Title: American Renewable Energy and Efficiency Act
Policy area: Energy

Summary:
American Renewable Energy and Efficiency Act
This bill requires (1) electric utilities to obtain a minimum percentage of the electricity they sell in 2021 through 2039 from renewable resources, and (2) electric utilities and natural gas utilities to meet performance standards for 2021 through 2030 with respect to cumulative electricity savings and cumulative natural gas savings.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9036 Introduced in House (IH)]

<DOC>






116th CONGRESS
  2d Session
                                H. R. 9036

To amend title VI of the Public Utility Regulatory Policies Act of 1978 
   to establish a Federal renewable electricity standard for retail 
electricity suppliers and a Federal energy efficiency resource standard 
for retail electricity suppliers and retail natural gas suppliers, and 
                          for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           December 18, 2020

    Mr. Welch (for himself, Ms. Clarke of New York, and Mr. Lujan) 
 introduced the following bill; which was referred to the Committee on 
                          Energy and Commerce

_______________________________________________________________________

                                 A BILL


 
To amend title VI of the Public Utility Regulatory Policies Act of 1978 
   to establish a Federal renewable electricity standard for retail 
electricity suppliers and a Federal energy efficiency resource standard 
for retail electricity suppliers and retail natural gas suppliers, and 
                          for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; FINDINGS.

    (a) Short Title.--This Act may be cited as the ``American Renewable 
Energy and Efficiency Act''.
    (b) Findings.--Congress finds that--
            (1) the Federal renewable electricity standard established 
        by section 610 of the Public Utility Regulatory Policies Act of 
        1978 (as added by this Act) establishes a market-based policy 
        to create ongoing competition among renewable electricity 
        generators across the United States and provide the greatest 
        quantity of clean electricity for the lowest price;
            (2) the United States has vast wind, solar, hydropower, 
        biomass, and geothermal resources that--
                    (A) are renewable;
                    (B) are dispersed widely across different regions 
                of the United States; and
                    (C) can be harnessed to generate a significant 
                share of electricity in the United States;
            (3) the Federal energy efficiency resource standard 
        established by section 611 of the Public Utility Regulatory 
        Policies Act of 1978 (as added by this Act)--
                    (A) establishes nationwide minimum levels 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 upgrades;
                            (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
            (4) in light of the cost-effective energy efficiency 
        opportunities that exist across the United States in every 
        sector of the economy, retail electricity suppliers, retail 
        natural gas suppliers, and States should--
                    (A) include energy efficiency as a resource in 
                utility planning and procurement activities; and
                    (B) seek to achieve all energy efficiency measures 
                that are available at lower cost than other energy 
                supply options.

SEC. 2. FEDERAL RENEWABLE ELECTRICITY STANDARD.

    Title VI of the Public Utility Regulatory Policies Act of 1978 (16 
U.S.C. 2601 et seq.) is amended by adding after section 609 (7 U.S.C. 
918c) the following:

``SEC. 610. FEDERAL RENEWABLE ELECTRICITY STANDARD.

