I 

113TH CONGRESS 

2D SESSION H. R. 5301 

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 30, 2014 

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) 118 countries have national goals for re8 newable electricity production and 30 States and the 

9 District of Columbia have enacted mandatory renew10 able electricity standards; 

11 ‘‘(2) the Federal renewable electricity standard 

12 established by this section establishes a market13 based policy to create ongoing competition among 

14 renewable electricity generators across the United 

15 States and provide the greatest quantity of clean 

16 electricity for the lowest price; and 

17 ‘‘(3) the United States has vast wind, solar, hy18 dropower, biomass, and geothermal resources that— 

19 ‘‘(A) are renewable; 

20 ‘‘(B) are dispersed widely across different 

21 regions of the United States; and 

22 ‘‘(C) can be harnessed to generate a sig23 nificant share of electricity in the United 

24 States. 

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


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1 ‘‘(1) BROWNFIELD SITE GENERATION FACIL2 ITY.—The term ‘brownfield site generation facility’ 

3 means a facility that— 

4 ‘‘(A) generates renewable electricity; and 

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

6 term is defined in section 101 of the Com7 prehensive Environmental Response, Compensa8 tion, and Liability Act of 1980 (42 U.S.C. 

9 9601)). 

10 ‘‘(2) DISTRIBUTED RENEWABLE GENERATION

11 FACILITY.—The term ‘distributed renewable genera12 tion facility’ means a facility that— 

13 ‘‘(A) generates renewable electricity; 

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

15 consumers at or near the facility site; and 

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

17 capacity. 

18 ‘‘(3) FEDERAL RENEWABLE ELECTRICITY

19 CREDIT.—The term ‘Federal renewable electricity 

20 credit’ means a credit, representing 1 megawatt 

21 hour of renewable electricity, issued pursuant to sub22 section (f). 

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

24 means— 


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1 ‘‘(A) any land within the limits of any In2 dian reservation, pueblo, or rancheria; 

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

4 Indian reservation, pueblo, or rancheria, title to 

5 which was on the date of enactment of this sec6 tion held by— 

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

8 of any Indian tribe or individual; or 

9 ‘‘(ii) any Indian tribe or individual 

10 subject to restriction by the United States 

11 against alienation; 

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

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

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

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

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

17 U.S.C. 1602)). 

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

19 means any Indian tribe, band, nation, or other orga20 nized group or community (including any Native vil21 lage, Regional Corporation, or Village Corporation 

22 (as those terms are defined in section 3 of the Alas23 ka Native Claims Settlement Act (43 U.S.C. 1602))) 

24 that is recognized as eligible for the special proVerDate Mar 15 2010 03:00 Aug 07, 2014 Jkt 039060 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5301.IH H5301

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1 grams and services provided by the United States to 

2 Indians because of their status as Indians. 

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

4 ‘qualified hydropower’ means— 

5 ‘‘(A) energy produced from increased effi6 ciency achieved, or additions of capacity made, 

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

8 facility that— 

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

10 date; and 

11 ‘‘(ii) does not include additional en12 ergy generated as a result of operational 

13 changes not directly associated with effi14 ciency improvements or capacity additions; 

15 or 

16 ‘‘(B) energy produced from generating ca17 pacity added to a dam on or after January 1, 

18 2001, if the Commission certifies that— 

19 ‘‘(i) the dam— 

20 ‘‘(I) was placed in service before 

21 the date of enactment of this section; 

22 ‘‘(II) was operated for flood con23 trol, navigation, or water supply pur24 poses; and 


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1 ‘‘(III) was not producing hydro2 electric power prior to the addition of 

3 the capacity; and 

4 ‘‘(ii) the hydroelectric project installed 

5 on the dam— 

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

7 licensing by the Commission; 

8 ‘‘(II) is in compliance with— 

9 ‘‘(aa) the terms and condi10 tions of the license or exemption; 

11 and 

12 ‘‘(bb) other applicable legal 

13 requirements for the protection 

14 of environmental quality, includ15 ing applicable fish passage re16 quirements; and 

17 ‘‘(III) is operated so that the 

18 water surface elevation at any given 

19 location and time that would have oc20 curred in the absence of the hydro21 electric project is maintained, subject 

22 to any license or exemption require23 ments that require changes in water 

24 surface elevation for the purpose of 


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1 improving the environmental quality 

2 of the affected waterway. 

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

4 term ‘qualified renewable biomass’ means renewable 

5 biomass that, when combusted, yields, on a weight6 ed-average basis, a 50-percent reduction in lifecycle 

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

8 of the American Renewable Energy and Efficiency 

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

10 operation of a combined cycle natural gas electric 

11 generating facility using the most efficient commer12 cially available technology, when calculated over a 

13 20-year life cycle. 

