location and time that would have 
                                occurred in the absence of the 
                                hydroelectric project is maintained, 
                                subject to any license or exemption 
                                requirements that require changes in 
                                water surface elevation for the purpose 
                                of improving the environmental quality 
                                of the affected waterway.
            ``(7) Qualified renewable biomass.--The term `qualified 
        renewable biomass' means renewable biomass that, when 
        combusted, yields, on a weighted-average basis, a 50-percent 
        reduction in lifecycle greenhouse gas emissions (as defined in 
        section 4(a) of the American Renewable Energy and Efficiency 
        Act) per unit of useful energy, as compared to the operation of 
        a combined cycle natural gas electric generating facility using 
        the most efficient commercially available technology, when 
        calculated over a 20-year life cycle.
            ``(8) Renewable biomass.--The term `renewable biomass' 
        means--
                    ``(A) crops, crop byproducts, or crop residues 
                harvested from actively managed or fallow agricultural 
                land that is--
                            ``(i) nonforested; and
                            ``(ii) cleared prior to the date of 
                        enactment of this section;
                    ``(B) planted trees, brush, slash, and all residues 
                from an actively managed tree farm located on non-
                Federal land cleared prior to the date of enactment of 
                this section;
                    ``(C) precommercial-sized thinnings, slash, brush, 
                and residue from milled trees, from forested land that 
                is not--
                            ``(i) old-growth or mature forest;
                            ``(ii) identified under a State natural 
                        heritage program as rare, imperiled, or 
                        critically imperiled; or
                            ``(iii) Federal land;
                    ``(D) algae;
                    ``(E) nonhazardous plant matter derived from 
                waste--
                            ``(i) including separated yard waste, 
                        landscape right-of-way trimmings, or food 
                        waste; but
                            ``(ii) not including municipal solid waste, 
                        recyclable waste paper, painted, treated or 
                        pressurized wood, or wood contaminated with 
                        plastic or metals;
                    ``(F) animal waste or animal byproducts, including 
                products of animal waste digesters;
                    ``(G) vegetative matter removed from within 200 
                yards of any manmade structure or campground;
                    ``(H) slash and precommercial-sized thinnings 
                harvested--
                            ``(i) in environmentally sustainable 
                        quantities, as determined by the appropriate 
                        Federal land manager; and
                            ``(ii) from National Forest System land or 
                        public lands (as defined in section 103 of the 
                        Federal Land Policy and Management Act of 1976 
                        (43 U.S.C. 1702)), other than--
                                    ``(I) components of the National 
                                Wilderness Preservation System 
                                established under the Wilderness Act 
                                (16 U.S.C. 1131 et seq.);
                                    ``(II) Wilderness Study Areas, as 
                                identified by the Bureau of Land 
                                Management;
                                    ``(III) inventoried roadless areas 
                                and all unroaded areas of at least 
                                5,000 acres;
                                    ``(IV) old growth and late seral 
                                stands;
                                    ``(V) components of the National 
                                Landscape Conservation System 
                                administered by the Bureau of Land 
                                Management; and
                                    ``(VI) national monuments; and
                    ``(I) forest thinnings sourced as part of 
                catastrophic wildfire risk mitigation activities.
            ``(9) Renewable electricity.--The term `renewable 
        electricity' means electricity generated (including by means of 
        a fuel cell) from a renewable energy resource.
            ``(10) Renewable energy resource.--The term `renewable 
        energy resource' means each of the following:
                    ``(A) Wind energy.
                    ``(B) Solar energy.
                    ``(C) Geothermal energy.
                    ``(D) Qualified renewable biomass.
                    ``(E) Biogas derived from qualified renewable 
                biomass.
                    ``(F) Biofuels derived from qualified renewable 
                biomass.
                    ``(G) Qualified hydropower.
                    ``(H) Marine and hydrokinetic renewable energy (as 
                defined in section 632 of the Energy Independence and 
                Security Act of 2007 (42 U.S.C. 17211)).
                    ``(I) Landfill gas.
            ``(11) Retail electric supplier.--
                    ``(A) In general.--The term `retail electric 
                supplier' means, for any calendar year, an electric 
                utility that sells not fewer than 1,000,000 megawatt 
                hours of electric energy to electric consumers for 
                purposes other than resale during the preceding 
                calendar year.
                    ``(B) Inclusions and limitations.--For purposes of 
                determining whether an electric utility qualifies as a 
                retail electric supplier under subparagraph (A)--
                            ``(i) the sales made by any affiliate of 
                        the electric utility to electric consumers, 
                        other than sales to lessees or tenants of the 
                        affiliate, for purposes other than resale shall 
                        be considered to be sales made by the electric 
                        utility; and
                            ``(ii) sales made by the electric utility 
                        to an affiliate, lessee, or tenant of the 
                        electric utility shall not be treated as sales 
                        to electric consumers.
                    ``(C) Affiliate.--In this paragraph, the term 
                `affiliate' when used in relation to a person, means 
                another person that directly or indirectly owns or 
                controls, is owned or controlled by, or is under common 
                ownership or control with, that person, as determined 
                under regulations promulgated by the Commission.
            ``(12) Retail electric supplier's base quantity.--The term 
        `retail electric supplier's base quantity' means the total 
        quantity of electric energy sold by the retail electric 
        supplier, expressed in megawatt hours, to electric customers 
        for purposes other than resale during the relevant calendar 
        year, excluding--
                    ``(A) electricity generated by a hydroelectric 
                facility, other than qualified hydropower; and
                    ``(B) electricity generated by the combustion of 
                municipal solid waste.
            ``(13) Retire and retirement.--The terms `retire' and 
        `retirement' with respect to a Federal renewable electricity 
        credit, mean to disqualify the credit for any subsequent use 
        under this section, regardless of whether the use is a sale, 
        transfer, exchange, or submission in satisfaction of a 
        compliance obligation.
    ``(c) Annual Compliance Obligation.--Except as otherwise provided 
in subsection (g), for each of calendar years 2017 through 2040, not 
later than March 31 of the following calendar year, each retail 
electric supplier shall submit to the Commission a quantity of Federal 
renewable electricity credits that is equal to at least the annual 
target of the retail electric supplier under subsection (e).
    ``(d) Establishment of Program.--
            ``(1) In general.--Not later than 1 year after the date of 
        enactment of this section, the Commission shall promulgate 
        regulations to implement and enforce the requirements of this 
        section.
            ``(2) Considerations.--In promulgating regulations under 
        paragraph (1), the Commission shall, to the maximum extent 
        practicable--
                    ``(A) preserve the integrity and incorporate best 
                practices of existing State and tribal renewable 
                electricity programs;
                    ``(B) rely on existing and emerging State, tribal, 
                or regional tracking systems that issue and track non-
                Federal renewable electricity credits; and
                    ``(C) cooperate with States and Indian tribes--
                            ``(i) to facilitate coordination between 
                        State, tribal, and Federal renewable 
                        electricity programs; and
                            ``(ii) to minimize administrative burdens 
                        and costs to retail electric suppliers.
    ``(e) Annual Compliance Requirement.--
            ``(1) Annual targets.--For each of calendar years 2017 
        through 2040, the annual target of a retail electric supplier 
        shall be equal to the product obtained by multiplying--
                    ``(A) the required annual percentage for that 
                calendar year under paragraph (2); and
                    ``(B) the retail electric supplier's base quantity 
                for that calendar year.
            ``(2) Required annual percentage.--
                    ``(A) Calendar years 2017 through 2040.--Subject to 
                subparagraph (B), for each of calendar years 2017 
                through 2040, the required annual percentage shall be 
                as follows:

                                                        Required annual
``Year:                                                     percentage:
        2017...................................................    8.5 
        2018...................................................    9.5 
        2019...................................................   10.5 
        2020...................................................   12.0 
        2021...................................................   13.5 
        2022...................................................   15.0 
        2023...................................................   16.5 
        2024...................................................   18.0 
        2025...................................................   20.0 
        2026...................................................   22.0 
        2027...................................................   24.0 
        2028...................................................   26.0 
        2029...................................................   28.0 
        2030-2040..............................................   30.0.
                    ``(B) Increase authorized for calendar years 2031 
                through 2040.--The Commission may issue orders 
                increasing the required annual percentage amounts for 
                each of calendar years 2031 through 2040 to reflect the 
                maximum achievable level of renewable electricity 
                generation potential, taking into account regional 
                resource availability, economic feasibility, and 
                technological capability.
    ``(f) Federal Renewable Electricity Credits.--
            ``(1) In general.--
                    ``(A) Issuance; tracking; verification.--The 
                regulations promulgated under this section shall 
                include provisions governing the issuance, tracking, 
                and verification of Federal renewable electricity 
                credits.
                    ``(B) Credit ratio.--Except as provided in 
                paragraphs (2) through (4), the Commission shall issue 
                to each generator of renewable electricity, 1 Federal 
                renewable electricity credit for each megawatt hour of 
                renewable electricity generated by the generator after 
                December 31, 2016.
                    ``(C) Serial number.--The Commission shall assign a 
                unique serial number to each Federal renewable 
                electricity credit.
            ``(2) Generation from certain state renewable electricity 
        programs.--
                    ``(A) In general.--If renewable electricity is 
                generated with the support of payments from a retail 
                electric supplier pursuant to a State renewable 
                electricity program (whether through State alternative 
                compliance payments or through payments to a State 
                renewable electricity procurement fund or entity), the 
                Commission shall issue Federal renewable electricity 
                credits to the retail electric supplier for the portion 
                of the relevant renewable electricity generation that 
                is attributable to payments made by the retail electric 
                supplier, as determined pursuant to regulations 
                promulgated by the Commission.
                    ``(B) Remaining portion.--For any remaining portion 
                of the relevant renewable electricity generation, the 
                Commission shall issue Federal renewable electricity 
                credits to the generator, as provided in paragraph (1), 
                except that not more than 1 Federal renewable 
                electricity credit shall be issued for the same 
                megawatt hour of electricity.
                    ``(C) State guidance.--In determining how Federal 
                renewable electricity credits will be apportioned among 
                retail electric suppliers and generators under this 
                paragraph, the Commission shall consider information 
                and guidance issued by the applicable one or more 
                States.
            ``(3) Certain power sales contracts.--Except as otherwise 
        provided in paragraph (2), if a generator has sold renewable 
        electricity to a retail electric supplier under a contract for 
        power from a facility placed in service before the date of 
        enactment of this section, and the contract does not provide 
        for the determination of ownership of the Federal renewable 
        electricity credits associated with the generation, the 
        Commission shall issue the Federal renewable electricity 
        credits to the retail electric supplier for the duration of the 
        contract.
            ``(4) Credit multipliers.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the Commission shall issue--
                            ``(i) not more than 3 Federal renewable 
                        electricity credits for each megawatt hour of 
                        renewable electricity generated by a 
                        distributed renewable generation facility;
                            ``(ii) not more than 2 Federal renewable 
                        electricity credits for each megawatt hour of 
                        renewable electricity generated on Indian land; 
                        and
                            ``(iii) not more than 2 Federal renewable 
                        electricity credits for each megawatt hour of 
                        renewable electricity generated by a brownfield 
                        site generation facility.
                    ``(B) Adjustment.--Except as provided in 
                subparagraph (C), not later than January 1, 2019, and 
                not less frequently than every 4 years thereafter, the 
                Commission shall review the effect of this paragraph on 
                the aggregate quantity of renewable electricity 
                produced under the standard and shall, as necessary and 
                after providing 1 year of notice, reduce the number of 
                Federal renewable electricity credits per megawatt hour 
                issued under this paragraph for any given energy source 
                or facility, but not below one, to ensure that the 
                number is no higher than the Commission determines is 
                necessary--
                            ``(i) to incentivize incremental renewable 
                        energy generation on Indian land and brownfield 
                        sites; and
                            ``(ii) to make distributed renewable 
                        generation facilities cost competitive with 
                        other sources of renewable electricity 
                        generation.
                    ``(C) Facilities placed in service after 
                enactment.--
                            ``(i) In general.--For any renewable 
                        generation facility placed in service after the 
                        date of enactment of this section, subparagraph 
                        (B) shall not apply for the first 10 years 
                        after the date on which the facility is placed 
                        in service.
                            ``(ii) Initial period.--For each year 
                        during the 10-year period described in clause 
                        (i), the Commission shall issue to the facility 
                        the same number of Federal renewable 
                        electricity credits per megawatt hour as are 
                        issued to that facility in the year in which 
                        the facility is placed in service.
                            ``(iii) Subsequent period.--After the 10-
                        year period described in clause (i), the 
                        Commission shall issue Federal renewable 
                        electricity credits to the facility in 
                        accordance with subparagraph (B).
            ``(5) Credits based on qualified hydropower.--For purposes 
        of this subsection, the number of Federal renewable electricity 
        credits issued for qualified hydropower shall be calculated--
                    ``(A) based solely on the increase in average 
                annual generation directly resulting from the 
                efficiency improvements or capacity additions described 
                in subsection (b)(6)(A); and
                    ``(B) using the same water flow information used to 
                determine a historic average annual generation baseline 
                for the hydroelectric facility, as certified by the 
                Commission.
            ``(6) Generation from mixed renewable and nonrenewable 
        resources.--If electricity is generated using both a renewable 
        energy resource and an energy source that is not a renewable 
        energy resource (such as cofiring of renewable biomass and 
        fossil fuel), the Commission shall issue Federal renewable 
        electricity credits based on the proportion of the electricity 
        that is attributable to the renewable energy resource.
            ``(7) Prohibition against double-counting.--The Commission 
        shall ensure that--
                    ``(A) no Federal renewable electricity credit is 
                used more than once for compliance with this section; 
                and
                    ``(B) except as provided in paragraph (4), not more 
                than 1 Federal renewable electricity credit is issued 
                for any megawatt hour of renewable electricity.
            ``(8) Trading.--The lawful holder of a Federal renewable 
        electricity credit may--
                    ``(A) sell, exchange, or transfer the credit;
                    ``(B) submit the credit for compliance under 
                subsection (c); or
                    ``(C) submit the credit for retirement by the 
                Commission.
            ``(9) Banking.--
                    ``(A) In general.--A Federal renewable electricity 
                credit may be submitted in satisfaction of the 
                compliance obligation under subsection (c) for the 
                compliance year in which the credit was issued or for 
                any of the 3 immediately subsequent compliance years.
                    ``(B) Retirement.--The Commission shall retire any 
                Federal renewable electricity credit that has not been 
                retired by April 2 of the calendar year that is 3 years 
                after the calendar year during which the credit was 
                issued.
            ``(10) Retirement.--The Commission shall retire a Federal 
        renewable electricity credit immediately upon submission by the 
        lawful holder of the credit, whether in satisfaction of a 
        compliance obligation under subsection (c) or for another 
        reason.
    ``(g) Alternative Compliance Payments.--
            ``(1) In general.--A retail electric supplier may satisfy 
        the requirements of subsection (c) in whole or in part by 
        submitting in accordance with this subsection, in lieu of each 
        Federal renewable electricity credit that would otherwise be 
        due, a payment equal to $50, adjusted for inflation on January 
        1 of each year following calendar year 2017, in accordance with 
        regulations promulgated by the Commission.
            ``(2) Payment to state funds.--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, payments made under this subsection 
                shall be made directly to one or more States in which 
                the retail electric supplier sells electric energy, in 
                proportion to the portion of the retail electric 
                supplier's base quantity that is sold within each 
                applicable State, if--
                            ``(i) the payments are deposited directly 
                        into a fund of the State treasury established 
                        for that purpose; and
                            ``(ii) the State uses the funds in 
                        accordance with paragraphs (3) and (4).
                    ``(B) Noncompliance.--If the Commission determines 
                that a State is in substantial noncompliance with 
                paragraph (3) or (4), the Commission shall direct that 
                any future alternative compliance payments that would 
                otherwise be paid to the State under this subsection 
                shall instead be paid to the Commission and deposited 
                in the Treasury.
            ``(3) State use of funds.--As a condition of receipt of 
        alternative compliance payments under this subsection, a State 
        shall use the payments exclusively for--
                    ``(A) deploying technologies that generate 
                electricity from renewable energy resources; or
                    ``(B) implementing cost-effective energy efficiency 
                programs to achieve energy savings.
            ``(4) Reporting.--
                    ``(A) In general.--As a condition of receipt of 
                alternative compliance payments pursuant to this 
                subsection, a State shall submit to the Commission an 
                annual report, in accordance with regulations 
                promulgated by the Commission, containing a full 
                accounting of the use of the payments, including a 
                detailed description of the activities funded by the 
                payments and demonstrating compliance with the 
                requirements of this subsection.
                    ``(B) Deadline.--A State shall submit a report 
                under this paragraph--
                            ``(i) not later than 1 year after the date 
                        on which the first alternative compliance 
                        payment is received; and
                            ``(ii) every 1 year thereafter until all 
                        alternative compliance payments are expended.
    ``(h) Information Collection.--
            ``(1) In general.--The Commission may require any retail 
        electric supplier, renewable electricity generator, or any 
        other entity that the Commission determines appropriate, to 
        provide any information the Commission determines appropriate 
        to carry out this section.
            ``(2) Failure to submit; false or misleading information.--
        Any entity required to submit information under paragraph (1) 
        that fails to submit the information or submits false or 
        misleading information shall be in violation of this section.
    ``(i) Enforcement and Judicial Review.--
            ``(1) Failure to submit credits.--If any person fails to 
        comply with the requirements of subsection (c) or (g), the 
        person shall be liable to pay to the Commission a civil penalty 
        equal to the product obtained by multiplying--
                    ``(A) double the alternative compliance payment 
                calculated under subsection (g)(1); and
                    ``(B) the aggregate quantity of Federal renewable 
                electricity credits or equivalent alternative 
                compliance payments that the person failed to submit in 
                violation of the requirements of subsections (c) and 
                (g).
            ``(2) Enforcement.--The Commission shall assess a civil 
        penalty under paragraph (1) in accordance with the procedures 
        described in section 31(d) of the Federal Power Act (16 U.S.C. 
        823b(d)).
            ``(3) Violation of requirement of regulations or orders.--
                    ``(A) In general.--Any person who violates or fails 
                or refuses to comply with any requirement of a 
                regulation promulgated or order issued under this 
                section shall be subject to a civil penalty under 
                section 316A(b) of the Federal Power Act (16 U.S.C. 
                825o-1(b)).
                    ``(B) Assessment.--The penalty under subparagraph 
                (A) shall be assessed by the Commission in the same 
                manner as in the case of a violation referred to in 
                section 316A(b) of that Act.
            ``(4) Judicial review.--
                    ``(A) In general.--Any person aggrieved by a final 
                action taken by the Commission under this section, 
                other than the assessment of a civil penalty under 
                paragraphs (1) through (3), may use the procedures for 
                review described in section 313 of the Federal Power 
                Act (16 U.S.C. 825l).
                    ``(B) Reference.--For purposes of this paragraph, 
                references to an order in section 313 of that Act shall 
                be considered to refer also to all other final actions 
                of the Commission under this section other than the 
                assessment of a civil penalty under paragraphs (1) 
                through (3).
    ``(j) Administration.--Nothing in this section--
            ``(1) diminishes or qualifies any authority of a State, a 
        political subdivision of a State, or an Indian tribe--
                    ``(A) to adopt or enforce any law or regulation 
                respecting renewable electricity, including any law or 
                regulation establishing requirements that are more 
                stringent than those established by this section, 
                provided that no such law or regulation may relieve any 
                person of any requirement otherwise applicable under 
                this section; or
                    ``(B) to regulate the acquisition and disposition 
                of Federal renewable electricity credits by retail 
                electric suppliers within the jurisdiction of the 
                State, political subdivision, or Indian tribe, 
                including the authority to require the retail electric 
                supplier to acquire and submit to the Commission for 
                retirement Federal renewable electricity credits in 
                excess of those submitted under this section; or
            ``(2) affects the application of or the responsibility for 
        compliance with any other provision of law or regulation, 
        including environmental and licensing requirements.
    ``(k) Sunset.--The authority provided by this section expires on 
December 31, 2041.''.

