SEC. 2. 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 is amended by adding after 
section 609 (7 U.S.C. 918c) 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 (including an electric 
utility and a local distribution company), means an-
other person that owns or controls, is owned or con-
trolled by, or is under common ownership or control 
with, that person, as determined under regulations 
promulgated by the Secretary. 
‘‘(2) ASHRAE; ANSI; 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 
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or retail natural gas supplier, means, for each 
calendar year for which a performance standard 
is established under subsection (c), 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 
first year that compliance is required under 
subsection (c)(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. 
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‘‘(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) COMBINED HEAT AND POWER SYSTEM.— 
The term ‘combined heat and power system’ means 
a system that uses the same energy source for the 
generation of electrical or mechanical power and the 
production of steam or another form of useful ther-
mal energy, if— 
‘‘(A) the system meets all applicable re-
quirements relating to efficiency and other op-
erating characteristics that the Secretary pro-
mulgates by regulation; and 
‘‘(B) the net quantity of electricity sold 
wholesale by the facility using the system does 
not exceed 50 percent of the total quantity of 
electricity generated annually by the system. 
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‘‘(7) COST-EFFECTIVE.—The term ‘cost-effec-
tive’ means, with respect to an energy efficiency 
measure, that the measure achieves, directly to the 
energy consumer and to the economy, a net present 
value of economic benefits over the life of the meas-
ure that is greater than the net present value of the 
cost of the measure over the life of the measure, 
using a societal benefit-cost test calculated using the 
lower of— 
‘‘(A) a utility weighted average cost of cap-
ital; or 
‘‘(B) a social discount rate of 3 percent. 
‘‘(8) 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 retail natural gas sup-
plier, as compared to— 
‘‘(A) in the case of a new facility, con-
sumption at a reference facility of average effi-
ciency; 
‘‘(B) in the case of an existing facility, 
consumption at the facility during a base period 
of not less than 1 year; 
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‘‘(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 toward 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 by 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. 
‘‘(9) ELECTRICITY SAVINGS.—The term ‘elec-
tricity savings’ means reductions in electricity con-
sumption or losses achieved through measures imple-
mented after the date of enactment of this section, 
as determined in accordance with regulations pro-
mulgated by the Secretary, that— 
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‘‘(A) occur in the service territory of the 
retail electricity supplier claiming or transfer-
ring the electricity savings; and 
‘‘(B) are limited to— 
‘‘(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 
attributable to new or replacement dis-
tribution system equipment of average effi-
ciency, as defined in regulations promul-
gated by the Secretary; 
‘‘(iii) CHP savings; 
‘‘(iv) State and local codes and stand-
ards savings of electricity; and 
‘‘(v) fuel-switching energy savings 
that result in net savings of source energy, 
as defined in regulations promulgated by 
the Secretary. 
‘‘(10) FUEL-SWITCHING ENERGY SAVINGS.— 
‘‘(A) IN GENERAL.—The term ‘fuel-switch-
ing energy savings’ means net energy savings, 
calculated in accordance with subparagraph 
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(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 
burned at a new power plant, taking into 
account existing and planned renewable en-
ergy generators 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. 
‘‘(11) LOCAL
DISTRIBUTION
COMPANY.—The 
term ‘local distribution company’ has the meaning 
given the term in section 2 of the Natural Gas Pol-
icy Act of 1978 (15 U.S.C. 3301). 
‘‘(12) NATURAL GAS SAVINGS.—The term ‘nat-
ural gas savings’ means reductions in natural gas 
consumption, leakage, or operational losses from 
measures implemented after the date of enactment 
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of this section, as determined in accordance with 
regulations promulgated by the Secretary, that— 
‘‘(A) occur in the service territory of the 
retail natural gas supplier claiming or transfer-
ring the natural gas savings; and 
‘‘(B) 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 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; 
‘‘(iii) State and local codes and stand-
ards savings of natural gas; and 
‘‘(iv) fuel-switching energy savings 
that result in net savings of source energy, 
as defined in regulations promulgated by 
the Secretary. 
‘‘(13) PERFORMANCE STANDARD.— 
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‘‘(A) IN
GENERAL.—The term ‘perform-
ance standard’ means a standard established 
for a calendar year for cumulative electricity 
savings or cumulative natural gas savings that 
is expressed as a percentage of base quantity. 
