I 

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 LUJA ́N 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. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘American Renewable 

5 Energy and Efficiency Act’’. 


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1 SEC. 2. FEDERAL RENEWABLE ELECTRICITY STANDARD. 

2 Title VI of the Public Utility Regulatory Policies Act 

3 of 1978 (16 U.S.C. 2601 et seq.) is amended by adding 

4 after section 609 (7 U.S.C. 918c) the following: 

5 ‘‘SEC. 610. FEDERAL RENEWABLE ELECTRICITY STANDARD. 

6 ‘‘(a) FINDINGS.—Congress finds that— 

7 ‘‘(1) the Federal renewable electricity standard 

8 established by this section establishes a market9 based policy to create ongoing competition among 

10 renewable electricity generators across the United 

11 States and provide the greatest quantity of clean 

12 electricity for the lowest price; and 

13 ‘‘(2) the United States has vast wind, solar, hy14 dropower, biomass, and geothermal resources that— 

15 ‘‘(A) are renewable; 

16 ‘‘(B) are dispersed widely across different 

17 regions of the United States; and 

18 ‘‘(C) can be harnessed to generate a sig19 nificant share of electricity in the United 

20 States. 

21 ‘‘(b) DEFINITIONS.—In this section: 

22 ‘‘(1) BROWNFIELD SITE GENERATION FACIL23 ITY.—The term ‘brownfield site generation facility’ 

24 means a facility that— 

25 ‘‘(A) generates renewable electricity; and 


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1 ‘‘(B) occupies a brownfield site (as that 

2 term is defined in section 101 of the Com3 prehensive Environmental Response, Compensa4 tion, and Liability Act of 1980 (42 U.S.C. 

5 9601)). 

6 ‘‘(2) DISTRIBUTED RENEWABLE GENERATION

7 FACILITY.—The term ‘distributed renewable genera8 tion facility’ means a facility that— 

9 ‘‘(A) generates renewable electricity; 

10 ‘‘(B) primarily serves one or more electric 

11 consumers at or near the facility site; and 

12 ‘‘(C) has not more than 2 megawatts in 

13 capacity. 

14 ‘‘(3) FEDERAL RENEWABLE ELECTRICITY

15 CREDIT.—The term ‘Federal renewable electricity 

16 credit’ means a credit, representing 1 megawatt 

17 hour of renewable electricity, issued pursuant to sub18 section (f). 

19 ‘‘(4) INDIAN LAND.—The term ‘Indian land’ 

20 means— 

21 ‘‘(A) any land within the limits of any In22 dian reservation, pueblo, or rancheria; 

23 ‘‘(B) any land not within the limits of any 

24 Indian reservation, pueblo, or rancheria, title to 


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1 which was on the date of enactment of this sec2 tion held by— 

3 ‘‘(i) the United States for the benefit 

4 of any Indian tribe or individual; or 

5 ‘‘(ii) any Indian tribe or individual 

6 subject to restriction by the United States 

7 against alienation; 

8 ‘‘(C) any dependent Indian community; or 

9 ‘‘(D) any land conveyed under the Alaska 

10 Native Claims Settlement Act (43 U.S.C. 1601 

11 et seq.) to any Native Corporation (as that 

12 term is defined in section 3 of that Act (43 

13 U.S.C. 1602)). 

14 ‘‘(5) INDIAN TRIBE.—The term ‘Indian tribe’ 

15 means any Indian tribe, band, nation, or other orga16 nized group or community (including any Native vil17 lage, Regional Corporation, or Village Corporation 

18 (as those terms are defined in section 3 of the Alas19 ka Native Claims Settlement Act (43 U.S.C. 1602))) 

20 that is recognized as eligible for the special pro21 grams and services provided by the United States to 

22 Indians because of their status as Indians. 

23 ‘‘(6) QUALIFIED HYDROPOWER.—The term 

24 ‘qualified hydropower’ means— 


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1 ‘‘(A) energy produced from increased effi2 ciency achieved, or additions of capacity made, 

3 on or after January 1, 2001, at a hydroelectric 

4 facility that— 

5 ‘‘(i) was placed in service before that 

6 date; and 

7 ‘‘(ii) does not include additional en8 ergy generated as a result of operational 

9 changes not directly associated with effi10 ciency improvements or capacity additions; 

11 or 

12 ‘‘(B) energy produced from generating ca13 pacity added to a dam on or after January 1, 

14 2001, if the Commission certifies that— 

15 ‘‘(i) the dam— 

16 ‘‘(I) was placed in service before 

17 the date of enactment of this section; 

18 ‘‘(II) was operated for flood con19 trol, navigation, or water supply pur20 poses; and 

21 ‘‘(III) was not producing hydro22 electric power prior to the addition of 

23 the capacity; and 

24 ‘‘(ii) the hydroelectric project installed 

25 on the dam— 


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1 ‘‘(I) is licensed or is exempt from 

2 licensing by the Commission; 

3 ‘‘(II) is in compliance with— 

4 ‘‘(aa) the terms and condi5 tions of the license or exemption; 

6 and 

7 ‘‘(bb) other applicable legal 

8 requirements for the protection 

9 of environmental quality, includ10 ing applicable fish passage re11 quirements; and 

12 ‘‘(III) is operated so that the 

13 water surface elevation at any given 

14 location and time that would have oc15 curred in the absence of the hydro16 electric project is maintained, subject 

17 to any license or exemption require18 ments that require changes in water 

19 surface elevation for the purpose of 

20 improving the environmental quality 

21 of the affected waterway. 

22 ‘‘(7) QUALIFIED RENEWABLE BIOMASS.—The 

23 term ‘qualified renewable biomass’ means renewable 

24 biomass that, when combusted, yields, on a weight25 ed-average basis, a 50-percent reduction in lifecycle 


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1 greenhouse gas emissions (as defined in section 4(a) 

2 of the American Renewable Energy and Efficiency 

3 Act) per unit of useful energy, as compared to the 

4 operation of a combined cycle natural gas electric 

5 generating facility using the most efficient commer6 cially available technology, when calculated over a 

7 20-year life cycle. 

8 ‘‘(8) RENEWABLE BIOMASS.—The term ‘renew9 able biomass’ means— 

10 ‘‘(A) crops, crop byproducts, or crop resi11 dues harvested from actively managed or fallow 

12 agricultural land that is— 

13 ‘‘(i) nonforested; and 

14 ‘‘(ii) cleared prior to the date of en15 actment of this section; 

16 ‘‘(B) planted trees, brush, slash, and all 

17 residues from an actively managed tree farm lo18 cated on non-Federal land cleared prior to the 

19 date of enactment of this section; 

20 ‘‘(C) precommercial-sized thinnings, slash, 

21 brush, and residue from milled trees, from for22 ested land that is not— 

23 ‘‘(i) old-growth or mature forest; 


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1 ‘‘(ii) identified under a State natural 

2 heritage program as rare, imperiled, or 

3 critically imperiled; or 

4 ‘‘(iii) Federal land; 

5 ‘‘(D) algae; 

6 ‘‘(E) nonhazardous plant matter derived 

7 from waste— 

8 ‘‘(i) including separated yard waste, 

9 landscape right-of-way trimmings, or food 

10 waste; but 

11 ‘‘(ii) not including municipal solid 

12 waste, recyclable waste paper, painted, 

13 treated or pressurized wood, or wood con14 taminated with plastic or metals; 

15 ‘‘(F) animal waste or animal byproducts, 

16 including products of animal waste digesters; 

17 ‘‘(G) vegetative matter removed from with18 in 200 yards of any manmade structure or 

19 campground; 

20 ‘‘(H) slash and precommercial-sized 

21 thinnings harvested— 

22 ‘‘(i) in environmentally sustainable 

23 quantities, as determined by the appro24 priate Federal land manager; and 


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1 ‘‘(ii) from National Forest System 

2 land or public lands (as defined in section 

3 103 of the Federal Land Policy and Man4 agement Act of 1976 (43 U.S.C. 1702)), 

5 other than— 

6 ‘‘(I) components of the National 

7 Wilderness Preservation System es8 tablished under the Wilderness Act 

9 (16 U.S.C. 1131 et seq.); 

10 ‘‘(II) Wilderness Study Areas, as 

11 identified by the Bureau of Land 

12 Management; 

13 ‘‘(III) inventoried roadless areas 

14 and all unroaded areas of at least 

15 5,000 acres; 

16 ‘‘(IV) old growth and late seral 

17 stands; 

18 ‘‘(V) components of the National 

19 Landscape Conservation System ad20 ministered by the Bureau of Land 

21 Management; and 

22 ‘‘(VI) national monuments; and 

23 ‘‘(I) forest thinnings sourced as part of 

24 catastrophic wildfire risk mitigation activities. 


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1 ‘‘(9) RENEWABLE ELECTRICITY.—The term ‘re2 newable electricity’ means electricity generated (in3 cluding by means of a fuel cell) from a renewable en4 ergy resource. 

5 ‘‘(10) RENEWABLE ENERGY RESOURCE.—The 

6 term ‘renewable energy resource’ means each of the 

7 following: 

8 ‘‘(A) Wind energy. 

9 ‘‘(B) Solar energy. 

10 ‘‘(C) Geothermal energy. 

11 ‘‘(D) Qualified renewable biomass. 

12 ‘‘(E) Biogas derived from qualified renew13 able biomass. 

14 ‘‘(F) Biofuels derived from qualified re15 newable biomass. 

16 ‘‘(G) Qualified hydropower. 

17 ‘‘(H) Marine and hydrokinetic renewable 

18 energy (as defined in section 632 of the Energy 

19 Independence and Security Act of 2007 (42 

20 U.S.C. 17211)). 

21 ‘‘(I) Landfill gas. 

22 ‘‘(11) RETAIL ELECTRIC SUPPLIER.— 

23 ‘‘(A) IN GENERAL.—The term ‘retail elec24 tric supplier’ means, for any calendar year, an 

25 electric utility that sells not fewer than 


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

2 electric consumers for purposes other than re3 sale during the preceding calendar year. 

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

5 purposes of determining whether an electric 

6 utility qualifies as a retail electric supplier 

7 under subparagraph (A)— 

8 ‘‘(i) the sales made by any affiliate of 

9 the electric utility to electric consumers, 

10 other than sales to lessees or tenants of 

11 the affiliate, for purposes other than resale 

12 shall be considered to be sales made by the 

13 electric utility; and 

14 ‘‘(ii) sales made by the electric utility 

15 to an affiliate, lessee, or tenant of the elec16 tric utility shall not be treated as sales to 

17 electric consumers. 

18 ‘‘(C) AFFILIATE.—In this paragraph, the 

19 term ‘affiliate’ when used in relation to a per20 son, means another person that directly or indi21 rectly owns or controls, is owned or controlled 

22 by, or is under common ownership or control 

23 with, that person, as determined under regula24 tions promulgated by the Commission. 


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1 ‘‘(12) RETAIL ELECTRIC SUPPLIER’S BASE

2 QUANTITY.—The term ‘retail electric supplier’s base 

3 quantity’ means the total quantity of electric energy 

4 sold by the retail electric supplier, expressed in 

5 megawatt hours, to electric customers for purposes 

6 other than resale during the relevant calendar year, 

7 excluding— 

8 ‘‘(A) electricity generated by a hydro9 electric facility, other than qualified hydro10 power; and 

11 ‘‘(B) electricity generated by the combus12 tion of municipal solid waste. 

13 ‘‘(13) RETIRE AND RETIREMENT.—The terms 

14 ‘retire’ and ‘retirement’ with respect to a Federal re15 newable electricity credit, mean to disqualify the 

16 credit for any subsequent use under this section, re17 gardless of whether the use is a sale, transfer, ex18 change, or submission in satisfaction of a compliance 

19 obligation. 

20 ‘‘(c) ANNUAL COMPLIANCE OBLIGATION.—Except as 

21 otherwise provided in subsection (g), for each of calendar 

22 years 2017 through 2040, not later than March 31 of the 

23 following calendar year, each retail electric supplier shall 

24 submit to the Commission a quantity of Federal renewable 


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1 electricity credits that is equal to at least the annual tar2 get of the retail electric supplier under subsection (e). 

3 ‘‘(d) ESTABLISHMENT OF PROGRAM.— 

4 ‘‘(1) IN GENERAL.—Not later than 1 year after 

5 the date of enactment of this section, the Commis6 sion shall promulgate regulations to implement and 

7 enforce the requirements of this section. 

8 ‘‘(2) CONSIDERATIONS.—In promulgating regu9 lations under paragraph (1), the Commission shall, 

10 to the maximum extent practicable— 

11 ‘‘(A) preserve the integrity and incorporate 

12 best practices of existing State and tribal re13 newable electricity programs; 

14 ‘‘(B) rely on existing and emerging State, 

15 tribal, or regional tracking systems that issue 

16 and track non-Federal renewable electricity 

17 credits; and 

18 ‘‘(C) cooperate with States and Indian 

19 tribes— 

20 ‘‘(i) to facilitate coordination between 

21 State, tribal, and Federal renewable elec22 tricity programs; and 

23 ‘‘(ii) to minimize administrative bur24 dens and costs to retail electric suppliers. 

25 ‘‘(e) ANNUAL COMPLIANCE REQUIREMENT.— 


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1 ‘‘(1) ANNUAL TARGETS.—For each of calendar 

2 years 2017 through 2040, the annual target of a re3 tail electric supplier shall be equal to the product ob4 tained by multiplying— 

5 ‘‘(A) the required annual percentage for 

6 that calendar year under paragraph (2); and 

7 ‘‘(B) the retail electric supplier’s base 

8 quantity for that calendar year. 

9 ‘‘(2) REQUIRED ANNUAL PERCENTAGE.— 

10 ‘‘(A) CALENDAR YEARS 2017 THROUGH

11 2040.—Subject to subparagraph (B), for each of 

12 calendar years 2017 through 2040, the required 

13 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. 

14 ‘‘(B) INCREASE AUTHORIZED FOR CAL15 ENDAR YEARS 2031 THROUGH 2040.—The Com16 mission may issue orders increasing the re17 quired annual percentage amounts for each of 

18 calendar years 2031 through 2040 to reflect the 


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1 maximum achievable level of renewable elec2 tricity generation potential, taking into account 

3 regional resource availability, economic feasi4 bility, and technological capability. 

5 ‘‘(f) FEDERAL RENEWABLE ELECTRICITY CRED6 ITS.— 

7 ‘‘(1) IN GENERAL.— 

8 ‘‘(A) ISSUANCE; TRACKING; 

9 VERIFICATION.—The regulations promulgated 

10 under this section shall include provisions gov11 erning the issuance, tracking, and verification 

12 of Federal renewable electricity credits. 

13 ‘‘(B) CREDIT RATIO.—Except as provided 

14 in paragraphs (2) through (4), the Commission 

15 shall issue to each generator of renewable elec16 tricity, 1 Federal renewable electricity credit for 

17 each megawatt hour of renewable electricity 

18 generated by the generator after December 31, 

19 2016. 

20 ‘‘(C) SERIAL NUMBER.—The Commission 

21 shall assign a unique serial number to each 

22 Federal renewable electricity credit. 

23 ‘‘(2) GENERATION FROM CERTAIN STATE RE24 NEWABLE ELECTRICITY PROGRAMS.— 


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1 ‘‘(A) IN GENERAL.—If renewable elec2 tricity is generated with the support of pay3 ments from a retail electric supplier pursuant 

4 to a State renewable electricity program 

5 (whether through State alternative compliance 

6 payments or through payments to a State re7 newable electricity procurement fund or entity), 

8 the Commission shall issue Federal renewable 

9 electricity credits to the retail electric supplier 

10 for the portion of the relevant renewable elec11 tricity generation that is attributable to pay12 ments made by the retail electric supplier, as 

13 determined pursuant to regulations promul14 gated by the Commission. 

15 ‘‘(B) REMAINING PORTION.—For any re16 maining portion of the relevant renewable elec17 tricity generation, the Commission shall issue 

18 Federal renewable electricity credits to the gen19 erator, as provided in paragraph (1), except 

20 that not more than 1 Federal renewable elec21 tricity credit shall be issued for the same mega22 watt hour of electricity. 

23 ‘‘(C) STATE GUIDANCE.—In determining 

24 how Federal renewable electricity credits will be 

25 apportioned among retail electric suppliers and 


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1 generators under this paragraph, the Commis2 sion shall consider information and guidance 

3 issued by the applicable one or more States. 

4 ‘‘(3) CERTAIN POWER SALES CONTRACTS.—Ex5 cept as otherwise provided in paragraph (2), if a 

6 generator has sold renewable electricity to a retail 

7 electric supplier under a contract for power from a 

8 facility placed in service before the date of enact9 ment of this section, and the contract does not pro10 vide for the determination of ownership of the Fed11 eral renewable electricity credits associated with the 

12 generation, the Commission shall issue the Federal 

13 renewable electricity credits to the retail electric sup14 plier for the duration of the contract. 

15 ‘‘(4) CREDIT MULTIPLIERS.— 

16 ‘‘(A) IN GENERAL.—Except as provided in 

17 subparagraph (B), the Commission shall 

18 issue— 

19 ‘‘(i) not more than 3 Federal renew20 able electricity credits for each megawatt 

21 hour of renewable electricity generated by 

22 a distributed renewable generation facility; 

23 ‘‘(ii) not more than 2 Federal renew24 able electricity credits for each megawatt 


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1 hour of renewable electricity generated on 

2 Indian land; and 

3 ‘‘(iii) not more than 2 Federal renew4 able electricity credits for each megawatt 

5 hour of renewable electricity generated by 

6 a brownfield site generation facility. 

