I 
117TH CONGRESS 
1ST SESSION H. R. 5889 
To amend title VI of the Public Utility Regulatory Policies Act of 1978 
to establish a Federal energy efficiency resource standard for retail 
electricity suppliers and retail natural gas suppliers, and for other pur-
poses. 
IN THE HOUSE OF REPRESENTATIVES 
NOVEMBER 4, 2021 
Mr. WELCH (for himself and Ms. CLARKE of New York) introduced the 
following bill; which was referred to the Committee on Energy and Commerce 
A BILL 
To amend title VI of the Public Utility Regulatory Policies 
Act of 1978 to establish a Federal energy efficiency 
resource standard for retail electricity suppliers and re-
tail natural gas suppliers, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; FINDINGS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘American Energy Efficiency Act’’. 
(b) FINDINGS.—Congress finds that— 
(1) the Federal energy efficiency resource 
standard established by section 610 of the Public 
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Utility Regulatory Policies Act of 1978 (as added by 
this Act)— 
(A) establishes nationwide minimum levels 
of electricity and natural gas savings to be 
achieved through utility efficiency programs, 
building energy codes, appliance standards, and 
related efficiency measures; and 
(B) rewards energy-saving improvements 
achieved through— 
(i) end-use energy efficiency upgrades; 
(ii) reduced losses in transmission and 
distribution of energy; and 
(iii) fuel switching, to the extent that 
the switching results in reduced primary 
energy use; and 
(2) in light of the cost-effective energy effi-
ciency opportunities that exist across the United 
States in every sector of the economy, retail elec-
tricity suppliers, retail natural gas suppliers, and 
States should— 
(A) include energy efficiency as a resource 
in utility planning and procurement activities; 
and 
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(B) seek to achieve all energy efficiency 
measures that are available at lower cost than 
other energy supply options. 
SEC. 2. ENERGY EFFICIENCY RESOURCE STANDARD FOR 
RETAIL ELECTRICITY AND NATURAL GAS 
SUPPLIERS. 
Title VI of the Public Utility Regulatory Policies Act 
of 1978 (16 U.S.C. 2601 et seq.) is amended by adding 
at the end the following: 
‘‘SEC. 610. FEDERAL ENERGY EFFICIENCY RESOURCE 
STANDARD FOR RETAIL ELECTRICITY AND 
NATURAL GAS SUPPLIERS. 
‘‘(a) DEFINITIONS.—In this section: 
‘‘(1) AFFILIATE.—The term ‘affiliate’ when 
used in relation to a person, means another person 
that owns or controls, is owned or controlled by, or 
is under common ownership control with, that per-
son, as determined under regulations promulgated 
by the Secretary. 
‘‘(2) ASHRAE, ANSI, AND IESNA.—The terms 
‘ASHRAE’, ‘ANSI’, and ‘IESNA’ mean the Amer-
ican Society of Heating, Refrigerating and Air Con-
ditioning Engineers, the American National Stand-
ards Institute, and the Illuminating Engineering So-
ciety of North America, respectively. 
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‘‘(B) the increase in CHP system savings 
from upgrading or replacing, after the date of 
enactment of this section, a combined heat and 
power system that commenced operation on or 
before the date of enactment of this section. 
‘‘(5) CHP SYSTEM SAVINGS.—The term ‘CHP 
system savings’ means the electric output, and the 
electricity saved due to the mechanical output, of a 
combined heat and power system, adjusted to reflect 
any increase in fuel consumption by that system as 
compared to the fuel that would have been required 
to produce an equivalent useful thermal energy out-
put in a separate thermal-only system, as deter-
mined in accordance with regulations promulgated 
by the Secretary. 
‘‘(6) CODES
AND
STANDARDS
SAVINGS.—The 
term ‘codes and standards savings’ means a reduc-
tion in electricity or natural gas consumption as a 
result of the adoption and implementation, after the 
date of enactment of this section, of new or revised 
appliance and equipment efficiency standards or 
building energy codes. 
‘‘(7) COMBINED HEAT AND POWER SYSTEM.— 
The term ‘combined heat and power system’ means 
a system that uses the same energy source both for 
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the generation of electrical or mechanical power and 
the production of steam or another form of useful 
thermal energy, if— 
‘‘(A) the system meets any requirements 
relating to efficiency and other operating char-
acteristics that the Secretary promulgates by 
regulation; and 
‘‘(B) the net wholesale sales of electricity 
by the applicable facility do not exceed 50 per-
cent of total annual electric generation by the 
facility. 
‘‘(8) COST-EFFECTIVE.—The term ‘cost-effec-
tive’ means, with respect to an energy efficiency pro-
gram, that the program achieves a net present value 
of economic benefits over the life of the implemented 
measures, both directly to the energy consumer and 
to the economy, that is greater than the net present 
value of the cost of the program over the life of the 
program, both directly to the energy consumer and 
to the economy. The cost-effectiveness of an energy 
efficiency program shall be calculated using a soci-
etal benefit-cost test that uses the lower of a utility 
weighted average cost of capital or a social discount 
rate of 3 percent. 