14 ‘‘(8) RENEWABLE BIOMASS.—The term ‘renew15 able biomass’ means— 

16 ‘‘(A) crops, crop byproducts, or crop resi17 dues harvested from actively managed or fallow 

18 agricultural land that is— 

19 ‘‘(i) nonforested; and 

20 ‘‘(ii) cleared prior to the date of en21 actment of this section; 

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

23 residues from an actively managed tree farm lo24 cated on non-Federal land cleared prior to the 

25 date of enactment of this section; 


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

2 brush, and residue from milled trees, from for3 ested land that is not— 

4 ‘‘(i) old-growth or mature forest; 

5 ‘‘(ii) identified under a State natural 

6 heritage program as rare, imperiled, or 

7 critically imperiled; or 

8 ‘‘(iii) Federal land; 

9 ‘‘(D) algae; 

10 ‘‘(E) nonhazardous plant matter derived 

11 from waste— 

12 ‘‘(i) including separated yard waste, 

13 landscape right-of-way trimmings, or food 

14 waste; but 

15 ‘‘(ii) not including municipal solid 

16 waste, recyclable waste paper, painted, 

17 treated or pressurized wood, or wood con18 taminated with plastic or metals; 

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

20 including products of animal waste digesters; 

21 ‘‘(G) vegetative matter removed from with22 in 200 yards of any manmade structure or 

23 campground; and 

24 ‘‘(H) slash and precommercial-sized 

25 thinnings harvested— 


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1 ‘‘(i) in environmentally sustainable 

2 quantities, as determined by the appro3 priate Federal land manager; and 

4 ‘‘(ii) from National Forest System 

5 land or public lands (as defined in section 

6 103 of the Federal Land Policy and Man7 agement Act of 1976 (43 U.S.C. 1702)), 

8 other than— 

9 ‘‘(I) components of the National 

10 Wilderness Preservation System es11 tablished under the Wilderness Act 

12 (16 U.S.C. 1131 et seq.); 

13 ‘‘(II) Wilderness Study Areas, as 

14 identified by the Bureau of Land 

15 Management; 

16 ‘‘(III) inventoried roadless areas 

17 and all unroaded areas of at least 

18 5,000 acres; 

19 ‘‘(IV) old growth and late seral 

20 stands; 

21 ‘‘(V) components of the National 

22 Landscape Conservation System ad23 ministered by the Bureau of Land 

24 Management; and 

25 ‘‘(VI) national monuments. 


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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, means 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 2015 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 2015 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 2015 THROUGH

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

12 calendar years 2015 through 2040, the required 

13 annual percentage shall be as follows: 

Required annual 

‘‘Year: percentage: 

2015 ................................................................................................... 6

2016 ................................................................................................... 7

2017 ................................................................................................... 9

2018 ................................................................................................... 11

2019 ................................................................................................... 13

2020 ................................................................................................... 15

2021 ................................................................................................... 17

2022 ................................................................................................... 19

2023 ................................................................................................... 21

2024 ................................................................................................... 23

2025–2040 ......................................................................................... 25. 

14 ‘‘(B) INCREASE AUTHORIZED FOR CAL15 ENDAR YEARS 2026 THROUGH 2040.—The Com16 mission may issue orders increasing the re17 quired annual percentage amounts for each of 

18 calendar years 2026 through 2040 to reflect the 

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1 tricity generation potential, taking into account 

2 regional resource availability, economic feasi3 bility, and technological capability. 

4 ‘‘(f) FEDERAL RENEWABLE ELECTRICITY CRED5 ITS.— 

6 ‘‘(1) IN GENERAL.— 

7 ‘‘(A) ISSUANCE; TRACKING; 

8 VERIFICATION.—The regulations promulgated 

9 under this section shall include provisions gov10 erning the issuance, tracking, and verification 

11 of Federal renewable electricity credits. 

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

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

14 shall issue to each generator of renewable elec15 tricity, 1 Federal renewable electricity credit for 

16 each megawatt hour of renewable electricity 

17 generated by the generator after December 31, 

18 2014. 

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

20 shall assign a unique serial number to each 

21 Federal renewable electricity credit. 

22 ‘‘(2) GENERATION FROM CERTAIN STATE RE23 NEWABLE ELECTRICITY PROGRAMS.— 

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1 ments from a retail electric supplier pursuant 

2 to a State renewable electricity program 

3 (whether through State alternative compliance 

4 payments or through payments to a State re5 newable electricity procurement fund or entity), 

6 the Commission shall issue Federal renewable 

7 electricity credits to the retail electric supplier 

8 for the portion of the relevant renewable elec9 tricity generation that is attributable to pay10 ments made by the retail electric supplier, as 

11 determined pursuant to regulations promul12 gated by the Commission. 

13 ‘‘(B) REMAINING PORTION.—For any re14 maining portion of the relevant renewable elec15 tricity generation, the Commission shall issue 

16 Federal renewable electricity credits to the gen17 erator, as provided in paragraph (1), except 

18 that not more than 1 Federal renewable elec19 tricity credit shall be issued for the same mega20 watt hour of electricity. 

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

22 how Federal renewable electricity credits will be 

23 apportioned among retail electric suppliers and 

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1 sion shall consider information and guidance 

2 issued by the applicable one or more States. 

3 ‘‘(3) CERTAIN POWER SALES CONTRACTS.—Ex4 cept as otherwise provided in paragraph (2), if a 

5 generator has sold renewable electricity to a retail 

6 electric supplier under a contract for power from a 

7 facility placed in service before the date of enact8 ment of this section, and the contract does not pro9 vide for the determination of ownership of the Fed10 eral renewable electricity credits associated with the 

11 generation, the Commission shall issue the Federal 

12 renewable electricity credits to the retail electric sup13 plier for the duration of the contract. 

14 ‘‘(4) CREDIT MULTIPLIERS.— 

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

16 subparagraph (B), the Commission shall 

17 issue— 

18 ‘‘(i) not more than 3 Federal renew19 able electricity credits for each megawatt 

20 hour of renewable electricity generated by 

21 a distributed renewable generation facility; 

22 ‘‘(ii) not more than 2 Federal renew23 able electricity credits for each megawatt 

24 hour of renewable electricity generated on 

25 Indian land; and 


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1 ‘‘(iii) not more than 2 Federal renew2 able electricity credits for each megawatt 

3 hour of renewable electricity generated by 

4 a brownfield site generation facility. 