7 ‘‘(B) ADJUSTMENT.—Except as provided 

8 in subparagraph (C), not later than January 1, 

9 2019, and not less frequently than every 4 

10 years thereafter, the Commission shall review 

11 the effect of this paragraph on the aggregate 

12 quantity of renewable electricity produced under 

13 the standard and shall, as necessary and after 

14 providing 1 year of notice, reduce the number 

15 of Federal renewable electricity credits per 

16 megawatt hour issued under this paragraph for 

17 any given energy source or facility, but not 

18 below one, to ensure that the number is no 

19 higher than the Commission determines is nec20 essary— 

21 ‘‘(i) to incentivize incremental renew22 able energy generation on Indian land and 

23 brownfield sites; and 

24 ‘‘(ii) to make distributed renewable 

25 generation facilities cost competitive with 


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1 other sources of renewable electricity gen2 eration. 

3 ‘‘(C) FACILITIES PLACED IN SERVICE

4 AFTER ENACTMENT.— 

5 ‘‘(i) IN GENERAL.—For any renewable 

6 generation facility placed in service after 

7 the date of enactment of this section, sub8 paragraph (B) shall not apply for the first 

9 10 years after the date on which the facil10 ity is placed in service. 

11 ‘‘(ii) INITIAL PERIOD.—For each year 

12 during the 10-year period described in 

13 clause (i), the Commission shall issue to 

14 the facility the same number of Federal re15 newable electricity credits per megawatt 

16 hour as are issued to that facility in the 

17 year in which the facility is placed in serv18 ice. 

19 ‘‘(iii) SUBSEQUENT PERIOD.—After 

20 the 10-year period described in clause (i), 

21 the Commission shall issue Federal renew22 able electricity credits to the facility in ac23 cordance with subparagraph (B). 

24 ‘‘(5) CREDITS BASED ON QUALIFIED HYDRO25 POWER.—For purposes of this subsection, the numVerDate Sep 11 2014 22:16 Aug 10, 2015 Jkt 049200 PO 00000 Frm 00019 Fmt 6652 Sfmt 6201 E:\BILLS\H3426.IH H3426

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1 ber of Federal renewable electricity credits issued for 

2 qualified hydropower shall be calculated— 

3 ‘‘(A) based solely on the increase in aver4 age annual generation directly resulting from 

5 the efficiency improvements or capacity addi6 tions described in subsection (b)(6)(A); and 

7 ‘‘(B) using the same water flow informa8 tion used to determine a historic average an9 nual generation baseline for the hydroelectric 

10 facility, as certified by the Commission. 

11 ‘‘(6) GENERATION FROM MIXED RENEWABLE

12 AND NONRENEWABLE RESOURCES.—If electricity is 

13 generated using both a renewable energy resource 

14 and an energy source that is not a renewable energy 

15 resource (such as cofiring of renewable biomass and 

16 fossil fuel), the Commission shall issue Federal re17 newable electricity credits based on the proportion of 

18 the electricity that is attributable to the renewable 

19 energy resource. 

20 ‘‘(7) PROHIBITION AGAINST DOUBLE-COUNT21 ING.—The Commission shall ensure that— 

22 ‘‘(A) no Federal renewable electricity cred23 it is used more than once for compliance with 

24 this section; and 


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1 ‘‘(B) except as provided in paragraph (4), 

2 not more than 1 Federal renewable electricity 

3 credit is issued for any megawatt hour of re4 newable electricity. 

5 ‘‘(8) TRADING.—The lawful holder of a Federal 

6 renewable electricity credit may— 

7 ‘‘(A) sell, exchange, or transfer the credit; 

8 ‘‘(B) submit the credit for compliance 

9 under subsection (c); or 

10 ‘‘(C) submit the credit for retirement by 

11 the Commission. 

12 ‘‘(9) BANKING.— 

13 ‘‘(A) IN GENERAL.—A Federal renewable 

14 electricity credit may be submitted in satisfac15 tion of the compliance obligation under sub16 section (c) for the compliance year in which the 

17 credit was issued or for any of the 3 imme18 diately subsequent compliance years. 

19 ‘‘(B) RETIREMENT.—The Commission 

20 shall retire any Federal renewable electricity 

21 credit that has not been retired by April 2 of 

22 the calendar year that is 3 years after the cal23 endar year during which the credit was issued. 

24 ‘‘(10) RETIREMENT.—The Commission shall re25 tire a Federal renewable electricity credit immeVerDate Sep 11 2014 22:16 Aug 10, 2015 Jkt 049200 PO 00000 Frm 00021 Fmt 6652 Sfmt 6201 E:\BILLS\H3426.IH H3426

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1 diately upon submission by the lawful holder of the 

2 credit, whether in satisfaction of a compliance obli3 gation under subsection (c) or for another reason. 

4 ‘‘(g) ALTERNATIVE COMPLIANCE PAYMENTS.— 

5 ‘‘(1) IN GENERAL.—A retail electric supplier 

6 may satisfy the requirements of subsection (c) in 

7 whole or in part by submitting in accordance with 

8 this subsection, in lieu of each Federal renewable 

9 electricity credit that would otherwise be due, a pay10 ment equal to $50, adjusted for inflation on January 

11 1 of each year following calendar year 2017, in ac12 cordance with regulations promulgated by the Com13 mission. 

14 ‘‘(2) PAYMENT TO STATE FUNDS.— 

15 ‘‘(A) IN GENERAL.—Except as otherwise 

16 provided in this paragraph, payments made 

17 under this subsection shall be made directly to 

18 one or more States in which the retail electric 

19 supplier sells electric energy, in proportion to 

20 the portion of the retail electric supplier’s base 

21 quantity that is sold within each applicable 

22 State, if— 

23 ‘‘(i) the payments are deposited di24 rectly into a fund of the State treasury es25 tablished for that purpose; and 


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1 ‘‘(ii) the State uses the funds in ac2 cordance with paragraphs (3) and (4). 

3 ‘‘(B) NONCOMPLIANCE.—If the Commis4 sion determines that a State is in substantial 

5 noncompliance with paragraph (3) or (4), the 

6 Commission shall direct that any future alter7 native compliance payments that would other8 wise be paid to the State under this subsection 

9 shall instead be paid to the Commission and de10 posited in the Treasury. 

11 ‘‘(3) STATE USE OF FUNDS.—As a condition of 

12 receipt of alternative compliance payments under 

13 this subsection, a State shall use the payments ex14 clusively for— 

15 ‘‘(A) deploying technologies that generate 

16 electricity from renewable energy resources; or 

17 ‘‘(B) implementing cost-effective energy ef18 ficiency programs to achieve energy savings. 

19 ‘‘(4) REPORTING.— 

20 ‘‘(A) IN GENERAL.—As a condition of re21 ceipt of alternative compliance payments pursu22 ant to this subsection, a State shall submit to 

23 the Commission an annual report, in accord24 ance with regulations promulgated by the Com25 mission, containing a full accounting of the use 


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1 of the payments, including a detailed descrip2 tion of the activities funded by the payments 

3 and demonstrating compliance with the require4 ments of this subsection. 

5 ‘‘(B) DEADLINE.—A State shall submit a 

6 report under this paragraph— 

7 ‘‘(i) not later than 1 year after the 

8 date on which the first alternative compli9 ance payment is received; and 

10 ‘‘(ii) every 1 year thereafter until all 

11 alternative compliance payments are ex12 pended. 

13 ‘‘(h) INFORMATION COLLECTION.— 

14 ‘‘(1) IN GENERAL.—The Commission may re15 quire any retail electric supplier, renewable elec16 tricity generator, or any other entity that the Com17 mission determines appropriate, to provide any in18 formation the Commission determines appropriate to 

19 carry out this section. 

20 ‘‘(2) FAILURE TO SUBMIT; FALSE OR MIS21 LEADING INFORMATION.—Any entity required to 

22 submit information under paragraph (1) that fails to 

23 submit the information or submits false or mis24 leading information shall be in violation of this sec25 tion. 


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1 ‘‘(i) ENFORCEMENT AND JUDICIAL REVIEW.— 

2 ‘‘(1) FAILURE TO SUBMIT CREDITS.—If any 

3 person fails to comply with the requirements of sub4 section (c) or (g), the person shall be liable to pay 

5 to the Commission a civil penalty equal to the prod6 uct obtained by multiplying— 

7 ‘‘(A) double the alternative compliance 

8 payment calculated under subsection (g)(1); 

9 and 

10 ‘‘(B) the aggregate quantity of Federal re11 newable electricity credits or equivalent alter12 native compliance payments that the person 

13 failed to submit in violation of the requirements 

14 of subsections (c) and (g). 

15 ‘‘(2) ENFORCEMENT.—The Commission shall 

16 assess a civil penalty under paragraph (1) in accord17 ance with the procedures described in section 31(d) 

18 of the Federal Power Act (16 U.S.C. 823b(d)). 

