I 
108TH CONGRESS 
1ST SESSION H. R. 1294
To amend title VI of the Public Utility Regulatory Policies Act of 1978 
to establish a Federal renewable energy portfolio standard for certain 
retail electric utilities, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 13, 2003
Mr. UDALL of New Mexico (for himself, Mr. UDALL of Colorado, Mr. WAX-
MAN, Mr. GEORGE MILLER of California, Mr. TIERNEY, Mr. OWENS, Mr. 
HINCHEY, Mr. CARDIN, Mr. BERMAN, Mr. LEACH, and Mr. PALLONE) 
introduced the following bill; which was referred to the Committee on En-
ergy and Commerce 
A BILL 
To amend title VI of the Public Utility Regulatory Policies 
Act of 1978 to establish a Federal renewable energy 
portfolio standard for certain retail electric utilities, 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. FEDERAL RENEWABLE PORTFOLIO STANDARD. 
Title VI of the Public Utility Regulatory Policies Act 
of 1978 is amended by adding at the end the following: 
‘‘SEC. 609. FEDERAL RENEWABLE PORTFOLIO STANDARD. 
‘‘(a) MINIMUM RENEWABLE GENERATION REQUIRE-
MENT.—For each calendar year beginning in calendar 
year 2005, each retail electric supplier shall submit to the 
Secretary, not later than April 1 of the following calendar 
year, renewable energy credits in an amount equal to the 
required annual percentage specified in subsection (b). 
‘‘(b) REQUIRED ANNUAL PERCENTAGE.—For cal-
endar years 2005 through 2035, the required annual per-
centage of the retail electric supplier’s base amount that 
shall be generated from renewable energy resources, or 
otherwise credited towards such percentage requirement 
pursuant to subsection (c), shall be the percentage speci-
fied in the following table:
Required annual 
‘‘Calendar Years 
percentage 
2006 .....................................................................................
2007 .....................................................................................
2008 .....................................................................................
2009 .....................................................................................
2010 .....................................................................................
2011 .....................................................................................
2012 .....................................................................................
2013 .....................................................................................
2014 .....................................................................................
2015 .....................................................................................
2016 .....................................................................................
2017 .....................................................................................
2018 .....................................................................................
2019 .....................................................................................
2020 .....................................................................................
2021 .....................................................................................
Required annual 
‘‘Calendar Years 
percentage 
2022 .....................................................................................
2023 .....................................................................................
2024 .....................................................................................
2025 .....................................................................................
‘‘(c) RENEWABLE ENERGY CREDITS.—(1) A retail 
electric supplier may satisfy the requirements of sub-
section (a) through the submission of renewable energy 
credits—
‘‘(A) issued to the retail electric supplier under 
subsection (d); 
‘‘(B) obtained by purchase or exchange under 
subsection (e) or (g); or 
‘‘(C) borrowed under subsection (f). 
‘‘(2) A renewable energy credit may be counted to-
ward compliance with subsection (a) only once. 
‘‘(d) ISSUANCE
OF CREDITS.—(1) The Secretary 
shall establish by rule, not later than 1 year after the date 
of enactment of this section, a program to verify and issue 
renewable energy credits, track their sale, exchange and 
submission, and enforce the requirements of this section. 
‘‘(2) An entity that generates electric energy through 
the use of a renewable energy resource may apply to the 
Secretary for the issuance of renewable energy credits. 
The applicant must demonstrate that the electric energy 
will be transmitted onto the grid or, in the case of a gen-
eration offset, that the electric energy offset would have
otherwise been consumed on site. The application shall in-
dicate—
‘‘(A) the type of renewable energy resource 
used to produce the electricity; 
‘‘(B) the location where the electric energy 
was produced; and 
‘‘(C) any other information the Secretary 
determines appropriate. 
‘‘(3)(A) Except as provided in subparagraphs (B), 
(C), and (D), the Secretary shall issue to each entity that 
generates electric energy one renewable energy credit for 
each kilowatt hour of electric energy the entity generates 
from the date of enactment of this section and in each 
subsequent calendar year through the use of a renewable 
energy resource at an eligible facility. 
