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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 889 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 889

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

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            February 4, 2009

 Mr. Markey of Massachusetts 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 energy efficiency resource standard for retail 
   electricity and natural gas distributors, 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 ``Save American Energy Act''.

SEC. 2. ENERGY EFFICIENCY RESOURCE STANDARD FOR RETAIL ELECTRICITY AND 
              NATURAL GAS DISTRIBUTORS.

    (a) In General.--Title VI of the Public Utility Regulatory Policies 
Act of 1978 (16 U.S.C. 2601 and following) is amended by adding at the 
end the following:

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

    ``(a) Statement of Federal Policy.--The Federal energy efficiency 
resource standard established by this section sets 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. In light of the cost-
effective energy efficiency opportunities that exist across the country 
in every sector of the economy, retail electricity distributors, retail 
natural gas distributors, and States should additionally consider 
energy efficiency as a resource in utility planning and procurement 
activities and should seek to achieve all energy efficiency that is 
available at lower cost than energy supply options.
    ``(b) Definitions.--In this section:
            ``(1) Affiliate.--The term `affiliate' when used in 
        relation to a person, means another person which owns or 
        controls, is owned or controlled by, or is under common 
        ownership control with, such 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.--The term `base quantity', with 
        respect to a retail electricity distributor or retail natural 
        gas distributor, means, for each 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 distributor or retail natural gas 
        distributor to retail customers during the 2 calendar years 
        immediately preceding such year. In determining the base 
        quantity of a retail natural gas distributor, natural gas 
        delivered for purposes of electricity generation shall be 
        excluded.
            ``(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 in a retail electricity 
                distributor or a retail natural gas distributor's 
                service territory 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--
                            ``(i) the baseline for calculating savings 
                        from building codes shall be the 2006 
                        International Energy Conservation Code for 
                        residential buildings and the ASHRAE/ANSI/IESNA 
                        Standard 90.1-2004 for commercial buildings, or 
                        the relevant State building code in effect on 
                        date of enactment of this section, whichever is 
                        more stringent; and
                            ``(ii) the baseline for calculating savings 
                        from appliance standards shall be the average 
                        efficiency of new appliances in the relevant 
                        category or categories prior to 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, provided that--
                    ``(A) the system meets such requirements relating 
                to efficiency and other operating characteristics as 
                the Secretary may promulgate by regulation; and
                    ``(B) the net wholesale sales of electricity by the 
                facility will 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.
            ``(9) Customer facility savings.--The term `customer 
        facility savings' means a reduction in end-use electricity or 
        natural gas consumption (including recycled energy savings) at 
        a facility of an end-use consumer of electricity or natural gas 
        served by a retail electricity distributor or natural gas 
        distributor, 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 such facility during a base period 
                (which shall not be less than 1 year); or
                    ``(C) in the case of new equipment, regardless of 
                whether the new equipment 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, provided that 
                customer savings under this subparagraph shall not be 
                counted towards customer savings under subparagraph (A) 
                or (B).
            ``(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, 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 
                distributor, as compared to losses attributable to new 
                or replacement distribution system equipment of average 
                efficiency (as defined in regulations to be promulgated 
                by the Secretary);
                    ``(C) CHP savings; and
                    ``(D) codes and standards savings of electricity.
            ``(11) 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, 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 
                distributor, as compared to similar leakage, losses, 
                and consumption during a base period (which shall not 