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

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

7 2017, and not less frequently than every 4 

8 years thereafter, the Commission shall review 

9 the effect of this paragraph on the aggregate 

10 quantity of renewable electricity produced under 

11 the standard and shall, as necessary and after 

12 providing 1 year of notice, reduce the number 

13 of Federal renewable electricity credits per 

14 megawatt hour issued under this paragraph for 

15 any given energy source or facility, but not 

16 below one, to ensure that the number is no 

17 higher than the Commission determines is nec18 essary— 

19 ‘‘(i) to incentivize incremental renew20 able energy generation on Indian land and 

21 brownfield sites; and 

22 ‘‘(ii) to make distributed renewable 

23 generation facilities cost competitive with 

24 other sources of renewable electricity gen25 eration. 


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1 ‘‘(C) FACILITIES PLACED IN SERVICE

2 AFTER ENACTMENT.— 

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

4 generation facility placed in service after 

5 the date of enactment of this section, sub6 paragraph (B) shall not apply for the first 

7 10 years after the date on which the facil8 ity is placed in service. 

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

10 during the 10-year period described in 

11 clause (i), the Commission shall issue to 

12 the facility the same number of Federal re13 newable electricity credits per megawatt 

14 hour as are issued to that facility in the 

15 year in which the facility is placed in serv16 ice. 

17 ‘‘(iii) SUBSEQUENT PERIOD.—After 

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

19 the Commission shall issue Federal renew20 able electricity credits to the facility in ac21 cordance with subparagraph (B). 

22 ‘‘(5) CREDITS BASED ON QUALIFIED HYDRO23 POWER.—For purposes of this subsection, the num24 ber of Federal renewable electricity credits issued for 

25 qualified hydropower shall be calculated— 


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1 ‘‘(A) based solely on the increase in aver2 age annual generation directly resulting from 

3 the efficiency improvements or capacity addi4 tions described in subsection (a)(6)(A); and 

5 ‘‘(B) using the same water flow informa6 tion used to determine a historic average an7 nual generation baseline for the hydroelectric 

8 facility, as certified by the Commission. 

9 ‘‘(6) GENERATION FROM MIXED RENEWABLE

10 AND NONRENEWABLE RESOURCES.—If electricity is 

11 generated using both a renewable energy resource 

12 and an energy source that is not a renewable energy 

13 resource (such as cofiring of renewable biomass and 

14 fossil fuel), the Commission shall issue Federal re15 newable electricity credits based on the proportion of 

16 the electricity that is attributable to the renewable 

17 energy resource. 

18 ‘‘(7) PROHIBITION AGAINST DOUBLE-COUNT19 ING.—The Commission shall ensure that— 

20 ‘‘(A) no Federal renewable electricity cred21 it is used more than once for compliance with 

22 this section; and 

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

24 not more than 1 Federal renewable electricity 


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1 credit is issued for any megawatt hour of re2 newable electricity. 

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

4 renewable electricity credit may— 

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

6 ‘‘(B) submit the credit for compliance 

7 under subsection (c); or 

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

9 the Commission. 

10 ‘‘(9) BANKING.— 

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

12 electricity credit may be submitted in satisfac13 tion of the compliance obligation under sub14 section (c) for the compliance year in which the 

15 credit was issued or for any of the 3 imme16 diately subsequent compliance years. 

17 ‘‘(B) RETIREMENT.—The Commission 

18 shall retire any Federal renewable electricity 

19 credit that has not been retired by April 2 of 

20 the calendar year that is 3 years after the cal21 endar year during which the credit was issued. 

22 ‘‘(10) RETIREMENT.—The Commission shall re23 tire a Federal renewable electricity credit imme24 diately upon submission by the lawful holder of the 


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1 credit, whether in satisfaction of a compliance obli2 gation under subsection (c) or for another reason. 

3 ‘‘(g) ALTERNATIVE COMPLIANCE PAYMENTS.— 

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

5 may satisfy the requirements of subsection (c) in 

6 whole or in part by submitting in accordance with 

7 this subsection, in lieu of each Federal renewable 

8 electricity credit that would otherwise be due, a pay9 ment equal to $50, adjusted for inflation on January 

10 1 of each year following calendar year 2015, in ac11 cordance with regulations promulgated by the Com12 mission. 

13 ‘‘(2) PAYMENT TO STATE FUNDS.— 

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

15 provided in this paragraph, payments made 

16 under this subsection shall be made directly to 

17 one or more States in which the retail electric 

18 supplier sells electric energy, in proportion to 

19 the portion of the retail electric supplier’s base 

20 quantity that is sold within each applicable 

21 State, if— 

22 ‘‘(i) the payments are deposited di23 rectly into a fund of the State treasury es24 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 

25 States in every sector of the economy, retail elecVerDate Mar 15 2010 03:00 Aug 07, 2014 Jkt 039060 PO 00000 Frm 00031 Fmt 6652 Sfmt 6201 E:\BILLS\H5301.IH H5301

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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 2009 International 

2 Energy Conservation Code for resi3 dential buildings; or 

4 ‘‘(bb) the ASHRAE/ANSI/ 

5 IESNA Standard 90.1–2007 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 weighted average utility cost of 

14 capital as the discount rate. 