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‘‘(9) CUSTOMER FACILITY SAVINGS.—The term 
‘customer facility savings’ means a reduction in elec-
tricity or natural gas consumption, including waste 
heat energy savings, at a facility of an electricity 
consumer served by a retail electricity supplier or a 
gas consumer served by a natural gas supplier, as 
compared to— 
‘‘(A) in the case of new equipment that re-
places existing equipment with remaining useful 
life— 
‘‘(i) consumption of the existing 
equipment for the remaining useful life of 
the equipment; and 
‘‘(ii) thereafter, consumption by new 
equipment of average efficiency of the 
same equipment type; 
‘‘(B) in the case of new equipment other 
than new equipment described in subparagraph 
(A), consumption by new equipment of average 
efficiency of the same equipment type; 
‘‘(C) in the case of consumption, other 
than consumption described in subparagraphs 
(A) and (B), at an existing facility, consump-
tion at the facility during a base period of not 
less than 1 year; and 
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‘‘(D) in the case of consumption, other 
than consumption described in subparagraphs 
(A) and (B), at a new facility, consumption at 
a reference new facility of average efficiency for 
new facilities of the same type. 
‘‘(10) ELECTRICITY SAVINGS.—The term ‘elec-
tricity savings’ means reductions in electricity con-
sumption or losses, as determined in accordance 
with regulations promulgated by the Secretary, 
that— 
‘‘(A) are achieved through measures imple-
mented after the date of enactment of this sec-
tion; 
‘‘(B) are additional to business-as-usual— 
‘‘(i) customer purchase practices; and 
‘‘(ii) distribution system efficiency; 
‘‘(C) the retail electricity supplier claiming 
or transferring the electricity savings has 
played a significant role in achieving; 
‘‘(D) occur in the service territory of the 
retail electricity supplier claiming or transfer-
ring the electricity savings; and 
‘‘(E) are limited to— 
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‘‘(i) customer facility savings of elec-
tricity, adjusted to reflect any associated 
increase in fuel consumption at the facility; 
‘‘(ii) reductions in distribution system 
losses of electricity achieved by a retail 
electricity supplier, as compared to losses 
that would occur with new distribution sys-
tem equipment of average efficiency; 
‘‘(iii) CHP savings; 
‘‘(iv) codes and standards savings of 
electricity; and 
‘‘(v) fuel-switching energy savings 
that result in net savings of electricity. 
‘‘(11) FUEL-SWITCHING ENERGY SAVINGS.— 
‘‘(A) IN GENERAL.—The term ‘fuel-switch-
ing energy savings’ means net energy savings, 
calculated in accordance with subparagraph 
(B), from consumer switches from one energy 
source to another, as determined in accordance 
with regulations promulgated by the Secretary. 
‘‘(B) CALCULATION.—For purposes of cal-
culating net energy savings under subparagraph 
(A)— 
‘‘(i) electricity consumption shall be 
evaluated based on the average additional 
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quantity of fuel burned at power plants to 
supply each additional kilowatt-hour of 
electricity consumption in the region; 
‘‘(ii) electricity and natural gas con-
sumption shall include losses in the trans-
mission and distribution systems; and 
‘‘(iii) fuel-switching that does not re-
sult in net cost savings to the consumer 
shall not be counted. 
‘‘(12) GAS
CONSUMER.—The term ‘gas con-
sumer’ has the meaning given such term in section 
302. 
‘‘(13) NATURAL GAS SAVINGS.—The term ‘nat-
ural gas savings’ means reductions in natural gas 
consumption or losses, as determined in accordance 
with regulations promulgated by the Secretary, 
that— 
‘‘(A) are achieved through measures imple-
mented after the date of enactment of this sec-
tion; 
‘‘(B) are additional to business-as-usual— 
‘‘(i) customer purchase practices; and 
‘‘(ii) distribution system efficiency; 
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‘‘(C) the retail natural gas supplier claim-
ing or transferring the natural gas savings has 
played a significant role in achieving; 
‘‘(D) occur in the service territory of the 
retail natural gas supplier claiming or transfer-
ring the natural gas savings; and 
‘‘(E) are limited to— 
‘‘(i) customer facility savings of nat-
ural gas, adjusted to reflect any associated 
increase in electricity consumption or con-
sumption of other fuels at the facility; 
‘‘(ii) reductions in leakage, operational 
losses, and consumption of natural gas to 
operate a gas distribution system, achieved 
by a retail natural gas supplier, as com-
pared to similar leakage, losses, and con-
sumption during a base period of not less 
than 1 year; 
‘‘(iii) codes and standards savings of 
natural gas; and 
‘‘(iv) fuel-switching energy savings 
that results in net savings of natural gas. 
‘‘(14) PERFORMANCE
STANDARD.—The term 
‘performance standard’ means a standard— 
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‘‘(A) established for a calendar year for cu-
mulative electricity savings or cumulative nat-
ural gas savings that is expressed as a percent-
age of base quantity; and 
‘‘(B) for each of calendar years 2021 
through 2035, that is labeled as cumulative 
electricity savings percentage or cumulative nat-
ural gas savings percentage, as applicable, in 
the table under subsection (c)(2). 
‘‘(15) POWER
POOL.—The term ‘power pool’ 
means an association of two or more interconnected 
electric systems that have entered into an agreement 
to coordinate operations and planning for improved 
reliability and efficiencies, including a Regional 
Transmission Organization or an Independent Sys-
tem Operator, as determined by the Secretary. 
‘‘(16) REPORTING PERIOD.—The term ‘report-
ing period’ means— 
‘‘(A) calendar years 2021 through 2023; 
and 
‘‘(B) each successive 2-calendar-year pe-
riod thereafter. 
‘‘(17) RETAIL ELECTRICITY SUPPLIER.— 
‘‘(A) IN GENERAL.—The term ‘retail elec-
tricity supplier’ means, for any calendar year, 
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an electric utility that delivered not fewer than 
1,000,000 megawatt hours of electricity to elec-
tric consumers for purposes other than resale 
during the preceding calendar year. 
‘‘(B) INCLUSIONS AND LIMITATIONS.—For 
purposes of determining whether an electric 
utility qualifies as a retail electricity supplier 
under subparagraph (A)— 
‘‘(i) deliveries by any affiliate of the 
electric utility to electric consumers for 
purposes other than resale shall be consid-
ered to be deliveries by the electric utility; 
and 
‘‘(ii) deliveries by any electric utility 
to a lessee, tenant, or affiliate of the elec-
tric utility shall not be considered to be de-
liveries to electric consumers. 
‘‘(18) RETAIL NATURAL GAS SUPPLIER.— 
‘‘(A) IN GENERAL.—The term ‘retail nat-
ural gas supplier’ means, for any calendar year, 
a local distribution company (as defined in sec-
tion 2 of the Natural Gas Policy Act of 1978), 
that delivered to gas consumers more than 
5,000,000,000 cubic feet of natural gas for pur-
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poses other than resale during the preceding 
calendar year. 
‘‘(B) INCLUSIONS AND LIMITATIONS.—For 
purposes of determining whether a local dis-
tribution company qualifies as a retail natural 
gas supplier under subparagraph (A)— 
‘‘(i) deliveries of natural gas by any 
affiliate of a local distribution company to 
consumers for purposes other than resale 
shall be considered to be deliveries by the 
local distribution company; and 
‘‘(ii) deliveries of natural gas to a les-
see, tenant, or affiliate of a local distribu-
tion company shall not be considered to be 
deliveries to gas consumers. 
‘‘(19) STATE
REGULATORY
AUTHORITY.—The 
term ‘State regulatory authority’ means any State 
agency which has ratemaking authority with respect 
to— 
‘‘(A) the sale of natural gas by any gas 
utility (other than by such State agency); or 
‘‘(B) the sale of electric energy by any 
electric utility (other than such State agency), 
and in the case of an electric utility with re-
spect to which the Tennessee Valley Authority 
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has ratemaking authority, such term means the 
Tennessee Valley Authority. 
‘‘(20) 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 or natural gas savings in accordance 
with subsections (d) and (e). 
‘‘(21) WASTE HEAT ENERGY SAVINGS.— 
‘‘(A) IN GENERAL.—The term ‘waste heat 
energy savings’ means a reduction in electricity 
or natural gas consumption that results from a 
modification of an industrial or commercial sys-
tem that commenced operation before the date 
of enactment of this section, in order to recap-
ture electrical, mechanical, or thermal energy 
that would otherwise be wasted, as determined 
in accordance with regulations promulgated by 
the Secretary. 
‘‘(B) INCLUSION.—Waste heat energy sav-
ings shall be included as part of customer facil-
ity savings. 
‘‘(b) ESTABLISHMENT.— 
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‘‘(1) REGULATIONS.—Not later than 1 year 
after the date of enactment of this section, the Sec-
retary shall, by regulation, establish a program to 
implement and enforce the requirements of this sec-
tion, including by— 
‘‘(A) 
establishing 
measurement 
and 
verification procedures and standards under 
subsection (e); 
‘‘(B) 
establishing 
requirements 
under 
which retail electricity suppliers and retail nat-
ural gas suppliers shall— 
‘‘(i) demonstrate, document, and re-
port the compliance of the retail electricity 
suppliers and retail natural gas suppliers 
with the performance standards under sub-
section (c); and 
‘‘(ii) estimate the impact of the per-
formance standards on current and future 
electricity and natural gas consumption in 
the service territories of the suppliers; and 
‘‘(C) establishing requirements governing 
applications for, and implementation of, State 
programs under subsection (g). 
‘‘(2) COORDINATION WITH STATE PROGRAMS.— 
In establishing and implementing this section, the 
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Secretary shall, to the maximum extent practicable, 
preserve the integrity and incorporate best practices 
of existing State energy efficiency programs. 
‘‘(c) PERFORMANCE STANDARDS.— 
‘‘(1) COMPLIANCE
OBLIGATION.—Not later 
than May 1 of the calendar year immediately fol-
lowing each reporting period— 
‘‘(A) each retail electricity supplier shall 
submit to the Secretary a report, in accordance 
with regulations promulgated by the Secretary, 
demonstrating that such retail electricity sup-
plier has achieved cumulative electricity savings 
(adjusted to account for any attrition of savings 
from measures implemented in prior years) in 
each calendar year of such reporting period that 
are equal to or greater than the applicable per-
formance standard; and 
‘‘(B) each retail natural gas supplier shall 
submit to the Secretary a report, in accordance 
with regulations promulgated by the Secretary, 
demonstrating that such retail natural gas sup-
plier has achieved cumulative natural gas sav-
ings (adjusted to account for any attrition of 
savings from measures implemented in prior 
years) in each calendar year of such reporting 
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period that are equal to or greater than the ap-
plicable performance standard. 
