478 
shall be deposited into the renewable energy account 
established pursuant to this subsection. 
‘‘(3) USE.—Proceeds deposited in the State re-
newable energy account shall be used by the Sec-
retary, subject to appropriations, for a program to 
provide grants to the State agency responsible for 
developing State energy conservation plans under 
section 362 of the Energy Policy and Conservation 
Act (42 U.S.C. 6322) for the purposes of promoting 
renewable energy production, including programs 
that promote technologies that reduce the use of 
electricity at customer sites such as solar water 
heating. 
‘‘(4) ADMINISTRATION.—The Secretary may 
issue guidelines and criteria for grants awarded 
under this subsection. State energy offices receiving 
grants under this section shall maintain such 
records and evidence of compliance as the Secretary 
may require. 
‘‘(5) PREFERENCE.—In allocating funds under 
this program, the Secretary shall give preference— 
‘‘(A) to States in regions which have a dis-
proportionately small share of economically sus-
tainable renewable energy generation capacity; 
and 
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‘‘(B) to State programs to stimulate or en-
hance innovative renewable energy technologies. 
‘‘(e) RULES.—The Secretary shall issue rules imple-
menting this section not later than 1 year after the date 
of enactment of this section. 
‘‘(f) EXEMPTIONS.—This section shall not apply in 
any calendar year to an electric utility— 
‘‘(1) that sold less than 4,000,000 megawatt- 
hours of electric energy to electric consumers during 
the preceding calendar year; or 
‘‘(2) in Hawaii. 
‘‘(g) INFLATION ADJUSTMENT.—Not later than De-
cember 31 of each year beginning in 2008, the Secretary 
shall adjust for inflation the rate of the alternative compli-
ance payment under subsection (a)(2)(B) and the amount 
of the civil penalty per kilowatt-hour under subsection 
(c)(2). 
‘‘(h) STATE PROGRAMS.— 
‘‘(1) IN GENERAL.—Nothing in this section di-
minishes any authority of a State or political sub-
division of a State to adopt or enforce any law or 
regulation respecting renewable energy or the regu-
lation of electric utilities, but, except as provided in 
subsection (c)(3), no such law or regulation shall re-
lieve any person of any requirement otherwise appli-
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cable under this section. The Secretary, in consulta-
tion with States having such renewable energy pro-
grams, shall, to the maximum extent practicable, fa-
cilitate coordination between the Federal program 
and State programs. 
‘‘(2) REGULATIONS.— 
‘‘(A) IN GENERAL.—The Secretary, in con-
sultation with States, shall promulgate regula-
tions to ensure that an electric utility that is 
subject to the requirements of this section and 
is subject to a State renewable energy standard 
receives renewable energy credits if— 
‘‘(i) the electric utility complies with 
State standard by generating or pur-
chasing renewable electric energy or renew-
able energy certificates or credits; or 
‘‘(ii) the State imposes or allows other 
mechanisms for achieving the State stand-
ard, including the payment of taxes, fees, 
surcharges, or other financial obligations. 
‘‘(B) AMOUNT OF CREDITS.—The amount 
of credits received by an electric utility under 
this subsection shall equal— 
‘‘(i) in the case of subparagraph 
(A)(i), the renewable energy resulting from 
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the generation or purchase by the electric 
utility of existing renewable energy or new 
renewable energy; and 
‘‘(ii) in the case of subparagraph 
(A)(ii), the pro rata share of the electric 
utility, based on the contributions to the 
mechanism made by the electric utility or 
customers of the electric utility, in the 
State, of the renewable energy resulting 
from those mechanisms. 
‘‘(C) PROHIBITION
ON
DOUBLE
COUNT-
ING.—The regulations promulgated under this 
paragraph shall ensure that a kilowatt-hour as-
sociated with a renewable energy credit issued 
pursuant to this subsection shall not be used 
for compliance with this section more than 
once. 
‘‘(i) DEFINITIONS.—In this section: 
‘‘(1) BASE
AMOUNT
OF
ELECTRICITY.—The 
term ‘base amount of electricity’ means the total 
amount of electricity sold by an electric utility to 
electric consumers in a calendar year, excluding— 
‘‘(A) electricity generated by a hydro-
electric facility (including a pumped storage fa-
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