‘‘(B) For incremental hydropower the renewable en-
ergy credits shall be calculated based on the expected in-
crease in average annual generation resulting from the ef-
ficiency improvements or capacity additions. The number 
of credits shall be calculated using the same water flow 
information used to determine a historic average annual 
generation baseline for the hydroelectric facility and cer-
tified by the Secretary or the Federal Energy Regulatory 
Commission. The calculation of the renewable energy cred-
its for incremental hydropower shall not be based on any
operational changes at the hydroelectric facility not di-
rectly associated with the efficiency improvements or ca-
pacity additions. 
‘‘(C) The Secretary shall issue two renewable energy 
credits for each kilowatt hour of electric energy generated 
and supplied to the grid in that calendar year through the 
use of a renewable energy resource at an eligible facility 
located on Indian land. For purposes of this paragraph, 
renewable energy generated by biomass cofired with other 
fuels is eligible for two credits only if the biomass was 
grown on such land. 
‘‘(D) For electric energy generated by a renewable 
energy resource at an on-site eligible facility, used to offset 
part or all of the customer’s requirements for electric en-
ergy, the Secretary shall issue three renewable energy 
credits for each kilowatt hour generated. 
‘‘(E) In the case of a retail electric supplier that is 
subject to a State renewable standard program that—
‘‘(i) requires the generation of electricity from 
renewable energy; or 
‘‘(ii) provides for alternative compliance pay-
ments in satisfaction of applicable State require-
ments under the program, 
the Secretary shall issue an amount of renewable energy 
credits equal to the amount of renewable energy credits
that the Secretary would have issued had a payment of 
the same amount been made to the Secretary under sub-
section (g). Such renewable energy credits may be applied 
against the retail electric supplier’s own required annual 
percentage or may be transferred for use only by an asso-
ciate company of the retail electric supplier. 
‘‘(F) To be eligible for a renewable energy credit, the 
unit of electric energy generated through the use of a re-
newable energy resource may be sold or may be used by 
the generator. If both a renewable energy resource and 
a non-renewable energy resource are used to generate the 
electric energy, the Secretary shall issue renewable energy 
credits based on the proportion of the renewable energy 
resources used. The Secretary shall identify renewable en-
ergy credits by type and date of generation. 
‘‘(4) When a generator sells electric energy generated 
through the use of a renewable energy resource to a retail 
electric supplier under a contract subject to section 210 
of this Act, the retail electric supplier is treated as the 
generator of the electric energy for the purposes of this 
section or the duration of the contract. 
‘‘(5) The Secretary shall issue renewable energy cred-
its for existing facility offsets to be applied against a retail 
electric supplier’s required annual percentage. Such cred-
its are not tradeable and may be used only in the calendar 
year generation actually occurs. 
‘‘(e) RENEWABLE ENERGY CREDIT TRADING.—A re-
newable energy credit, may be sold, transferred or ex-
changed by the entity to whom issued or by any other enti-
ty who acquires the renewable energy credit, except for 
those renewable energy credits issued pursuant to sub-
section (d)(3)(E). A renewable energy credit for any year 
that is not used to satisfy the minimum renewable genera-
tion requirement of subsection (a) for that year may be 
carried forward for use within the next 4 years. 
‘‘(f) RENEWABLE ENERGY CREDIT BORROWING.—At 
any time before the end of calendar year 2005, a retail 
electric supplier that has reason to believe it will not have 
sufficient renewable energy credits to comply with sub-
section (a) may—
‘‘(1) submit a plan to the Secretary dem-
onstrating that the retail electric supplier will earn 
sufficient credits within the next 3 calendar years 
which, when taken into account, will enable the re-
tail electric supplier to meet the requirements of 
subsection (a) for calendar year 2005 and the subse-
quent calendar years involved; and 
‘‘(2) upon the approval of the plan by the Sec-
retary, apply renewable energy credits that the plan
demonstrates will be earned within the next 3 cal-
endar years to meet the requirements of subsection 
(a) for each calendar year involved. 