‘‘(2) PERFORMANCE
STANDARDS
FOR
2021 
THROUGH 2035.—For each of calendar years 2021 
through 2035, the performance standards are as fol-
lows: 
‘‘Calendar Year 
Cumulative Electricity 
Savings Percentage 
Cumulative Natural Gas 
Savings Percentage 
2021 
1.00 
0.50 
2022 
2.25 
1.25 
2023 
3.75 
2.00 
2024 
5.25 
3.00 
2025 
7.00 
4.00 
2026 
9.00 
5.00 
2027 
11.00 
5.50 
2028 
13.00 
7.00 
2029 
15.00 
8.50 
2030 
17.00 
10.00 
2031 
19.00 
12.00 
2032 
21.00 
14.00 
2033 
23.00 
16.00 
2034 
25.00 
18.00 
2035 
27.00 
20.00 
‘‘(3) SUBSEQUENT YEARS.— 
‘‘(A) CALENDAR
YEARS
2036
THROUGH 
2045.—Not later than December 31, 2033, the 
Secretary shall promulgate regulations estab-
lishing performance standards for each of cal-
endar years 2036 through 2045. 
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‘‘(B) SUBSEQUENT EXTENSIONS.—Except 
as provided in subparagraph (A), not later than 
the last day of the penultimate reporting period 
for which performance standards have been es-
tablished under this paragraph, the Secretary 
shall promulgate regulations establishing per-
formance standards for the 10-calendar-year 
period following the last calendar year for which 
performance standards previously were estab-
lished. 
‘‘(C) 
REQUIREMENTS.—The 
Secretary 
shall establish performance standards under 
this paragraph at levels reflecting the maximum 
achievable level of cost-effective energy effi-
ciency potential, taking into account— 
‘‘(i) 
cost-effective 
energy 
savings 
achieved by leading retail electricity sup-
pliers and retail natural gas suppliers; 
‘‘(ii) opportunities for new codes and 
standards savings; 
‘‘(iii) technology improvements; and 
‘‘(iv) other indicators of cost-effective 
energy efficiency potential. 
‘‘(D) MINIMUM PERCENTAGE.—In no case 
shall a performance standard established under 
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this paragraph for any calendar year be less 
than the applicable performance standard for 
calendar year 2035 (including any increase in 
the standard for calendar year 2035 established 
pursuant to paragraph (4)). 
‘‘(4) MIDCOURSE REVIEW AND ADJUSTMENT OF 
PERFORMANCE STANDARDS.— 
‘‘(A) IN
GENERAL.—Not later than De-
cember 31, 2029, and at 10-year intervals 
thereafter, the Secretary shall— 
‘‘(i) review the most recent perform-
ance standards established under para-
graph (2) or (3); and 
‘‘(ii) increase the performance stand-
ards by regulation if the Secretary deter-
mines that additional cost-effective energy 
efficiency potential is achievable, taking 
into account the requirements described in 
paragraph (3)(C). 
‘‘(B) LEAD TIME.—If the Secretary revises 
performance standards under this paragraph, 
the regulations shall provide adequate lead time 
to ensure that compliance with the increased 
performance standards is feasible. 
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‘‘(5) DELAY
OF
SUBMISSION
FOR
FIRST
RE-
PORTING PERIOD.— 
‘‘(A) 
IN
GENERAL.—Notwithstanding 
paragraphs (1) and (2), for the first reporting 
period, the Secretary may accept a request from 
a retail electricity supplier or a retail natural 
gas supplier to delay the required submission of 
documentation of all or part of the required 
savings for up to 2 years. 
‘‘(B) PLAN
FOR
COMPLIANCE.—The re-
quest for delay under subparagraph (A) shall 
include a plan for coming into full compliance 
by the end of the second reporting period. 
‘‘(6) APPLYING UNUSED SAVINGS TO FUTURE 
YEARS.—If electricity savings or natural gas savings 
achieved by a retail electricity supplier or retail nat-
ural gas supplier in a year exceed the applicable per-
formance standard specified or established under 
this subsection, any savings in excess of the per-
formance standard may be applied toward perform-
ance standards specified or established for any of 
the 2 immediately subsequent compliance years. 
‘‘(d) TRANSFERS OF ELECTRICITY OR NATURAL GAS 
SAVINGS.— 
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‘‘(1) BILATERAL
CONTRACTS
FOR
SAVINGS 
TRANSFERS.—Subject to the limitations of this sub-
section, a retail electricity supplier or retail natural 
gas supplier may use electricity savings or natural 
gas savings purchased pursuant to a bilateral con-
tract from another retail electricity supplier or retail 
natural gas supplier, a State, or a third-party effi-
ciency provider to meet the applicable performance 
standard under subsection (c). 
‘‘(2) REQUIREMENTS.—Electricity savings or 
natural gas savings purchased and used for compli-
ance under this subsection shall be— 
‘‘(A) measured and verified in accordance 
with subsection (e); 
‘‘(B) reported in accordance with sub-
section (c); and 
‘‘(C) achieved within the same State as is 
served by the retail electricity supplier or retail 
natural gas supplier. 