SEC. 3. CLARIFYING STATE AUTHORITY TO ADOPT RENEWABLE ENERGY 
              INCENTIVES.

    Section 210 of the Public Utility Regulatory Policies Act of 1978 
(16 U.S.C. 824a-3) is amended by adding at the end the following:
    ``(o) Clarification of State Authority To Adopt Renewable Energy 
Incentives.--
            ``(1) Definition of state-approved production incentive 
        program.--In this subsection, the term `State-approved 
        production incentive program' means a requirement imposed 
        pursuant to State law or by a State regulatory authority acting 
        within its authority under State law that an electric utility 
        purchase renewable energy (as defined in section 609(a)) at a 
        specified rate.
            ``(2) State authority to adopt renewable energy 
        incentives.--Notwithstanding any other provision of this Act or 
        the Federal Power Act (16 U.S.C. 791a et seq.), a State 
        legislature or regulatory authority may set the rates for a 
        sale of electric energy by a facility generating electric 
        energy from renewable energy sources pursuant to a State-
        approved production incentive program under which the facility 
        voluntarily participates in the State-approved production 
        incentive program.''.

SEC. 4. GUIDELINES FOR DETERMINING QUALIFIED RENEWABLE BIOMASS.

    (a) Definitions.--In this section:
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Environmental Protection Agency.
            (2) Lifecycle greenhouse gas emissions.--
                    (A) In general.--The term ``lifecycle greenhouse 
                gas emissions'' means the aggregate quantity of 
                greenhouse gas emissions, adjusted to account for the 
                relative global warming potential of the emissions 
                relative to all greenhouse gas emissions.
                    (B) Inclusions.--For purposes of subparagraph (A), 
                the term ``greenhouse gas emissions'' includes--
                            (i) direct emissions; and
                            (ii) significant indirect emissions, 
                        including from--
                                    (I) land use changes and temporal 
                                changes in forest carbon sequestration;
                                    (II) biomass harvests, regrowth, 
                                and avoided decomposition related to 
                                the full fuel lifecycle, including all 
                                stages of fuel and feedstock production 
                                and distribution; and
                                    (III) feedstock generation or 
                                extraction through the distribution and 
                                delivery of the finished fuel to the 
                                ultimate consumer.
    (b) Guidelines.--Not later than 1 year after the date of enactment 
of this Act, the Administrator shall, recognizing the recommendations 
of and coordinating with the Scientific Advisory Board of the 
Environmental Protection Agency regarding the accounting of biogenic 
carbon dioxide emissions and after notice and public comment, issue 
guidelines for calculating lifecycle greenhouse gas emissions for 
renewable biomass (as that term is defined in section 610(b) of the 
Public Utility Regulatory Policies Act of 1978).

SEC. 5. ENERGY EFFICIENCY RESOURCE STANDARD FOR RETAIL ELECTRICITY AND 
              NATURAL GAS SUPPLIERS.

    (a) In General.--Title VI of the Public Utility Regulatory Policies 
Act of 1978 (16 U.S.C. 2601 et seq.) (as amended by section 2) is 
amended by adding after section 610 the following:

``SEC. 611. FEDERAL ENERGY EFFICIENCY RESOURCE STANDARD FOR RETAIL 
              ELECTRICITY AND NATURAL GAS SUPPLIERS.

    ``(a) Findings.--Congress finds that--
            ``(1) the Federal energy efficiency resource standard 
        established by this section--
                    ``(A) establishes nationwide minimum levels of 
                electricity and natural gas savings to be achieved 
                through utility efficiency programs, building energy 
                codes, appliance standards, and related efficiency 
                measures; and
                    ``(B) rewards energy-saving improvements achieved 
                through--
                            ``(i) end-use energy efficiency upgrades;
                            ``(ii) reduced losses in transmission and 
                        distribution of energy; and
                            ``(iii) fuel-switching, to the extent that 
                        the switching results in reduced primary energy 
                        use; and
            ``(2) in light of the cost-effective energy efficiency 
        opportunities that exist across the United States in every 
        sector of the economy, retail electricity suppliers, retail 
        natural gas suppliers, and States should--
                    ``(A) consider energy efficiency as a resource in 
                utility planning and procurement activities; and
                    ``(B) seek to achieve all energy efficiency that is 
                available at lower cost than other energy supply 
                options.
    ``(b) Definitions.--In this section:
            ``(1) Affiliate.--The term `affiliate' when used in 
        relation to a person, means another person that owns or 
        controls, is owned or controlled by, or is under common 
        ownership control with, that person, as determined under 
        regulations promulgated by the Secretary.
            ``(2) ASHRAE, ansi, and iesna.--The terms `ASHRAE', `ANSI', 
        and `IESNA' mean the American Society of Heating, Refrigerating 
        and Air Conditioning Engineers, the American National Standards 
        Institute, and the Illuminating Engineering Society of North 
        America, respectively.
            ``(3) Base quantity.--
                    ``(A) In general.--The term `base quantity', with 
                respect to a retail electricity supplier or retail 
                natural gas supplier, means, for each calendar year for 
                which a performance standard is established under 
                subsection (d), the average annual quantity of 
                electricity or natural gas delivered by the retail 
                electricity supplier or retail natural gas supplier to 
                retail customers during the 3 calendar years 
                immediately preceding the year that compliance is 
                required under subsection (d)(1).
                    ``(B) Exclusion.--The term `base quantity', with 
                respect to a retail natural gas supplier, does not 
                include natural gas delivered for purposes of 
                electricity generation.
            ``(4) CHP savings.--The term `CHP savings' means--
                    ``(A) CHP system savings from a combined heat and 
                power system that commences operation after the date of 
                enactment of this section; and
                    ``(B) the increase in CHP system savings from 
                upgrading or replacing, after the date of enactment of 
                this section, a combined heat and power system that 
                commenced operation on or before the date of enactment 
                of this section.
            ``(5) CHP system savings.--The term `CHP system savings' 
        means the electric output, and the electricity saved due to the 
        mechanical output, of a combined heat and power system, 
        adjusted to reflect any increase in fuel consumption by that 
        system as compared to the fuel that would have been required to 
        produce an equivalent useful thermal energy output in a 
        separate thermal-only system, as determined in accordance with 
        regulations promulgated by the Secretary.
            ``(6) Codes and standards savings.--
                    ``(A) In general.--The term `codes and standards 
                savings' means a reduction in end-use electricity or 
                natural gas consumption by a retail electricity 
                supplier or in the service territory of a retail 
                natural gas supplier as a result of the adoption and 
                implementation, after the date of enactment of this 
                section, of new or revised appliance and equipment 
                efficiency standards or building energy codes.
                    ``(B) Baselines.--In calculating codes and 
                standards savings under subparagraph (A)--
                            ``(i) the baseline for calculating savings 
                        from building codes shall be the more stringent 
                        of--
                                    ``(I)(aa) the 2015 International 
                                Energy Conservation Code for 
                                residential buildings; or
                                    ``(bb) the ASHRAE/ANSI/IESNA 
                                Standard 90.1-2013 for commercial 
                                buildings; or
                                    ``(II) the applicable State 
                                building code in effect on the date of 
                                enactment of this section; and
                            ``(ii) the baseline for calculating savings 
                        from appliance standards shall be the average 
                        efficiency of new appliances in the applicable 
                        one or more categories prior to the adoption 
                        and implementation of the new standard.
            ``(7) Combined heat and power system.--The term `combined 
        heat and power system' means a system that uses the same energy 
        source both for the generation of electrical or mechanical 
        power and the production of steam or another form of useful 
        thermal energy, if--
                    ``(A) the system meets any requirements relating to 
                efficiency and other operating characteristics that the 
                Secretary promulgates by regulation; and
                    ``(B) the net wholesale sales of electricity by a 
                facility does not exceed 50 percent of total annual 
                electric generation by the facility.
            ``(8) Cost-effective.--The term `cost-effective', with 
        respect to an energy efficiency measure, means that the measure 
        achieves a net present value of economic benefits over the life 
        of the measure, both directly to the energy consumer and to the 
        economy, that is greater than the net present value of the cost 
        of the measure over the life of the measure, both directly to 
        the energy consumer and to the economy, using the societal 
        benefit-cost test calculated using the lower of a utility 
        weighted average cost of capital or a social discount rate of 3 
        percent.
            ``(9) Customer facility savings.--The term `customer 
        facility savings' means a reduction in end-use electricity or 
        natural gas consumption (including waste heat energy savings) 
        at a facility of an end-use consumer of electricity or natural 
        gas served by a retail electricity supplier or natural gas 
        supplier, as compared to--
                    ``(A) in the case of a new facility, consumption at 
                a reference facility of average efficiency;
                    ``(B) in the case of an existing facility, 
                consumption at the facility during a base period of not 
                less than 1 year;
                    ``(C) in the case of new equipment that replaces 
                existing equipment at the end of the useful life of the 
                existing equipment, consumption by new equipment of 
                average efficiency of the same equipment type, except 
                that customer savings under this subparagraph shall not 
                be counted towards customer savings under subparagraph 
                (A) or (B); and
                    ``(D) in the case of new equipment that replaces 
                existing equipment with remaining useful life--
                            ``(i) consumption of the existing equipment 
                        for the remaining useful life of the equipment; 
                        and
                            ``(ii) thereafter, consumption of new 
                        equipment of average efficiency.
            ``(10) Electricity savings.--The term `electricity savings' 
        means reductions in electricity consumption achieved through 
        measures implemented after the date of enactment of this 
        section, as determined in accordance with regulations 
        promulgated by the Secretary, that are limited to--
                    ``(A) customer facility savings of electricity, 
                adjusted to reflect any associated increase in fuel 
