system (as compared to the efficiency of separate 
production of the electric and thermal outputs). 
‘‘(3) 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 char-
acteristics as the Commission may promulgate 
by regulation; and 
‘‘(B) the net sales of electricity by the fa-
cility to customers not consuming the thermal 
output from that facility will not exceed 50 per-
cent of total annual electric generation by the 
facility. 
‘‘(4) CUSTOMER FACILITY SAVINGS.—The term 
‘customer facility savings’ means a reduction in end- 
use electricity consumption (including recycled en-
ergy savings) at a facility of an end-use consumer of 
electricity served by a retail electric supplier, as 
compared to— 
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‘‘(A) in the case of a new facility, con-
sumption at a reference facility of average effi-
ciency; 
‘‘(B) in the case of an existing facility, 
consumption at such facility during a base pe-
riod, except as provided in subparagraphs (C) 
and (D); 
‘‘(C) in the case of new equipment that re-
places existing equipment with remaining useful 
life, the projected consumption of the existing 
equipment for the remaining useful life of such 
equipment, and thereafter, consumption of new 
equipment of average efficiency of the same 
equipment type; and 
‘‘(D) in the case of new equipment that re-
places existing equipment at the end of the use-
ful life of the existing equipment, consumption 
by new equipment of average efficiency of the 
same equipment type. 
‘‘(5) DISTRIBUTED
RENEWABLE
GENERATION 
FACILITY.—The term ‘distributed renewable genera-
tion facility’ means a facility that— 
‘‘(A) generates renewable electricity; 
‘‘(B) primarily serves 1 or more electricity 
consumers at or near the facility site; and 
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‘‘(C) is no greater than 2 megawatts in ca-
pacity. 
‘‘(6) ELECTRICITY SAVINGS.—The term ‘elec-
tricity savings’ means reductions in electricity con-
sumption, relative to business-as-usual projections, 
achieved through measures implemented after the 
date of enactment of this section, limited to— 
‘‘(A) customer facility savings of elec-
tricity, adjusted to reflect any associated in-
crease in fuel consumption at the facility; 
‘‘(B) reductions in distribution system 
losses of electricity achieved by a retail elec-
tricity distributor, as compared to losses attrib-
utable to new or replacement distribution sys-
tem equipment of average efficiency; 
‘‘(C) CHP savings; and 
‘‘(D) fuel cell savings. 
‘‘(7) 
FEDERAL
RENEWABLE
ELECTRICITY 
CREDIT.—The term ‘Federal renewable electricity 
credit’ means a credit, representing one megawatt 
hour of renewable electricity, issued pursuant to sub-
section (e). 
‘‘(8) FUEL CELL.—The term ‘fuel cell’ means a 
device that directly converts the chemical energy of 
a fuel and an oxidant into electricity by electro-
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chemical processes occurring at separate electrodes 
in the device. 
‘‘(9) FUEL CELL SAVINGS.—The term ‘fuel cell 
savings’ means the electricity saved by a fuel cell 
that is installed after the date of enactment of this 
section, or by upgrading a fuel cell that commenced 
operation on or before the date of enactment of this 
section, as a result of the greater efficiency with 
which the fuel cell transforms fuel into electricity as 
compared with sources of electricity delivered 
through the grid, provided that— 
‘‘(A) the fuel cell meets such requirements 
relating to efficiency and other operating char-
acteristics as the Commission may promulgate 
by regulation; and 
‘‘(B) the net sales of electricity from the 
fuel cell to customers not consuming the ther-
mal output from the fuel cell, if any, do not ex-
ceed 50 percent of the total annual electricity 
generation by the fuel cell. 
‘‘(10) QUALIFIED
HYDROPOWER.—The term 
‘qualified hydropower’ means— 
‘‘(A) energy produced from increased effi-
ciency achieved, or additions of capacity made, 
on or after January 1, 2001, at a hydroelectric 
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facility that was placed in service before that 
date and does not include additional energy 
generated as a result of operational changes not 
directly associated with efficiency improvements 
or capacity additions; or 
‘‘(B) energy produced from generating ca-
pacity added to a dam on or after January 1, 
2001, provided that the Commission certifies 
that— 
‘‘(i) the dam was placed in service be-
fore the date of the enactment of this sec-
tion and was operated for flood control, 
navigation, or water supply purposes and 
was not producing hydroelectric power 
prior to the addition of such capacity; 
‘‘(ii) the hydroelectric project installed 
on the dam is licensed (or is exempt from 
licensing) by the Commission and is in 
compliance with the terms and conditions 
of the license or exemption, and with other 
applicable legal requirements for the pro-
tection of environmental quality, including 
applicable fish passage requirements; and 
‘‘(iii) the hydroelectric project in-
stalled on the dam is operated so that the 
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water surface elevation at any given loca-
tion and time that would have occurred in 
the absence of the hydroelectric project is 
maintained, subject to any license or ex-
emption requirements that require changes 
in water surface elevation for the purpose 
of improving the environmental quality of 
the affected waterway. 