‘‘(B) CALENDAR
YEARS
2025
THROUGH 
2039.—For each of calendar years 2025 through 
2039, the term ‘performance standard’ means 
the percentage labeled as cumulative electricity 
savings percentage or cumulative natural gas 
savings percentage, as applicable, in the table in 
subsection (c)(2) for the applicable calendar 
year. 
‘‘(14) POWER POOL.— 
‘‘(A) IN GENERAL.—The term ‘power pool’ 
means an association of 2 or more inter-
connected electric systems that have entered 
into an agreement to coordinate operations and 
planning for improved reliability and effi-
ciencies, as determined by the Secretary. 
‘‘(B) INCLUSIONS.—The term ‘power pool’ 
includes a Regional Transmission Organization 
(as defined in section 3 of the Federal Power 
Act (16 U.S.C. 796)) and an Independent Sys-
tem Operator (as defined in that section). 
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‘‘(15) REPORTING PERIOD.—The term ‘report-
ing period’ means— 
‘‘(A) calendar year 2025; and 
‘‘(B) each successive 2-calendar-year pe-
riod thereafter. 
‘‘(16) RETAIL ELECTRICITY SUPPLIER.— 
‘‘(A) IN GENERAL.—The term ‘retail elec-
tricity supplier’ means, for any given calendar 
year, an electric utility that delivers not less 
than 2,000,000 megawatt hours of electric en-
ergy to electric 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 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. 
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‘‘(17) RETAIL NATURAL GAS SUPPLIER.— 
‘‘(A) IN GENERAL.—The term ‘retail nat-
ural gas supplier’ means, for any given calendar 
year, a local distribution company that delivered 
to 
natural 
gas 
consumers 
more 
than 
5,000,000,000 cubic feet of natural gas for pur-
poses other than resale during the preceding 
calendar year. 
‘‘(B) INCLUSIONS AND LIMITATIONS.—For 
purposes of determining whether an entity 
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 natural gas consumers. 
‘‘(18) STATE AND LOCAL CODES AND STAND-
ARDS SAVINGS.— 
‘‘(A) IN GENERAL.—The term ‘State and 
local codes and standards savings’ means a re-
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duction, due to the adoption and implementa-
tion, after the date of enactment of this section, 
of new or revised appliance and equipment effi-
ciency standards or building energy codes, in— 
‘‘(i) end-use electricity consumption 
for a retail electricity supplier; or 
‘‘(ii) natural gas consumption in the 
service territory of a retail natural gas 
supplier. 
‘‘(B) BASELINES.—In calculating State 
and local codes and standards savings under 
subparagraph (A)— 
‘‘(i) the baseline for calculating sav-
ings from a new or revised building code 
shall be the more stringent of— 
‘‘(I)(aa) the 2021 International 
Energy Conservation Code for resi-
dential buildings; or 
‘‘(bb) 
the 
ASHRAE/ANSI/ 
IESNA Standard 90.1–2019 for com-
mercial buildings; or 
‘‘(II) the applicable State build-
ing code in effect on the date of en-
actment of this section; and 
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‘‘(ii) the baseline for calculating sav-
ings from a new or revised appliance 
standard shall be the estimated average ef-
ficiency of new appliances in the applicable 
1 or more categories during the 1-year pe-
riod preceding the date on which the new 
or revised standard is adopted. 
‘‘(19) 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 any procedures, standards, and rules estab-
lished by the Secretary under subsections (b)(1)(D) 
and (e). 
‘‘(20) WASTE
HEAT
ENERGY
SAVINGS.—The 
term ‘waste heat energy savings’ means a reduction 
in the mechanical or thermal energy used at a facil-
ity or the electric output of a facility, adjusted to re-
flect any associated increase in fuel consumption, 
that results from a modification of an industrial, 
commercial, or institutional system that commenced 
operation before the date of enactment of this sec-
tion, in order to recapture electrical, mechanical, or 
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thermal energy that would otherwise be wasted, such 
as through exhaust or dissipation to the environ-
ment, and productively use that recaptured energy, 
represented as a reduction in net electricity or nat-
ural gas consumption, as determined in accordance 
with regulations promulgated by the Secretary. 