                consumption at the facility;
                    ``(B) reductions in distribution system losses of 
                electricity achieved by a retail electricity supplier, 
                as compared to losses attributable to new or 
                replacement distribution system equipment of average 
                efficiency, as defined in regulations promulgated by 
                the Secretary;
                    ``(C) CHP savings;
                    ``(D) codes and standards savings of electricity; 
                and
                    ``(E) fuel switching energy savings that results in 
                net savings of electricity.
            ``(11) Fuel switching energy savings.--
                    ``(A) In general.--The term `fuel-switching energy 
                savings' means net energy savings, calculated in 
                accordance with subparagraph (B), from end-user 
                switches from 1 energy source to another, as determined 
                in accordance with regulations promulgated by the 
                Secretary.
                    ``(B) Calculation.--For purposes of calculating 
                fuel-switching net energy savings--
                            ``(i) electricity use shall be evaluated 
                        based on the average quantity of fuel burned at 
                        a 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.
            ``(12) Natural gas savings.--The term `natural gas savings' 
        means reductions in natural gas consumption from measures 
        implemented after the date of enactment of this section, as 
        determined in accordance with regulations promulgated by the 
        Secretary, that are limited to--
                    ``(A) customer facility savings of natural gas, 
                adjusted to reflect any associated increase in 
                electricity consumption or consumption of other fuels 
                at the facility;
                    ``(B) reductions in leakage, operational losses, 
                and consumption of natural gas fuel to operate a gas 
                distribution system, achieved by a retail natural gas 
                supplier, as compared to similar leakage, losses, and 
                consumption during a base period of not less than 1 
                year;
                    ``(C) codes and standards savings of natural gas; 
                and
                    ``(D) fuel switching energy savings that results in 
                net savings of natural gas.
            ``(13) Power pool.--The term `power pool' means an 
        association of two or more interconnected electric systems that 
        have entered into an agreement to coordinate operations and 
        planning for improved reliability and efficiencies, including a 
        Regional Transmission Organization or an Independent System 
        Operator, as determined by the Secretary.
            ``(14) Reporting period.--The term `reporting period' 
        means--
                    ``(A) calendar year 2017; and
                    ``(B) each successive 2-calendar-year period 
                thereafter.
            ``(15) Retail electricity supplier.--
                    ``(A) In general.--The term `retail electricity 
                supplier' means, for any given calendar year, an 
                electric utility that sells not less than 1,000,000 
                megawatt hours of electric energy to electric consumers 
                for purposes other than resale during the preceding 
                calendar 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.
            ``(16) Retail natural gas supplier.--
                    ``(A) In general.--The term `retail natural gas 
                supplier' means, for any given calendar year, a local 
                distribution company (as defined in section 2 of the 
                Natural Gas Policy Act of 1978 (15 U.S.C. 3301)), that 
                delivered to natural gas consumers more than 
                5,000,000,000 cubic feet of natural gas for purposes 
                other than resale during the preceding calendar year.
                    ``(B) Inclusions and limitations.--For purposes of 
                determining whether a person qualifies as a retail 
                natural gas supplier under subparagraph (A)--
                            ``(i) deliveries of natural gas by any 
                        affiliate of a local distribution company to 
                        consumers for purposes other than resale shall 
                        be considered to be deliveries by the local 
                        distribution company; and
                            ``(ii) deliveries of natural gas to a 
                        lessee, tenant, or affiliate of a local 
                        distribution company shall not be considered to 
                        be deliveries to natural gas consumers.
            ``(17) Third-party efficiency provider.--The term `third-
        party efficiency provider' means any retailer, building owner, 
        energy service company, financial institution, or other 
        commercial, industrial, or nonprofit entity that is capable of 
        providing electricity savings or natural gas savings in 
        accordance with subsections (e) and (f).
            ``(18) Waste heat energy savings.--
                    ``(A) In general.--The term `waste heat energy 
                savings' means a reduction in electricity or natural 
                gas consumption that results from a modification of an 
                industrial or commercial system that commenced 
                operation before the date of enactment of this section, 
                in order to recapture electrical, mechanical, or 
                thermal energy that would otherwise be wasted, as 
                determined in accordance with regulations promulgated 
                by the Secretary.
                    ``(B) Inclusion.--Such savings shall be included as 
                part of customer facility savings.
    ``(c) Establishment of Program.--
            ``(1) Regulations.--Not later than 1 year after the date of 
        enactment of this section, the Secretary shall, by regulation, 
        establish a program to implement and enforce the requirements 
        of this section, including by--
                    ``(A) establishing measurement and verification 
                procedures and standards under subsection (f);
                    ``(B) establishing requirements under which retail 
                electricity suppliers and retail natural gas suppliers 
                shall--
                            ``(i) demonstrate, document, and report the 
                        compliance of the retail electricity suppliers 
                        and retail natural gas suppliers with the 
                        performance standards under subsection (d); and
                            ``(ii) estimate the impact of the standards 
                        on current and future electricity and natural 
                        gas use in the service territories of the 
                        suppliers; and
                    ``(C) establishing requirements governing 
                applications for, and implementation of, delegated 
                State administration under subsection (h).
            ``(2) Coordination with state programs.--In establishing 
        and implementing this section, the Secretary shall, to the 
        maximum extent practicable, preserve the integrity and 
        incorporate best practices of existing State energy efficiency 
        programs.
    ``(d) Performance Standards.--
            ``(1) Compliance obligation.--Not later than May 1 of the 
        calendar year immediately following each reporting period--
                    ``(A) each retail electricity supplier shall submit 
                to the Secretary a report, in accordance with 
                regulations promulgated by the Secretary, demonstrating 
                that the retail electricity supplier has achieved 
                cumulative electricity savings (adjusted to account for 
                any attrition of savings measures implemented in prior 
                years) in each calendar year that are equal to the 
                applicable percentage, established under paragraph (2), 
                (3), or (4), of the base quantity of the retail 
                electricity supplier; and
                    ``(B) each retail natural gas supplier shall submit 
                to the Secretary a report, in accordance with 
                regulations promulgated by the Secretary, demonstrating 
                that it has achieved cumulative natural gas savings 
                (adjusted to account for any attrition of savings 
                measures implemented in prior years) in each calendar 
                year that are equal to the applicable percentage, 
                established under paragraph (2), (3), or (4), of the 
                base quantity of such retail natural gas supplier.
            ``(2) Standards for 2017 through 2030.--For each of 
        calendar years 2017 through 2030, the applicable percentages 
        are as follows:

------------------------------------------------------------------------
                          Cumulative Electricity  Cumulative Natural Gas
    ``Calendar Year         Savings Percentage       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.
------------------------------------------------------------------------

            ``(3) Subsequent years.--
                    ``(A) Calendar years 2031 through 2040.--Not later 
                than December 31, 2028, 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 2031 
                through 2040.
                    ``(B) Subsequent extensions.--Except as provided in 
                subparagraph (A), not later than December 31 of the 
                penultimate reporting period for which performance 
                standards have been established under this paragraph, 
                the Secretary shall promulgate regulations establishing 
                performance standards (expressed as applicable 
                percentages of base quantity for both cumulative 
                electricity savings and cumulative natural gas savings) 
                for the 10-calendar-year period following the last 
                calendar year for which performance standards 
                previously were established.
                    ``(C) Requirements.--The Secretary shall establish 
                standards under this paragraph at levels reflecting the 
                maximum achievable level of cost-effective energy 
                efficiency potential, taking into account--
                            ``(i) cost-effective energy savings 
                        achieved by leading retail electricity 
                        suppliers and retail natural gas suppliers;
                            ``(ii) opportunities for new codes and 
                        standards savings;
                            ``(iii) technology improvements; and
                            ``(iv) other indicators of cost-effective 
                        energy efficiency potential.
                    ``(D) Minimum percentage.--In no case shall the 
                applicable percentages for any calendar year be less 
                than the applicable percentages for calendar year 2030 
                (including any increase in the standard for calendar 
                year 2030 established pursuant to paragraph (4)).
            ``(4) Midcourse review and adjustment of standards.--
                    ``(A) In general.--Not later than December 31, 
                2023, and at 10-year intervals thereafter, the 
                Secretary shall--
                            ``(i) review the most recent standards 
                        established under paragraph (2) or (3); and
                            ``(ii) increase the standards by regulation 
                        if the Secretary determines that additional 
                        cost-effective energy efficiency potential is 
                        achievable, taking into account the 
                        requirements described in paragraph (3)(C).
                    ``(B) Lead time.--If the Secretary revises 
                standards under this paragraph, the regulations shall 
                provide adequate lead time to ensure that compliance 
                with the increased standards is feasible.
            ``(5) Delay of submission for first reporting period.--
                    ``(A) In general.--Notwithstanding paragraphs (1) 
                and (2), for the 2017 reporting period, the Secretary 
                may accept a request from a retail electricity supplier 
                or a retail natural gas supplier to delay the required 
                submission of documentation of all or part of the 
                required savings for up to 2 years.
                    ``(B) Plan for compliance.--The request for delay 
                under subparagraph (A) shall include a plan for coming 
                into full compliance by the end of the 2018-2019 
                reporting period.
            ``(6) Applying unused savings to future years.--If savings 
        achieved in a year exceed the performance standards specified 
        in this subsection, any savings in excess of the performance 
        standards may be applied toward performance standards specified 
        for future years.
    ``(e) Transfers of Electricity or Natural Gas Savings.--
            ``(1) Bilateral contracts for savings transfers.--Subject 
        to the limitations of this subsection, a retail electricity 
        supplier or retail natural gas supplier may use electricity 
        savings or natural gas savings purchased pursuant to a 
        bilateral contract from another retail electricity supplier or 
        retail natural gas supplier, a State, or a third-party 
        efficiency provider to meet the applicable performance standard 
        under subsection (d).
            ``(2) Requirements.--Electricity savings or natural gas 
        savings purchased and used for compliance under this subsection 
        shall be--
                    ``(A) measured and verified in accordance with 
                subsection (f);
                    ``(B) reported in accordance with subsection (d); 
                and
                    ``(C) achieved within the same State as is served 
                by the retail electricity supplier or retail natural 
                gas supplier.
            ``(3) Exception.--Notwithstanding paragraph (2)(C), a State 
        regulatory authority may authorize a retail electricity 
        supplier or a retail natural gas supplier regulated by the 
        State regulatory authority to purchase savings achieved in a 
        different State, if--
                    ``(A) the savings are achieved within the same 
                power pool; and
                    ``(B) the State regulatory authority that regulates 
                the purchaser oversees the measurement and verification 
                of the savings pursuant to the procedures and standards 
                applicable in the State in which the purchaser is 
                located.
            ``(4) Regulatory approval.--Nothing in this subsection 
        limits or affects the authority of a State regulatory authority 
        to require a retail electricity supplier or retail natural gas 
        supplier that is regulated by the State regulatory authority to 
        obtain the authorization or approval of the State regulatory 
        authority of a contract for transfer of electricity savings or 
        natural gas savings under this subsection.
            ``(5) Limitations.--To optimize the achievement of cost-
        effective efficiency potential, the Secretary may prescribe 
        such limitations as the Secretary determines appropriate with 
        respect to the proportion of the compliance obligation of a 
        retail electricity or natural gas supplier under the applicable 
        performance standards under subsection (d) that may be met 
        using electricity savings or natural gas savings that are 
        purchased under this subsection.
    ``(f) Measurement and Verification of Savings.--The regulations 
promulgated pursuant to subsection (c) shall include--
            ``(1) procedures and standards for defining and measuring 
        electricity savings and natural gas savings that can be counted 
        towards the performance standards established under subsection 
        (d), that shall--
                    ``(A) specify the types of energy efficiency and 
                energy conservation measures that can be counted;
                    ``(B) require that energy consumption estimates for 
                customer facilities or portions of facilities in the 
                applicable base and current years be adjusted, as 
                appropriate, to account for changes in weather, level 
                of production, and building area;
                    ``(C) account for the useful life of measures;
                    ``(D) include assigned savings values for specific, 
                commonly used measures;
                    ``(E) allow for savings from a program to be 
                estimated based on extrapolation from a representative 
                sample of participating customers;
                    ``(F) include procedures for calculating and 
                documenting CHP savings, fuel-switching energy savings, 
                and waste heat energy savings;
                    ``(G) establish methods for calculating codes and 
                standards energy savings, including the use of verified 
                compliance rates;
                    ``(H) include procedures for calculating and 
                documenting--
                            ``(i) customer facility savings and 
                        reductions in distribution system losses of 
                        electricity and natural gas that are achieved 
                        as a result of smart grid deployment, as 
                        described in section 1301 of the Energy 
                        Independence and Security Act of 2007 (42 
                        U.S.C. 17381); and
                            ``(ii) reductions in natural gas 
                        distribution system losses attributable to 
                        pipeline repair and replacement programs;
                    ``(I) count only measures and savings that are 
                additional to business-as-usual customer purchase 
                practices;
                    ``(J) ensure that the retail electricity supplier 
                or retail natural gas supplier claiming the electricity 
                savings or natural gas savings, including codes and 
                standards savings, played a significant role in 
                achieving the savings (including through the activities 
                of a designated agent of the supplier or through the 
                purchase of transferred electricity savings or natural 
                gas savings);
                    ``(K) avoid double-counting of savings used for 
                compliance with this section, including transferred 
                savings;
                    ``(L) include electricity savings or natural gas 
                savings from programs administered by the retail 
                electric supplier or natural gas supplier that are 
                funded by Federal, State, or other sources;
                    ``(M) credit large customer self-directed 
                electricity savings or natural gas savings to the 
                retail electricity supplier or the retail natural gas 
                supplier if the large customers receive incentives or 
                rate reductions from the retail supplier for self-
                directed energy efficiency improvements;
                    ``(N) include procedures for counting electricity 
                savings and natural gas savings achieved by solar 
                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 but that reduce on-
                site energy use;
                    ``(O) in any State in which the State regulatory 
                authority has designated one or more entities to 
                administer electric ratepayer-funded efficiency 
                programs approved by the State regulatory authority, 
                provide that electricity savings and natural gas 
                savings achieved through the programs shall be 
                distributed proportionally among retail electric 
                suppliers and retail natural gas suppliers; and
                    ``(P) include guidance for utilities to calculate 
                and document business-as-usual consumption projections; 
                and
            ``(2) procedures and standards for third-party verification 
        of reported electricity savings or natural gas savings.
    ``(g) Enforcement and Judicial Review.--
            ``(1) Review of retail supplier reports.--
                    ``(A) In general.--The Secretary shall review each 
                report submitted to the Secretary by a retail 
                electricity supplier or retail natural gas supplier 
                under subsection (d) to verify that the applicable 
                performance standards under subsection (d) have been 
                met.
                    ``(B) Exclusion.--In determining compliance with 