    ``(a) Definitions.--In this section:
            ``(1) Federal renewable electricity credit.--The term 
        `Federal renewable electricity credit' means a credit, that 
        represents, for purposes of compliance with this section, 1 
        megawatt hour of renewable electricity, issued pursuant to 
        subsection (e).
            ``(2) Impacted community.--The term `impacted community' 
        means--
                    ``(A) an economically distressed area affected by 
                environmental pollution or other hazards that can lead 
                to--
                            ``(i) exposure to the pollution or hazard, 
                        including negative public health effects 
                        resulting from that exposure; or
                            ``(ii) environmental degradation; or
                    ``(B) an economically distressed area affected by 
                high unemployment due to--
                            ``(i) a significant decline in coal mining 
                        activity; or
                            ``(ii) the closure of a coal-fired power 
                        plant.
            ``(3) 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 on the 
                date of enactment of this section was held by--
                            ``(i) the United States for the benefit of 
                        any Indian Tribe or individual; or
                            ``(ii) any Indian Tribe or individual 
                        subject to restriction by the United States 
                        against alienation;
                    ``(C) any dependent Indian community; or
                    ``(D) any land conveyed under the Alaska Native 
                Claims Settlement Act to any Native Corporation (as 
                that term is defined in section 3 of that Act).
            ``(4) Indian tribe.--The term `Indian Tribe' means any 
        Indian Tribe, band, nation, or other organized group or 
        community (including any Native village, Regional Corporation, 
        or Village Corporation (as those terms are defined in section 3 
        of the Alaska Native Claims Settlement Act)) that is recognized 
        as eligible for the special programs and services provided by 
        the United States to Indians because of their status as 
        Indians.
            ``(5) Qualified hydropower.--The term `qualified 
        hydropower' means energy produced from generating capacity 
        added to a dam on or after January 1, 2001, if the Commission 
        certifies that--
                    ``(A) the dam--
                            ``(i) was placed in service before the date 
                        of enactment of this section;
                            ``(ii) was operated for flood control, 
                        navigation, or water supply purposes; and
                            ``(iii) was not producing hydroelectric 
                        power prior to the addition of the capacity; 
                        and
                    ``(B) the hydroelectric project installed on the 
                dam--
                            ``(i) is licensed or is exempt from 
                        licensing by the Commission;
                            ``(ii) is in compliance with--
                                    ``(I) the terms and conditions of 
                                the license or exemption; and
                                    ``(II) other applicable legal 
                                requirements for the protection of 
                                environmental quality, including 
                                applicable fish passage requirements; 
                                and
                            ``(iii) is operated so that the water 
                        surface elevation at any given location and 
                        time that would have occurred in the absence of 
                        the hydroelectric project is maintained, 
                        subject to any license or exemption 
                        requirements that require changes in water 
                        surface elevation for the purpose of improving 
                        the environmental quality of the affected 
                        waterway.
            ``(6) Qualified renewable biomass.--The term `qualified 
        renewable biomass' means renewable biomass that, when 
        combusted, yields, on a weighted-average basis, at least 50 
        percent less lifecycle greenhouse gas emissions (as defined in 
        section 4(a) of the American Renewable Energy and Efficiency 
        Act) per unit of useful energy, than the lifecycle greenhouse 
        gas emissions, including methane leakage, from the generation 
        of such unit of useful energy by a combined cycle natural gas 
        electric generating unit using the most efficient commercially 
        available technology (based on lifecycle greenhouse gas 
        emissions).
            ``(7) Renewable biomass.--The term `renewable biomass' 
        means--
                    ``(A) crop byproducts or crop residues harvested 
                from actively managed or fallow agricultural land that 
                is cleared prior to the date of enactment of this 
                section;
                    ``(B) planted trees, brush, slash, and residues 
                from an actively managed tree farm dedicated to energy 
                crop production and located on land cleared prior to 
                the date of enactment of this section;
                    ``(C) byproducts of wood or paper mill operations, 
                including lignin in spent pulping liquors;
                    ``(D) algae;
                    ``(E) nonhazardous plant matter derived from 
                waste--
                            ``(i) including separated yard waste, 
                        landscape right-of-way trimmings, or food 
                        waste; but
                            ``(ii) not including municipal solid waste, 
                        recyclable waste paper, painted, treated or 
                        pressurized wood, or wood contaminated with 
                        plastic or metals; and
                    ``(F) vegetative matter removed from within 200 