‘‘(b) 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— 
‘‘(A) by establishing evaluation, measure-
ment, and verification procedures and stand-
ards under subsection (e); 
‘‘(B) by 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 stand-
ards on current and future electricity and 
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natural gas use in the service territories of 
the suppliers; 
‘‘(C) by establishing requirements gov-
erning applications for, and implementation of, 
delegated State administration under subsection 
(g); and 
‘‘(D) by establishing rules to govern trans-
fers of electricity savings and natural gas sav-
ings— 
‘‘(i) between suppliers and third-party 
efficiency providers serving the same State; 
and 
‘‘(ii) between suppliers and third- 
party efficiency providers serving different 
States. 
‘‘(2) 
NATIONAL
ACADEMY
OF
SCIENCES 
STUDY.—In establishing and implementing the pro-
gram under this section, the Secretary shall take 
into consideration a report published under sub-
section (e)(2)(C). 
‘‘(3) COORDINATION WITH STATE PROGRAMS.— 
In establishing and implementing the program under 
this section, the Secretary shall, to the maximum ex-
tent practicable, preserve the integrity and incor-
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porate best practices of existing State energy effi-
ciency programs. 
‘‘(4) SAVINGS
PROGRAMS
FOR
LOW-INCOME 
CUSTOMERS.—In implementing this section, the Sec-
retary shall encourage retail electricity suppliers and 
retail natural gas suppliers to ensure that a portion 
of the customer facility savings achieved for a cal-
endar year shall result from programs that target 
households that are at or below 200 percent of the 
poverty line (as defined in section 673 of the Com-
munity Services Block Grant Act (42 U.S.C. 9902)). 
‘‘(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 the retail electricity supplier 
has achieved cumulative consistent electricity 
savings (adjusted to account for any attrition of 
savings measures implemented in prior years) 
in each calendar year that are equal to the ap-
plicable percentage 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 the retail natural gas sup-
plier has achieved cumulative consistent natural 
gas savings (adjusted to account for any attri-
tion of savings measures implemented in prior 
years) in each calendar year that are equal to 
the applicable percentage of the base quantity 
of the retail natural gas supplier. 
‘‘(2) STANDARDS FOR 2025 THROUGH 2039.— 
For each of calendar years 2025 through 2039, the 
applicable percentages are as follows: 
‘‘Calendar Year 
Cumulative Electricity 
Savings Percentage 
Cumulative Natural Gas 
Savings Percentage 
2025 
1.00 
0.50 
2026 
2.00 
1.25 
2027 
3.00 
2.00 
2028 
4.25 
3.00 
2029 
5.50 
4.00 
2030 
7.00 
5.00 
2031 
8.50 
6.00 
2032 
10.00 
7.00 
2033 
11.50 
8.00 
2034 
13.00 
9.00 
2035 
14.75 
10.00 
2036 
16.50 
11.00 
2037 
18.25 
12.00 
2038 
20.00 
13.00 
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‘‘Calendar Year 
Cumulative Electricity 
Savings Percentage 
Cumulative Natural Gas 
Savings Percentage 
2039 
22.00 
14.00 
‘‘(3) SUBSEQUENT YEARS.— 
‘‘(A) CALENDAR
YEARS
2040
THROUGH 
2049.—Not later than December 31, 2034, the 
Secretary shall promulgate regulations estab-
lishing performance standards (expressed as ap-
plicable percentages of base quantity for both 
cumulative electricity savings and cumulative 
natural gas savings) for each of calendar years 
2040 through 2049. 
‘‘(B) 
REQUIREMENTS.—The 
Secretary 
shall establish standards under this paragraph 
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 State and 
local codes and standards savings; 
‘‘(iii) technology improvements; and 
‘‘(iv) other indicators of cost-effective 
energy efficiency potential, including dif-
ferences between States. 
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‘‘(C) MINIMUM PERCENTAGE.—In no case 
shall the applicable percentages for any cal-
endar year after calendar year 2039 be less 
than the applicable percentages for calendar 
year 2039. 
‘‘(4) MIDCOURSE REVIEW AND ADJUSTMENT OF 
PERFORMANCE STANDARDS.— 
‘‘(A) IN
GENERAL.—Not later than De-
cember 31, 2033, and at 10-year intervals 
thereafter, the Secretary shall— 
‘‘(i) review the most recent perform-
ance standards established under para-
graph (2) or (3), as applicable; 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 requirement described in 
paragraph (3)(C). 