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 power plant to provide each 

2 kilowatt hour of electricity; 

3 ‘‘(ii) electricity and natural gas use 

4 shall include losses in the transmission and 

5 distribution system; and 

6 ‘‘(iii) fuel-switching that is not cost-ef7 fective to the end-user shall not be count8 ed. 

9 ‘‘(12) NATURAL GAS SAVINGS.—The term ‘nat10 ural gas savings’ means reductions in natural gas 

11 consumption from measures implemented after the 

12 date of enactment of this section, as determined in 

13 accordance with regulations promulgated by the Sec14 retary, that are limited to— 

15 ‘‘(A) customer facility savings of natural 

16 gas, adjusted to reflect any associated increase 

17 in electricity consumption or consumption of 

18 other fuels at the facility; 

19 ‘‘(B) reductions in leakage, operational 

20 losses, and consumption of natural gas fuel to 

21 operate a gas distribution system, achieved by 

22 a retail natural gas supplier, as compared to 

23 similar leakage, losses, and consumption during 

24 a base period of not less than 1 year; 


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1 ‘‘(C) codes and standards savings of nat2 ural gas; and 

3 ‘‘(D) fuel switching energy savings that re4 sults in net savings of natural gas. 

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

6 means an association of two or more interconnected 

7 electric systems that have entered into an agreement 

8 to coordinate operations and planning for improved 

9 reliability and efficiencies, including a Regional 

10 Transmission Organization or an Independent Sys11 tem Operator, as determined by the Secretary. 

12 ‘‘(14) REPORTING PERIOD.—The term ‘report13 ing period’ means— 

14 ‘‘(A) calendar year 2015; and 

15 ‘‘(B) each successive 2-calendar-year pe16 riod thereafter. 

17 ‘‘(15) RETAIL ELECTRICITY SUPPLIER.— 

18 ‘‘(A) IN GENERAL.—The term ‘retail elec19 tricity supplier’ means, for any given calendar 

20 year, an electric utility that sells not less than 

21 1,000,000 megawatt hours of electric energy to 

22 electric consumers for purposes other than re23 sale during the preceding calendar. 

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

25 purposes of determining whether an electric 


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1 utility qualifies as a retail electricity supplier 

2 under subparagraph (A)— 

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

4 electric utility to electric consumers for 

5 purposes other than resale shall be consid6 ered to be deliveries by the electric utility; 

7 and 

8 ‘‘(ii) deliveries by any electric utility 

9 to a lessee, tenant, or affiliate of the elec10 tric utility shall not be considered to be de11 liveries to electric consumers. 

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

13 ‘‘(A) IN GENERAL.—The term ‘retail nat14 ural gas supplier’ means, for any given calendar 

15 year, a local distribution company (as defined 

16 in section 2 of the Natural Gas Policy Act of 

17 1978 (15 U.S.C. 3301)), that delivered to nat18 ural gas consumers more than 5,000,000,000 

19 cubic feet of natural gas for purposes other 

20 than resale during the preceding calendar year. 

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

22 purposes of determining whether a person 

23 qualifies as a retail natural gas supplier under 

24 subparagraph (A)— 


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

2 affiliate of a local distribution company to 

3 consumers for purposes other than resale 

4 shall be considered to be deliveries by the 

5 local distribution company; and 

6 ‘‘(ii) deliveries of natural gas to a les7 see, tenant, or affiliate of a local distribu8 tion company shall not be considered to be 

9 deliveries to natural gas consumers. 

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

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

12 retailer, building owner, energy service company, fi13 nancial institution or other commercial, industrial or 

14 nonprofit entity that is capable of providing elec15 tricity savings or natural gas savings in accordance 

16 with subsections (e) and (f). 

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

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

19 energy savings’ means a reduction in electricity 

20 or natural gas consumption that results from a 

21 modification of an industrial or commercial sys22 tem that commenced operation before the date 

23 of enactment of this section, in order to recap24 ture electrical, mechanical, or thermal energy 

25 that would otherwise be wasted, as determined 


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1 in accordance with regulations promulgated by 

2 the Secretary. 

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

4 included as part of customer facility savings. 

5 ‘‘(c) ESTABLISHMENT OF PROGRAM.— 

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

7 after the date of enactment of this section, the Sec8 retary shall, by regulation, establish a program to 

9 implement and enforce the requirements of this sec10 tion, including by— 

11 ‘‘(A) establishing measurement and 

12 verification procedures and standards under 

13 subsection (f); 

14 ‘‘(B) establishing requirements under 

15 which retail electricity suppliers and retail nat16 ural gas suppliers shall— 

17 ‘‘(i) demonstrate, document, and re18 port the compliance of the retail electricity 

19 suppliers and retail natural gas suppliers 

20 with the performance standards under sub21 section (d); and 

22 ‘‘(ii) estimate the impact of the stand23 ards on current and future electricity and 

24 natural gas use in the service territories of 

25 the suppliers; and 


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1 ‘‘(C) establishing requirements governing 

2 applications for, and implementation of, dele3 gated State administration under subsection 

4 (h). 

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

6 In establishing and implementing this section, the 

7 Secretary shall, to the maximum extent practicable, 

8 preserve the integrity and incorporate best practices 

9 of existing State energy efficiency programs. 