‘‘(11) RECYCLED ENERGY SAVINGS.—The term 
‘recycled energy savings’ means a reduction in elec-
tricity consumption that results from a modification 
of an industrial or commercial system that com-
menced operation before the date of enactment of 
this section, in order to recapture electrical, mechan-
ical, or thermal energy that would otherwise be 
wasted. 
‘‘(12) RENEWABLE
BIOMASS.—The term ‘re-
newable biomass’ means any of the following: 
‘‘(A) Crops, crop byproducts, or crop resi-
dues harvested from actively managed or fallow 
agricultural land that was cleared prior to the 
date of enactment of this section and is nonfor-
ested. 
‘‘(B) Planted trees, brush, slash, and all 
residues from an actively managed tree planta-
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tion located on land that was cleared prior to 
the date of enactment of this section and is not 
Federal land. 
‘‘(C) Precommercial-sized thinnings, slash, 
brush, and residue from milled trees, from for-
ested land that is not— 
‘‘(i) old-growth or mature forest; 
‘‘(ii) identified under a State Natural 
Heritage Program as rare, imperiled, or 
critically imperiled; or 
‘‘(iii) Federal land. 
‘‘(D) Algae. 
‘‘(E) Nonhazardous plant matter derived 
from waste such as separated yard waste, land-
scape right-of-way trimmings, or food waste 
(but not municipal solid waste, recyclable waste 
paper, painted, treated or pressurized wood, or 
wood contaminated with plastic or metals). 
‘‘(F) Animal waste or animal byproducts, 
including products of animal waste digesters. 
‘‘(G) Vegetative matter removed from 
within 200 yards of any manmade structure or 
campground. 
‘‘(H) 
Slash 
and 
precommercial-sized 
thinnings harvested— 
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‘‘(i) in environmentally sustainable 
quantities, as determined by the appro-
priate Federal land manager; and 
‘‘(ii) from National Forest System 
land or public lands (as defined in section 
103 of the Federal Land Policy and Man-
agement Act of 1976 (43 U.S.C. 1702)), 
other than— 
‘‘(I) components of the National 
Wilderness Preservation System es-
tablished under the Wilderness Act 
(16 U.S.C. 1131 et seq.); 
‘‘(II) Wilderness Study Areas, as 
identified by the Bureau of Land 
Management; 
‘‘(III) inventoried roadless areas 
and all unroaded areas of at least 
5,000 acres; 
‘‘(IV) old growth and late seral 
stands; 
‘‘(V) components of the National 
Landscape Conservation System ad-
ministered by the Bureau of Land 
Management; and 
‘‘(VI) national monuments. 
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‘‘(13) RENEWABLE
ELECTRICITY.—The term 
‘renewable electricity’ means electricity generated 
(including by means of a fuel cell) from a renewable 
energy resource. 
‘‘(14) RENEWABLE
ENERGY
RESOURCE.—The 
term ‘renewable energy resource’ means each of the 
following: 
‘‘(A) Wind energy. 
‘‘(B) Solar energy. 
‘‘(C) Geothermal energy. 
‘‘(D) Renewable biomass. 
‘‘(E) Biogas derived exclusively from re-
newable biomass. 
‘‘(F) Biofuels derived exclusively from re-
newable biomass. 
‘‘(G) Qualified hydropower. 
‘‘(H) Marine and hydrokinetic renewable 
energy, as that term is defined in section 632 
of the Energy Independence and Security Act 
of 2007 (42 U.S.C. 17211). 
‘‘(I) Landfill gas. 
‘‘(15) RETAIL ELECTRIC SUPPLIER.— 
‘‘(A) IN GENERAL.—The term ‘retail elec-
tric supplier’ means, for any given year, an 
electric utility that sold not less than 1,000,000 
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megawatt hours of electric energy to electric 
consumers for purposes other than resale dur-
ing the preceding calendar year. 