                yards of any manmade structure or campground for the 
                purposes of protecting structures from wildfire.
            ``(8) Renewable electricity.--The term `renewable 
        electricity' means electricity generated (including by means of 
        a fuel cell) from a renewable energy resource.
            ``(9) Renewable energy resource.--The term `renewable 
        energy resource' means each of the following:
                    ``(A) Wind energy.
                    ``(B) Solar energy.
                    ``(C) Geothermal energy.
                    ``(D) Qualified renewable biomass.
                    ``(E) Biogas derived from qualified renewable 
                biomass.
                    ``(F) Biofuel derived from qualified renewable 
                biomass.
                    ``(G) Biogas derived from anaerobic digestion at 
                wastewater treatment facilities or from farms through 
                anaerobic digesters.
                    ``(H) Qualified hydropower.
                    ``(I) Marine and hydrokinetic renewable energy (as 
                defined in section 632 of the Energy Independence and 
                Security Act of 2007).
                    ``(J) Landfill gas.
            ``(10) Retail electricity supplier.--
                    ``(A) In general.--The term `retail electricity 
                supplier' means, for any calendar year, an electric 
                utility that sells not fewer than 1,000,000 megawatt 
                hours of electricity to electric consumers 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) the sales made by any affiliate of 
                        the electric utility to electric consumers, 
                        other than sales to lessees or tenants of the 
                        affiliate, shall be considered to be sales made 
                        by the electric utility; and
                            ``(ii) sales made by the electric utility 
                        to an affiliate, lessee, or tenant of the 
                        electric utility shall not be treated as sales 
                        to electric consumers.
                    ``(C) Affiliate.--In this paragraph, the term 
                `affiliate' when used in relation to a person, means 
                another person that directly or indirectly owns or 
                controls, is owned or controlled by, or is under common 
                ownership or control with, that person, as determined 
                under regulations promulgated by the Commission.
            ``(11) Retail electricity supplier's base quantity.--The 
        term `retail electricity supplier's base quantity' means the 
        total quantity of electricity sold by the retail electricity 
        supplier, expressed in megawatt hours, to electric consumers 
        during the relevant calendar year, excluding--
                    ``(A) electricity generated by a hydroelectric 
                facility, other than qualified hydropower; and
                    ``(B) electricity generated by the combustion of 
                municipal solid waste.
            ``(12) Retire and retirement.--The terms `retire' and 
        `retirement' with respect to a Federal renewable electricity 
        credit, mean to disqualify the credit for any subsequent use 
        under this section, regardless of whether the use is a sale, 
        transfer, exchange, or submission in satisfaction of a 
        compliance obligation.
    ``(b) Annual Compliance Obligation.--Except as otherwise provided 
in subsection (f), for each of calendar years 2021 through 2039, not 
later than March 31 of the following calendar year, each retail 
electricity supplier shall submit to the Commission a quantity of 
Federal renewable electricity credits that represents a quantity of 
megawatt hours of renewable electricity that is at least equal to the 
annual target of the retail electricity supplier under subsection (d).
    ``(c) Establishment.--
            ``(1) In general.--Not later than 1 year after the date of 
        enactment of this section, the Commission shall promulgate 
        regulations to implement and enforce the requirements of this 
        section.
            ``(2) Considerations.--In promulgating regulations under 
        paragraph (1), the Commission shall, to the maximum extent 
        practicable--
                    ``(A) preserve the integrity and incorporate best 
                practices of existing State and tribal renewable 
                electricity programs;
                    ``(B) preserve the integrity of voluntary renewable 
                energy markets;
                    ``(C) delegate to an appropriate market-making 
                entity the administration of a national tradeable 
                Federal renewable electricity credit market for 
                purposes of creating a transparent national market for 
                the sale or trade of Federal renewable electricity 
                credits, relying on existing and emerging State, 
                tribal, or regional tracking systems that issue and 
                track non-Federal renewable electricity credits; and
                    ``(D) cooperate with States and Indian Tribes--
                            ``(i) to facilitate coordination between 
                        State, tribal, and Federal renewable 
                        electricity programs; and
                            ``(ii) to minimize administrative burdens 
                        and costs to retail electricity suppliers.
    ``(d) Annual Compliance Requirement.--
            ``(1) Annual targets.--For each of calendar years 2021 
        through 2039, the annual target of a retail electricity 
        supplier shall be equal to the number of megawatt hours that is 
        equal to the product obtained by multiplying--
                    ``(A) the required annual percentage for that 
                calendar year under paragraph (2); and
                    ``(B) the retail electricity supplier's base 
                quantity for that calendar year.
            ``(2) Required annual percentage.--
                    ``(A) Calendar years 2021 through 2030.--For each 
                of calendar years 2021 through 2030, the required 
                annual percentage shall be as follows:

                                                        Required annual
``Year:                                                     percentage:
        2021...................................................    21.0
        2022...................................................    24.5
        2023...................................................    28.0
        2024...................................................    31.5
        2025...................................................    35.0
        2026...................................................    39.0
        2027...................................................    43.0
        2028...................................................    47.0
        2029...................................................    51.0
        2030...................................................    55.0

                    ``(B) Calendar years 2031 through 2039.--
                            ``(i) Increase.--Except as provided in 
                        clause (ii), for each of calendar years 2031 
                        through 2039, the required annual percentage 
                        shall be equal to the required annual 
                        percentage for the previous calendar year plus 
                        4 percentage points.
                            ``(ii) Feasibility.--
                                    ``(I) Adjustment.--Except as 
                                provided in subclause (II), for any of 
                                calendar years 2031 through 2039, the 
                                Commission may increase or decrease the 
                                4 percentage point increase required 
                                under clause (i) if the Commission 
                                determines necessary based on technical 
                                and economic feasibility studies or 
                                other equivalent means.
                                    ``(II) Exception.--For each of 
                                calendar years 2031 through 2039, the 
                                percentage point increase required 
                                under this subparagraph for the 
                                required annual percentage shall be 
                                greater than zero.
    ``(e) Federal Renewable Electricity Credits.--
            ``(1) In general.--
                    ``(A) Issuance; tracking; verification.--The 
                regulations promulgated under this section shall 
                include provisions governing the issuance, tracking, 
                and verification of Federal renewable electricity 
                credits.
                    ``(B) Credit ratio.--Except as provided in 
                paragraphs (2) through (4), the Commission shall issue 
                to each generator of renewable electricity 1 Federal 
                renewable electricity credit for each megawatt hour of 
                renewable electricity generated by the generator after 
                December 31, 2020.
                    ``(C) Serial number.--The Commission shall assign a 
                unique serial number to each Federal renewable 
                electricity credit.
            ``(2) Generation from certain state renewable electricity 
        programs.--
                    ``(A) In general.--If renewable electricity is 
                generated with the support of payments from a retail 
                electricity supplier pursuant to a State renewable 
                electricity program (whether through State alternative 
                compliance payments or through payments to a State 
                renewable electricity procurement fund or entity), the 
                Commission shall issue Federal renewable electricity 
                credits to the retail electricity supplier for the 
                portion of the relevant renewable electricity 
                generation that is attributable to payments made by the 
                retail electricity supplier, as determined pursuant to 
                regulations promulgated by the Commission.
                    ``(B) Remaining portion.--For any remaining portion 
                of the relevant renewable electricity generation, the 
                Commission shall issue Federal renewable electricity 
                credits to the generator, as provided in paragraph (1), 
                except that not more than 1 Federal renewable 
                electricity credit shall be issued for the same 
                megawatt hour of electricity.
                    ``(C) State guidance.--In determining how Federal 
                renewable electricity credits will be apportioned among 
                retail electricity suppliers and generators under this 
                paragraph, the Commission shall consider information 
                and guidance issued by the applicable one or more 
                States.
            ``(3) Certain power sales contracts.--Except as otherwise 
        provided in paragraph (2), if a generator has sold renewable 
        electricity to a retail electricity supplier under a contract 
        for power from a facility placed in service before the date of 
        enactment of this section, and the contract does not provide 
        for the determination of ownership of the Federal renewable 
        electricity credits associated with the generation, the 
        Commission shall issue the Federal renewable electricity 
        credits to the retail electricity supplier for the duration of 
        the contract.
            ``(4) