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provided that not more than 10 percent of al-
lowances distributed to each State pursuant to 
this section shall be used for such purpose. 
(5) For any allowances used for the purpose de-
scribed in paragraph (4)(C), the State shall— 
(A) prioritize expansion of existing energy 
efficiency programs approved and overseen by 
the State or the appropriate State regulatory 
authority; and 
(B) demonstrate that such allowances have 
been used to supplement, and not to supplant, 
existing and otherwise available State, local, 
and ratepayer funding for such purpose. 
(d) REPORTING.—Each State receiving allowances 
under this section shall include in its biennial reports re-
quired under section 131, in accordance with such require-
ments as the Administrator may prescribe— 
(1) a list of entities receiving allowances or al-
lowance value under this section, including entities 
receiving such allowances or allowance value from 
units of local government pursuant to subsection 
(c)(1); 
(2) the amount and nature of allowances or al-
lowance value received by each such recipient; 
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(3) the specific purposes for which such allow-
ances or allowance value was conveyed to each such 
recipient; 
(4) documentation of the amount of energy sav-
ings, emission reductions, renewable energy deploy-
ment, and new or retooled manufacturing capacity 
resulting from the use of such allowances or allow-
ance value; and 
(5) for any energy efficiency program supported 
under subsection (c)(4)(C)— 
(A) an assessment demonstrating the cost- 
effectiveness of such program; and 
(B) a demonstration that the requirements 
set forth in subsection (c)(5) have been satis-
fied. 
(e) ENFORCEMENT.—If the Administrator deter-
mines that a State is not in compliance with this section, 
the Administrator may withhold up to twice the number 
of allowances that the State failed to use in accordance 
with the requirements of this section, that such State 
would otherwise be eligible to receive under this section 
in later years. Allowances withheld pursuant to this sub-
section shall be distributed among the remaining States 
in accordance with the requirements of subsection (b). 
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SEC. 133. SUPPORT OF INDIAN RENEWABLE ENERGY AND 
ENERGY EFFICIENCY PROGRAMS. 
(a) DEFINITIONS.—For purposes of this section: 
(1) ALLOWANCE; 
COST-EFFECTIVE; 
RENEW-
ABLE ENERGY RESOURCE.—The terms ‘‘allowance’’, 
‘‘cost-effective’’, and ‘‘renewable energy resource’’ 
have the meaning given those terms in section 132 
of this Act. 
(2) INDIAN TRIBE.—The term ‘‘Indian tribe’’ 
has the meaning given the term in section 4 of the 
Indian Self-Determination and Education Assistance 
Act (25. U.S.C. 450b). 
(3) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Energy. 
(b) ESTABLISHMENT.—Not later than 18 months 
after the date of enactment of this Act, the Secretary 
shall, in consultation with the Administrator and the Sec-
retary of the Interior, promulgate regulations establishing 
a program to distribute allowances to Indian tribes on a 
competitive basis for the following purposes: 
(1) ENERGY
EFFICIENCY.—Cost-effective en-
ergy efficiency programs for end-use consumers of 
electricity, natural gas, home heating oil, or propane. 
(2) 
RENEWABLE
ENERGY.—Deployment 
of 
technologies to generate electricity from renewable 
energy resources. 
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(c) REQUIREMENTS.—The regulations promulgated 
pursuant to subsection (b) shall prescribe design elements 
and requirements of the program established under this 
section, including— 
(1) objective criteria for evaluating proposals 
submitted by Indian tribes, and for selecting projects 
and programs to receive support, under this section; 
(2) reporting requirements for Indian tribes 
that receive allowances under this section; and 
(3) other appropriate elements and require-
ments. 
(d) DISTRIBUTION.—The Administrator shall, at the 
direction of the Secretary, distribute to Indian tribes al-
lowances that are set aside, pursuant to section 132, for 
use under this section. 
Subtitle E—Smart Grid 
Advancement 
SEC. 141. DEFINITIONS. 
For purposes of this subtitle: 
(1) The term ‘‘applicable baseline’’ means the 
average of the highest three annual peak demands a 
load-serving entity has experienced during the 5 
years immediately prior to the date of enactment of 
this Act. 
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(2) The term ‘‘Commission’’ means Federal En-
ergy Regulatory Commission. 
(3) The term ‘‘load-serving entity’’ means an 
entity that provides electricity directly to retail con-
sumers with the responsibility to assure power qual-
ity and reliability, including such entities that are 
investor-owned, publicly owned, owned by rural elec-
tric cooperatives, or other entities. 
(4) The term ‘‘peak demand’’ means the high-
est point of electricity demand, net of any distrib-
uted electricity generation or storage from sources 
on the load-serving entity’s customers’ premises, 
during any hour on the system of a load serving en-
tity during a calendar year, expressed in Megawatts 
(MW), or more than one such high point as a func-
tion of seasonal demand changes. 
(5) The term ‘‘peak demand reduction’’ means 
the reduction in annual peak demand as compared 
to a previous baseline year or period, expressed in 
Megawatts (MW), whether accomplished by— 
(A) diminishing the end-use requirements 
for electricity; 
(B) use of locally stored energy or gen-
erated electricity to meet those requirements 
from distributed resources on the load-serving 
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