‘‘(B) INCLUSIONS AND LIMITATIONS.—For 
purposes of determining whether an electric 
utility qualifies as a retail electric supplier 
under subparagraph (A)— 
‘‘(i) the sales of any affiliate of an 
electric utility to electric consumers, other 
than sales to the affiliate’s lessees or ten-
ants, for purposes other than resale shall 
be considered to be sales of such electric 
utility; and 
‘‘(ii) sales by any electric utility to an 
affiliate, lessee, or tenant of such electric 
utility shall not be treated as sales to elec-
tric consumers. 
‘‘(C) AFFILIATE.—For purposes of this 
paragraph, the term ‘affiliate’ when used in re-
lation to a person, means another person that 
directly or indirectly owns or controls, is owned 
or controlled by, or is under common ownership 
or control with, such person, as determined 
under regulations promulgated by the Commis-
sion. 
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‘‘(16) RETAIL
ELECTRIC
SUPPLIER’S
BASE 
AMOUNT.—The term ‘retail electric supplier’s base 
amount’ means the total amount of electric energy 
sold by the retail electric supplier, expressed in 
megawatt hours, to electric customers for purposes 
other than resale during the relevant calendar year, 
excluding— 
‘‘(A) electricity generated by a hydro-
electric facility, other than qualified hydro-
power; 
‘‘(B) electricity generated by the combus-
tion of municipal solid waste; 
‘‘(C) electricity generated by a nuclear gen-
erating unit placed in service after the date of 
enactment of this section; and 
‘‘(D) the proportion of electricity generated 
by a fossil-fueled generating unit that is equal 
to the proportion of greenhouse gases produced 
by such unit that are captured and geologically 
sequestered. 
‘‘(17) RETIRE AND RETIREMENT.—The terms 
‘retire’ and ‘retirement’ with respect to a Federal re-
newable electricity credit, means to disqualify such 
credit for any subsequent use under this section, re-
gardless of whether the use is a sale, transfer, ex-
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change, or submission in satisfaction of a compliance 
obligation. 
‘‘(18) THIRD-PARTY EFFICIENCY PROVIDER.— 
The term ‘third-party efficiency provider’ means any 
retailer, building owner, energy service company, fi-
nancial institution or other commercial, industrial, 
or nonprofit entity that is capable of providing elec-
tricity savings in accordance with the requirements 
of this section. 
‘‘(19) TOTAL ANNUAL ELECTRICITY SAVINGS.— 
The term ‘total annual electricity savings’ means 
electricity savings during a specified calendar year 
from measures implemented since the date of the en-
actment of this section, taking into account verified 
measure lifetimes or verified annual savings attrition 
rates, as determined in accordance with such regula-
tions as the Commission may promulgate and meas-
ured in megawatt hours. 
‘‘(b) ANNUAL COMPLIANCE OBLIGATION.— 
‘‘(1) IN GENERAL.—For each of calendar years 
2014 through 2040, not later than March 31 of the 
following calendar year, each retail electric supplier 
shall submit to the Commission an amount of Fed-
eral renewable electricity credits and demonstrated 
total annual electricity savings that, in the aggre-
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gate, is equal to such retail electric supplier’s annual 
combined target as set forth in subsection (d), ex-
cept as otherwise provided in subsection (g). 
‘‘(2) DEMONSTRATION OF SAVINGS.—For pur-
poses of this subsection, submission of demonstrated 
total annual electricity savings means submission of 
a report that demonstrates, in accordance with the 
requirements of subsection (f), the total annual elec-
tricity savings achieved by the retail electric supplier 
within the relevant compliance year. 
‘‘(3) RENEWABLE ELECTRICITY CREDITS POR-
TION.—Except as provided in paragraph (4), each 
retail electric supplier must submit Federal renew-
able electricity credits equal to at least three quar-
ters of the retail electric supplier’s annual combined 
target. 
‘‘(4) STATE PETITION.— 
‘‘(A) IN GENERAL.—Upon written request 
from the Governor of any State (including, for 
purposes of this paragraph, the Mayor of the 
District of Columbia), the Commission shall in-
crease, to not more than half, the proportion of 
the annual combined targets of retail electric 
suppliers located within such State that may be 
met through submission of demonstrated total 
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annual electricity savings, provided that such 
increase shall be effective only with regard to 
the portion of a retail electric supplier’s annual 
combined target that is attributable to elec-
tricity sales within such State. 