19 ‘‘(3) VIOLATION OF REQUIREMENT OF REGULA20 TIONS OR ORDERS.— 

21 ‘‘(A) IN GENERAL.—Any person who vio22 lates or fails or refuses to comply with any re23 quirement of a regulation promulgated or order 

24 issued under this section shall be subject to a 


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1 civil penalty under section 316A(b) of the Fed2 eral Power Act (16 U.S.C. 825o–1(b)). 

3 ‘‘(B) ASSESSMENT.—The penalty under 

4 subparagraph (A) shall be assessed by the Com5 mission in the same manner as in the case of 

6 a violation referred to in section 316A(b) of 

7 that Act. 

8 ‘‘(4) JUDICIAL REVIEW.— 

9 ‘‘(A) IN GENERAL.—Any person aggrieved 

10 by a final action taken by the Commission 

11 under this section, other than the assessment of 

12 a civil penalty under paragraphs (1) through 

13 (3), may use the procedures for review de14 scribed in section 313 of the Federal Power Act 

15 (16 U.S.C. 825l). 

16 ‘‘(B) REFERENCE.—For purposes of this 

17 paragraph, references to an order in section 

18 313 of that Act shall be considered to refer also 

19 to all other final actions of the Commission 

20 under this section other than the assessment of 

21 a civil penalty under paragraphs (1) through 

22 (3). 

23 ‘‘(j) ADMINISTRATION.—Nothing in this section— 


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1 ‘‘(1) diminishes or qualifies any authority of a 

2 State, a political subdivision of a State, or an Indian 

3 tribe— 

4 ‘‘(A) to adopt or enforce any law or regula5 tion respecting renewable electricity, including 

6 any law or regulation establishing requirements 

7 that are more stringent than those established 

8 by this section, provided that no such law or 

9 regulation may relieve any person of any re10 quirement otherwise applicable under this sec11 tion; or 

12 ‘‘(B) to regulate the acquisition and dis13 position of Federal renewable electricity credits 

14 by retail electric suppliers within the jurisdic15 tion of the State, political subdivision, or Indian 

16 tribe, including the authority to require the re17 tail electric supplier to acquire and submit to 

18 the Commission for retirement Federal renew19 able electricity credits in excess of those sub20 mitted under this section; or 

21 ‘‘(2) affects the application of or the responsi22 bility for compliance with any other provision of law 

23 or regulation, including environmental and licensing 

24 requirements. 


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1 ‘‘(k) SUNSET.—The authority provided by this sec2 tion expires on December 31, 2041.’’. 

3 SEC. 3. CLARIFYING STATE AUTHORITY TO ADOPT RENEW4 ABLE ENERGY INCENTIVES. 

5 Section 210 of the Public Utility Regulatory Policies 

6 Act of 1978 (16 U.S.C. 824a–3) is amended by adding 

7 at the end the following: 

8 ‘‘(o) CLARIFICATION OF STATE AUTHORITY TO

9 ADOPT RENEWABLE ENERGY INCENTIVES.— 

10 ‘‘(1) DEFINITION OF STATE-APPROVED PRO11 DUCTION INCENTIVE PROGRAM.—In this subsection, 

12 the term ‘State-approved production incentive pro13 gram’ means a requirement imposed pursuant to 

14 State law or by a State regulatory authority acting 

15 within its authority under State law that an electric 

16 utility purchase renewable energy (as defined in sec17 tion 609(a)) at a specified rate. 

18 ‘‘(2) STATE AUTHORITY TO ADOPT RENEWABLE

19 ENERGY INCENTIVES.—Notwithstanding any other 

20 provision of this Act or the Federal Power Act (16 

21 U.S.C. 791a et seq.), a State legislature or regu22 latory authority may set the rates for a sale of elec23 tric energy by a facility generating electric energy 

24 from renewable energy sources pursuant to a State25 approved production incentive program under which 


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1 the facility voluntarily participates in the State-ap2 proved production incentive program.’’. 

3 SEC. 4. GUIDELINES FOR DETERMINING QUALIFIED RE4 NEWABLE BIOMASS. 

5 (a) DEFINITIONS.—In this section: 

6 (1) ADMINISTRATOR.—The term ‘‘Adminis7 trator’’ means the Administrator of the Environ8 mental Protection Agency. 

9 (2) LIFECYCLE GREENHOUSE GAS EMIS10 SIONS.— 

11 (A) IN GENERAL.—The term ‘‘lifecycle 

12 greenhouse gas emissions’’ means the aggregate 

13 quantity of greenhouse gas emissions, adjusted 

14 to account for the relative global warming po15 tential of the emissions relative to all green16 house gas emissions. 

17 (B) INCLUSIONS.—For purposes of sub18 paragraph (A), the term ‘‘greenhouse gas emis19 sions’’ includes— 

20 (i) direct emissions; and 

21 (ii) significant indirect emissions, in22 cluding from— 

23 (I) land use changes and tem24 poral changes in forest carbon seques25 tration; 


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1 (II) biomass harvests, regrowth, 

2 and avoided decomposition related to 

3 the full fuel lifecycle, including all 

4 stages of fuel and feedstock produc5 tion and distribution; and 

6 (III) feedstock generation or ex7 traction through the distribution and 

8 delivery of the finished fuel to the ul9 timate consumer. 

10 (b) GUIDELINES.—Not later than 1 year after the 

11 date of enactment of this Act, the Administrator shall, rec12 ognizing the recommendations of and coordinating with 

13 the Scientific Advisory Board of the Environmental Pro14 tection Agency regarding the accounting of biogenic car15 bon dioxide emissions and after notice and public com16 ment, issue guidelines for calculating lifecycle greenhouse 

17 gas emissions for renewable biomass (as that term is de18 fined in section 610(b) of the Public Utility Regulatory 

19 Policies Act of 1978). 

20 SEC. 5. ENERGY EFFICIENCY RESOURCE STANDARD FOR 

21 RETAIL ELECTRICITY AND NATURAL GAS 

22 SUPPLIERS. 

23 (a) IN GENERAL.—Title VI of the Public Utility Reg24 ulatory Policies Act of 1978 (16 U.S.C. 2601 et seq.) (as 


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1 amended by section 2) is amended by adding after section 

2 610 the following: 

3 ‘‘SEC. 611. FEDERAL ENERGY EFFICIENCY RESOURCE 

4 STANDARD FOR RETAIL ELECTRICITY AND 

5 NATURAL GAS SUPPLIERS. 

6 ‘‘(a) FINDINGS.—Congress finds that— 

7 ‘‘(1) the Federal energy efficiency resource 

8 standard established by this section— 

9 ‘‘(A) establishes nationwide minimum lev10 els of electricity and natural gas savings to be 

11 achieved through utility efficiency programs, 

12 building energy codes, appliance standards, and 

13 related efficiency measures; and 

14 ‘‘(B) rewards energy-saving improvements 

15 achieved through— 

16 ‘‘(i) end-use energy efficiency up17 grades; 

18 ‘‘(ii) reduced losses in transmission 

19 and distribution of energy; and 

20 ‘‘(iii) fuel-switching, to the extent that 

21 the switching results in reduced primary 

22 energy use; and 

23 ‘‘(2) in light of the cost-effective energy effi24 ciency opportunities that exist across the United 

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1 tricity suppliers, retail natural gas suppliers, and 

2 States should— 

3 ‘‘(A) consider energy efficiency as a re4 source in utility planning and procurement ac5 tivities; and 

6 ‘‘(B) seek to achieve all energy efficiency 

7 that is available at lower cost than other energy 

8 supply options. 

9 ‘‘(b) DEFINITIONS.—In this section: 

10 ‘‘(1) AFFILIATE.—The term ‘affiliate’ when 

11 used in relation to a person, means another person 

12 that owns or controls, is owned or controlled by, or 

13 is under common ownership control with, that per14 son, as determined under regulations promulgated 

15 by the Secretary. 

16 ‘‘(2) ASHRAE, ANSI, AND IESNA.—The terms 

17 ‘ASHRAE’, ‘ANSI’, and ‘IESNA’ mean the Amer18 ican Society of Heating, Refrigerating and Air Con19 ditioning Engineers, the American National Stand20 ards Institute, and the Illuminating Engineering So21 ciety of North America, respectively. 

22 ‘‘(3) BASE QUANTITY.— 

23 ‘‘(A) IN GENERAL.—The term ‘base quan24 tity’, with respect to a retail electricity supplier 

25 or retail natural gas supplier, means, for each 


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1 calendar year for which a performance standard 

2 is established under subsection (d), the average 

3 annual quantity of electricity or natural gas de4 livered by the retail electricity supplier or retail 

5 natural gas supplier to retail customers during 

6 the 3 calendar years immediately preceding the 

7 year that compliance is required under sub8 section (d)(1). 

9 ‘‘(B) EXCLUSION.—The term ‘base quan10 tity’, with respect to a retail natural gas sup11 plier, does not include natural gas delivered for 

12 purposes of electricity generation. 