The retail electric supplier must repay all of the borrowed 
renewable energy credits by submitting an equivalent 
number of renewable energy credits, in addition to those 
otherwise required under subsection (a), by calendar year 
2008 or any earlier deadlines specified in the approved 
plan. Failure to repay the borrowed renewable energy 
credits shall subject the retail electric supplier to civil pen-
alties under subsection (h) for violation of the require-
ments of subsection (a) for each calendar year involved. 
‘‘(g) CREDIT COST CAP.— The Secretary shall offer 
renewable energy credits for sale at the lesser of 3 cents 
per kilowatt-hour or 200 percent of the average market 
value of renewable credits for the applicable compliance 
period. On January 1 of each year following calendar year 
2005, the Secretary shall adjust for inflation the price 
charged per credit for such calendar year, based on the 
Gross Domestic Product Implicit Price Deflator. 
‘‘(h) ENFORCEMENT.—A retail electric supplier that 
does not submit renewable energy credits as required 
under subsection (a) shall be liable for the payment of a 
civil penalty. That penalty shall be calculated on the basis 
of the number of renewable energy credits not submitted,
multiplied by the lesser of 4.5 cents or 300 percent of the 
average market value of credits for the compliance period. 
Any such penalty shall be due and payable without de-
mand to the Secretary as provided in the regulations 
issued under subsection (d). 
‘‘(i) INFORMATION
COLLECTION.—The Secretary 
may collect the information necessary to verify and 
audit—
‘‘(1) the annual electric energy generation and 
renewable energy generation of any entity applying 
for renewable energy credits under this section; 
‘‘(2) the validity of renewable energy credits 
submitted by a retail electric supplier to the Sec-
retary; and 
‘‘(3) the quantity of electricity sales of all retail 
electric suppliers. 
‘‘(j) ENVIRONMENTAL
SAVINGS
CLAUSE.—Incre-
mental hydropower shall be subject to all applicable envi-
ronmental laws and licensing and regulatory requirements. 
‘‘(k) EXISTING PROGRAMS.—(1) This section does 
not preclude a State from imposing additional renewable 
energy requirements in that State, including specifying eli-
gible technologies under such State requirements. 
‘‘(2) In the rule establishing this program, the Sec-
retary shall incorporate common elements of existing re-
newable energy programs, including state programs, to en-
sure administrative ease, market transparency and effec-
tive enforcement. The Secretary shall work with the States 
to minimize administrative burdens and costs and to avoid 
duplicating compliance charges to retail electric suppliers. 
‘‘(l) DEFINITIONS.—For purposes of this section: 
‘‘(1) BIOMASS.—The term ‘biomass’ means any 
organic material that is available on a renewable or 
recurring basis, including dedicated energy crops, 
trees grown for energy production, wood waste and 
wood residues, plants (including aquatic plants, 
grasses, and agricultural crops), residues, fibers, 
animal wastes and other organic waste materials 
(but not including unsegregated municipal solid 
waste (garbage)), and fats and oils, except that with 
respect to material removed from National Forest 
System lands the term includes only organic mate-
rial from—
‘‘(A) precommercial thinnings; 
‘‘(B) slash; 
‘‘(C) brush; and 
‘‘(D) mill residues. 
‘‘(2) ELIGIBLE
FACILITY.—The term ‘eligible 
facility’ means—
‘‘(A) a facility for the generation of electric 
energy from a renewable energy resource that is 
placed in service on or after the date of enact-
ment of this section or the effective date of the 
applicable State renewable portfolio standard 
program; or 
‘‘(B) a repowering or cofiring increment 
that is placed in service on or after the date of 
enactment of this section or the effective date 
of the applicable State renewable portfolio 
standard program, at a facility for the genera-
tion of electric energy from a renewable energy 
resource that was placed in service before that 
date. 
‘‘(3) EXISTING FACILITY OFFSET.—The term 
‘existing facility offset’ means renewable energy gen-
erated from an existing facility, not classified as an 
eligible facility, that is owned or under contract, di-
rectly or indirectly, to a retail electric supplier on 
the date of enactment of this section. 