‘‘(B) CONTENTS.—A Governor’s request 
under this paragraph shall include an expla-
nation of the Governor’s rationale for deter-
mining, after consultation with the relevant 
State regulatory authority and other retail elec-
tricity ratemaking authorities within the State, 
to make such request. The request shall specify 
the maximum proportion of annual combined 
targets (not more than half) that can be met 
through demonstrated total annual electricity 
savings, and the period for which such propor-
tion shall be effective. 
‘‘(C) REVISION.—The Governor of any 
State may, after consultation with the relevant 
State regulatory authority and other retail elec-
tricity ratemaking authorities within the State, 
submit a written request for revocation or revi-
sion of a previous request submitted under this 
paragraph. The Commission shall grant such 
request, provided that— 
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‘‘(i) any revocation or revision shall 
not apply to the combined annual target 
for any year that is any earlier than 2 cal-
endar years after the calendar year in 
which such request is submitted, so as to 
provide retail electric suppliers with ade-
quate notice of such change; and 
‘‘(ii) any revision shall meet the re-
quirements of subparagraph (A). 
‘‘(c) ESTABLISHMENT OF PROGRAM.—Not later than 
1 year after the date of enactment of this section, the 
Commission shall promulgate regulations to implement 
and enforce the requirements of this section. In promul-
gating such regulations, the Commission shall, to the ex-
tent practicable— 
‘‘(1) preserve the integrity, and incorporate best 
practices, of existing State and tribal renewable elec-
tricity and energy efficiency programs; 
‘‘(2) rely upon existing and emerging State, 
tribal, or regional tracking systems that issue and 
track non-Federal renewable electricity credits; and 
‘‘(3) cooperate with the States and Indian 
tribes to facilitate coordination between State, tribal, 
and Federal renewable electricity and energy effi-
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ciency programs and to minimize administrative bur-
dens and costs to retail electric suppliers. 
‘‘(d) ANNUAL COMPLIANCE REQUIREMENT.— 
‘‘(1) ANNUAL COMBINED TARGETS.—For each 
of calendar years 2014 through 2040, a retail elec-
tric supplier’s annual combined target shall be the 
product of— 
‘‘(A) the required annual percentage for 
such year, as set forth in paragraph (2); and 
‘‘(B) the retail electric supplier’s base 
amount for such year. 
‘‘(2) REQUIRED
ANNUAL
PERCENTAGE.—For 
each of calendar years 2014 through 2040, the re-
quired annual percentage shall be as follows: 
Required annual 
‘‘Year: 
percentage: 
2014 ...................................................................................................
2015 ...................................................................................................
2016 ...................................................................................................
2017 ...................................................................................................
2018 ...................................................................................................
2019 ...................................................................................................
2020 ...................................................................................................
2021 ...................................................................................................
2022 ...................................................................................................
2023 ...................................................................................................
2024 ...................................................................................................
2025 ...................................................................................................
2026 ...................................................................................................
2027 ...................................................................................................
2028 ...................................................................................................
2029 ...................................................................................................
2030 ...................................................................................................
2031 ...................................................................................................
2032 ...................................................................................................
2033 ...................................................................................................
2034 ...................................................................................................
2035 through 2040 ............................................................................
50. 
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‘‘(e) FEDERAL RENEWABLE ELECTRICITY CRED-
ITS.— 
‘‘(1) IN
GENERAL.—The regulations promul-
gated under this section shall include provisions gov-
erning the issuance, tracking, and verification of 
Federal renewable electricity credits. Except as pro-
vided in paragraphs (2), (3), and (4) of this sub-
section, the Commission shall issue to each gener-
ator of renewable electricity, 1 Federal renewable 
electricity credit for each megawatt hour of renew-
able electricity generated by such generator after 
December 31, 2013. The Commission shall assign a 
unique serial number to each Federal renewable 
electricity credit. 
‘‘(2) GENERATION FROM CERTAIN STATE RE-
NEWABLE ELECTRICITY PROGRAMS.—Where renew-
able electricity is generated with the support of pay-
ments from a retail electric supplier pursuant to a 
State 
renewable 
electricity 
program 
(whether 
through State alternative compliance payments or 
through payments to a State renewable electricity 
procurement fund or entity), the Commission shall 
issue Federal renewable electricity credits to such re-
tail electric supplier for the proportion of the rel-
evant renewable electricity generation that is attrib-
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utable to the retail electric supplier’s payments, as 
determined pursuant to regulations issued by the 
Commission. For any remaining portion of the rel-
evant renewable electricity generation, the Commis-
sion shall issue Federal renewable electricity credits 
to the generator, as provided in paragraph (1), ex-
cept that in no event shall more than 1 Federal re-
newable electricity credit be issued for the same 
megawatt hour of electricity. In determining how 
Federal renewable electricity credits will be appor-
tioned among retail electric suppliers and generators 
in such circumstances, the Commission shall con-
sider information and guidance furnished by the rel-
evant State or States. 
‘‘(3) CERTAIN POWER SALES CONTRACTS.—Ex-
cept as otherwise provided in paragraph (2), when a 
generator has sold renewable electricity to a retail 
electric supplier under a contract for power from a 
facility placed in service before the date of enact-
ment of this section, and the contract does not pro-
vide for the determination of ownership of the Fed-
eral renewable electricity credits associated with 
such generation, the Commission shall issue such 
Federal renewable electricity credits to the retail 
electric supplier for the duration of the contract. 
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‘‘(4) CREDIT
MULTIPLIER
FOR
DISTRIBUTED 
RENEWABLE GENERATION.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the Commission shall issue 3 
Federal renewable electricity credits for each 
megawatt hour of renewable electricity gen-
erated by a distributed renewable generation fa-
cility. 
‘‘(B) ADJUSTMENT.—Except as provided 
in subparagraph (C), not later than January 1, 
2016, and not less frequently than every 4 
years thereafter, the Commission shall review 
the effect of this paragraph and shall, as nec-
essary, reduce the number of Federal renewable 
electricity credits per megawatt hour issued 
under this paragraph for any given energy 
source or technology, but not below 1, to ensure 
that such number is no higher than the Com-
mission determines is necessary to make dis-
tributed renewable generation facilities using 
such source or technology cost competitive with 
other sources of renewable electricity genera-
tion. 
‘‘(C) FACILITIES
PLACED
IN
SERVICE 
AFTER ENACTMENT.—For any distributed re-
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newable generation facility placed in service 
after the date of enactment of this section, sub-
paragraph (B) shall not apply for the first 10 
years after the date on which the facility is 
placed in service. For each year during such 10- 
year period, the Commission shall issue to the 
facility the same number of Federal renewable 
electricity credits per megawatt hour as are 
issued to that facility in the year in which such 
facility is placed in service. After such 10-year 
period, the Commission shall issue Federal re-
newable electricity credits to the facility in ac-
cordance with the current multiplier as deter-
mined pursuant to subparagraph (B). 
‘‘(5) CREDITS BASED ON QUALIFIED HYDRO-
POWER.—For purposes of this subsection, the num-
ber of Federal renewable electricity credits issued for 
qualified hydropower shall be calculated— 
‘‘(A) based solely on the increase in aver-
age annual generation directly resulting from 
the efficiency improvements or capacity addi-
tions described in subsection (a)(10)(A); and 
‘‘(B) using the same water flow informa-
tion used to determine a historic average an-
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nual generation baseline for the hydroelectric 
facility, as certified by the Commission. 
‘‘(6) GENERATION
FROM
MIXED
RENEWABLE 
AND NONRENEWABLE RESOURCES.—If electricity is 
generated using both a renewable energy resource 
and an energy source that is not a renewable energy 
resource (as, for example, in the case of co-firing of 
renewable biomass and fossil fuel), the Commission 
shall issue Federal renewable electricity credits 
based on the proportion of the electricity that is at-
tributable to the renewable energy resource. 
‘‘(7) PROHIBITION
AGAINST
DOUBLE-COUNT-
ING.—The Commission shall ensure that— 
‘‘(A) no Federal renewable electricity cred-
it is used more than once for compliance with 
this section; and 
‘‘(B) except as provided in paragraph (4), 
no more than 1 Federal renewable electricity 
credit is issued for any megawatt hour of re-
newable electricity. 
‘‘(8) TRADING.—The lawful holder of a Federal 
renewable electricity credit may sell, exchange, 
transfer, submit for compliance in accordance with 
subsection (b), or submit such credit for retirement 
by the Commission. 