13 ‘‘(4) CHP SAVINGS.—The term ‘CHP savings’ 

14 means— 

15 ‘‘(A) CHP system savings from a combined 

16 heat and power system that commences oper17 ation after the date of enactment of this sec18 tion; and 

19 ‘‘(B) the increase in CHP system savings 

20 from upgrading or replacing, after the date of 

21 enactment of this section, a combined heat and 

22 power system that commenced operation on or 

23 before the date of enactment of this section. 

24 ‘‘(5) CHP SYSTEM SAVINGS.—The term ‘CHP 

25 system savings’ means the electric output, and the 


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1 electricity saved due to the mechanical output, of a 

2 combined heat and power system, adjusted to reflect 

3 any increase in fuel consumption by that system as 

4 compared to the fuel that would have been required 

5 to produce an equivalent useful thermal energy out6 put in a separate thermal-only system, as deter7 mined in accordance with regulations promulgated 

8 by the Secretary. 

9 ‘‘(6) CODES AND STANDARDS SAVINGS.— 

10 ‘‘(A) IN GENERAL.—The term ‘codes and 

11 standards savings’ means a reduction in end12 use electricity or natural gas consumption by a 

13 retail electricity supplier or in the service terri14 tory of a retail natural gas supplier as a result 

15 of the adoption and implementation, after the 

16 date of enactment of this section, of new or re17 vised appliance and equipment efficiency stand18 ards or building energy codes. 

19 ‘‘(B) BASELINES.—In calculating codes 

20 and standards savings under subparagraph 

21 (A)— 

22 ‘‘(i) the baseline for calculating sav23 ings from building codes shall be the more 

24 stringent of— 


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1 ‘‘(I)(aa) the 2015 International 

2 Energy Conservation Code for resi3 dential buildings; or 

4 ‘‘(bb) the ASHRAE/ANSI/ 

5 IESNA Standard 90.1–2013 for com6 mercial buildings; or 

7 ‘‘(II) the applicable State build8 ing code in effect on the date of en9 actment of this section; and 

10 ‘‘(ii) the baseline for calculating sav11 ings from appliance standards shall be the 

12 average efficiency of new appliances in the 

13 applicable one or more categories prior to 

14 the adoption and implementation of the 

15 new standard. 

16 ‘‘(7) COMBINED HEAT AND POWER SYSTEM.— 

17 The term ‘combined heat and power system’ means 

18 a system that uses the same energy source both for 

19 the generation of electrical or mechanical power and 

20 the production of steam or another form of useful 

21 thermal energy, if— 

22 ‘‘(A) the system meets any requirements 

23 relating to efficiency and other operating char24 acteristics that the Secretary promulgates by 

25 regulation; and 


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1 ‘‘(B) the net wholesale sales of electricity 

2 by a facility does not exceed 50 percent of total 

3 annual electric generation by the facility. 

4 ‘‘(8) COST-EFFECTIVE.—The term ‘cost-effec5 tive’, with respect to an energy efficiency measure, 

6 means that the measure achieves a net present value 

7 of economic benefits over the life of the measure, 

8 both directly to the energy consumer and to the 

9 economy, that is greater than the net present value 

10 of the cost of the measure over the life of the meas11 ure, both directly to the energy consumer and to the 

12 economy, using the societal benefit-cost test cal13 culated using the lower of a utility weighted average 

14 cost of capital or a social discount rate of 3 percent. 

15 ‘‘(9) CUSTOMER FACILITY SAVINGS.—The term 

16 ‘customer facility savings’ means a reduction in end17 use electricity or natural gas consumption (including 

18 waste heat energy savings) at a facility of an end19 use consumer of electricity or natural gas served by 

20 a retail electricity supplier or natural gas supplier, 

21 as compared to— 

22 ‘‘(A) in the case of a new facility, con23 sumption at a reference facility of average effi24 ciency; 


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

2 consumption at the facility during a base period 

3 of not less than 1 year; 

4 ‘‘(C) in the case of new equipment that re5 places existing equipment at the end of the use6 ful life of the existing equipment, consumption 

7 by new equipment of average efficiency of the 

8 same equipment type, except that customer sav9 ings under this subparagraph shall not be 

10 counted towards customer savings under sub11 paragraph (A) or (B); and 

12 ‘‘(D) in the case of new equipment that re13 places existing equipment with remaining useful 

14 life— 

15 ‘‘(i) consumption of the existing 

16 equipment for the remaining useful life of 

17 the equipment; and 

18 ‘‘(ii) thereafter, consumption of new 

19 equipment of average efficiency. 

20 ‘‘(10) ELECTRICITY SAVINGS.—The term ‘elec21 tricity savings’ means reductions in electricity con22 sumption achieved through measures implemented 

23 after the date of enactment of this section, as deter24 mined in accordance with regulations promulgated 

25 by the Secretary, that are limited to— 


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1 ‘‘(A) customer facility savings of elec2 tricity, adjusted to reflect any associated in3 crease in fuel consumption at the facility; 

4 ‘‘(B) reductions in distribution system 

5 losses of electricity achieved by a retail elec6 tricity supplier, as compared to losses attrib7 utable to new or replacement distribution sys8 tem equipment of average efficiency, as defined 

9 in regulations promulgated by the Secretary; 

10 ‘‘(C) CHP savings; 

11 ‘‘(D) codes and standards savings of elec12 tricity; and 

13 ‘‘(E) fuel switching energy savings that re14 sults in net savings of electricity. 

15 ‘‘(11) FUEL SWITCHING ENERGY SAVINGS.— 

16 ‘‘(A) IN GENERAL.—The term ‘fuel-switch17 ing energy savings’ means net energy savings, 

18 calculated in accordance with subparagraph 

19 (B), from end-user switches from 1 energy 

20 source to another, as determined in accordance 

21 with regulations promulgated by the Secretary. 

22 ‘‘(B) CALCULATION.—For purposes of cal23 culating fuel-switching net energy savings— 

24 ‘‘(i) electricity use shall be evaluated 

25 based on the average quantity of fuel 


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1 burned at a new power plant taking into 

2 account existing and planned renewable en3 ergy generators to provide each kilowatt 

4 hour of electricity; 

5 ‘‘(ii) electricity and natural gas use 

6 shall include losses in the transmission and 

7 distribution system; and 

8 ‘‘(iii) fuel-switching that is not cost-ef9 fective to the end-user shall not be count10 ed. 

11 ‘‘(12) NATURAL GAS SAVINGS.—The term ‘nat12 ural gas savings’ means reductions in natural gas 

13 consumption from measures implemented after the 

14 date of enactment of this section, as determined in 

15 accordance with regulations promulgated by the Sec16 retary, that are limited to— 

17 ‘‘(A) customer facility savings of natural 

18 gas, adjusted to reflect any associated increase 

19 in electricity consumption or consumption of 

20 other fuels at the facility; 

21 ‘‘(B) reductions in leakage, operational 

22 losses, and consumption of natural gas fuel to 

23 operate a gas distribution system, achieved by 

24 a retail natural gas supplier, as compared to 


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1 similar leakage, losses, and consumption during 

2 a base period of not less than 1 year; 

3 ‘‘(C) codes and standards savings of nat4 ural gas; and 

5 ‘‘(D) fuel switching energy savings that re6 sults in net savings of natural gas. 

7 ‘‘(13) POWER POOL.—The term ‘power pool’ 

8 means an association of two or more interconnected 

9 electric systems that have entered into an agreement 

10 to coordinate operations and planning for improved 

11 reliability and efficiencies, including a Regional 

12 Transmission Organization or an Independent Sys13 tem Operator, as determined by the Secretary. 

14 ‘‘(14) REPORTING PERIOD.—The term ‘report15 ing period’ means— 

16 ‘‘(A) calendar year 2017; and 

17 ‘‘(B) each successive 2-calendar-year pe18 riod thereafter. 

19 ‘‘(15) RETAIL ELECTRICITY SUPPLIER.— 

20 ‘‘(A) IN GENERAL.—The term ‘retail elec21 tricity supplier’ means, for any given calendar 

22 year, an electric utility that sells not less than 

23 1,000,000 megawatt hours of electric energy to 

24 electric consumers for purposes other than re25 sale during the preceding calendar year. 


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

2 purposes of determining whether an electric 

3 utility qualifies as a retail electricity supplier 

4 under subparagraph (A)— 

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

6 electric utility to electric consumers for 

7 purposes other than resale shall be consid8 ered to be deliveries by the electric utility; 

9 and 

10 ‘‘(ii) deliveries by any electric utility 

11 to a lessee, tenant, or affiliate of the elec12 tric utility shall not be considered to be de13 liveries to electric consumers. 

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

15 ‘‘(A) IN GENERAL.—The term ‘retail nat16 ural gas supplier’ means, for any given calendar 

17 year, a local distribution company (as defined 

18 in section 2 of the Natural Gas Policy Act of 

19 1978 (15 U.S.C. 3301)), that delivered to nat20 ural gas consumers more than 5,000,000,000 

21 cubic feet of natural gas for purposes other 

22 than resale during the preceding calendar year. 

