‘‘(k) SUNSET.—The authority provided by this sec-
tion expires on December 31, 2041.’’. 
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 the following: 
‘‘(o) CLARIFICATION
OF STATE AUTHORITY TO 
ADOPT RENEWABLE ENERGY INCENTIVES.— 
‘‘(1) DEFINITION
OF
STATE-APPROVED
PRO-
DUCTION INCENTIVE PROGRAM.—In this subsection, 
the term ‘State-approved production incentive pro-
gram’ means a requirement imposed pursuant to 
State law or by a State regulatory authority acting 
within its authority under State law that an electric 
utility purchase renewable energy (as defined in sec-
tion 609(a)) at a specified rate. 
‘‘(2) STATE AUTHORITY TO ADOPT RENEWABLE 
ENERGY
INCENTIVES.—Notwithstanding any other 
provision of this Act or the Federal Power Act (16 
U.S.C. 791a et seq.), a State legislature or regu-
latory authority may set the rates for a sale of elec-
tric energy by a facility generating electric energy 
from renewable energy sources pursuant to a State- 
approved production incentive program under which 
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the facility voluntarily participates in the State-ap-
proved production incentive program.’’. 
SEC. 4. GUIDELINES FOR DETERMINING QUALIFIED RE-
NEWABLE BIOMASS. 
(a) DEFINITIONS.—In this section: 
(1) ADMINISTRATOR.—The term ‘‘Adminis-
trator’’ means the Administrator of the Environ-
mental Protection Agency. 
(2) 
LIFECYCLE
GREENHOUSE
GAS
EMIS-
SIONS.— 
(A) IN
GENERAL.—The term ‘‘lifecycle 
greenhouse gas emissions’’ means the aggregate 
quantity of greenhouse gas emissions, adjusted 
to account for the relative global warming po-
tential of the emissions relative to all green-
house gas emissions. 
(B) INCLUSIONS.—For purposes of sub-
paragraph (A), the term ‘‘greenhouse gas emis-
sions’’ includes— 
(i) direct emissions; and 
(ii) significant indirect emissions, in-
cluding from— 
(I) land use changes and tem-
poral changes in forest carbon seques-
tration; 
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(II) biomass harvests, regrowth, 
and avoided decomposition related to 
the full fuel lifecycle, including all 
stages of fuel and feedstock produc-
tion and distribution; and 
(III) feedstock generation or ex-
traction through the distribution and 
delivery of the finished fuel to the ul-
timate consumer. 
(b) GUIDELINES.—Not later than 1 year after the 
date of enactment of this Act, the Administrator shall, rec-
ognizing the recommendations of and coordinating with 
the Scientific Advisory Board of the Environmental Pro-
tection Agency regarding the accounting of biogenic car-
bon dioxide emissions and after notice and public com-
ment, issue guidelines for calculating lifecycle greenhouse 
gas emissions for renewable biomass (as that term is de-
fined in section 610(b) of the Public Utility Regulatory 
Policies Act of 1978). 
SEC. 5. ENERGY EFFICIENCY RESOURCE STANDARD FOR 
RETAIL ELECTRICITY AND NATURAL GAS 
SUPPLIERS. 
(a) IN GENERAL.—Title VI of the Public Utility Reg-
ulatory Policies Act of 1978 (16 U.S.C. 2601 et seq.) (as 
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amended by section 2) is amended by adding after section 
610 the following: 
‘‘SEC. 611. FEDERAL ENERGY EFFICIENCY RESOURCE 
STANDARD FOR RETAIL ELECTRICITY AND 
NATURAL GAS SUPPLIERS. 
‘‘(a) FINDINGS.—Congress finds that— 
‘‘(1) the Federal energy efficiency resource 
standard established by this section— 
‘‘(A) establishes nationwide minimum lev-
els 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 up-
grades; 
‘‘(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-
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tricity suppliers, retail natural gas suppliers, and 
States should— 
‘‘(A) consider energy efficiency as a re-
source in utility planning and procurement ac-
tivities; and 
‘‘(B) seek to achieve all energy efficiency 
that is available at lower cost than other energy 
supply options. 
‘‘(b) 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. 
‘‘(3) BASE QUANTITY.— 
‘‘(A) IN GENERAL.—The term ‘base quan-
tity’, with respect to a retail electricity supplier 
or retail natural gas supplier, means, for each 
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calendar year for which a performance standard 
is established under subsection (d), the average 
annual quantity of electricity or natural gas de-
livered by the retail electricity supplier or retail 
natural gas supplier to retail customers during 
the 3 calendar years immediately preceding the 
year that compliance is required under sub-
section (d)(1). 
‘‘(B) EXCLUSION.—The term ‘base quan-
tity’, with respect to a retail natural gas sup-
plier, does not include natural gas delivered for 
purposes of electricity generation. 
‘‘(4) CHP SAVINGS.—The term ‘CHP savings’ 
means— 
‘‘(A) CHP system savings from a combined 
heat and power system that commences oper-
ation after the date of enactment of this sec-
tion; and 
‘‘(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 
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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.— 
‘‘(A) IN GENERAL.—The term ‘codes and 
standards savings’ means a reduction in end- 
use electricity or natural gas consumption by a 
retail electricity supplier or in the service terri-
tory of a retail natural gas supplier as a result 
of the adoption and implementation, after the 
date of enactment of this section, of new or re-
vised appliance and equipment efficiency stand-
ards or building energy codes. 
‘‘(B) BASELINES.—In calculating codes 
and standards savings under subparagraph 
(A)— 
‘‘(i) the baseline for calculating sav-
ings from building codes shall be the more 
stringent of— 
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‘‘(I)(aa) the 2009 International 
Energy Conservation Code for resi-
dential buildings; or 
‘‘(bb) 
the 
ASHRAE/ANSI/ 
IESNA Standard 90.1–2007 for com-
mercial buildings; or 
‘‘(II) the applicable State build-
ing code in effect on the date of en-
actment of this section; and 
‘‘(ii) the baseline for calculating sav-
ings from appliance standards shall be the 
average efficiency of new appliances in the 
applicable one or more categories prior to 
the adoption and implementation of the 
new standard. 
‘‘(7) 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, if— 
‘‘(A) the system meets any requirements 
relating to efficiency and other operating char-
acteristics that the Secretary promulgates by 
regulation; and 
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‘‘(B) the net wholesale sales of electricity 
by a facility does not exceed 50 percent of total 
annual electric generation by the facility. 
‘‘(8) COST-EFFECTIVE.—The term ‘cost-effec-
tive’, with respect to an energy efficiency measure, 
means that the measure achieves a net present value 
of economic benefits over the life of the measure, 
both directly to the energy consumer and to the 
economy, that is greater than the net present value 
of the cost of the measure over the life of the meas-
ure, both directly to the energy consumer and to the 
economy, using the societal benefit-cost test cal-
culated using the weighted average utility cost of 
capital as the discount rate. 
‘‘(9) CUSTOMER FACILITY SAVINGS.—The term 
‘customer facility savings’ means a reduction in end- 
use electricity or natural gas consumption (including 
waste heat energy savings) at a facility of an end- 
use consumer of electricity or natural gas served by 
a retail electricity supplier or natural gas supplier, 
as compared to— 
‘‘(A) in the case of a new facility, con-
sumption at a reference facility of average effi-
ciency; 
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‘‘(B) in the case of an existing facility, 
consumption at the facility during a base period 
of not less than 1 year; 
‘‘(C) 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, except that customer sav-
ings under this subparagraph shall not be 
counted towards customer savings under sub-
paragraph (A) or (B); and 
‘‘(D) 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 of new 
equipment of average efficiency. 
‘‘(10) ELECTRICITY SAVINGS.—The term ‘elec-
tricity savings’ means reductions in electricity con-
sumption achieved through measures implemented 
after the date of enactment of this section, as deter-
mined in accordance with regulations promulgated 
by the Secretary, that are limited to— 
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‘‘(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 supplier, as compared to losses attrib-
utable to new or replacement distribution sys-
tem equipment of average efficiency, as defined 
in regulations promulgated by the Secretary; 
‘‘(C) CHP savings; 
‘‘(D) codes and standards savings of elec-
tricity; and 
‘‘(E) fuel switching energy savings that re-
sults 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 end-user switches from 1 energy 
source to another, as determined in accordance 
with regulations promulgated by the Secretary. 
‘‘(B) CALCULATION.—For purposes of cal-
culating fuel-switching net energy savings— 
‘‘(i) electricity use shall be evaluated 
based on the average quantity of fuel 
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burned at a power plant to provide each 
kilowatt hour of electricity; 
‘‘(ii) electricity and natural gas use 
shall include losses in the transmission and 
distribution system; and 
‘‘(iii) fuel-switching that is not cost-ef-
fective to the end-user shall not be count-
ed. 
‘‘(12) NATURAL GAS SAVINGS.—The term ‘nat-
ural gas savings’ means reductions in natural gas 
consumption from measures implemented after the 
date of enactment of this section, as determined in 
accordance with regulations promulgated by the Sec-
retary, that are limited to— 
‘‘(A) customer facility savings of natural 
gas, adjusted to reflect any associated increase 
in electricity consumption or consumption of 
other fuels at the facility; 
‘‘(B) reductions in leakage, operational 
losses, and consumption of natural gas fuel to 
operate a gas distribution system, achieved by 
a retail natural gas supplier, as compared to 
similar leakage, losses, and consumption during 
a base period of not less than 1 year; 
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‘‘(C) codes and standards savings of nat-
ural gas; and 
‘‘(D) fuel switching energy savings that re-
sults in net savings of natural gas. 
‘‘(13) 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. 
‘‘(14) REPORTING PERIOD.—The term ‘report-
ing period’ means— 
‘‘(A) calendar year 2015; and 
‘‘(B) each successive 2-calendar-year pe-
riod thereafter. 
‘‘(15) RETAIL ELECTRICITY SUPPLIER.— 
‘‘(A) IN GENERAL.—The term ‘retail elec-
tricity supplier’ means, for any given calendar 
year, an electric utility that sells not less than 
1,000,000 megawatt hours of electric energy to 
electric consumers for purposes other than re-
sale during the preceding calendar. 
‘‘(B) INCLUSIONS AND LIMITATIONS.—For 
purposes of determining whether an electric 
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utility qualifies as a retail electricity supplier 
under subparagraph (A)— 
‘‘(i) deliveries by any affiliate of an 
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. 
‘‘(16) RETAIL NATURAL GAS SUPPLIER.— 
‘‘(A) IN GENERAL.—The term ‘retail nat-
ural gas supplier’ means, for any given calendar 
year, a local distribution company (as defined 
in section 2 of the Natural Gas Policy Act of 
1978 (15 U.S.C. 3301)), that delivered to nat-
ural gas consumers more than 5,000,000,000 
cubic feet of natural gas for purposes other 
than resale during the preceding calendar year. 
‘‘(B) INCLUSIONS AND LIMITATIONS.—For 
purposes of determining whether a person 
qualifies as a retail natural gas supplier under 
subparagraph (A)— 
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‘‘(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 natural gas consumers. 
‘‘(17) 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 (e) and (f). 
‘‘(18) 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 
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in accordance with regulations promulgated by 
the Secretary. 
‘‘(B) INCLUSION.—Such savings shall be 
included as part of customer facility savings. 
‘‘(c) ESTABLISHMENT OF PROGRAM.— 
‘‘(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 (f); 
‘‘(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 (d); and 
‘‘(ii) estimate the impact of the stand-
ards on current and future electricity and 
natural gas use in the service territories of 
the suppliers; and 
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‘‘(C) establishing requirements governing 
applications for, and implementation of, dele-
gated State administration under subsection 
(h). 
‘‘(2) COORDINATION WITH STATE PROGRAMS.— 
In establishing and implementing this section, the 
Secretary shall, to the maximum extent practicable, 
preserve the integrity and incorporate best practices 
of existing State energy efficiency programs. 
‘‘(d) 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 the retail electricity supplier 
has achieved annual electricity savings (ad-
justed to account for any attrition of savings 
measures implemented in prior years) in each 
calendar year that are equal to the applicable 
percentage, established under paragraph (2), 
(3), or (4), of the base quantity of the retail 
electricity supplier; and 
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‘‘(B) each retail natural gas supplier shall 
submit to the Secretary a report, in accordance 
with regulations promulgated by the Secretary, 
demonstrating that it has achieved cumulative 
natural gas savings (adjusted to account for 
any attrition of savings measures implemented 
in prior years) in each calendar year that are 
equal to the applicable percentage, established 
under paragraph (2), (3), or (4), of the base 
quantity of such retail natural gas supplier, 
subject to business-as-usual consumption pro-
jections calculated in accordance with sub-
section (f)(1)(P). 
‘‘(2) STANDARDS FOR 2015 THROUGH 2025.— 
For each of calendar years 2015 through 2025, the 
applicable percentages are as follows: 
‘‘Calendar Year 
Cumulative Electricity 
Savings Percentage 
Cumulative Natural Gas 
Savings Percentage 
2015 
1.00 
0.50
2016 
2.00 
1.25
2017 
3.00 
2.00
2018 
4.25 
3.00
2019 
5.50 
4.00
2020 
7.00 
5.00
2021 
8.50 
6.00
2022 
10.00 
7.00
2023 
11.50 
8.00
2024 
13.25 
9.00
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at levels reflecting the maximum achievable 
level of cost-effective energy efficiency 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 
standard savings; 
‘‘(iii) technology improvements; and 
‘‘(iv) other indicators of cost-effective 
energy efficiency potential. 
‘‘(D) MINIMUM PERCENTAGE.—In no case 
shall the applicable percentages for any cal-
endar year be less than the applicable percent-
ages for calendar year 2025 (including any in-
crease in the standard for calendar year 2025 
established pursuant to paragraph (4)). 
‘‘(4) MIDCOURSE REVIEW AND ADJUSTMENT OF 
STANDARDS.— 
‘‘(A) IN
GENERAL.—Not later than De-
cember 31, 2020, and at 10-year intervals 
thereafter, the Secretary shall— 
‘‘(i) review the most recent standards 
established under paragraph (2) or (3); 
and 
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‘‘(ii) increase the standards by regula-
tion if the Secretary determines that addi-
tional cost-effective energy efficiency po-
tential is achievable, taking into account 
the requirements described in paragraph 
(3)(C). 
‘‘(B) LEAD TIME.—If the Secretary revises 
standards under this paragraph, the regulations 
shall provide adequate lead time to ensure that 
compliance with the increased standards is fea-
sible. 
‘‘(5) DELAY
OF
SUBMISSION
FOR
FIRST
RE-
PORTING PERIOD.— 
‘‘(A) 
IN
GENERAL.—Notwithstanding 
paragraphs (1) and (2), for the 2015 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 2016–2017 reporting period. 
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‘‘(6) APPLYING UNUSED SAVINGS TO FUTURE 
YEARS.—If savings achieved in a year exceed the 
performance standards specified in this subsection, 
any savings in excess of the performance standards 
may be applied toward performance standards speci-
fied for future years. 
‘‘(e) TRANSFERS OF ELECTRICITY OR NATURAL GAS 
SAVINGS.— 
‘‘(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 (d). 
‘‘(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 (f); 
‘‘(B) reported in accordance with sub-
section (d); and 
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‘‘(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— 
‘‘(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 paragraph. 
‘‘(5) LIMITATIONS.—To optimize the achieve-
ment of cost-effective efficiency potential, the Sec-
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retary 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 (d) that 
may be met using electricity savings or natural gas 
savings that are purchased under this subsection. 
‘‘(f) MEASUREMENT
AND VERIFICATION
OF SAV-
INGS.—The regulations promulgated pursuant to sub-
section (c) shall include— 
‘‘(1) procedures and standards for defining and 
measuring electricity savings and natural gas sav-
ings that can be counted towards the performance 
standards established under subsection (d), that 
shall— 
‘‘(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; 
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‘‘(C) account for the useful life of meas-
ures; 
‘‘(D) include assigned 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 calculating and 
documenting CHP savings, fuel-switching en-
ergy savings, and waste heat energy savings; 
‘‘(G) establish methods for calculating 
codes and standards energy savings, including 
the use of verified compliance rates; 
‘‘(H) include procedures for calculating 
and documenting— 
‘‘(i) customer facility savings and re-
ductions in distribution 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 Independence and Security Act of 
2007 (42 U.S.C. 17381); and 
‘‘(ii) reductions in natural gas dis-
tribution system losses attributable to pipe-
line repair and replacement programs; 
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plier for self-directed energy efficiency improve-
ments; 
‘‘(N) include procedures for counting elec-
tricity savings and natural gas savings achieved 
by solar water heating, solar light pipe tech-
nology, geothermal heat pumps, and other tech-
nologies utilizing renewable resources that re-
duce on-site energy use; 
‘‘(O) in any State in which the State regu-
latory authority has designated one or more en-
tities to administer electric ratepayer-funded ef-
ficiency programs approved by the State regu-
latory authority, provide that electricity savings 
and natural gas savings achieved through the 
programs shall be distributed proportionally 
among retail electric suppliers and retail nat-
ural gas suppliers; and 
‘‘(P) include guidance for utilities to cal-
culate and document business-as-usual con-
sumption projections; and 
‘‘(2) procedures and standards for third-party 
verification of reported electricity savings or natural 
gas savings. 
‘‘(g) ENFORCEMENT AND JUDICIAL REVIEW.— 
‘‘(1) REVIEW OF RETAIL SUPPLIER REPORTS.— 
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‘‘(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 (d) to verify that 
the applicable performance standards under 
subsection (d) have been met. 
‘‘(B) EXCLUSION.—In determining compli-
ance with the applicable performance standards 
under subsection (d), 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 subsections (d), (e), 
and (f). 
‘‘(2) PENALTY
FOR
FAILURE
TO
DOCUMENT 
ADEQUATE SAVINGS.—If a retail electricity supplier 
or a retail natural gas supplier fails to demonstrate 
compliance with an applicable performance standard 
under subsection (d), or to pay to the State an ap-
plicable alternative compliance payment under sub-
section (h)(4), the Secretary shall assess against the 
retail electricity supplier or retail natural gas sup-
plier a civil penalty for each failure in an amount 
equal to, as adjusted for inflation in accordance with 
such regulations as the Secretary may promulgate— 
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‘‘(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 the Federal 
standard established under this section; and 
‘‘(B) is more stringent than the applicable 
performance standards under subsection (d). 
‘‘(4) 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 (42 U.S.C. 6303(d)). 
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‘‘(5) 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 (42 U.S.C. 
6306(b)). 
‘‘(B) REFERENCE.—In this paragraph, 
references to a rule in section 336(b) of the En-
ergy Policy and Conservation Act (42 U.S.C. 
6306(b)) shall be considered to refer also to all 
other final actions of the Secretary under this 
section other than the assessment of a civil pen-
alty. 
‘‘(h) STATE ADMINISTRATION.— 
‘‘(1) IN GENERAL.—Upon receipt of an applica-
tion from the Governor of a State (including the 
Mayor of the District of Columbia), the Secretary 
may delegate to the State responsibility for admin-
istering this section within the territory of the State 
if the Secretary determines that the State will imple-
ment an energy efficiency program that meets or ex-
ceeds the requirements of this section, including— 
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‘‘(A) achieving electricity savings and nat-
ural gas savings that are at least as great as 
those required under the applicable performance 
standards established under subsection (d); 
‘‘(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) collecting any alternative compliance 
payments under paragraph (4) and using the 
payments to implement cost-effective efficiency 
programs. 
‘‘(2) 
SECRETARIAL
DETERMINATION.—Not 
later than 180 days after the date on which a com-
plete application is received by the Secretary, the 
Secretary shall make a substantive determination 
approving or disapproving a State application, after 
public notice and comment. 
‘‘(3) 
ALTERNATIVE
MEASUREMENT
AND 
VERIFICATION PROCEDURES AND STANDARDS.—As 
part of an application submitted under paragraph 
(1), a State may request to use alternative measure-
ment and verification procedures and standards 
from the procedures and standards described in sub-
section (f), if the State demonstrates that the alter-
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native 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 (f). 
‘‘(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 April 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-
icit with regard to a compliance obligation 
under the applicable performance stand-
ard; or 
‘‘(ii) $5 per million Btu of natural gas 
savings needed to make up any deficit with 
regard to a compliance obligation under 
the applicable performance standard. 
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‘‘(B) USE
OF
PAYMENTS.—Alternative 
compliance payments collected by a State under 
subparagraph (A) shall be used by the State to 
administer the delegated authority of the State 
under this section and to implement cost-effec-
tive energy 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 (f) or 
paragraph (3), as applicable. 
‘‘(5) REVIEW OF STATE IMPLEMENTATION.— 
‘‘(A) PERIODIC REVIEW.—Every 2 years, 
the Secretary shall review State implementation 
of this section for conformance with the re-
quirements of this section in approximately 1⁄2 
of the States that have received approval under 
this subsection to administer the program, so 
that each State shall be reviewed at least every 
4 years. 
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‘‘(B) REPORT.—To facilitate the review 
under subparagraph (A), the Secretary may re-
quire the State to submit a report dem-
onstrating the conformance of the State with 
the requirements of this section, including— 
‘‘(i) reports submitted by retail elec-
tricity suppliers and retail natural gas sup-
pliers to the State demonstrating compli-
ance with applicable performance stand-
ards; 
‘‘(ii) the impact of the standards on 
projected electricity and natural gas de-
mand 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 
substantial deficiencies, the Secretary shall 
promptly review the State implementation of 
delegated authority under this section. 
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‘‘(D) DEFICIENCIES.— 
‘‘(i) IN
GENERAL.—In completing a 
review under this paragraph, if the Sec-
retary 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; 
‘‘(II) re-review the State not 
later than 2 years after the date on 
which the original review was com-
pleted; and 
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‘‘(III) if substantial deficiencies 
remain uncorrected after the review 
provided for under subclause (II), re-
voke the authority of the State to ad-
minister 
the 
program 
established 
under this section. 
‘‘(6) CALLS FOR REVISION OF STATE APPLICA-
TIONS.—As a condition of maintaining the delegated 
authority of a State to administer this section, the 
Secretary may require a State to submit a revised 
application under paragraph (1) if the Secretary 
has— 
‘‘(A) promulgated new or revised perform-
ance standards under subsection (d); 
‘‘(B) promulgated new or substantially re-
vised measurement and verification procedures 
and standards under subsection (f); or 
‘‘(C) otherwise substantially revised the 
program established under this section. 
‘‘(7) COST RECOVERY, FIXED COST RECOVERY 
AND SHAREHOLDER INCENTIVES.—State utility reg-
ulatory commissions are encouraged to review the 
rules and regulations of the commission to ensure 
that utilities under the jurisdiction of the commis-
sion can— 
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‘‘(A) recover the direct costs of energy effi-
ciency programs; 
‘‘(B) fully recover authorized fixed costs, 
including lost margins from lower annual sales 
due to energy efficiency programs; and 
‘‘(C) earn an incentive for shareholders if 
the energy efficiency standards are achieved. 
‘‘(i) INFORMATION AND REPORTS.—In accordance 
with section 13 of the Federal Energy Administration Act 
of 1974 (15 U.S.C. 772), the Secretary may require any 
retail electricity supplier, retail natural gas supplier, third- 
party efficiency provider, or any other entity that the Sec-
retary determines appropriate, to provide any information 
the Secretary determines appropriate to carry out this sec-
tion. 
‘‘(j) 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, except that no State law or regulation shall relieve 
any person of any requirement otherwise applicable under 
this section.’’. 
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SEC. 6. PROGRAM REVIEW. 
(a) NATIONAL ACADEMY OF SCIENCES REVIEW.— 
The Secretary of Energy shall enter into a contract with 
the National Academy of Sciences under which the Acad-
emy shall, not later than July 1, 2019, and every 10 years 
thereafter, submit to Congress, the Federal Energy Regu-
latory Commission, and the Secretary of Energy a com-
prehensive evaluation of all aspects of the programs estab-
lished under this Act and under sections 610 and 611 of 
the Public Utility Regulatory Policies Act of 1978 (as 
added by this Act), including— 
(1) an evaluation of the effectiveness of the pro-
grams, including the specific design elements of the 
programs, in increasing the efficiency of retail nat-
ural gas and electricity distribution and consumption 
and increasing the deployment of renewable elec-
tricity capacity; 
(2) the opportunities for additional technologies 
and sources of efficiency and renewable electricity 
that have emerged since the date of enactment of 
this Act; 
(3) the impact of the programs on the reli-
ability of electricity and natural gas supply; 
(4) the net benefits or costs of the programs to 
the United States and the States, including— 
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(A) the effects on electricity and natural 
gas demand and prices; 
(B) the economic development benefits of 
investment; 
(C) environmental costs and benefits; 
(D) the impacts on public health and 
health care costs; and 
(E) avoided costs related to environmental 
and congestion mitigation investments that oth-
erwise would have been required; 
(5) an assessment of the benefits and costs of 
increasing the performance standards established 
under section 611(d) of the Public Utility Regu-
latory Policies Act of 1978 (as added by this Act); 
(6) the feasibility, advantages, and disadvan-
tages of alternative models for demonstrating com-
pliance with a Federal energy efficiency resource 
standard, including— 
(A) establishing a national trading system 
for energy efficiency credits; or 
(B) demonstrating compliance through ac-
tual reductions in delivery or sales of electricity 
and natural gas, rather than on program sav-
ings; and 
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(7) 
recommendations 
regarding 
potential 
changes to this section, to regulations and proce-
dures for implementing this section, or to related 
public policies. 
(b) RECOMMENDATIONS TO CONGRESS.—Not later 
than January 1, 2020, and every 10 years thereafter, the 
Secretary of Energy shall submit to the Committee on En-
ergy and Commerce of the House of Representatives and 
the Committee on Energy and Natural Resources of the 
Senate a report making recommendations for modifica-
tions and improvements to the programs established under 
this Act and under sections 610 and 611 of the Public 
Utility Regulatory Policies Act of 1978 (as added by this 
Act), including an explanation of the inconsistencies, if 
any, between the recommendations of the Secretary of En-
ergy and the recommendations included in the evaluation 
of the National Academy of Sciences under paragraph (1). 
SEC. 7. 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 renewable electricity standard. 
‘‘Sec. 611. Federal energy efficiency resource standard for retail electricity and 
natural gas suppliers.’’. 
Æ 
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