10 ‘‘(d) PERFORMANCE STANDARDS.— 

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

12 than May 1 of the calendar year immediately fol13 lowing each reporting period— 

14 ‘‘(A) each retail electricity supplier shall 

15 submit to the Secretary a report, in accordance 

16 with regulations promulgated by the Secretary, 

17 demonstrating that the retail electricity supplier 

18 has achieved annual electricity savings (ad19 justed to account for any attrition of savings 

20 measures implemented in prior years) in each 

21 calendar year that are equal to the applicable 

22 percentage, established under paragraph (2), 

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

24 electricity supplier; and 


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

2 submit to the Secretary a report, in accordance 

3 with regulations promulgated by the Secretary, 

4 demonstrating that it has achieved cumulative 

5 natural gas savings (adjusted to account for 

6 any attrition of savings measures implemented 

7 in prior years) in each calendar year that are 

8 equal to the applicable percentage, established 

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

10 quantity of such retail natural gas supplier, 

11 subject to business-as-usual consumption pro12 jections calculated in accordance with sub13 section (f)(1)(P). 

14 ‘‘(2) STANDARDS FOR 2015 THROUGH 2025.— 

15 For each of calendar years 2015 through 2025, the 

16 applicable percentages are as follows: 

‘‘Calendar Year Cumulative Electricity 

Savings Percentage 

Cumulative Natural Gas 

Savings Percentage 

2015 1.00 0.50

2016 2.00 1.25

2017 3.00 2.00

2018 4.25 3.00

2019 5.50 4.00

2020 7.00 5.00

2021 8.50 6.00

2022 10.00 7.00

2023 11.50 8.00

2024 13.25 9.00


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‘‘Calendar Year Cumulative Electricity 

Savings Percentage 

Cumulative Natural Gas 

Savings Percentage 

2025 15.00 10.00. 

1 ‘‘(3) SUBSEQUENT YEARS.— 

2 ‘‘(A) CALENDAR YEARS 2026 THROUGH

3 2040.—Not later than December 31, 2023, 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 2026 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. 

22 ‘‘(C) REQUIREMENTS.—The Secretary 

23 shall establish standards under this paragraph 


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1 at levels reflecting the maximum achievable 

2 level of cost-effective energy efficiency potential, 

3 taking into account— 

4 ‘‘(i) cost-effective energy savings 

5 achieved by leading retail electricity sup6 pliers and retail natural gas suppliers; 

7 ‘‘(ii) opportunities for new codes and 

8 standard savings; 

9 ‘‘(iii) technology improvements; and 

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

11 energy efficiency potential. 

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

13 shall the applicable percentages for any cal14 endar year be less than the applicable percent15 ages for calendar year 2025 (including any in16 crease in the standard for calendar year 2025 

17 established pursuant to paragraph (4)). 

18 ‘‘(4) MIDCOURSE REVIEW AND ADJUSTMENT OF

19 STANDARDS.— 

20 ‘‘(A) IN GENERAL.—Not later than De21 cember 31, 2020, and at 10-year intervals 

22 thereafter, the Secretary shall— 

23 ‘‘(i) review the most recent standards 

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

25 and 


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1 ‘‘(ii) increase the standards by regula2 tion if the Secretary determines that addi3 tional cost-effective energy efficiency po4 tential is achievable, taking into account 

5 the requirements described in paragraph 

6 (3)(C). 

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

8 standards under this paragraph, the regulations 

9 shall provide adequate lead time to ensure that 

10 compliance with the increased standards is fea11 sible. 

12 ‘‘(5) DELAY OF SUBMISSION FOR FIRST RE13 PORTING PERIOD.— 

14 ‘‘(A) IN GENERAL.—Notwithstanding 

15 paragraphs (1) and (2), for the 2015 reporting 

16 period, the Secretary may accept a request from 

17 a retail electricity supplier or a retail natural 

18 gas supplier to delay the required submission of 

19 documentation of all or part of the required 

20 savings for up to 2 years. 

21 ‘‘(B) PLAN FOR COMPLIANCE.—The re22 quest for delay under subparagraph (A) shall 

23 include a plan for coming into full compliance 

24 by the end of the 2016–2017 reporting period. 


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1 ‘‘(6) APPLYING UNUSED SAVINGS TO FUTURE

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

3 performance standards specified in this subsection, 

4 any savings in excess of the performance standards 

5 may be applied toward performance standards speci6 fied for future years. 

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

8 SAVINGS.— 

9 ‘‘(1) BILATERAL CONTRACTS FOR SAVINGS

10 TRANSFERS.—Subject to the limitations of this sub11 section, a retail electricity supplier or retail natural 

12 gas supplier may use electricity savings or natural 

13 gas savings purchased pursuant to a bilateral con14 tract from another retail electricity supplier or retail 

15 natural gas supplier, a State, or a third-party effi16 ciency provider to meet the applicable performance 

17 standard under subsection (d). 

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

19 natural gas savings purchased and used for compli20 ance under this subsection shall be— 

21 ‘‘(A) measured and verified in accordance 

22 with subsection (f); 

23 ‘‘(B) reported in accordance with sub24 section (d); and 


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

2 served by the retail electricity supplier or retail 

3 natural gas supplier. 

4 ‘‘(3) EXCEPTION.—Notwithstanding paragraph 

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

6 retail electricity supplier or a retail natural gas sup7 plier regulated by the State regulatory authority to 

8 purchase savings achieved in a different State, if— 

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

10 same power pool; and 

11 ‘‘(B) the State regulatory authority that 

12 regulates the purchaser oversees the measure13 ment and verification of the savings pursuant to 

14 the procedures and standards applicable in the 

15 State in which the purchaser is located. 

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

17 subsection limits or affects the authority of a State 

18 regulatory authority to require a retail electricity 

19 supplier or retail natural gas supplier that is regu20 lated by the State regulatory authority to obtain the 

21 authorization or approval of the State regulatory au22 thority of a contract for transfer of electricity sav23 ings or natural gas savings under this paragraph. 