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‘‘(9) BANKING.—A Federal renewable elec-
tricity credit may be submitted in satisfaction of the 
compliance obligation set forth in subsection (b) for 
the compliance year in which the credit was issued 
or for any of the 3 immediately subsequent compli-
ance years. The Commission shall retire any Federal 
renewable electricity credit that has not been retired 
by April 2 of the calendar year that is 3 years after 
the calendar year in which the credit was issued. 
‘‘(10) RETIREMENT.—The Commission shall re-
tire a Federal renewable electricity credit imme-
diately upon submission by the lawful holder of such 
credit, whether in satisfaction of a compliance obli-
gation under subsection (b) or on some other basis. 
‘‘(f) ELECTRICITY SAVINGS.— 
‘‘(1) STANDARDS FOR MEASUREMENT OF SAV-
INGS.—As part of the regulations promulgated 
under this section, the Commission shall prescribe 
standards and protocols for defining and measuring 
electricity savings and total annual electricity sav-
ings that can be counted towards the compliance ob-
ligation set forth in subsection (b). Such protocols 
and standards shall, at minimum— 
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‘‘(A) specify the types of energy efficiency 
and energy conservation measures that can be 
counted; 
‘‘(B) require that energy consumption esti-
mates for customer facilities or portions of fa-
cilities 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 meas-
ures; 
‘‘(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 rep-
resentative sample of participating customers; 
‘‘(F) include procedures for counting CHP 
savings, recycled energy savings, and fuel cell 
savings; 
‘‘(G) count only measures and savings that 
are additional to business-as-usual practices; 
‘‘(H) include procedures for documenting 
measurable and verifiable electricity savings 
achieved as a result of programs that address 
market barriers to energy-saving goods and 
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services and result in long-term changes in the 
market for such goods and services; 
‘‘(I) include procedures for counting elec-
tricity savings achieved by solar water heating 
and solar light pipe technology that has the ca-
pability to provide measurable data on the 
amount of megawatt-hours displaced; 
‘‘(J) establish methods for calculating 
codes and standard savings, including the use 
of verified compliance rates; 
‘‘(K) avoid double-counting of savings used 
for compliance with this section, including sav-
ings that are transferred pursuant to paragraph 
(3); 
‘‘(L) ensure that, except as provided in 
subparagraph (N), the retail electric supplier 
claiming the savings played a significant role in 
achieving the savings (including through the ac-
tivities of a designated agent of the supplier or 
through the purchase of transferred savings); 
‘‘(M) include savings from programs ad-
ministered by a retail electric supplier (or a re-
tail electricity distributor that is not a retail 
electric supplier) that are funded by State, Fed-
eral, or other sources; and 
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‘‘(N) in any State in which the State regu-
latory authority has designated 1 or more enti-
ties to administer electric ratepayer-funded effi-
ciency programs approved by such State regu-
latory authority, provide that electricity savings 
achieved through such programs shall be dis-
tributed equitably among retail electric sup-
pliers in accordance with the direction of the 
relevant State regulatory authority. 
‘‘(2) 
STANDARDS
FOR
THIRD-PARTY 
VERIFICATION
OF
SAVINGS.—The regulations pro-
mulgated under this section shall establish proce-
dures 
and 
standards 
requiring 
third-party 
verification of all reported electricity savings, includ-
ing requirements for accreditation of third-party 
verifiers to ensure that such verifiers are profes-
sionally qualified and have no conflicts of interest. 
‘‘(3) TRANSFERS OF SAVINGS.— 
‘‘(A) BILATERAL CONTRACTS FOR SAVINGS 
TRANSFERS.—Subject to the limitations of this 
paragraph, a retail electric supplier may use 
electricity savings transferred, pursuant to a bi-
lateral contract, from another retail electric 
supplier, an owner of an electric distribution fa-
cility that is not a retail electric supplier, a 
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State, or a third-party efficiency provider to 
meet the applicable compliance obligation under 
subsection (b). 
‘‘(B) REQUIREMENTS.—Electricity savings 
transferred and used for compliance pursuant 
to this paragraph shall be— 
‘‘(i) measured and verified in accord-
ance with the procedures specified under 
this subsection; 
‘‘(ii) reported in accordance with 
paragraph (4) of this subsection; and 
‘‘(iii) achieved within the same State 
as is served by the retail electric supplier. 
‘‘(C) REGULATORY
APPROVAL.—Nothing 
in this paragraph shall limit or affect the au-
thority of a State regulatory authority to re-
quire a retail electric supplier that is regulated 
by such authority to obtain such authority’s au-
thorization or approval of a contract for trans-
fer of savings under this paragraph. 