                the applicable performance standards under subsection 
                (d), the Secretary shall exclude reported electricity 
                savings or natural gas savings that are not adequately 
                demonstrated and documented, in accordance with the 
                regulations promulgated under this section.
            ``(2) Penalty for failure to document adequate savings.--If 
        a retail electricity supplier or a retail natural gas supplier 
        fails to demonstrate compliance with an applicable performance 
        standard under subsection (d), or to pay to the State an 
        applicable alternative compliance payment under subsection 
        (h)(4), the Secretary shall assess against the retail 
        electricity supplier or retail natural gas supplier a civil 
        penalty for each failure in an amount equal to, as adjusted for 
        inflation in accordance with such regulations as the Secretary 
        may promulgate--
                    ``(A) $100 per megawatt hour of electricity savings 
                or alternative compliance payment that the retail 
                electricity supplier failed to achieve or make, 
                respectively; or
                    ``(B) $10 per million Btu of natural gas savings or 
                alternative compliance payment that the retail natural 
                gas supplier failed to achieve or make, respectively.
            ``(3) Offsetting state penalties.--The Secretary shall 
        reduce the amount of any penalty under paragraph (2) by the 
        amount paid by the relevant retail electricity supplier or 
        retail natural gas supplier to a State for failure to comply 
        with the requirements of a State energy efficiency resource 
        standard during the same compliance period, if the State 
        standard--
                    ``(A) is comparable in type to the Federal standard 
                established under this section; and
                    ``(B) is more stringent than the applicable 
                performance standards under subsection (d).
            ``(4) Enforcement procedures.--The Secretary shall assess a 
        civil penalty, as provided under paragraph (2), in accordance 
        with the procedures described in section 333(d) of the Energy 
        Policy and Conservation Act (42 U.S.C. 6303(d)).
            ``(5) Judicial review.--
                    ``(A) In general.--Any person adversely affected by 
                a final action taken by the Secretary under this 
                section, other than the assessment of a civil penalty, 
                may use the procedures for review described in section 
                336(b) of the Energy Policy and Conservation Act (42 
                U.S.C. 6306(b)).
                    ``(B) Reference.--In this paragraph, references to 
                a rule in section 336(b) of the Energy Policy and 
                Conservation Act (42 U.S.C. 6306(b)) shall be 
                considered to refer also to all other final actions of 
                the Secretary under this section other than the 
                assessment of a civil penalty.
    ``(h) State Administration.--
            ``(1) In general.--Upon receipt of an application from the 
        Governor of a State (including the Mayor of the District of 
        Columbia), the Secretary may delegate to the State 
        responsibility for administering this section within the 
        territory of the State if the Secretary determines that the 
        State will implement an energy efficiency program that meets or 
        exceeds the requirements of this section, including--
                    ``(A) achieving electricity savings and natural gas 
                savings that are at least as great as those required 
                under the applicable performance standards established 
                under subsection (d);
                    ``(B) reviewing reports and verifying electricity 
                savings and natural gas savings achieved in the State 
                (including savings transferred from outside the State); 
                and
                    ``(C) collecting any alternative compliance 
                payments under paragraph (4) and using the payments to 
                implement cost-effective efficiency programs.
            ``(2) Secretarial determination.--Not later than 180 days 
        after the date on which a complete application is received by 
        the Secretary, the Secretary shall make a substantive 
        determination approving or disapproving a State application, 
        after public notice and comment.
            ``(3) Alternative measurement and verification procedures 
        and standards.--As part of an application submitted under 
        paragraph (1), a State may request to use alternative 
        measurement and verification procedures and standards from the 
        procedures and standards described in subsection (f), if the 
        State demonstrates that the alternative procedures and 
        standards provide a level of accuracy of measurement and 
        verification that are at least equivalent to the Federal 
        procedures and standards under subsection (f).
            ``(4) Alternative compliance payments.--
                    ``(A) In general.--As part of an application 
                submitted under paragraph (1), a State may permit 
                retail electricity suppliers or retail natural gas 
                suppliers to pay to the State, by not later than 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 section and to 
                implement cost-effective energy efficiency programs 
                that--
                            ``(i) to the maximum extent practicable, 
                        achieve electricity savings and natural gas 
                        savings in the State sufficient to make up the 
                        deficit associated with the alternative 
                        compliance payments; and
                            ``(ii) can be measured and verified in 
                        accordance with the applicable procedures and 
                        standards under subsection (f) or paragraph 
                        (3), as applicable.
            ``(5) Review of state implementation.--
                    ``(A) Periodic review.--Every 2 years, the 
                Secretary shall review State implementation of this 
                section for conformance with the requirements of this 
                section in approximately \1/2\ of the States that have 
                received approval under this subsection to administer 
                the program, so that each State shall be reviewed at 
                least every 4 years.
                    ``(B) Report.--To facilitate the review under 
                subparagraph (A), the Secretary may require the State 
                to submit a report demonstrating the conformance of the 
                State with the requirements of this section, 
                including--
                            ``(i) reports submitted by retail 
                        electricity suppliers and retail natural gas 
                        suppliers to the State demonstrating compliance 
                        with applicable performance standards;
                            ``(ii) the impact of the standards on 
                        projected electricity and natural gas demand 
                        within the State;
                            ``(iii) an accounting of the use of 
                        alternative compliance payments by the State 
                        and the resulting electricity savings and 
                        natural gas savings achieved; and
                            ``(iv) any other information that the 
                        Secretary determines appropriate.
                    ``(C) Review upon petition.--Notwithstanding 
                subparagraph (A), upon receipt of a public petition 
                containing credible allegation of substantial 
                deficiencies, the Secretary shall promptly review the 
                State implementation of delegated authority under this 
                section.
                    ``(D) Deficiencies.--
                            ``(i) In general.--In completing a review 
                        under this paragraph, if the Secretary finds 
                        deficiencies, the Secretary shall--
                                    ``(I) notify the State of the 
                                deficiencies;
                                    ``(II) direct the State to correct 
                                the deficiencies; and
                                    ``(III) require the State to report 
                                to the Secretary on progress made by 
                                not later than 180 days after the date 
                                on which the State receives notice 
                                under subclause (I).
                            ``(ii) Substantial deficiencies.--If the 
                        deficiencies are substantial, the Secretary 
                        shall--
                                    ``(I) disallow the reported 
                                electricity savings or natural gas 
                                savings that the Secretary determines 
                                are not credible due to deficiencies;
                                    ``(II) re-review the State not 
                                later than 2 years after the date on 
                                which the original review was 
                                completed; and
                                    ``(III) if substantial deficiencies 
                                remain uncorrected after the review 
                                provided for under subclause (II), 
                                revoke the authority of the State to 
                                administer the program established 
                                under this section.
            ``(6) Calls for revision of state applications.--As a 
        condition of maintaining the delegated authority of a State to 
        administer this section, the Secretary may require a State to 
        submit a revised application under paragraph (1) if the 
        Secretary has--
                    ``(A) promulgated new or revised performance 
                standards under subsection (d);
                    ``(B) promulgated new or substantially revised 
                measurement and verification procedures and standards 
                under subsection (f); or
                    ``(C) otherwise substantially revised the program 
                established under this section.
            ``(7) Cost recovery, fixed cost recovery and shareholder 
        incentives.--State utility regulatory commissions are 
        encouraged to review the rules and regulations of the 
        commission to ensure that utilities under the jurisdiction of 
        the commission can--
                    ``(A) recover the direct costs of energy efficiency 
                programs;
                    ``(B) fully recover authorized fixed costs, 
                including lost margins from lower annual sales due to 
                energy efficiency programs; and
                    ``(C) earn an incentive for shareholders if the 
                energy efficiency standards are achieved.
    ``(i) Information and Reports.--In accordance with section 13 of 
the Federal Energy Administration Act of 1974 (15 U.S.C. 772), the 
Secretary may require any retail electricity supplier, retail natural 
gas supplier, third-party efficiency provider, or any other entity that 
the Secretary determines appropriate, to provide any information the 
Secretary determines appropriate to carry out this section.
    ``(j) State Law.--Nothing in this section diminishes or qualifies 
any authority of a State or political subdivision of a State to adopt 
or enforce any law or regulation respecting electricity savings or 
natural gas savings, including any law or regulation establishing 
energy efficiency requirements that are more stringent than those under 
this section, except that no State law or regulation shall relieve any 
person of any requirement otherwise applicable under this section.''.

