To amend title VI of the Public Utility Regulatory Policies Act of 1978 to establish a Federal renewable energy portfolio standard for certain retail electric utilities, and for other purposes.

SECTION 1. FEDERAL RENEWABLE PORTFOLIO STANDARD.

    Title VI of the Public Utility Regulatory Policies Act of 1978 is 
amended by adding at the end the following:

``SEC. 606. FEDERAL RENEWABLE PORTFOLIO STANDARD.

    ``(a) Minimum Renewable Generation Requirement.--For each calendar 
year beginning in calendar year 2005, each retail electric supplier 
shall submit to the Secretary, not later than April 1 of the following 
calendar year, renewable energy credits in an amount equal to the 
required annual percentage specified in subsection (b).
    ``(b) Required Annual Percentage.--For calendar years 2005 through 
2025, the required annual percentage of the retail electric supplier's 
base amount that shall be generated from renewable energy resources 
shall be the percentage specified in the following table:

                                                        Required annual
    ``Calendar Years                                         percentage
                2005 through 2006..........................        1.0 
                2007 through 2008..........................        2.2 
                2009 through 2010..........................        3.4 
                2011 through 2012..........................        4.6 
                2013 through 2014..........................        5.8 
                2015 through 2016..........................        7.0 
                2017 through 2018..........................        8.5 
                2019 through 2020..........................       10.0 
                2020 through 2021..........................       12.0 
                2021 through 2022..........................       14.0 
                2022 through 2023..........................       16.0 
                2023 through 2024..........................       18.0 
                2024 through 2025..........................       20.0.
    ``(c) Submission of Credits.--(1) A retail electric supplier may 
satisfy the requirements of subsection (a) through the submission of 
renewable energy credits--
            ``(A) issued to the retail electric supplier under 
        subsection (d);
            ``(B) obtained by purchase or exchange under subsection 
        (e); or
            ``(C) borrowed under subsection (f).
    ``(2) A credit may be counted toward compliance with subsection (a) 
only once.
    ``(d) Issuance of Credits.--(1) The Secretary shall establish, not 
later than 1 year after the date of enactment of this section, a 
program to issue, monitor the sale or exchange of, and track renewable 
energy credits.
    ``(2) Under the program, an entity that generates electric energy 
through the use of a renewable energy resource may apply to the 
Secretary for the issuance of renewable energy credits. The application 
shall indicate--
            ``(A) the type of renewable energy resource used to produce 
        the electricity,
            ``(B) the location where the electric energy was produced, 
        and
            ``(C) any other information the Secretary determines 
        appropriate.
    ``(3)(A) Except as provided in paragraphs (B), (C), and (D), the 
Secretary shall issue to an entity one renewable energy credit for each 
kilowatt-hour of electric energy the entity generates from the date of 
enactment of this section and in each subsequent calendar year through 
the use of a renewable energy resource at an eligible facility.
    ``(B) For incremental hydropower the credits shall be calculated 
based on the expected increase in average annual generation resulting 
from the efficiency improvements or capacity additions. The number of 
credits shall be calculated using the same water flow information used 
to determine a historic average annual generation baseline for the 
hydroelectric facility and certified by the Secretary or the Federal 
Energy Regulatory Commission. The calculation of the credits for 
incremental hydropower shall not be based on any operational changes at 
the hydroelectric facility not directly associated with the efficiency 
improvements or capacity additions.
    ``(C) The Secretary shall issue two renewable energy credits for 
each kilowatt-hour of electric energy generated and supplied to the 
grid in that calendar year through the use of a renewable energy 
resource at an eligible facility located on Indian land. For purposes 
of this paragraph, renewable energy generated by biomass cofired with 
other fuels is eligible for two credits only if the biomass was grown 
on the land eligible under this paragraph.
    ``(D) For renewable energy resources produced from a generation 
offset, the Secretary shall issue two renewable energy credits for each 
kilowatt-hour generated.
    ``(E) To be eligible for a renewable energy credit, the unit of 
electric energy generated through the use of a renewable energy 
resource may be sold or may be used by the generator. If both a 
renewable energy resource and a nonrenewable energy resource are used 
to generate the electric energy, the Secretary shall issue credits 
based on the proportion of the renewable energy resource used. The 