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

24 purposes of determining whether a person 


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1 qualifies as a retail natural gas supplier under 

2 subparagraph (A)— 

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

4 affiliate of a local distribution company to 

5 consumers for purposes other than resale 

6 shall be considered to be deliveries by the 

7 local distribution company; and 

8 ‘‘(ii) deliveries of natural gas to a les9 see, tenant, or affiliate of a local distribu10 tion company shall not be considered to be 

11 deliveries to natural gas consumers. 

12 ‘‘(17) THIRD-PARTY EFFICIENCY PROVIDER.— 

13 The term ‘third-party efficiency provider’ means any 

14 retailer, building owner, energy service company, fi15 nancial institution, or other commercial, industrial, 

16 or nonprofit entity that is capable of providing elec17 tricity savings or natural gas savings in accordance 

18 with subsections (e) and (f). 

19 ‘‘(18) WASTE HEAT ENERGY SAVINGS.— 

20 ‘‘(A) IN GENERAL.—The term ‘waste heat 

21 energy savings’ means a reduction in electricity 

22 or natural gas consumption that results from a 

23 modification of an industrial or commercial sys24 tem that commenced operation before the date 

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1 ture electrical, mechanical, or thermal energy 

2 that would otherwise be wasted, as determined 

3 in accordance with regulations promulgated by 

4 the Secretary. 

5 ‘‘(B) INCLUSION.—Such savings shall be 

6 included as part of customer facility savings. 

7 ‘‘(c) ESTABLISHMENT OF PROGRAM.— 

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

9 after the date of enactment of this section, the Sec10 retary shall, by regulation, establish a program to 

11 implement and enforce the requirements of this sec12 tion, including by— 

13 ‘‘(A) establishing measurement and 

14 verification procedures and standards under 

15 subsection (f); 

16 ‘‘(B) establishing requirements under 

17 which retail electricity suppliers and retail nat18 ural gas suppliers shall— 

19 ‘‘(i) demonstrate, document, and re20 port the compliance of the retail electricity 

21 suppliers and retail natural gas suppliers 

22 with the performance standards under sub23 section (d); and 

24 ‘‘(ii) estimate the impact of the stand25 ards on current and future electricity and 


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1 natural gas use in the service territories of 

2 the suppliers; and 

3 ‘‘(C) establishing requirements governing 

4 applications for, and implementation of, dele5 gated State administration under subsection 

6 (h). 

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

8 In establishing and implementing this section, the 

9 Secretary shall, to the maximum extent practicable, 

10 preserve the integrity and incorporate best practices 

11 of existing State energy efficiency programs. 

12 ‘‘(d) PERFORMANCE STANDARDS.— 

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

14 than May 1 of the calendar year immediately fol15 lowing each reporting period— 

16 ‘‘(A) each retail electricity supplier shall 

17 submit to the Secretary a report, in accordance 

18 with regulations promulgated by the Secretary, 

19 demonstrating that the retail electricity supplier 

20 has achieved cumulative electricity savings (ad21 justed to account for any attrition of savings 

22 measures implemented in prior years) in each 

23 calendar year that are equal to the applicable 

24 percentage, established under paragraph (2), 


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1 (3), or (4), of the base quantity of the retail 

2 electricity supplier; and 

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

4 submit to the Secretary a report, in accordance 

5 with regulations promulgated by the Secretary, 

6 demonstrating that it has achieved cumulative 

7 natural gas savings (adjusted to account for 

8 any attrition of savings measures implemented 

9 in prior years) in each calendar year that are 

10 equal to the applicable percentage, established 

11 under paragraph (2), (3), or (4), of the base 

12 quantity of such retail natural gas supplier. 

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

14 For each of calendar years 2017 through 2030, the 

15 applicable percentages are as follows: 

‘‘Calendar Year Cumulative Electricity 

Savings Percentage 

Cumulative Natural Gas 

Savings Percentage 

2017 1.00 0.50

2018 2.00 1.25

2019 3.00 2.00

2020 4.25 3.00

2021 5.50 4.00

2022 7.00 5.00

2023 8.50 6.00

2024 10.00 7.00

2025 11.50 8.00

2026 13.00 9.00

2027 14.75 10.00


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‘‘Calendar Year Cumulative Electricity 

Savings Percentage 

Cumulative Natural Gas 

Savings Percentage 

2028 16.50 11.00

2029 18.25 12.00

2030 20.00 13.00. 

1 ‘‘(3) SUBSEQUENT YEARS.— 

2 ‘‘(A) CALENDAR YEARS 2031 THROUGH

3 2040.—Not later than December 31, 2028, the 

4 Secretary shall promulgate regulations estab5 lishing performance standards (expressed as ap6 plicable percentages of base quantity for both 

7 cumulative electricity savings and cumulative 

8 natural gas savings) for each of calendar years 

9 2031 through 2040. 

10 ‘‘(B) SUBSEQUENT EXTENSIONS.—Except 

11 as provided in subparagraph (A), not later than 

12 December 31 of the penultimate reporting pe13 riod for which performance standards have been 

14 established under this paragraph, the Secretary 

15 shall promulgate regulations establishing per16 formance standards (expressed as applicable 

17 percentages of base quantity for both cumu18 lative electricity savings and cumulative natural 

19 gas savings) for the 10-calendar-year period fol20 lowing the last calendar year for which perform21 ance standards previously were established. 


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1 ‘‘(C) REQUIREMENTS.—The Secretary 

2 shall establish standards under this paragraph 

3 at levels reflecting the maximum achievable 

4 level of cost-effective energy efficiency potential, 

5 taking into account— 

6 ‘‘(i) cost-effective energy savings 

7 achieved by leading retail electricity sup8 pliers and retail natural gas suppliers; 

9 ‘‘(ii) opportunities for new codes and 

10 standards savings; 

11 ‘‘(iii) technology improvements; and 

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

13 energy efficiency potential. 

14 ‘‘(D) MINIMUM PERCENTAGE.—In no case 

15 shall the applicable percentages for any cal16 endar year be less than the applicable percent17 ages for calendar year 2030 (including any in18 crease in the standard for calendar year 2030 

19 established pursuant to paragraph (4)). 

20 ‘‘(4) MIDCOURSE REVIEW AND ADJUSTMENT OF

21 STANDARDS.— 

22 ‘‘(A) IN GENERAL.—Not later than De23 cember 31, 2023, and at 10-year intervals 

24 thereafter, the Secretary shall— 


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1 ‘‘(i) review the most recent standards 

2 established under paragraph (2) or (3); 

3 and 

4 ‘‘(ii) increase the standards by regula5 tion if the Secretary determines that addi6 tional cost-effective energy efficiency po7 tential is achievable, taking into account 

8 the requirements described in paragraph 

9 (3)(C). 

10 ‘‘(B) LEAD TIME.—If the Secretary revises 

11 standards under this paragraph, the regulations 

12 shall provide adequate lead time to ensure that 

13 compliance with the increased standards is fea14 sible. 

15 ‘‘(5) DELAY OF SUBMISSION FOR FIRST RE16 PORTING PERIOD.— 

17 ‘‘(A) IN GENERAL.—Notwithstanding 

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

19 period, the Secretary may accept a request from 

20 a retail electricity supplier or a retail natural 

21 gas supplier to delay the required submission of 

22 documentation of all or part of the required 

23 savings for up to 2 years. 

24 ‘‘(B) PLAN FOR COMPLIANCE.—The re25 quest for delay under subparagraph (A) shall 


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1 include a plan for coming into full compliance 

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

3 ‘‘(6) APPLYING UNUSED SAVINGS TO FUTURE

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

5 performance standards specified in this subsection, 

6 any savings in excess of the performance standards 

7 may be applied toward performance standards speci8 fied for future years. 

9 ‘‘(e) TRANSFERS OF ELECTRICITY OR NATURAL GAS

10 SAVINGS.— 

11 ‘‘(1) BILATERAL CONTRACTS FOR SAVINGS

12 TRANSFERS.—Subject to the limitations of this sub13 section, a retail electricity supplier or retail natural 

14 gas supplier may use electricity savings or natural 

15 gas savings purchased pursuant to a bilateral con16 tract from another retail electricity supplier or retail 

17 natural gas supplier, a State, or a third-party effi18 ciency provider to meet the applicable performance 

19 standard under subsection (d). 

20 ‘‘(2) REQUIREMENTS.—Electricity savings or 

21 natural gas savings purchased and used for compli22 ance under this subsection shall be— 

23 ‘‘(A) measured and verified in accordance 

24 with subsection (f); 


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1 ‘‘(B) reported in accordance with sub2 section (d); and 

3 ‘‘(C) achieved within the same State as is 

4 served by the retail electricity supplier or retail 

5 natural gas supplier. 