24 ‘‘(5) LIMITATIONS.—To optimize the achieve25 ment of cost-effective efficiency potential, the SecVerDate Mar 15 2010 03:00 Aug 07, 2014 Jkt 039060 PO 00000 Frm 00050 Fmt 6652 Sfmt 6201 E:\BILLS\H5301.IH H5301

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1 retary may prescribe such limitations as the Sec2 retary determines appropriate with respect to the 

3 proportion of the compliance obligation of a retail 

4 electricity or natural gas supplier under the applica5 ble performance standards under subsection (d) that 

6 may be met using electricity savings or natural gas 

7 savings that are purchased under this subsection. 

8 ‘‘(f) MEASUREMENT AND VERIFICATION OF SAV9 INGS.—The regulations promulgated pursuant to sub10 section (c) shall include— 

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

12 measuring electricity savings and natural gas sav13 ings that can be counted towards the performance 

14 standards established under subsection (d), that 

15 shall— 

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

17 and energy conservation measures that can be 

18 counted; 

19 ‘‘(B) require that energy consumption esti20 mates for customer facilities or portions of fa21 cilities in the applicable base and current years 

22 be adjusted, as appropriate, to account for 

23 changes in weather, level of production, and 

24 building area; 


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1 ‘‘(C) account for the useful life of meas2 ures; 

3 ‘‘(D) include assigned savings values for 

4 specific, commonly used measures; 

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

6 be estimated based on extrapolation from a rep7 resentative sample of participating customers; 

8 ‘‘(F) include procedures for calculating and 

9 documenting CHP savings, fuel-switching en10 ergy savings, and waste heat energy savings; 

11 ‘‘(G) establish methods for calculating 

12 codes and standards energy savings, including 

13 the use of verified compliance rates; 

14 ‘‘(H) include procedures for calculating 

15 and documenting— 

16 ‘‘(i) customer facility savings and re17 ductions in distribution system losses of 

18 electricity and natural gas that are 

19 achieved as a result of smart grid deploy20 ment, as described in section 1301 of the 

21 Energy Independence and Security Act of 

22 2007 (42 U.S.C. 17381); and 

23 ‘‘(ii) reductions in natural gas dis24 tribution system losses attributable to pipe25 line repair and replacement programs; 


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

2 are additional to business-as-usual customer 

3 purchase practices; 

4 ‘‘(J) ensure that the retail electricity sup5 plier or retail natural gas supplier claiming the 

6 electricity savings or natural gas savings, in7 cluding codes and standards savings, played a 

8 significant role in achieving the savings (includ9 ing through the activities of a designated agent 

10 of the supplier or through the purchase of 

11 transferred electricity savings or natural gas 

12 savings); 

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

14 for compliance with this section, including 

15 transferred savings; 

16 ‘‘(L) include electricity savings or natural 

17 gas savings from programs administered by the 

18 retail electric supplier or natural gas supplier 

19 that are funded by Federal, State, or other 

20 sources; 

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

22 electricity savings or natural gas savings to the 

23 retail electricity supplier or the retail natural 

24 gas supplier if the large customers receive in25 centives or rate reductions from the retail supVerDate Mar 15 2010 03:00 Aug 07, 2014 Jkt 039060 PO 00000 Frm 00053 Fmt 6652 Sfmt 6201 E:\BILLS\H5301.IH H5301

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1 plier for self-directed energy efficiency improve2 ments; 

3 ‘‘(N) include procedures for counting elec4 tricity savings and natural gas savings achieved 

5 by solar water heating, solar light pipe tech6 nology, geothermal heat pumps, and other tech7 nologies utilizing renewable resources that re8 duce on-site energy use; 

9 ‘‘(O) in any State in which the State regu10 latory authority has designated one or more en11 tities to administer electric ratepayer-funded ef12 ficiency programs approved by the State regu13 latory authority, provide that electricity savings 

14 and natural gas savings achieved through the 

15 programs shall be distributed proportionally 

16 among retail electric suppliers and retail nat17 ural gas suppliers; and 

18 ‘‘(P) include guidance for utilities to cal19 culate and document business-as-usual con20 sumption projections; and 

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

22 verification of reported electricity savings or natural 

23 gas savings. 

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

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


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

2 review each report submitted to the Secretary 

3 by a retail electricity supplier or retail natural 

4 gas supplier under subsection (d) to verify that 

5 the applicable performance standards under 

6 subsection (d) have been met. 

7 ‘‘(B) EXCLUSION.—In determining compli8 ance with the applicable performance standards 

9 under subsection (d), the Secretary shall ex10 clude reported electricity savings or natural gas 

11 savings that are not adequately demonstrated 

12 and documented, in accordance with the regula13 tions promulgated under subsections (d), (e), 

14 and (f). 

15 ‘‘(2) PENALTY FOR FAILURE TO DOCUMENT

16 ADEQUATE SAVINGS.—If a retail electricity supplier 

17 or a retail natural gas supplier fails to demonstrate 

18 compliance with an applicable performance standard 

19 under subsection (d), or to pay to the State an ap20 plicable alternative compliance payment under sub21 section (h)(4), the Secretary shall assess against the 

22 retail electricity supplier or retail natural gas sup23 plier a civil penalty for each failure in an amount 

24 equal to, as adjusted for inflation in accordance with 

25 such regulations as the Secretary may promulgate— 


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

2 savings or alternative compliance payment that 

3 the retail electricity supplier failed to achieve or 

4 make, respectively; or 

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

6 savings or alternative compliance payment that 

7 the retail natural gas supplier failed to achieve 

8 or make, respectively. 