                be less than 1 year); and
                    ``(C) codes and standards savings of natural gas.
            ``(12) Power pool.--The term `power pool' means an 
        association of 2 or more interconnected electric systems that 
        is recognized by the Commission as having an agreement to 
        coordinate operations and planning for improved reliability and 
        efficiencies, including a Regional Transmission Organization or 
        an Independent System Operator.
            ``(13) Recycled energy savings.--The term `recycled 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.
            ``(14) Reporting period.--The term `reporting period' 
        means--
                    ``(A) calendar year 2012; and
                    ``(B) each successive 2-calendar-year period 
                thereafter.
            ``(15) Retail electricity distributor.--
                    ``(A) In general.--The term `retail electricity 
                distributor' means, for any given calendar year, an 
                electric utility that owns or operates an electric 
                distribution facility and, using the facility, 
                delivered not less than 1,500,000 megawatt-hours of 
                electric energy to electric consumers for purposes 
                other than resale during the most recent 2-calendar-
                year period for which data are available.
                    ``(B) Inclusions and limitations.--For purposes of 
                determining whether an electric utility qualifies as a 
                retail electricity distributor 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 such electric utility; and
                            ``(ii) deliveries by any electric utility 
                        to a lessee, tenant, or affiliate of such 
                        electric utility shall not be treated as 
                        deliveries to electric consumers.
            ``(16) Retail natural gas distributor.--
                    ``(A) In general.--The term `retail natural gas 
                distributor' means, for any given calendar year, a 
                local distribution company, as that term is defined in 
                section 2(17) of the Natural Gas Policy Act of 1978 (15 
                U.S.C. 3301(17)), that delivered to natural gas 
                consumers more than 5,000,000,000 cubic feet of natural 
                gas during the most recent 2-calendar-year period for 
                which data are available.
                    ``(B) Inclusions and limitations.--For purposes of 
                determining whether a person qualifies as a retail 
                natural gas distributor 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 such local 
                        distribution company; and
                            ``(ii) deliveries of natural gas to a 
                        lessee, tenant, or affiliate of a local 
                        distribution company shall not be treated as 
                        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 non-profit entity that is capable of 
        providing electricity savings or natural gas savings in 
        accordance with the requirements of subsections (e) and (f).
    ``(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--
                    ``(A) measurement and verification procedures and 
                standards under subsection (f);
                    ``(B) requirements by which retail electricity 
                distributors and retail natural gas distributors shall 
                demonstrate, document, and report their compliance with 
                the performance standards specified in subsection (d) 
                and estimate the impact of the standards on current and 
                future electricity and natural gas use in such 
                distributors' service territories; and
                    ``(C) requirements governing applications for, and 
                implementation of, delegated State administration under 
                subsection (h).
            ``(2) Coordination with state programs.--In establishing 
        and implementing this program, the Secretary shall, to the 
        extent practicable, preserve the integrity, and incorporate 
        best practices, of existing State energy efficiency programs.
    ``(d) Performance Standards.--
            ``(1) Compliance obligation.--Not later than April 1 of the 
        calendar year immediately following each reporting period--
                    ``(A) each retail electricity distributor shall 
                submit to the Secretary a report, in accordance with 
                regulations issued by the Secretary, demonstrating that 
                it 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 this 
                subsection, of the base quantity of such retail 
                electricity distributor; and
                    ``(B) each retail natural gas distributor shall 
                submit to the Secretary a report, in accordance with 
                regulations issued 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 this 
                subsection, of the base quantity of such retail natural 
                gas distributor.
            ``(2) Standards for 2012 through 2020.--For calendar years 
        2012 through 2020, the applicable percentages are as follows:

------------------------------------------------------------------------
                          Cumulative Electricity  Cumulative Natural Gas
    ``Calendar Year         Savings Percentage      Savings Percentage
------------------------------------------------------------------------
                 2012                     1.00                    0.75
------------------------------------------------------------------------
                 2013                     2.00                    1.50
------------------------------------------------------------------------
                 2014                     3.25                    2.50
------------------------------------------------------------------------
                 2015                     4.50                    3.50
------------------------------------------------------------------------
                 2016                     6.00                    4.75
------------------------------------------------------------------------
                 2017                     7.50                    6.00
------------------------------------------------------------------------
                 2018                    10.00                    7.25
------------------------------------------------------------------------
                 2019                    12.50                    8.50
------------------------------------------------------------------------
                 2020                    15.00                   10.00
-------------------------------------------------------------------

            ``(3) Subsequent years.--
                    ``(A) Calendar years 2021 through 2030.--Not later 
                than December 31, 2018, 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 calendar years 2021 through 
                2030.
                    ``(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 set 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 set.
                    ``(C) Requirements.--The Secretary shall set 
                standards under this paragraph at levels reflecting the 
                maximum achievable level of cost-effective energy 
                efficiency potential, taking into account cost-
                effective energy savings achieved by leading retail 
                electricity distributors and retail natural gas 
                distributors, opportunities for new codes and standard 
                savings, technology improvements, and other indicators 
                of cost-effective energy efficiency potential. In no 
                case shall the applicable percentages for any calendar 
                year be lower than those for calendar year 2020 
                (including any increase in the standard for calendar 
                year 2020 pursuant to paragraph (4)).
            ``(4) Midcourse review and adjustment of standards.--Not 
        later than December 31, 2014, and at 10-year intervals 
        thereafter, the Secretary shall review the most recent 
        standards established under paragraph (2) or (3) and shall, by 
        regulation, increase the standards if the Secretary determines 
        that additional cost-effective energy efficiency potential is 
        achievable, taking into account the factors identified in 
        paragraph (3)(C). If the Secretary revises standards pursuant 
        to 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.--
        Notwithstanding paragraphs (1) and (2), for the 2012 reporting 
        period, the Secretary may accept a request from a retail 
        electricity distributor or a retail natural gas distributor to 
        delay the required submission of documentation of some or all 
        of the required savings for up to 2 years. The request for 
        delay shall include a plan for coming into full compliance by 
        the end of the 2013-2014 reporting period.
    ``(e) Transfers of Electricity or Natural Gas Savings.--
            ``(1) Bilateral contracts for savings transfers.--Subject 
        to the limitations of this paragraph, a retail electricity 
        distributor or retail natural gas distributor may use 
        electricity savings or natural gas savings purchased, pursuant 
        to a bilateral contract, from another retail electricity 
        distributor or retail natural gas distributor, a State, or a 
        third-party efficiency provider to meet the applicable 
        performance standard under subsection (d).
            ``(2) Requirements.--Electricity or natural gas savings 
        purchased and used for compliance pursuant to this paragraph 
        shall be--
                    ``(A) measured and verified in accordance with the 
                procedures specified under subsection (f);
                    ``(B) reported in accordance with subsection (d); 
                and
                    ``(C) achieved within the same State as is served 
                by the retail electricity distributor or retail natural 
                gas distributor.
            ``(3) Exception.--Notwithstanding paragraph (2)(C), a State 
        regulatory authority may authorize a retail electricity 
        distributor or a retail natural gas distributor regulated by 
        such State regulatory authority to purchase savings achieved in 
        a different State, provided that--
                    ``(A) such 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 purchaser's State.
            ``(4) Regulatory approval.--Nothing in this paragraph shall 
        limit or affect the authority of a State regulatory authority 
        to require a retail electricity distributor or retail natural 
        gas distributor that is regulated by such State regulatory 
        authority to obtain such State regulatory authority's 
        authorization or approval of a contract for transfer of savings 
        under this paragraph.
            ``(5) Limitations.--In the interest of optimizing 
        achievement of cost-effective efficiency potential, the 
        Secretary may prescribe such limitations as the Secretary 
        determines appropriate with respect to the proportion of a 
        retail electricity or natural gas distributor's compliance 
        obligation, under the applicable performance standards under 
        subsection (d), that may be met using electricity or natural 
        gas savings that are purchased under this paragraph.
    ``(f) Measurement and Verification of Savings.--The regulations 
promulgated pursuant to subsection (b) shall include--