6 ‘‘(3) EXCEPTION.—Notwithstanding paragraph 

7 (2)(C), a State regulatory authority may authorize a 

8 retail electricity supplier or a retail natural gas sup9 plier regulated by the State regulatory authority to 

10 purchase savings achieved in a different State, if— 

11 ‘‘(A) the savings are achieved within the 

12 same power pool; and 

13 ‘‘(B) the State regulatory authority that 

14 regulates the purchaser oversees the measure15 ment and verification of the savings pursuant to 

16 the procedures and standards applicable in the 

17 State in which the purchaser is located. 

18 ‘‘(4) REGULATORY APPROVAL.—Nothing in this 

19 subsection limits or affects the authority of a State 

20 regulatory authority to require a retail electricity 

21 supplier or retail natural gas supplier that is regu22 lated by the State regulatory authority to obtain the 

23 authorization or approval of the State regulatory au24 thority of a contract for transfer of electricity sav25 ings or natural gas savings under this subsection. 


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1 ‘‘(5) LIMITATIONS.—To optimize the achieve2 ment of cost-effective efficiency potential, the Sec3 retary may prescribe such limitations as the Sec4 retary determines appropriate with respect to the 

5 proportion of the compliance obligation of a retail 

6 electricity or natural gas supplier under the applica7 ble performance standards under subsection (d) that 

8 may be met using electricity savings or natural gas 

9 savings that are purchased under this subsection. 

10 ‘‘(f) MEASUREMENT AND VERIFICATION OF SAV11 INGS.—The regulations promulgated pursuant to sub12 section (c) shall include— 

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

14 measuring electricity savings and natural gas sav15 ings that can be counted towards the performance 

16 standards established under subsection (d), that 

17 shall— 

18 ‘‘(A) specify the types of energy efficiency 

19 and energy conservation measures that can be 

20 counted; 

21 ‘‘(B) require that energy consumption esti22 mates for customer facilities or portions of fa23 cilities in the applicable base and current years 

24 be adjusted, as appropriate, to account for 


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1 changes in weather, level of production, and 

2 building area; 

3 ‘‘(C) account for the useful life of meas4 ures; 

5 ‘‘(D) include assigned savings values for 

6 specific, commonly used measures; 

7 ‘‘(E) allow for savings from a program to 

8 be estimated based on extrapolation from a rep9 resentative sample of participating customers; 

10 ‘‘(F) include procedures for calculating and 

11 documenting CHP savings, fuel-switching en12 ergy savings, and waste heat energy savings; 

13 ‘‘(G) establish methods for calculating 

14 codes and standards energy savings, including 

15 the use of verified compliance rates; 

16 ‘‘(H) include procedures for calculating 

17 and documenting— 

18 ‘‘(i) customer facility savings and re19 ductions in distribution system losses of 

20 electricity and natural gas that are 

21 achieved as a result of smart grid deploy22 ment, as described in section 1301 of the 

23 Energy Independence and Security Act of 

24 2007 (42 U.S.C. 17381); and 


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1 ‘‘(ii) reductions in natural gas dis2 tribution system losses attributable to pipe3 line repair and replacement programs; 

4 ‘‘(I) count only measures and savings that 

5 are additional to business-as-usual customer 

6 purchase practices; 

7 ‘‘(J) ensure that the retail electricity sup8 plier or retail natural gas supplier claiming the 

9 electricity savings or natural gas savings, in10 cluding codes and standards savings, played a 

11 significant role in achieving the savings (includ12 ing through the activities of a designated agent 

13 of the supplier or through the purchase of 

14 transferred electricity savings or natural gas 

15 savings); 

16 ‘‘(K) avoid double-counting of savings used 

17 for compliance with this section, including 

18 transferred savings; 

19 ‘‘(L) include electricity savings or natural 

20 gas savings from programs administered by the 

21 retail electric supplier or natural gas supplier 

22 that are funded by Federal, State, or other 

23 sources; 

24 ‘‘(M) credit large customer self-directed 

25 electricity savings or natural gas savings to the 


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1 retail electricity supplier or the retail natural 

2 gas supplier if the large customers receive in3 centives or rate reductions from the retail sup4 plier for self-directed energy efficiency improve5 ments; 

6 ‘‘(N) include procedures for counting elec7 tricity savings and natural gas savings achieved 

8 by solar heating and cooling technologies, solar 

9 light pipe technology, geothermal heat pumps, 

10 and other technologies utilizing renewable re11 sources that do not produce electricity or gas12 eous fuel but that reduce on-site energy use; 

13 ‘‘(O) in any State in which the State regu14 latory authority has designated one or more en15 tities to administer electric ratepayer-funded ef16 ficiency programs approved by the State regu17 latory authority, provide that electricity savings 

18 and natural gas savings achieved through the 

19 programs shall be distributed proportionally 

20 among retail electric suppliers and retail nat21 ural gas suppliers; and 

22 ‘‘(P) include guidance for utilities to cal23 culate and document business-as-usual con24 sumption projections; and 


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1 ‘‘(2) procedures and standards for third-party 

2 verification of reported electricity savings or natural 

3 gas savings. 

4 ‘‘(g) ENFORCEMENT AND JUDICIAL REVIEW.— 

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

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

7 review each report submitted to the Secretary 

8 by a retail electricity supplier or retail natural 

9 gas supplier under subsection (d) to verify that 

10 the applicable performance standards under 

11 subsection (d) have been met. 

12 ‘‘(B) EXCLUSION.—In determining compli13 ance with the applicable performance standards 

14 under subsection (d), the Secretary shall ex15 clude reported electricity savings or natural gas 

16 savings that are not adequately demonstrated 

17 and documented, in accordance with the regula18 tions promulgated under this section. 

19 ‘‘(2) PENALTY FOR FAILURE TO DOCUMENT

20 ADEQUATE SAVINGS.—If a retail electricity supplier 

21 or a retail natural gas supplier fails to demonstrate 

22 compliance with an applicable performance standard 

23 under subsection (d), or to pay to the State an ap24 plicable alternative compliance payment under sub25 section (h)(4), the Secretary shall assess against the 


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1 retail electricity supplier or retail natural gas sup2 plier a civil penalty for each failure in an amount 

3 equal to, as adjusted for inflation in accordance with 

4 such regulations as the Secretary may promulgate— 

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

6 savings or alternative compliance payment that 

7 the retail electricity supplier failed to achieve or 

8 make, respectively; or 

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

10 savings or alternative compliance payment that 

11 the retail natural gas supplier failed to achieve 

12 or make, respectively. 

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

14 Secretary shall reduce the amount of any penalty 

15 under paragraph (2) by the amount paid by the rel16 evant retail electricity supplier or retail natural gas 

17 supplier to a State for failure to comply with the re18 quirements of a State energy efficiency resource 

19 standard during the same compliance period, if the 

20 State standard— 

21 ‘‘(A) is comparable in type to the Federal 

22 standard established under this section; and 

23 ‘‘(B) is more stringent than the applicable 

24 performance standards under subsection (d). 


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1 ‘‘(4) ENFORCEMENT PROCEDURES.—The Sec2 retary shall assess a civil penalty, as provided under 

3 paragraph (2), in accordance with the procedures 

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

5 Conservation Act (42 U.S.C. 6303(d)). 

6 ‘‘(5) JUDICIAL REVIEW.— 

7 ‘‘(A) IN GENERAL.—Any person adversely 

8 affected by a final action taken by the Sec9 retary under this section, other than the assess10 ment of a civil penalty, may use the procedures 

11 for review described in section 336(b) of the 

12 Energy Policy and Conservation Act (42 U.S.C. 

13 6306(b)). 

14 ‘‘(B) REFERENCE.—In this paragraph, 

15 references to a rule in section 336(b) of the En16 ergy Policy and Conservation Act (42 U.S.C. 

17 6306(b)) shall be considered to refer also to all 

18 other final actions of the Secretary under this 

19 section other than the assessment of a civil pen20 alty. 

21 ‘‘(h) STATE ADMINISTRATION.— 

22 ‘‘(1) IN GENERAL.—Upon receipt of an applica23 tion from the Governor of a State (including the 

24 Mayor of the District of Columbia), the Secretary 

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1 istering this section within the territory of the State 

2 if the Secretary determines that the State will imple3 ment an energy efficiency program that meets or ex4 ceeds the requirements of this section, including— 

5 ‘‘(A) achieving electricity savings and nat6 ural gas savings that are at least as great as 

7 those required under the applicable performance 

8 standards established under subsection (d); 

9 ‘‘(B) reviewing reports and verifying elec10 tricity savings and natural gas savings achieved 

11 in the State (including savings transferred from 

12 outside the State); and 

13 ‘‘(C) collecting any alternative compliance 

14 payments under paragraph (4) and using the 

15 payments to implement cost-effective efficiency 

16 programs. 

17 ‘‘(2) SECRETARIAL DETERMINATION.—Not 

18 later than 180 days after the date on which a com19 plete application is received by the Secretary, the 

20 Secretary shall make a substantive determination 

21 approving or disapproving a State application, after 

22 public notice and comment. 

23 ‘‘(3) ALTERNATIVE MEASUREMENT AND

24 VERIFICATION PROCEDURES AND STANDARDS.—As 

25 part of an application submitted under paragraph 


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1 (1), a State may request to use alternative measure2 ment and verification procedures and standards 

3 from the procedures and standards described in sub4 section (f), if the State demonstrates that the alter5 native procedures and standards provide a level of 

6 accuracy of measurement and verification that are at 

7 least equivalent to the Federal procedures and 

8 standards under subsection (f). 