‘‘(4) REPORTING SAVINGS.— 
‘‘(A) REQUIREMENTS.—The regulations 
promulgated under this section shall establish 
requirements governing the submission of re-
ports to demonstrate, in accordance with the 
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protocols and standards for measurement and 
third-party verification established under this 
subsection, the total annual electricity savings 
achieved by a retail electric supplier within the 
relevant year. 
‘‘(B) REVIEW AND APPROVAL.—The Com-
mission shall review each report submitted to 
the Commission by a retail electric supplier and 
shall exclude any electricity savings that have 
not been adequately demonstrated in accord-
ance with the requirements of this subsection. 
‘‘(5) STATE ADMINISTRATION.— 
‘‘(A) DELEGATION OF AUTHORITY.—Upon 
receipt of an application from the Governor of 
a State (including, for purposes of this sub-
section, the Mayor of the District of Columbia), 
the Commission may delegate to the State the 
authority to review and verify reported elec-
tricity savings for purposes of determining dem-
onstrated total annual electricity savings that 
may be counted towards a retail electric sup-
plier’s compliance obligation under subsection 
(b). The Commission shall make a substantive 
determination approving or disapproving a 
State application under this subparagraph, 
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after notice and comment, within 180 days of 
receipt of a complete application. 
‘‘(B) ALTERNATIVE
MEASUREMENT
AND 
VERIFICATION
PROCEDURES
AND
STAND-
ARDS.—As part of an application submitted 
under subparagraph (A), a State may request 
to use alternative measurement and verification 
procedures and standards to those specified in 
paragraphs (1) and (2), provided the State 
demonstrates that such alternative procedures 
and standards provide a level of accuracy of 
measurement and verification at least equiva-
lent to the Federal procedures and standards 
promulgated under paragraphs (1) and (2). 
‘‘(C) REVIEW
OF
STATE
IMPLEMENTA-
TION.—The Commission shall, not less fre-
quently than once every 4 years, review each 
State’s implementation of delegated authority 
under this paragraph to ensure conformance 
with the requirements of this section. The Com-
mission may, at any time, revoke the delegation 
of authority under this section upon a finding 
that the State is not implementing its delegated 
responsibilities in conformity with this para-
graph. As a condition of maintaining its dele-
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gated authority under this paragraph, the Com-
mission may require a State to submit a revised 
application under subparagraph (A) if the Com-
mission has— 
‘‘(i) promulgated new or substantially 
revised measurement and verification pro-
cedures and standards under this sub-
section; or 
‘‘(ii) otherwise substantially revised 
the program established under this section. 
‘‘(g) ALTERNATIVE COMPLIANCE PAYMENTS.— 
‘‘(1) IN
GENERAL.—A retail electric supplier 
may satisfy the requirements of subsection (b) in 
whole or in part by submitting in accordance with 
this subsection, in lieu of each Federal renewable 
electricity credit or megawatt hour of demonstrated 
total annual electricity savings that would otherwise 
be due, a payment equal to $50, adjusted for infla-
tion on January 1 of each year following calendar 
year 2014, in accordance with such regulations as 
the Commission may promulgate. 
‘‘(2) PAYMENT TO STATE FUNDS.—Except as 
otherwise provided in this paragraph, payments 
made under this subsection shall be made directly to 
the State or States in which the retail electric sup-
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SEC. 3. CLARIFYING STATE AUTHORITY TO ADOPT RENEW-
ABLE ENERGY INCENTIVES. 
Section 210 of the Public Utility Regulatory Policies 
Act of 1978 (16 U.S.C. 824a–3) is amended by adding 
at the end thereof: 
‘‘(o) CLARIFICATION
OF STATE AUTHORITY TO 
ADOPT
RENEWABLE
ENERGY
INCENTIVES.—Notwith-
standing any other provision of this Act or the Federal 
Power Act, a State legislature or regulatory authority may 
set the rates for a sale of electric energy by a facility gen-
erating electric energy from renewable energy sources pur-
suant to a State-approved production incentive program 
under which the facility voluntarily sells electric energy. 
For purposes of this subsection, ‘State-approved produc-
tion incentive program’ means a requirement imposed pur-
suant to State law, or by a State regulatory authority act-
ing within its authority under State law, that an electric 
utility purchase renewable energy (as defined in section 
609 of this Act) at a specified rate.’’. 
Æ 
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