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

10 Secretary shall reduce the amount of any penalty 

11 under paragraph (2) by the amount paid by the rel12 evant retail electricity supplier or retail natural gas 

13 supplier to a State for failure to comply with the re14 quirements of a State energy efficiency resource 

15 standard during the same compliance period, if the 

16 State standard— 

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

18 standard established under this section; and 

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

20 performance standards under subsection (d). 

21 ‘‘(4) ENFORCEMENT PROCEDURES.—The Sec22 retary shall assess a civil penalty, as provided under 

23 paragraph (2), in accordance with the procedures 

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

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


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1 ‘‘(5) JUDICIAL REVIEW.— 

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

3 affected by a final action taken by the Sec4 retary under this section, other than the assess5 ment of a civil penalty, may use the procedures 

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

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

8 6306(b)). 

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

10 references to a rule in section 336(b) of the En11 ergy Policy and Conservation Act (42 U.S.C. 

12 6306(b)) shall be considered to refer also to all 

13 other final actions of the Secretary under this 

14 section other than the assessment of a civil pen15 alty. 

16 ‘‘(h) STATE ADMINISTRATION.— 

17 ‘‘(1) IN GENERAL.—Upon receipt of an applica18 tion from the Governor of a State (including the 

19 Mayor of the District of Columbia), the Secretary 

20 may delegate to the State responsibility for admin21 istering this section within the territory of the State 

22 if the Secretary determines that the State will imple23 ment an energy efficiency program that meets or ex24 ceeds the requirements of this section, including— 


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1 ‘‘(A) achieving electricity savings and nat2 ural gas savings that are at least as great as 

3 those required under the applicable performance 

4 standards established under subsection (d); 

5 ‘‘(B) reviewing reports and verifying elec6 tricity savings and natural gas savings achieved 

7 in the State (including savings transferred from 

8 outside the State); and 

9 ‘‘(C) collecting any alternative compliance 

10 payments under paragraph (4) and using the 

11 payments to implement cost-effective efficiency 

12 programs. 

13 ‘‘(2) SECRETARIAL DETERMINATION.—Not 

14 later than 180 days after the date on which a com15 plete application is received by the Secretary, the 

16 Secretary shall make a substantive determination 

17 approving or disapproving a State application, after 

18 public notice and comment. 

19 ‘‘(3) ALTERNATIVE MEASUREMENT AND

20 VERIFICATION PROCEDURES AND STANDARDS.—As 

21 part of an application submitted under paragraph 

22 (1), a State may request to use alternative measure23 ment and verification procedures and standards 

24 from the procedures and standards described in sub25 section (f), if the State demonstrates that the alterVerDate Mar 15 2010 03:00 Aug 07, 2014 Jkt 039060 PO 00000 Frm 00058 Fmt 6652 Sfmt 6201 E:\BILLS\H5301.IH H5301

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1 native procedures and standards provide a level of 

2 accuracy of measurement and verification that are at 

3 least equivalent to the Federal procedures and 

4 standards under subsection (f). 

5 ‘‘(4) ALTERNATIVE COMPLIANCE PAYMENTS.— 

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

8 may permit retail electricity suppliers or retail 

9 natural gas suppliers to pay to the State, by 

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

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

15 may promulgate, not less than— 

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

19 under the applicable performance stand20 ard; or 

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

22 savings needed to make up any deficit with 

23 regard to a compliance obligation under 

24 the applicable performance standard. 


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1 ‘‘(B) USE OF PAYMENTS.—Alternative 

2 compliance payments collected by a State under 

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

4 administer the delegated authority of the State 

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

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

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

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

13 accordance with the applicable procedures 

14 and standards under subsection (f) or 

15 paragraph (3), as applicable. 

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

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

18 the Secretary shall review State implementation 

19 of this section for conformance with the requirements of this section in approximately 1 20 ⁄2

21 of the States that have received approval under 

22 this subsection to administer the program, so 

23 that each State shall be reviewed at least every 

24 4 years. 


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

2 under subparagraph (A), the Secretary may re3 quire the State to submit a report dem4 onstrating the conformance of the State with 

5 the requirements of this section, including— 

6 ‘‘(i) reports submitted by retail elec7 tricity suppliers and retail natural gas sup8 pliers to the State demonstrating compli9 ance with applicable performance stand10 ards; 

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

12 projected electricity and natural gas de13 mand within the State; 

14 ‘‘(iii) an accounting of the use of al15 ternative compliance payments by the 

16 State and the resulting electricity savings 

17 and natural gas savings achieved; and 

18 ‘‘(iv) any other information that the 

19 Secretary determines appropriate. 

20 ‘‘(C) REVIEW UPON PETITION.—Notwith21 standing subparagraph (A), upon receipt of a 

22 public petition containing credible allegation of 

23 substantial deficiencies, the Secretary shall 

24 promptly review the State implementation of 

25 delegated authority under this section. 


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1 ‘‘(D) DEFICIENCIES.— 

2 ‘‘(i) IN GENERAL.—In completing a 

3 review under this paragraph, if the Sec4 retary finds deficiencies, the Secretary 

5 shall— 

6 ‘‘(I) notify the State of the defi7 ciencies; 

8 ‘‘(II) direct the State to correct 

9 the deficiencies; and 

10 ‘‘(III) require the State to report 

11 to the Secretary on progress made by 

12 not later than 180 days after the date 

13 on which the State receives notice 

14 under subclause (I). 