9 ‘‘(4) ALTERNATIVE COMPLIANCE PAYMENTS.— 

10 ‘‘(A) IN GENERAL.—As part of an applica11 tion submitted under paragraph (1), a State 

12 may permit retail electricity suppliers or retail 

13 natural gas suppliers to pay to the State, by 

14 not later than May 1 of the calendar year im15 mediately following the applicable reporting pe16 riod, an alternative compliance payment in an 

17 amount equal to, as adjusted for inflation in ac18 cordance with such regulations as the Secretary 

19 may promulgate, not less than— 

20 ‘‘(i) $50 per megawatt hour of elec21 tricity savings needed to make up any def22 icit with regard to a compliance obligation 

23 under the applicable performance stand24 ard; or 


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

2 savings needed to make up any deficit with 

3 regard to a compliance obligation under 

4 the applicable performance standard. 

5 ‘‘(B) USE OF PAYMENTS.—Alternative 

6 compliance payments collected by a State under 

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

8 administer the delegated authority of the State 

9 under this section and to implement cost-effec10 tive energy efficiency programs that— 

11 ‘‘(i) to the maximum extent prac12 ticable, achieve electricity savings and nat13 ural gas savings in the State sufficient to 

14 make up the deficit associated with the al15 ternative compliance payments; and 

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

17 accordance with the applicable procedures 

18 and standards under subsection (f) or 

19 paragraph (3), as applicable. 

20 ‘‘(5) REVIEW OF STATE IMPLEMENTATION.— 

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

22 the Secretary shall review State implementation 

23 of this section for conformance with the requirements of this section in approximately 1 24 ⁄2

25 of the States that have received approval under 


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1 this subsection to administer the program, so 

2 that each State shall be reviewed at least every 

3 4 years. 

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

5 under subparagraph (A), the Secretary may re6 quire the State to submit a report dem7 onstrating the conformance of the State with 

8 the requirements of this section, including— 

9 ‘‘(i) reports submitted by retail elec10 tricity suppliers and retail natural gas sup11 pliers to the State demonstrating compli12 ance with applicable performance stand13 ards; 

14 ‘‘(ii) the impact of the standards on 

15 projected electricity and natural gas de16 mand within the State; 

17 ‘‘(iii) an accounting of the use of al18 ternative compliance payments by the 

19 State and the resulting electricity savings 

20 and natural gas savings achieved; and 

21 ‘‘(iv) any other information that the 

22 Secretary determines appropriate. 

23 ‘‘(C) REVIEW UPON PETITION.—Notwith24 standing subparagraph (A), upon receipt of a 

25 public petition containing credible allegation of 


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•HR 3426 IH

1 substantial deficiencies, the Secretary shall 

2 promptly review the State implementation of 

3 delegated authority under this section. 

4 ‘‘(D) DEFICIENCIES.— 

5 ‘‘(i) IN GENERAL.—In completing a 

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

8 shall— 

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

11 ‘‘(II) direct the State to correct 

12 the deficiencies; and 

13 ‘‘(III) require the State to report 

14 to the Secretary on progress made by 

15 not later than 180 days after the date 

16 on which the State receives notice 

17 under subclause (I). 

18 ‘‘(ii) SUBSTANTIAL DEFICIENCIES.—If 

19 the deficiencies are substantial, the Sec20 retary shall— 

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

23 that the Secretary determines are not 

24 credible due to deficiencies; 


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1 ‘‘(II) re-review the State not 

2 later than 2 years after the date on 

3 which the original review was com4 pleted; and 

5 ‘‘(III) if substantial deficiencies 

6 remain uncorrected after the review 

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

10 under this section. 

11 ‘‘(6) CALLS FOR REVISION OF STATE APPLICA12 TIONS.—As a condition of maintaining the delegated 

13 authority of a State to administer this section, the 

14 Secretary may require a State to submit a revised 

15 application under paragraph (1) if the Secretary 

16 has— 

17 ‘‘(A) promulgated new or revised perform18 ance standards under subsection (d); 

19 ‘‘(B) promulgated new or substantially re20 vised measurement and verification procedures 

21 and standards under subsection (f); or 

22 ‘‘(C) otherwise substantially revised the 

23 program established under this section. 

24 ‘‘(7) COST RECOVERY, FIXED COST RECOVERY

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1 ulatory commissions are encouraged to review the 

2 rules and regulations of the commission to ensure 

3 that utilities under the jurisdiction of the commis4 sion can— 

5 ‘‘(A) recover the direct costs of energy effi6 ciency programs; 

7 ‘‘(B) fully recover authorized fixed costs, 

8 including lost margins from lower annual sales 

9 due to energy efficiency programs; and 

10 ‘‘(C) earn an incentive for shareholders if 

11 the energy efficiency standards are achieved. 

12 ‘‘(i) INFORMATION AND REPORTS.—In accordance 

13 with section 13 of the Federal Energy Administration Act 

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

15 retail electricity supplier, retail natural gas supplier, third16 party efficiency provider, or any other entity that the Sec17 retary determines appropriate, to provide any information 

18 the Secretary determines appropriate to carry out this sec19 tion. 

20 ‘‘(j) STATE LAW.—Nothing in this section diminishes 

21 or qualifies any authority of a State or political subdivision 

22 of a State to adopt or enforce any law or regulation re23 specting electricity savings or natural gas savings, includ24 ing any law or regulation establishing energy efficiency re25 quirements that are more stringent than those under this 


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•HR 3426 IH

1 section, except that no State law or regulation shall relieve 

2 any person of any requirement otherwise applicable under 

3 this section.’’. 

4 SEC. 6. PROGRAM REVIEW. 

5 (a) NATIONAL ACADEMY OF SCIENCES REVIEW.— 

6 The Secretary of Energy shall enter into a contract with 

7 the National Academy of Sciences under which the Acad8 emy shall, not later than July 1, 2021, and every 10 years 

9 thereafter, submit to Congress, the Federal Energy Regu10 latory Commission, and the Secretary of Energy a com11 prehensive evaluation of all aspects of the programs estab12 lished under sections 610 and 611 of the Public Utility 

13 Regulatory Policies Act of 1978 (as added by this Act), 

14 including— 

15 (1) an evaluation of the effectiveness of the pro16 grams, including the specific design elements of the 

17 programs, in increasing the efficiency of retail nat18 ural gas and electricity distribution and consumption 

19 and increasing the deployment of renewable elec20 tricity capacity; 

21 (2) the opportunities for additional technologies 

22 and sources of efficiency and renewable electricity 

23 that have emerged since the date of enactment of 

24 this Act; 


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1 (3) the impact of the programs on the reli2 ability of electricity and natural gas supply; 

3 (4) the net benefits or costs of the programs to 

4 the United States and the States, including— 

5 (A) the effects on electricity and natural 

6 gas demand and prices; 

7 (B) the economic development benefits of 

8 investment; 

9 (C) environmental costs and benefits; 

10 (D) the impacts on public health and 

11 health care costs; and 

12 (E) avoided costs related to environmental 

13 and congestion mitigation investments that oth14 erwise would have been required; 

15 (5) an assessment of the benefits and costs of 

16 increasing the performance standards established 

17 under section 611(d) of the Public Utility Regu18 latory Policies Act of 1978 (as added by this Act); 

19 (6) the feasibility, advantages, and disadvan20 tages of alternative models for demonstrating com21 pliance with a Federal energy efficiency resource 

22 standard, including— 

23 (A) establishing a national trading system 

24 for energy efficiency credits; or 


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1 (B) demonstrating compliance through ac2 tual reductions in delivery or sales of electricity 

3 and natural gas, rather than on program sav4 ings; and 

5 (7) recommendations regarding potential 

6 changes to the programs, including to regulations 

7 and procedures for implementing the programs, or 

8 to related public policies. 

9 (b) RECOMMENDATIONS TO CONGRESS.—Not later 

10 than January 1, 2022, and every 10 years thereafter, the 

11 Secretary of Energy shall submit to the Committee on En12 ergy and Commerce of the House of Representatives and 

13 the Committee on Energy and Natural Resources of the 

14 Senate a report making recommendations for modifica15 tions and improvements to the programs established under 

16 sections 610 and 611 of the Public Utility Regulatory 

17 Policies Act of 1978 (as added by this Act), including an 

18 explanation of the inconsistencies, if any, between the rec19 ommendations of the Secretary of Energy and the rec20 ommendations included in the evaluation of the National 

21 Academy of Sciences under subsection (a). 

22 SEC. 7. CONFORMING AMENDMENT. 

23 The table of contents of the Public Utility Regulatory 

24 Policies Act of 1978 (16 U.S.C. prec. 2601) is amended 


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1 by adding at the end of the items relating to title VI the 

2 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.’’. 

Æ 


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