SEC. 6. PROGRAM REVIEW.

    (a) National Academy of Sciences Review.--The Secretary of Energy 
shall enter into a contract with the National Academy of Sciences under 
which the Academy shall, not later than July 1, 2021, and every 10 
years thereafter, submit to Congress, the Federal Energy Regulatory 
Commission, and the Secretary of Energy a comprehensive evaluation of 
all aspects of the programs established under sections 610 and 611 of 
the Public Utility Regulatory Policies Act of 1978 (as added by this 
Act), including--
            (1) an evaluation of the effectiveness of the programs, 
        including the specific design elements of the programs, in 
        increasing the efficiency of retail natural gas and electricity 
        distribution and consumption and increasing the deployment of 
        renewable electricity capacity;
            (2) the opportunities for additional technologies and 
        sources of efficiency and renewable electricity that have 
        emerged since the date of enactment of this Act;
            (3) the impact of the programs on the reliability of 
        electricity and natural gas supply;
            (4) the net benefits or costs of the programs to the United 
        States and the States, including--
                    (A) the effects on electricity and natural gas 
                demand and prices;
                    (B) the economic development benefits of 
                investment;
                    (C) environmental costs and benefits;
                    (D) the impacts on public health and health care 
                costs; and
                    (E) avoided costs related to environmental and 
                congestion mitigation investments that otherwise would 
                have been required;
            (5) an assessment of the benefits and costs of increasing 
        the performance standards established under section 611(d) of 
        the Public Utility Regulatory Policies Act of 1978 (as added by 
        this Act);
            (6) the feasibility, advantages, and disadvantages of 
        alternative models for demonstrating compliance with a Federal 
        energy efficiency resource standard, including--
                    (A) establishing a national trading system for 
                energy efficiency credits; or
                    (B) demonstrating compliance through actual 
                reductions in delivery or sales of electricity and 
                natural gas, rather than on program savings; and
            (7) recommendations regarding potential changes to the 
        programs, including to regulations and procedures for 
        implementing the programs, or to related public policies.
    (b) Recommendations to Congress.--Not later than January 1, 2022, 
and every 10 years thereafter, the Secretary of Energy shall submit to 
the Committee on Energy and Commerce of the House of Representatives 
and the Committee on Energy and Natural Resources of the Senate a 
report making recommendations for modifications and improvements to the 
programs established under sections 610 and 611 of the Public Utility 
Regulatory Policies Act of 1978 (as added by this Act), including an 
explanation of the inconsistencies, if any, between the recommendations 
of the Secretary of Energy and the recommendations included in the 
evaluation of the National Academy of Sciences under subsection (a).

SEC. 7. CONFORMING AMENDMENT.

    The table of contents of the Public Utility Regulatory Policies Act 
of 1978 (16 U.S.C. prec. 2601) is amended by adding at the end of the 
items relating to title VI the following:

``Sec. 609. Rural and remote communities electrification grants.
``Sec. 610. Federal renewable electricity standard.
``Sec. 611. Federal energy efficiency resource standard for retail 
                            electricity and natural gas suppliers.''.
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