To authorize the Secretary of Energy to make energy consumption reduction incentive payments to encourage the utilization of the best available technology in the development of desalination facilities, and other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Desalination Energy Consumption 
Reduction Act of 2006''.

SEC. 2. DEFINITIONS.

    For purposes of this Act:
            (1) Qualified desalination facility.--The term ``qualified 
        desalination facility'' means a facility that--
                    (A) produces for sale to domestic customers 
                desalinated seawater, brackish groundwater, or surface 
                water whose source water is greater than 1000 
                milligrams per liter total dissolved solids;
                    (B) is owned or operated by--
                            (i) a State or any political subdivision, 
                        agency, authority, or instrumentality of a 
                        State;
                            (ii) an Indian tribe; or
                            (iii) a corporation responsible for 
                        providing municipal water service pursuant to 
                        State or tribal law;
                    (C) is first used to produce commercial desalinated 
                water for sale during the 10-year period beginning on 
                October 1 of the first fiscal year occurring after the 
                date of enactment of this Act; and
                    (D) uses the best available technology as 
                determined by the Secretary.
            (2) Indian tribe.--The term ``Indian tribe'' has the 
        meaning given that term in section 4(e) of the Indian Self-
        Determination and Education Assistance Act (25 U.S.C. 450b(e)).
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.
            (4) State.--The term ``State'' means the several States, 
        the District of Columbia, Puerto Rico, American Samoa, the 
        Virgin Islands, Guam, and the Northern Mariana Islands.

SEC. 3. DESALINATED WATER ENERGY CONSUMPTION REDUCTION INCENTIVE 
              PAYMENTS.

    (a) Incentive Payments.--The Secretary shall make incentive 
payments in an amount determined under subsection (d) to the owners of 
qualified desalination facilities to encourage the utilization of the 
best available technology to reduce the consumption of electrical 
energy in the desalination process.
    (b) Agreement; Deadline.--The Secretary may not make any payment to 
the owner or operator of a quailfied desalination facility under this 
section unless, not later than the end of fiscal year 2018, the 
Secretary enters into a written agreement with the owner or operator to 
make such payment.
    (c) Payment Period.--The Secretary may make payments to the owner 
or operator of a qualified desalination facility under this section for 
a period not to exceed 10 years--
            (1) beginning on the date on which the facility is first 
        used to produce desalinated water; and
            (2) ending not later than September 30, 2028.
    (d) Amount of Payment.--
            (1) In general.--Payments made by the Secretary under this 
        section to the owner or operator of any qualified desalination 
        facility shall be based on the amount of electrical energy 
        conserved by the facility below the benchmarks included in the 
        formula established under paragraph (2) during the payment 
        period described in subsection (c), adjusted as provided in 
        paragraph (3).
            (2) Base payment.--The Secretary shall establish a formula 
        for making incentive payments to owners of qualified 
        desalination facilities producing potable water from source 
        waters ranging from 1,000 to 35,000 milligrams per liter total 
        dissolved solids or more. The payment shall range from 30 cents 
        per 1,000 gallons of potable water produced for any facility 
        that can demonstrate a savings of .25 kilowatt hours per gallon 
        to 90 cents per 1,000 gallons of potable water produced for any 
        facility that can demonstrate a savings of 4.75 kilowatt hours 
        per gallon from a benchmark for energy consumption by such 
        facilities that ranges along a linear scale from 1.8 kilowatt 
        hours per gallon for facilities utilizing source water of 1,000 
        milligrams per liter total dissolved solids to 14 kilowatt 
        hours per gallon for facilities utilizing source water of 
        35,000 milligrams per liter total dissolved solids or more.
            (3) Adjustments.--In the case of any payment made to any 
        person under this subsection in a fiscal year beginning after 
        calendar year 2008, the amount of such payment shall be 
        adjusted by multiplying such amount by the inflation adjustment 
        factor (determined under section 45K(d)(2) of the Internal 
        Revenue Code of 1986 by substituting ``2008'' for ``1979'' in 
        subparagraph (B) thereof) for the calendar year in which the 
        payment is made.
    (e) Application.--The Secretary may not make a grant to the owner 
or operator of a qualified desalination facility under this section 
unless the facility submits an application to the Secretary in such 
form, at such time, and containing such information and assurances as 
the Secretary may require. Further, as a part of the application the 
applicant shall provide a written assurance to the Secretary that the 
financial benefit of any incentive payments received by the applicant 
will be utilized for the benefit of the rate payers.
    (f) Limitation.--In any fiscal year not more than 60 percent of the 
funds made available by the Secretary under this section shall be made 
available to the owners or operators of qualified desalination 
facilities that obtain source water directly from the sea, an estuary, 
or from in-bank extraction wells that are of seawater origin.
    (g) Priority.--In awarding incentive payments under this section, 
the Secretary shall give priority to any application for a project 
that--
            (1) uses innovative technologies to reduce the energy 
        demand of the project;
            (2) uses renewable energy supplies in the desalination 
        process;
            (3) provides regional water supply benefits;
            (4) provides a secure source of new water supplies for 
        national defense activities;
            (5) reduces the threat of a water supply disruption as a 
        result of a natural disaster or acts of terrorism;
            (6) uses technologies that minimize the damage to marine 
        life; or
            (7) provides significant water quality benefits.
    (h) Budget Act Compliance.--The authority provided by this section 
may be exercised only in such amounts or to such extent as is provided 
in advance in appropriations Acts.
    (i) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary $200,000,000 to carry out this section 
for the period encompassing fiscal years 2008 through 2018.

Summary: Desalination Energy Consumption Reduction Act of 2006 - Requires the Secretary of Energy to make specified incentive payments to the owners of qualified desalination facilities for up to ten years to encourage the utilization of the best available technology to reduce the consumption of electrical energy in the desalination process. Limits to 60% the amount of available funds to be provided to facilities that obtain source water directly from the sea, an estuary, or from in-bank extraction wells that are of seawater origin.

Directs the Secretary, in awarding incentive payments, to give priority to projects that: (1) use innovative technologies to reduce its energy demand; (2) use renewable energy supplies; (3) provide regional water supply benefits; (4) provide a secure source of new water supplies for national defense activities; (5) reduce the threat of a water supply disruption as a result of a natural disaster or acts of terrorism; (6) use technologies that minimize the damage to marine life; or (7) provide significant water quality benefits.