‘‘(3) EXCEPTION.—Notwithstanding paragraph 
(2)(C), a State regulatory authority may authorize a 
retail electricity supplier or a retail natural gas sup-
plier regulated by the State regulatory authority to 
purchase savings achieved in a different State, if— 
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‘‘(A) the savings are achieved within the 
same power pool; and 
‘‘(B) the State regulatory authority that 
regulates the purchaser oversees the measure-
ment and verification of the savings pursuant to 
the procedures and standards applicable in the 
State in which the purchaser is located. 
‘‘(4) REGULATORY APPROVAL.—Nothing in this 
subsection limits or affects the authority of a State 
regulatory authority to require a retail electricity 
supplier or retail natural gas supplier that is regu-
lated by the State regulatory authority to obtain the 
authorization or approval of the State regulatory au-
thority of a contract for transfer of electricity sav-
ings or natural gas savings under this subsection. 
‘‘(5) LIMITATIONS.—To optimize the achieve-
ment of cost-effective energy efficiency potential, the 
Secretary may prescribe such limitations as the Sec-
retary determines appropriate with respect to the 
proportion of the compliance obligation of a retail 
electricity or natural gas supplier under the applica-
ble performance standards under subsection (c) that 
may be met using electricity savings or natural gas 
savings that are purchased under this subsection. 
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‘‘(e) 
EVALUATION, 
MEASUREMENT, 
AND 
VERIFICATION OF SAVINGS.— 
‘‘(1) REGULATIONS.—The regulations promul-
gated pursuant to subsection (b) shall— 
‘‘(A) be based on— 
‘‘(i) the Uniform Methods Project of 
the Department of Energy; 
‘‘(ii) the National Standard Practice 
Manual for Assessing the Cost-Effective-
ness of Energy Efficiency Resources, devel-
oped by the National Efficiency Screening 
Project; and 
‘‘(iii) other best practices recognized 
in the energy efficiency industry; and 
‘‘(B) include— 
‘‘(i) procedures and standards for 
evaluating, measuring, and verifying elec-
tricity savings and natural gas savings that 
count towards the performance standards 
under subsection (c) that— 
‘‘(I) specify the types of energy 
efficiency and energy conservation 
measures that may be counted; 
‘‘(II) require that energy con-
sumption estimates for customer fa-
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cilities or portions of facilities in the 
applicable base and current years be 
adjusted, as appropriate, to account 
for changes in weather, level of pro-
duction, and building area; 
‘‘(III) do not prevent overall load 
growth due to beneficial electrifica-
tion; 
‘‘(IV) account for the useful life 
of energy efficiency and energy con-
servation measures; 
‘‘(V) allow for savings from a 
program to be estimated based on ex-
trapolation from a representative sam-
ple of participating customers; 
‘‘(VI) include procedures for cal-
culating and documenting CHP sav-
ings, fuel-switching energy savings, 
and waste heat energy savings; 
‘‘(VII) establish methods for cal-
culating codes and standards savings, 
including— 
‘‘(aa) the use of verified 
compliance rates; 
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‘‘(bb) requiring that the 
baseline for calculating savings 
from building energy codes shall 
be the more stringent of— 
‘‘(AA) the 2021 Inter-
national Energy Conserva-
tion Code for residential 
buildings, or the ASHRAE/ 
ANSI/IESNA 
Standard 
90.1–2019 for commercial 
buildings; or 
‘‘(BB) the applicable 
State building code in effect 
on the date of enactment of 
this section; and 
‘‘(cc) 
requiring 
that 
the 
baseline for calculating savings 
from appliance and equipment 
standards shall be the average ef-
ficiency of new appliances and 
equipment in the applicable one 
or more categories prior to the 
adoption and implementation of 
the new standard; 
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‘‘(VIII) include procedures for 
calculating and documenting— 
‘‘(aa) customer facility sav-
ings and reductions in distribu-
tion system losses of electricity 
and natural gas that are achieved 
as a result of smart grid deploy-
ment, as described in section 
1301 of the Energy Independ-
ence and Security Act of 2007; 
and 
‘‘(bb) reductions in natural 
gas distribution system losses at-
tributable to pipeline repair and 
replacement programs; 
‘‘(IX) count only measures and 
savings that are additional to busi-
ness-as-usual customer purchase prac-
tices; 
‘‘(X) ensure that the retail elec-
tricity supplier or retail natural gas 
supplier claiming the electricity sav-
ings or natural gas savings, including 
State and local codes and standards 
savings, has played a significant role 
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in achieving the savings (including 
through the activities of a designated 
agent of the supplier); 
‘‘(XI) avoid double-counting of 
savings used for compliance with this 
section, including transferred savings; 
‘‘(XII) include electricity savings 
or natural gas savings from programs 
administered by retail electricity sup-
pliers or natural gas suppliers that 
are funded by Federal, State, or other 
sources, unless the funding source 
specifies otherwise; 
‘‘(XIII) credit large customer 
self-directed electricity savings or nat-
ural gas savings to the retail elec-
tricity supplier or retail natural gas 
supplier if the large customer receives 
incentives or rate reductions from the 
retail electricity supplier or retail nat-
ural gas supplier for self-directed en-
ergy efficiency improvements; 
‘‘(XIV) include guidance, as ap-
propriate, for additional alternative 
approaches to evaluate electricity sav-
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ings and natural gas savings for large 
commercial and industrial customers 
in energy-intensive industries that are 
subject to international competition; 
‘‘(XV) include procedures for 
counting electricity savings and nat-
ural gas savings achieved by solar 
heating and cooling technologies, solar 
light pipe technology, geothermal heat 
pumps, and other technologies uti-
lizing renewable resources that do not 
produce electricity or gaseous fuel and 
reduce on-site energy consumption; 
‘‘(XVI) include procedures for 
counting electricity savings and nat-
ural gas savings achieved by weather-
ization measures, such as installing 
mechanical insulation, repairing or re-
placing heating and cooling systems, 
repairing or replacing windows and 
doors, performing air sealing, and re-
placing lights and appliances with 
more energy efficient models; 
‘‘(XVII) include procedures for 
counting electricity savings and nat-
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ural gas savings achieved from in-
creased utilization of mechanical insu-
lation for new, retrofit, and mainte-
nance construction for commercial, in-
dustrial, public, and nonprofit build-
ings and facilities; 
‘‘(XVIII) in any State in which 
the State regulatory authority has 
designated one or more entities to ad-
minister electric ratepayer-funded effi-
ciency programs approved by the 
State regulatory authority, provide 
that electricity savings and natural 
gas savings achieved through those 
programs shall be distributed propor-
tionally among retail electricity sup-
pliers and retail natural gas suppliers; 
‘‘(XIX) include guidance for re-
tail electricity suppliers and retail nat-
ural gas suppliers to calculate and 
document business-as-usual consump-
tion projections; 
‘‘(XX) include guidance for esti-
mating savings using information 
from the database established under 
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paragraph (3) based on similar meas-
ures and programs in other settings 
with appropriate adjustments, as nec-
essary; and 
‘‘(XXI) incorporate advances in 
methods of policy evaluation, such as 
the use of— 
‘‘(aa) 
randomized 
control 
trials; 
‘‘(bb) 
other 
experimental 
and 
quasi-experimental 
ap-
proaches; and 
‘‘(cc) large data sets and 
machine learning techniques; and 
‘‘(ii) procedures and standards for 
third-party verification of reported elec-
tricity savings or natural gas savings. 
‘‘(2) 
NATIONAL
ACADEMY
OF
SCIENCES 
STUDY.—Not later than 180 days after the date of 
enactment of this section, the Secretary shall seek to 
enter into an agreement with the National Academy 
of Sciences, under which the Academy shall— 
‘‘(A) 
evaluate 
existing 
state-of-the-art 
methods for evaluating energy efficiency policies 
and measures; 
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‘‘(B) identify approaches in program eval-
uation literature that may be brought into the 
energy efficiency domain, including— 
‘‘(i) randomized control trials and 
other experimental or quasi-experimental 
approaches; 
‘‘(ii) control of confounding factors; 
‘‘(iii) longitudinal studies; 
‘‘(iv) assessments by neutral arbiters; 
and 
‘‘(v) disclosure of data for replication; 
and 
‘‘(C) not later than 18 months after the 
date of enactment of this section, publish a re-
port that includes— 
‘‘(i) a description of the evaluation 
under subparagraph (A); 
‘‘(ii) a description of the approaches 
identified under subparagraph (B); and 
‘‘(iii) recommendations for advancing 
and 
adopting 
rigorous 
state-of-the-art 
methods for evaluating energy efficiency 
policies and measures. 
‘‘(3) ENERGY EFFICIENCY PROGRAM EVALUA-
TION DATABASE.— 
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‘‘(A) IN
GENERAL.—The Secretary shall 
establish and maintain a searchable public data-
base, accessible on the website of the Depart-
ment of Energy, that contains a list of random-
ized control trials and other experimental or 
quasi-experimental evaluations of energy effi-
ciency programs. 
‘‘(B) REQUIREMENTS.—Each trial or eval-
uation on the list described in subparagraph 
(A) shall include, at a minimum— 
‘‘(i) the State in which the trial or 
evaluation was conducted; 
‘‘(ii) the type of trial or evaluation 
conducted; 
‘‘(iii) the type of program evaluated; 
‘‘(iv) an abstract or summary of the 
program evaluated; 
‘‘(v) a summary of the trial or evalua-
tion methodology; 
‘‘(vi) the revealed energy savings from 
the trial or evaluation; and 
‘‘(vii) to the extent practicable, the 
underlying data used to conduct the trial 
or evaluation. 
‘‘(f) ENFORCEMENT AND JUDICIAL REVIEW.— 
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‘‘(1) REVIEW OF RETAIL SUPPLIER REPORTS.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
review each report submitted to the Secretary 
by a retail electricity supplier or retail natural 
gas supplier under subsection (c) to verify that 
the applicable performance standards under 
subsection (c) have been met. 
‘‘(B) EXCLUSION.—In determining compli-
ance with the applicable performance standards 
under subsection (c), the Secretary shall ex-
clude reported electricity savings or natural gas 
savings that are not adequately demonstrated 
and documented, in accordance with the regula-
tions promulgated under this section. 
‘‘(2) 
PENALTY
FOR
FAILURE
TO
DEM-
ONSTRATE.—If a retail electricity supplier or a retail 
natural gas supplier that is subject to the require-
ments of the Federal program established under this 
section fails to demonstrate compliance with an ap-
plicable performance standard under subsection (c), 
or a retail electricity supplier or a retail natural gas 
supplier that is subject to the requirements of a 
State program approved pursuant to subsection (g) 
fails to comply with a requirement to achieve elec-
tricity savings or natural gas savings under such 
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State program, the Secretary shall assess against 
the retail electricity supplier or retail natural gas 
supplier a civil penalty in an amount equal to, as ad-
justed for inflation in accordance with such regula-
tions as the Secretary may promulgate— 
‘‘(A) $100 per megawatt hour of electricity 
savings or alternative compliance payment that 
the retail electricity supplier failed to achieve or 
make, respectively; or 
‘‘(B) $10 per million Btu of natural gas 
savings or alternative compliance payment that 
the retail natural gas supplier failed to achieve 
or make, respectively. 
‘‘(3) OFFSETTING
STATE
PENALTIES.—The 
Secretary shall reduce the amount of any penalty 
under paragraph (2) by the amount paid by the rel-
evant retail electricity supplier or retail natural gas 
supplier to a State for failure to comply with the re-
quirements of a State energy efficiency resource 
standard during the same compliance period, if the 
State standard— 
‘‘(A) is comparable in type to performance 
standards under subsection (c); and 
‘‘(B) is more stringent than the applicable 
performance standard under subsection (c). 
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‘‘(4) USE OF PAYMENTS.— 
‘‘(A) DEFINITION OF COVERED RATE.—In 
this paragraph, the term ‘covered rate’ means 
the proportion that— 
‘‘(i) the amount of penalty payments 
made by retail electricity suppliers and 
natural gas suppliers in a State under 
paragraph (2); bears to 
‘‘(ii) the total amount of penalty pay-
ments collected by the Secretary under 
that paragraph. 
‘‘(B) USE
OF
PAYMENTS.—Penalty pay-
ments collected under paragraph (2) by the 
Secretary shall be— 
‘‘(i) provided to each State at the cov-
ered rate for the State; and 
‘‘(ii) used by the State to implement 
cost-effective energy efficiency programs 
that— 
‘‘(I) to the maximum extent prac-
ticable, achieve electricity savings and 
natural gas savings in the State suffi-
cient to make up the deficit associated 
with the penalty payments; and 
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‘‘(II) are measured and verified 
in accordance with the applicable pro-
cedures and standards established 
under subsection (e). 
‘‘(5) ENFORCEMENT PROCEDURES.—The Sec-
retary shall assess a civil penalty, as provided under 
paragraph (2), in accordance with the procedures 
described in section 333(d) of the Energy Policy and 
Conservation Act. 
‘‘(6) JUDICIAL REVIEW.— 
‘‘(A) IN GENERAL.—Any person adversely 
affected by a final action taken by the Sec-
retary under this section, other than the assess-
ment of a civil penalty, may use the procedures 
for review described in section 336(b) of the 
Energy Policy and Conservation Act. 
‘‘(B) REFERENCE.—In this paragraph, 
references to a rule in section 336(b) of the En-
ergy Policy and Conservation Act shall be con-
sidered to refer also to all other final actions of 
the Secretary under this section other than the 
assessment of a civil penalty. 
‘‘(g) STATE PROGRAMS.— 
‘‘(1) IN GENERAL.—Upon receipt of an applica-
tion from the Governor of a State (including the 
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Mayor of the District of Columbia), the Secretary 
may authorize the State to implement a State en-
ergy efficiency program in lieu of the Federal pro-
gram established under subsection (b) if the Sec-
retary determines that the requirements of such 
State program meet or exceed the requirements of 
such Federal program, including— 
‘‘(A) achieving electricity savings and nat-
ural gas savings that are equal to or greater 
than savings required under the applicable per-
formance standards under subsection (c); 
‘‘(B) reviewing reports and verifying elec-
tricity savings and natural gas savings achieved 
in the State (including savings transferred from 
outside the State); and 
‘‘(C) if applicable, collecting any alter-
native compliance payments under paragraph 
(4) and using the payments to implement cost- 
effective energy efficiency programs. 
‘‘(2) 
SECRETARIAL
DETERMINATION.—Not 
later than 180 days after the date on which a com-
plete application is received by the Secretary under 
this subsection, the Secretary, after public notice 
and opportunity for comment, shall approve or dis-
approve such application. 
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‘‘(3) 
ALTERNATIVE
MEASUREMENT
AND 
VERIFICATION PROCEDURES AND STANDARDS.—As 
part of an application pursuant to paragraph (1), a 
State may request to use alternative measurement 
and verification procedures and standards from the 
procedures and standards described in subsection 
(e), if the State demonstrates that the alternative 
procedures and standards provide a level of accuracy 
of measurement and verification that are at least 
equivalent to the Federal procedures and standards 
under subsection (e). 
‘‘(4) ALTERNATIVE COMPLIANCE PAYMENTS.— 
‘‘(A) IN GENERAL.—As part of an applica-
tion submitted under paragraph (1), a State 
may permit retail electricity suppliers or retail 
natural gas suppliers to pay to the State, by 
not later than May 1 of the calendar year im-
mediately following the applicable reporting pe-
riod, an alternative compliance payment in an 
amount equal to, as adjusted for inflation in ac-
cordance with such regulations as the Secretary 
may promulgate, not less than— 
‘‘(i) $50 per megawatt hour of elec-
tricity savings needed to make up any def-
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icit in achieving electricity savings required 
under the applicable State program; or 
‘‘(ii) $5 per million Btu of natural gas 
savings needed to make up any deficit in 
achieving natural gas savings required 
under the applicable State program. 