‘‘(4) INCREMENTAL HYDROPOWER.—The term 
‘incremental hydropower’ means additional genera-
tion that is achieved from increased efficiency or ad-
ditions of capacity on or after the date of enactment 
of this section or the effective date of the applicable
State renewable portfolio standard program, at a hy-
droelectric facility that was placed in service before 
that date. 
‘‘(5) INDIAN
LAND.—The term ‘Indian land’ 
means—
‘‘(A) any land within the limits of any In-
dian reservation, pueblo, or rancheria; 
‘‘(B) any land not within the limits of any 
Indian reservation, pueblo, or rancheria title to 
which was on the date of enactment of this 
paragraph either held by the United States for 
the benefit of any Indian tribe or individual or 
held by any Indian tribe or individual subject to 
restriction by the United States against alien-
ation; 
‘‘(C) any dependent Indian community; 
and 
‘‘(D) any land conveyed to any Alaska Na-
tive corporation under the Alaska Native 
Claims Settlement Act. 
‘‘(6) INDIAN TRIBE.—The term ‘Indian tribe’ 
means any Indian tribe, band, nation, or other orga-
nized group or community, including any Alaskan 
Native village or regional or village corporation as 
defined in or established pursuant to the Alaska Na-
tive Claims Settlement Act (43 U.S.C. 1601 et seq.), 
which is recognized as eligible for the special pro-
grams and services provided by the United States to 
Indians because of their status as Indians. 
‘‘(7) RENEWABLE ENERGY.—The term ‘renew-
able energy’ means electric energy generated by a re-
newable energy resource. 
‘‘(8) RENEWABLE
ENERGY
RESOURCE.—The 
term ‘renewable energy resource’ means solar (in-
cluding solar water heating), wind, ocean, geo-
thermal energy, biomass, landfill gas, or incremental 
hydropower. 
‘‘(9) REPOWERING OR COFIRING INCREMENT.—
The 
term 
‘repowering 
or 
cofiring 
increment’ 
means—
‘‘(A) the additional generation from a 
modification that is placed in service on or after 
the date of enactment of this section or the ef-
fective date of the applicable State renewable 
portfolio standard program, to expand elec-
tricity production at a facility used to generate 
electric energy from a renewable energy re-
source or to cofire biomass that was placed in 
service before the date of enactment of this sec-
tion or the effective date of the applicable State 
renewable portfolio standard program; or 
‘‘(B) the additional generation above the 
average generation in the 3 years preceding the 
date of enactment of this section or the effec-
tive date of the applicable State renewable port-
folio standard program, to expand electricity 
production at a facility used to generate electric 
energy from a renewable energy resource or to 
cofire biomass that was placed in service before 
the date of enactment of this section or the ef-
fective date of the applicable State renewable 
portfolio standard program. 
‘‘(10) RETAIL ELECTRIC SUPPLIER.—The term 
‘retail electric supplier’ means a person that sells 
electric energy to electric consumers and sold not 
less than 1,000,000 megawatt-hours of electric en-
ergy to electric consumers for purposes other than 
resale during the preceding calendar year; except 
that such term does not include the United States, 
a State or any political subdivision of a State, or any 
agency, authority, or instrumentality of any one or 
more of the foregoing, or a rural electric cooperative. 
‘‘(11) 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 
terms of kilowatt hours, to electric customers for 
purposes other than resale during the most recent 
calendar year for which information is available, ex-
cluding electric energy generated by a hydroelectric 
facility. 
‘‘(m) RECOVERY
OF COSTS.—An electric utility 
whose sales of electric energy are subject to rate regula-
tion, including any utility whose rates are regulated by the 
Commission and any State regulated electric utility, shall 
not be denied the opportunity to recover the full amount 
of the prudently incurred incremental cost of renewable 
energy obtained to comply with the requirements of sub-
section (a) for sales to electric customers which are subject 
to rate regulation, notwithstanding any other law, regula-
tion, rule, administrative order or any agreement between 
the electric utility and either the Commission or a State 
regulatory authority. For the purpose of this subsection, 
the term ‘incremental cost of renewable energy’ means—
‘‘(1) the additional cost to the electric utility for 
the purchase or generation of renewable energy to 
satisfy the minimum renewable generation require-
ment of subsection (a), as compared to the cost of 
the electric energy the electric utility would generate
or purchase from another source but for the require-
ments of subsection (a); and 
‘‘(2) the cost to the electric utility for acquiring 
by purchase or exchange renewable energy credits to 
satisfy the minimum renewable generation require-
ment of subsection (a). 
For purposes of this subsection, the definitions in section 
3 of this Act shall apply to the terms ‘electric utility’, 
‘State regulated electric utility’, ‘State agency’, ‘Commis-
sion’, and ‘State regulatory authority’. 
‘‘(n) VOLUNTARY PARTICIPATION.—The Secretary 
shall encourage federally-owned utilities, municipally-
owned utilities and rural electric cooperatives that sell 
electric energy to electric consumers for purposes other 
than resale to participate in the renewable portfolio stand-
ard program. A municipally-owned utility or rural electric 
cooperative that owns or has under contract a facility for 
the generation of electric energy from a renewable energy 
resource may not sell or trade renewable energy credits 
generated by such resource unless it participates in the 
renewable portfolio standard program under the same 
terms and conditions as retail electric suppliers. 
‘‘(o) PROGRAM REVIEW.—The Secretary shall con-
duct a comprehensive evaluation of all aspects of the Re-
newable Portfolio Standard program, within 10 years of
enactment of this section. The study shall include an eval-
uation of—
‘‘(1) the effectiveness of the program in increas-
ing the market penetration and lower the cost of the 
eligible renewable technologies; 
‘‘(2) the opportunities for any additional tech-
nologies emerging since enactment of this section; 
‘‘(3) the impact on the regional diversity and 
reliability of supply sources, including the power 
quality benefits of distributed generation; 
‘‘(4) the regional resource development relative 
to renewable potential and reasons for any under in-
vestment in renewable resources; and 
‘‘(5) the net cost/benefit of the renewable port-
folio standard to the national and state economies, 
including retail power costs, economic development 
benefits of investment, avoided costs related to envi-
ronmental and congestion mitigation investments 
that would otherwise have been required, impact on 
natural gas demand and price, effectiveness of green 
marketing programs at reducing the cost of renew-
able resources. 
The Secretary shall transmit the results of the program 
review and any recommendations for modifications and
improvements to the program to Congress not later than 
January 1, 2012. 
‘‘(p) PROGRAM IMPROVEMENTS.—Using the results 
of the review under subsection (o), the Secretary shall by 
rule, within 6 months of the completion of the review, 
make such modifications to the program as may be nec-
essary to improve the efficiency of the program and maxi-
mize the use of renewable energy under the program. 
‘‘(q) STATE RENEWABLE ENERGY ACCOUNT PRO-
GRAM.—(1) The Secretary shall establish, not later than 
December 31, 2005, a State renewable energy account 
program. 
‘‘(2) All money collected by the Secretary from the 
sale of renewable energy credits shall be deposited into the 
state renewable energy account established pursuant to 
this subsection. The State renewable energy account shall 
be held by the Secretary and shall not be transferred to 
the Treasury Department. 
‘‘(3) Proceeds deposited in the state renewable energy 
account shall be used by the Secretary for a program to 
provide grants to the State agency responsible for devel-
oping State energy conservation plans under section 363 
of the Energy Policy and Conservation Act (42 U.S.C. 
6322) for the purposes of promoting renewable energy
production and providing energy assistance and weather-
ization services to low-income consumers. 
‘‘(4) The Secretary may issue guidelines and criteria 
for grants awarded under this subsection. At least 75 per-
cent of the funds provided to each State shall be used for 
promoting renewable energy production. The funds shall 
be allocated to the states on the basis of retail electric 
sales subject to the Renewable Portfolio Standard under 
this section or through voluntary participation. To the ex-
tent Federal credits have been issued without payment due 
to reciprocity with state programs under subsection 
(d)(3)(E), deductions shall be made from the relevant 
state’s allocation. State energy offices receiving grants 
under this section shall maintain such records and evi-
dence of compliance as the Secretary may require. 
‘‘(r) SUNSET.—This section expires December 31, 
2035.’’.
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