            ``(1) procedures and standards for defining and measuring 
        electricity savings and natural gas savings that can be counted 
        towards the performance standards set forth in subsection (d), 
        which 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 deemed 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 counting CHP savings 
                and recycled energy savings;
                    ``(G) establish methods for calculating codes and 
                standards energy savings, including the use of verified 
                compliance rates;
                    ``(H) count only measures and savings that are 
                additional to business-as-usual practices;
                    ``(I) except in the case of codes and standards 
                savings, ensure that the retail electricity distributor 
                or retail natural gas distributor claiming the savings 
                played a significant role in achieving the savings 
                (including through the activities of a designated agent 
                of the distributor or through the purchase of 
                transferred savings);
                    ``(J) avoid double-counting of savings used for 
                compliance with this section, including transferred 
                savings; and
                    ``(K) include savings from programs administered by 
                the retail electric or natural gas distributor that are 
                funded by State, Federal, or other sources; 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 distributor reports.--The Secretary 
        shall review each report submitted to the Secretary by a retail 
        electricity distributor or retail natural gas distributor under 
        subsection (d) to verify that the applicable performance 
        standards under subsection (d) have been met. In determining 
        compliance with the applicable performance standards, the 
        Secretary shall exclude reported electricity savings or natural 
        gas savings that are not adequately demonstrated and 
        documented, in accordance with the regulations issued under 
        subsections (d), (e), and (f).
            ``(2) Penalty for failure to document adequate savings.--If 
        a retail electricity distributor or a retail natural gas 
        distributor 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 distributor or retail natural gas 
        distributor a civil penalty for each such 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 distributor 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 distributor 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 distributor or 
        retail natural gas distributor to a State for failure to comply 
        with the requirements of a State energy efficiency resource 
        standard during the same compliance period, provided that the 
        State standard is comparable in type to the Federal standard 
        established under this section and 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 (1), in accordance 
        with the procedures described in section 333(d) of the Energy 
        Policy and Conservation Act of 1954 (42 U.S.C. 6303).
            ``(5) Judicial review.--Any person who will be 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). For 
        purposes of this paragraph, references to a rule in section 
        336(b) of the Energy Policy and Conservation Act shall be 
        deemed 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, for purposes of this 
        subsection, the Mayor of the District of Columbia), the 
        Secretary may delegate to the State the administration of this 
        section within the State's territory 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 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) of this subsection and 
                using such payments to implement cost-effective 
                efficiency programs.
            ``(2) Secretarial determination.--The Secretary shall make 
        a substantive determination approving or disapproving a State 
        application, after public notice and comment, within 180 days 
        of receipt of a complete application.
            ``(3) Alternative measurement and verification procedures 
        and standards.--As part of an application submitted under 
        paragraph (1), a State may request to use alternative 
        measurement and verification procedures and standards to those 
        specified in subsection (f), provided the State demonstrates 
        that such alternative procedures and standards provide a level 
        of accuracy of measurement and verification at least equivalent 
        to the Federal procedures and standards promulgated 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 distributors or retail natural gas 
                distributors to pay to the State, by not later than 
                April 1 of the calendar year immediately following the 
                relevant 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 pursuant to paragraph (4) 
                shall be used by the State to administer its delegated 
                authority under this section and to implement cost-
                effective energy efficiency programs. Such programs 
                shall--
                            ``(i) to the extent feasible, achieve 
                        electricity savings and natural gas savings in 
                        the State sufficient to make up the deficit 
                        associated with the alternative compliance 
                        payments; and
                            ``(ii) be measured and verified in 
                        accordance with the applicable procedures and 
                        standards under subsection (f) or paragraph (3) 
                        of this subsection, as the case may be.
            ``(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 one-half of the States that 
                have received approval under this subsection to 
                administer the program, such that each State shall be 
                reviewed at least every 4 years. To facilitate such 
                review, the Secretary may require the State to submit a 
                report demonstrating its conformance with the 
                requirements of this section, including--
                            ``(i) reports submitted by retail 