‘‘(B) USE
OF
PAYMENTS.—Alternative 
compliance payments collected by a State under 
subparagraph (A) shall be used by the State to 
implement the State program authorized under 
this section and to implement cost-effective en-
ergy efficiency programs that— 
‘‘(i) to the maximum extent prac-
ticable, achieve electricity savings and nat-
ural gas savings in the State sufficient to 
make up the deficit associated with the al-
ternative compliance payments; and 
‘‘(ii) can be measured and verified in 
accordance with the applicable procedures 
and standards under subsection (e) or 
paragraph (3), as applicable. 
‘‘(5) REVIEW OF STATE PROGRAM.— 
‘‘(A) PERIODIC REVIEW.—Every 2 years, 
the Secretary shall review State programs au-
thorized under this section in approximately 1⁄2 
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of the States with such authorized State pro-
grams, so that each such State program shall 
be reviewed at least every 4 years. 
‘‘(B) REPORT.—To facilitate review under 
subparagraph (A), the Secretary may require a 
State to submit a report demonstrating the 
State program authorized under this section 
meets the requirements of this section, includ-
ing— 
‘‘(i) reports submitted by retail elec-
tricity suppliers and retail natural gas sup-
pliers to the State demonstrating compli-
ance with applicable requirements; 
‘‘(ii) the impact of applicable require-
ments on projected electricity and natural 
gas demand within the State; 
‘‘(iii) an accounting of the use of al-
ternative compliance payments by the 
State and the resulting electricity savings 
and natural gas savings achieved; and 
‘‘(iv) any other information that the 
Secretary determines appropriate. 
‘‘(C) REVIEW UPON PETITION.—Notwith-
standing subparagraph (A), upon receipt of a 
public petition containing credible allegation of 
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substantial deficiencies of a State program au-
thorized under this section, the Secretary shall 
promptly re-review the State program. 
‘‘(D) DEFICIENCIES.— 
‘‘(i) IN
GENERAL.—In completing a 
review of a State program authorized 
under this section, if the Secretary finds 
deficiencies, the Secretary shall— 
‘‘(I) notify the State of the defi-
ciencies; 
‘‘(II) direct the State to correct 
the deficiencies; and 
‘‘(III) require the State to report 
to the Secretary on progress made by 
not later than 180 days after the date 
on which the State receives notice 
under subclause (I). 
‘‘(ii) SUBSTANTIAL DEFICIENCIES.—If 
the deficiencies are substantial, the Sec-
retary shall— 
‘‘(I) disallow the reported elec-
tricity savings or natural gas savings 
that the Secretary determines are not 
credible due to deficiencies; 
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‘‘(II) re-review the State program 
2 years after the date on which the 
original review was completed; and 
‘‘(III) if substantial deficiencies 
remain uncorrected after the review 
provided for under subclause (II), re-
voke the authorization for the State to 
implement a State program under this 
section. 
‘‘(6) CALLS FOR REVISION OF STATE APPLICA-
TIONS.—As a condition of maintaining the author-
ization to implement a State program under this 
section, the Secretary may require the State to sub-
mit a revised application under paragraph (1) if the 
Secretary has— 
‘‘(A) established new or revised perform-
ance standards under subsection (c); 
‘‘(B) promulgated new or substantially re-
vised measurement and verification procedures 
and standards under subsection (e); or 
‘‘(C) otherwise substantially revised the 
Federal program established under this section. 
‘‘(h) INFORMATION AND REPORTS.—In accordance 
with section 13 of the Federal Energy Administration Act 
of 1974, the Secretary may require any retail electricity 
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supplier, retail natural gas supplier, third-party efficiency 
provider, or any other entity that the Secretary determines 
appropriate, to provide any information the Secretary de-
termines appropriate to carry out this section. 
‘‘(i) STATE LAW.—Nothing in this section diminishes 
or qualifies any authority of a State or political subdivision 
of a State to adopt or enforce any law or regulation re-
specting electricity savings or natural gas savings, includ-
ing any law or regulation establishing energy efficiency re-
quirements that are more stringent than those under this 
section. 
‘‘(j) SENSE OF CONGRESS REGARDING COST RECOV-
ERY, FIXED COST RECOVERY, AND SHAREHOLDER IN-
CENTIVES.—It is the sense of Congress that each State 
regulatory authority is encouraged to review the rules and 
regulations of the State regulatory authority to ensure 
that retail electric suppliers and retail natural gas sup-
pliers under its jurisdiction can— 
‘‘(1) recover the direct costs of energy efficiency 
programs; 
‘‘(2) fully recover authorized fixed costs, includ-
ing lost margins from lower annual sales due to en-
ergy efficiency programs; and 
‘‘(3) earn an incentive for shareholders if the 
energy efficiency standards are achieved.’’. 
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SEC. 3. CONFORMING AMENDMENT. 
The table of contents of the Public Utility Regulatory 
Policies Act of 1978 (16 U.S.C. prec. 2601) is amended 
by adding at the end of the items relating to title VI the 
following: 
‘‘Sec. 609. Rural and remote communities electrification grants. 
‘‘Sec. 610. Federal energy efficiency resource standard for retail electricity and 
natural gas suppliers.’’. 
Æ 
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