‘‘(B) LEAD TIME.—If the Secretary revises 
performance standards under this paragraph, 
the applicable regulations shall provide ade-
quate 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 after the date of enactment of this sec-
tion, 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 after 
the date of enactment of this section. 
‘‘(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 the first 3 years following the year in which 
the excess savings are achieved. 
‘‘(d) TRANSFERS
OF ELECTRICITY SAVINGS
AND 
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 power pool 
as is served by the applicable retail electricity 
supplier or retail natural gas supplier. 
‘‘(3) 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-
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thority of a contract for transfer of electricity sav-
ings or natural gas savings under this subsection. 
‘‘(4) 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 supplier or retail natural gas supplier 
under the applicable performance standards under 
subsection (c) that may be met using electricity sav-
ings or natural gas savings that are purchased under 
this subsection. 
‘‘(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 
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‘‘(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 toward the performance standards 
established 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-
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, seasonal patterns, and build-
ing area; 
‘‘(III) for new customer facilities, 
establish a standardized method for 
calculating average efficiency that ac-
counts for factors such as weather, 
level of production, seasonal patterns, 
and building area; 
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‘‘(IV) do not prevent overall load 
growth due to beneficial electrifica-
tion; 
‘‘(V) account for the useful life of 
energy efficiency and energy conserva-
tion measures; 
‘‘(VI) allow for savings from a 
program to be estimated based on ex-
trapolation from a representative sam-
ple of participating customers; 
‘‘(VII) include procedures for cal-
culating and documenting CHP sav-
ings, fuel-switching energy savings, 
and waste heat energy savings; 
‘‘(VIII) establish methods for cal-
culating State and local codes and 
standards savings, including the use 
of verified compliance rates; 
‘‘(IX) include procedures for cal-
culating 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-
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ment, as described in section 
1301 of the Energy Independ-
ence and Security Act of 2007 
(42 U.S.C. 17381), or the siting 
of new generation capacity closer 
to the end-use customer; and 
‘‘(bb) reductions in natural 
gas distribution system losses at-
tributable to pipeline repair and 
replacement programs; 
‘‘(X) count only measures and 
savings that are additional to busi-
ness-as-usual customer purchase prac-
tices; 
‘‘(XI) 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 
in achieving the savings (including 
through the activities of a designated 
agent of the supplier or through the 
purchase of transferred electricity sav-
ings or natural gas savings); 
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‘‘(XII) avoid double-counting of 
savings used for compliance with this 
section, including transferred savings; 
‘‘(XIII) include electricity savings 
or natural gas savings from programs 
administered by retail electricity sup-
pliers or retail natural gas suppliers 
that are funded by Federal, State, or 
other sources, unless the funding 
source specifies otherwise; 
‘‘(XIV) 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; 
‘‘(XV) include guidance, as ap-
propriate, for additional alternative 
approaches to evaluate electricity sav-
ings and natural gas savings for large 
commercial and industrial customers 
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in energy-intensive industries that are 
subject to international competition; 
‘‘(XVI) 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 use; 
‘‘(XVII) 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; 
‘‘(XVIII) include procedures for 
counting electricity savings and nat-
ural gas savings achieved from in-
creased utilization of mechanical insu-
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lation for new, retrofit, and mainte-
nance construction for commercial, in-
dustrial, public, and nonprofit build-
ings and facilities; 
‘‘(XIX) in any State in which the 
State regulatory authority has des-
ignated 1 or more entities to admin-
ister 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; 
‘‘(XX) include guidance for retail 
electricity suppliers and retail natural 
gas suppliers to calculate and docu-
ment business-as-usual consumption 
projections; 
‘‘(XXI) include guidance for esti-
mating savings using information 
from the database established under 
paragraph (3) based on similar meas-
ures and programs in other settings 
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with appropriate adjustments, as nec-
essary; and 
‘‘(XXII) incorporate advances in 
the science 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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equal to, as adjusted for inflation in accordance with 
such regulations 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. 
‘‘(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 re-
tail natural gas suppliers in a State under 
paragraph (2); bears to 
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‘‘(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 
‘‘(II) 
can 
be 
measured 
and 
verified in accordance with the appli-
cable procedures and standards estab-
lished 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 (42 U.S.C. 6303(d)). 
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‘‘(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 (42 U.S.C. 
6306(b)). 
‘‘(B) REFERENCES.—For purposes of sub-
paragraph (A)— 
‘‘(i) any reference in section 336(b) of 
the Energy Policy and Conservation Act 
(42 U.S.C. 6306(b)) to a rule shall be con-
sidered to be a reference to a final action 
taken by the Secretary under this section 
(including the promulgation of a regula-
tion, if applicable), other than the assess-
ment of a civil penalty; and 
‘‘(ii) any reference in that section to 
the date on which a rule is prescribed shall 
be considered to be a reference to the date 
on which the applicable final action was 
taken. 
‘‘(g) STATE ADMINISTRATION.— 
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‘‘(1) IN GENERAL.—On 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. 
‘‘(2) 
SECRETARIAL
DETERMINATION.—Not 
later than 180 days after the date on which a com-
plete application described in paragraph (1) is re-
ceived by the Secretary, the Secretary shall make a 
substantive determination approving or disapproving 
the 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 to 
the procedures and standards described in sub-
section (e), if the State demonstrates that the alter-
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 that subsection. 
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‘‘(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-
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. 
‘‘(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 
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under this subsection and to implement cost-ef-
fective 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 established under subsection 
(e). 
‘‘(5) REVIEW OF STATE ADMINISTRATION.— 
‘‘(A) PERIODIC REVIEW.—Every 2 years, 
the Secretary shall review State administration 
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 this section, so 
that each State shall be reviewed not less fre-
quently than once every 4 years. 
‘‘(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— 
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‘‘(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 in 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
ON
PETITION.—Notwith-
standing subparagraph (A), on receipt of a pub-
lic petition containing a credible allegation of a 
substantial deficiency of a State energy effi-
ciency program authorized under this sub-
section, the Secretary shall promptly re-review 
the State energy efficiency program. 
‘‘(D) DEFICIENCIES.— 
‘‘(i) IN
GENERAL.—In completing a 
review under this paragraph, if the Sec-
retary finds deficiencies, the Secretary 
shall— 
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‘‘(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 
‘‘(III) if substantial deficiencies 
remain uncorrected after the review 
provided for under subclause (II), re-
voke the authority of the State to ad-
minister this section. 
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‘‘(6) CALLS FOR REVISION OF STATE APPLICA-
TIONS.—As a condition of maintaining the delegated 
authority to administer this section, the Secretary 
may require a State to submit 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. 
‘‘(7) COST RECOVERY, FIXED COST RECOVERY, 
AND
SHAREHOLDER
INCENTIVES.—The Secretary 
shall encourage State utility regulatory commissions 
to review the rules and regulations of the Commis-
sion to ensure that utilities under the jurisdiction of 
the Commission may— 
‘‘(A) recover the direct costs of energy effi-
ciency programs; 
‘‘(B)(i) fully recover authorized fixed costs 
from customers, including recovery of revenue 
associated with fixed costs that was lost due to 
annual sales that were lower than forecasted; 
but 
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‘‘(ii) return to customers the revenue asso-
ciated with fixed costs collected in excess of the 
authorized amount under clause (i); and 
‘‘(C) earn a performance-based incentive 
for shareholders for the achievement of energy 
efficiency standards. 
‘‘(8) 
EVALUATION, 
MEASUREMENT, 
AND 
VERIFICATION INCENTIVES.—The Secretary shall en-
courage States that have delegated authority to ad-
minister this section to provide incentives to retail 
electricity suppliers, retail natural gas suppliers, and 
third-party efficiency providers to use randomized 
control trials and other experimental or quasi-experi-
mental approaches to evaluate energy efficiency 
measures and programs within the State. 
‘‘(h) 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. 
‘‘(i) STATE LAW.—Nothing in this section diminishes 
or qualifies any authority of a State or political subdivision 
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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.’’. 
(b) CONFORMING AMENDMENT.—The table of con-
tents in section 1(b) of the Public Utility Regulatory Poli-
cies Act of 1978 (Public Law 95–617; 92 Stat. 3118) 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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