Secretary shall identify renewable energy credits by type and date of 
generation.
    ``(4) When a generator sells electric energy generated through the 
use of a renewable energy resource to a retail electric supplier under 
a contract subject to section 210 of this Act, the retail electric 
supplier is treated as the generator of the electric energy for the 
purposes of this section for the duration of the contract.
    ``(5) The Secretary may issue credits for existing facility offsets 
to be applied against a retail electric supplier's own required annual 
percentage. The credits are not tradeable and may only be used in the 
calendar year generation actually occurs.
    ``(e) Credit Trading.--A renewable energy credit may be sold or 
exchanged by the entity to whom issued or by any other entity who 
acquires the credit. A renewable energy credit for any year that is not 
used to satisfy the minimum renewable generation requirement of 
subsection (a) for that year may be carried forward for use within the 
next 4 years.
    ``(f) Credit Borrowing.--At any time before the end of calendar 
year 2005, a retail electric supplier that has reason to believe it 
will not have sufficient renewable energy credits to comply with 
subsection (a) may--
            ``(1) submit a plan to the Secretary demonstrating that the 
        retail electric supplier will earn sufficient credits within 
        the next 3 calendar years which, when taken into account, will 
        enable the retail electric suppliers to meet the requirements 
        of subsection (a) for calendar year 2005 and the subsequent 
        calendar years involved; and
            ``(2) upon the approval of the plan by the Secretary, apply 
        credits that the plan demonstrates will be earned within the 
        next 3 calendar years to meet the requirements of subsection 
        (a) for each calendar year involved.
    ``(g) Credit Cost Cap.--The Secretary shall offer renewable energy 
credits for sale at the lesser of 3 cents per kilowatt-hour or 200 
percent of the average market value of credits for the applicable 
compliance period. On January 1 of each year following calendar year 
2005, the Secretary shall adjust for inflation the price charged per 
credit for such calendar year, based on the Gross Domestic Product 
Implicit Price Deflator.
    ``(h) Enforcement.--The Secretary may bring an action in the 
appropriate United States district court to impose a civil penalty on a 
retail electric supplier that does not comply with subsection (a), 
unless the retail electric supplier was unable to comply with 
subsection (a) for reasons outside of the supplier's reasonable control 
(including weather-related damage, mechanical failure, lack of 
transmission capacity or availability, strikes, lockouts, actions of a 
governmental authority). A retail electric supplier who does not submit 
the required number of renewable energy credits under subsection (a) 
shall be subject to a civil penalty of not more than the greater of 3 
cents or 200 percent of the average market value of credits for the 
compliance period for each renewable energy credit not submitted.
    ``(i) Information Collection.--The Secretary may collect the 
information necessary to verify and audit--
            ``(1) the annual electric energy generation and renewable 
        energy generation of any entity applying for renewable energy 
        credits under this section,
            ``(2) the validity of renewable energy credits submitted by 
        a retail electric supplier to the Secretary, and
            ``(3) the quantity of electricity sales of all retail 
        electric suppliers.
    ``(j) Environmental Savings Clause.--Incremental hydropower shall 
be subject to all applicable environmental laws and licensing and 
regulatory requirements.
    ``(k) State Savings Clause.--This section does not preclude a State 
from requiring additional renewable energy generation in that State, or 
from specifying technology mix.
    ``(l) Definitions.--For purposes of this section:
            ``(1) Biomass.--The term `biomass' means any organic 
        material that is available on a renewable or recurring basis, 
        including dedicated energy crops, trees grown for energy 
        production, wood waste and wood residues, plants (including 
        aquatic plants, grasses, and agricultural crops), residues, 
        fibers, animal wastes and other organic waste materials, and 
        fats and oils, except that with respect to material removed 
        from National Forest System lands the term includes only 
        organic material from--
                    ``(A) thinnings from trees that are less than 12 
                inches in diameter;
                    ``(B) slash;
                    ``(C) brush; and
                    ``(D) mill residues.
            ``(2) Eligible facility.--The term `eligible facility' 
        means--
                    ``(A) a facility for the generation of electric 
                energy from a renewable energy resource that is placed 
                in service on or after the date of enactment of this 
                section; or
                    ``(B) a repowering or cofiring increment that is 
                placed in service on or after the date of enactment of 
                this section at a facility for the generation of 
                electric energy from a renewable energy resource that 
                was placed in service before that date.
            ``(3) Eligible renewable energy resource.--The term 
        `renewable energy resource' means solar, wind, ocean, or 
        geothermal energy, biomass (excluding solid waste and paper 
        that is commonly recycled), landfill gas, a generation offset, 
        or incremental hydropower.
            ``(4) Generation offset.--The term `generation offset' 
        means reduced electricity usage metered at a site where a 
        customer consumes energy from a renewable energy technology.
            ``(5) Existing facility offset.--The term `existing 
        facility offset' means renewable energy generated from an 
        existing facility, not classified as an eligible facility, that 
        is owned or under contract to a retail electric supplier on the 
        date of enactment of this section.
            ``(6) Incremental hydropower.--The term `incremental 
        hydropower' means additional generation that is achieved from 
        increased efficiency or additions of capacity after the date of 
        enactment of this section at a hydroelectric dam that was 
        placed in service before that date.
            ``(7) Indian land.--The term `Indian land' means--
                    ``(A) any land within the limits of any Indian 
                reservation, pueblo, or rancheria,
                    ``(B) any land not within the limits of any Indian 
                reservation, pueblo, or rancheria title to which was on 
                the date of enactment of this paragraph either held by 
                the United States for the benefit of any Indian tribe 
                or individual or held by any Indian tribe or individual 
                subject to restriction by the United States against 
                alienation,
                    ``(C) any dependent Indian community, and
                    ``(D) any land conveyed to any Alaska Native 
                corporation under the Alaska Native Claims Settlement 
                Act.
            ``(8) Indian tribe.--The term `Indian tribe' means any 
        Indian tribe, band, nation, or other organized group or 
        community, including any Alaskan Native village or regional or 
        village corporation as defined in or established pursuant to 
        the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et 
        seq.), which is recognized as eligible for the special programs 
        and services provided by the United States to Indians because 
        of their status as Indians.
            ``(9) Renewable energy.--The term `renewable energy' means 
        electric energy generated by a renewable energy resource.
            ``(10) Renewable energy resource.--The term `renewable 
        energy resource' means solar, wind, ocean, or geothermal 
        energy, biomass (including municipal solid waste), landfill 
        gas, a generation offset, or incremental hydropower.
            ``(11) Repowering or cofiring increment.--The term 
        `repowering or cofiring increment' means the additional 
        generation from a modification that is placed in service on or 
        after the date of enactment of this section to expand 
        electricity production at a facility used to generate electric 
        energy from a renewable energy resource or to cofire biomass 
        that was placed in service before the date of enactment of this 
        section, or the additional generation above the average 
        generation in the 3 years preceding the date of enactment of 
        this section, to expand electricity production at a facility 
        used to generate electric energy from a renewable energy 
        resource or to cofire biomass that was placed in service before 
        the date of enactment of this section.
            ``(12) Retail electric supplier.--The term `retail electric 
        supplier' means a person that sells electric energy to electric 
        consumers and sold not less than 1,000,000 megawatt-hours of 
        electric energy to electric consumers for purposes other than 
        resale during the preceding calendar year, except that such 
        term does not include the United States, a State or any 
        political subdivision of a State, or any agency, authority, or 
        instrumentality of any one or more of the foregoing, or a rural 
        electric cooperative.
            ``(13) Retail electric supplier's base amount.--The term 
        `retail electric supplier's base amount' means the total amount 
        of electric energy sold by the retail electric supplier to 
        electric customers during the most recent calendar year for 
        which information is available, excluding electric energy 
        generated by--
                    ``(A) an eligible renewable energy resource;
                    ``(B) municipal solid waste; or
                    ``(C) a hydroelectric facility.
    ``(m) Sunset.--This section expires December 31, 2030.''.

Summary: Amends the Public Utility Regulatory Policies Act of 1978 to prescribe guidelines for a Federal Renewable Portfolio Standard under which retail electric suppliers submit renewable energy credits to the Secretary.