15 ‘‘(ii) SUBSTANTIAL DEFICIENCIES.—If 

16 the deficiencies are substantial, the Sec17 retary shall— 

18 ‘‘(I) disallow the reported elec19 tricity savings or natural gas savings 

20 that the Secretary determines are not 

21 credible due to deficiencies; 

22 ‘‘(II) re-review the State not 

23 later than 2 years after the date on 

24 which the original review was com25 pleted; and 


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1 ‘‘(III) if substantial deficiencies 

2 remain uncorrected after the review 

3 provided for under subclause (II), re4 voke the authority of the State to ad5 minister the program established 

6 under this section. 

7 ‘‘(6) CALLS FOR REVISION OF STATE APPLICA8 TIONS.—As a condition of maintaining the delegated 

9 authority of a State to administer this section, the 

10 Secretary may require a State to submit a revised 

11 application under paragraph (1) if the Secretary 

12 has— 

13 ‘‘(A) promulgated new or revised perform14 ance standards under subsection (d); 

15 ‘‘(B) promulgated new or substantially re16 vised measurement and verification procedures 

17 and standards under subsection (f); or 

18 ‘‘(C) otherwise substantially revised the 

19 program established under this section. 

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

21 AND SHAREHOLDER INCENTIVES.—State utility reg22 ulatory commissions are encouraged to review the 

23 rules and regulations of the commission to ensure 

24 that utilities under the jurisdiction of the commis25 sion can— 


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1 ‘‘(A) recover the direct costs of energy effi2 ciency programs; 

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

4 including lost margins from lower annual sales 

5 due to energy efficiency programs; and 

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

7 the energy efficiency standards are achieved. 

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

9 with section 13 of the Federal Energy Administration Act 

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

11 retail electricity supplier, retail natural gas supplier, third12 party efficiency provider, or any other entity that the Sec13 retary determines appropriate, to provide any information 

14 the Secretary determines appropriate to carry out this sec15 tion. 

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

17 or qualifies any authority of a State or political subdivision 

18 of a State to adopt or enforce any law or regulation re19 specting electricity savings or natural gas savings, includ20 ing any law or regulation establishing energy efficiency re21 quirements that are more stringent than those under this 

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

23 any person of any requirement otherwise applicable under 

24 this section.’’. 


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1 SEC. 6. PROGRAM REVIEW. 

2 (a) NATIONAL ACADEMY OF SCIENCES REVIEW.— 

3 The Secretary of Energy shall enter into a contract with 

4 the National Academy of Sciences under which the Acad5 emy shall, not later than July 1, 2019, and every 10 years 

6 thereafter, submit to Congress, the Federal Energy Regu7 latory Commission, and the Secretary of Energy a com8 prehensive evaluation of all aspects of the programs estab9 lished under this Act and under sections 610 and 611 of 

10 the Public Utility Regulatory Policies Act of 1978 (as 

11 added by this Act), including— 

12 (1) an evaluation of the effectiveness of the pro13 grams, including the specific design elements of the 

14 programs, in increasing the efficiency of retail nat15 ural gas and electricity distribution and consumption 

16 and increasing the deployment of renewable elec17 tricity capacity; 

18 (2) the opportunities for additional technologies 

19 and sources of efficiency and renewable electricity 

20 that have emerged since the date of enactment of 

21 this Act; 

22 (3) the impact of the programs on the reli23 ability of electricity and natural gas supply; 

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

25 the United States and the States, including— 


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1 (A) the effects on electricity and natural 

2 gas demand and prices; 

3 (B) the economic development benefits of 

4 investment; 

5 (C) environmental costs and benefits; 

6 (D) the impacts on public health and 

7 health care costs; and 

8 (E) avoided costs related to environmental 

9 and congestion mitigation investments that oth10 erwise would have been required; 

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

12 increasing the performance standards established 

13 under section 611(d) of the Public Utility Regu14 latory Policies Act of 1978 (as added by this Act); 

15 (6) the feasibility, advantages, and disadvan16 tages of alternative models for demonstrating com17 pliance with a Federal energy efficiency resource 

18 standard, including— 

19 (A) establishing a national trading system 

20 for energy efficiency credits; or 

21 (B) demonstrating compliance through ac22 tual reductions in delivery or sales of electricity 

23 and natural gas, rather than on program sav24 ings; and 


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1 (7) recommendations regarding potential 

2 changes to this section, to regulations and proce3 dures for implementing this section, or to related 

4 public policies. 

5 (b) RECOMMENDATIONS TO CONGRESS.—Not later 

6 than January 1, 2020, and every 10 years thereafter, the 

7 Secretary of Energy shall submit to the Committee on En8 ergy and Commerce of the House of Representatives and 

9 the Committee on Energy and Natural Resources of the 

10 Senate a report making recommendations for modifica11 tions and improvements to the programs established under 

12 this Act and under sections 610 and 611 of the Public 

13 Utility Regulatory Policies Act of 1978 (as added by this 

14 Act), including an explanation of the inconsistencies, if 

15 any, between the recommendations of the Secretary of En16 ergy and the recommendations included in the evaluation 

17 of the National Academy of Sciences under paragraph (1). 

18 SEC. 7. CONFORMING AMENDMENT. 

19 The table of contents of the Public Utility Regulatory 

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

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

22 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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