                        electricity distributors and retail natural gas 
                        distributors to the State demonstrating 
                        compliance with applicable performance 
                        standards;
                            ``(ii) the impact of such standards on 
                        projected electricity and natural gas demand 
                        within the State;
                            ``(iii) an accounting of the State's use of 
                        alternative compliance payments and the 
                        resulting electricity savings and natural gas 
                        savings achieved; and
                            ``(iv) such other information as the 
                        Secretary determines appropriate.
                    ``(B) Review upon petition.--Notwithstanding 
                subparagraph (A), upon receipt of a public petition 
                containing credible allegation of substantial 
                deficiencies, the Secretary shall promptly review a 
                State's implementation of delegated authority under 
                this section.
                    ``(C) Deficiencies.--If deficiencies are found in a 
                review under this paragraph, the Secretary shall notify 
                the State and direct it to correct such deficiencies 
                and to report to the Secretary on progress within 180 
                days of the receipt of review results. If the 
                deficiencies are substantial, the Secretary shall--
                            ``(i) disallow such reported savings as the 
                        Secretary determines are not credible due to 
                        deficiencies;
                            ``(ii) re-review the State not later than 2 
                        years after the original review; and
                            ``(iii) if substantial deficiencies remain 
                        uncorrected after the review provided for under 
                        clause (ii), revoke the authority of such State 
                        to administer the program established under 
                        this section.
            ``(6) Calls for revision of state applications.--As a 
        condition of maintaining its delegated authority to administer 
        this section, the Secretary may require a State to submit a 
        revised application under paragraph (1) if the Secretary has--
                    ``(A) 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.
    ``(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 distributor, any retail 
natural gas distributor, any third-party efficiency provider, or such 
other entities as the Secretary deems appropriate, to provide any 
information the Secretary determines appropriate to carry out this 
section.
    ``(j) State Law.--Nothing in this section shall diminish or qualify 
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 more stringent than those under this 
section, provided that no such law or regulation may relieve any person 
of any requirement otherwise applicable under this section.
    ``(k) Program Review.--
            ``(1) National academy of sciences review.--The Secretary 
        shall enter into a contract with the National Academy of 
        Sciences under which the Academy shall, not later than July 1, 
        2017, and every 10 years thereafter, submit to the Secretary 
        and to Congress a comprehensive evaluation of all aspects of 
        the program established under this section, including--
                    ``(A) an evaluation of the effectiveness of the 
                program, including its specific design elements, in 
                increasing the efficiency of retail natural gas and 
                electricity distribution and consumption;
                    ``(B) the opportunities for additional technologies 
                and sources of efficiency that have emerged since 
                enactment of this section;
                    ``(C) the program's impact on the reliability of 
                electricity and natural gas supply;
                    ``(D) the net benefits or costs of the program to 
                the national and State economies, including effects on 
                electricity and natural gas demand and prices, economic 
                development benefits of investment, environmental 
                benefits, and avoided costs related to environmental 
                and congestion mitigation investments that otherwise 
                would have been required;
                    ``(E) an assessment of the benefits and costs of 
                increasing the performance standards established under 
                subsection (d) of this section;
                    ``(F) the feasibility, advantages, and 
                disadvantages of alternative models for demonstrating 
                compliance with a Federal energy efficiency resource 
                standard, including establishing a national trading 
                system for energy efficiency credits or demonstrating 
                compliance through actual reductions in delivery or 
                sales of electricity and natural gas, rather than on 
                program savings; and
                    ``(G) recommendations regarding potential changes 
                to this section, to regulations and procedures for 
                implementing this section, or to related public 
                policies.
            ``(2) Recommendations to congress.--Not later than January 
        1, 2018, and every 10 years thereafter, the Secretary shall 
        transmit to the Committee on Energy and Commerce of the United 
        States House of Representatives and the Committee on Energy and 
        Natural Resources of the United States Senate a report making 
        recommendations for modifications and improvements to the 
        program established under this section and any related 
        programs, including an explanation of the inconsistencies, if 
        any, between the Secretary's recommendations and those included 
        in the National Academy of Sciences evaluation under paragraph 
        (1).''.
    (b) Table of Contents Amendment.--The table of contents of the 
Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 and 
following) is amended by adding at the end of the items relating to 
title VI the following:

``Sec. 610. Federal energy efficiency resource standard.''.
                                 <all>
```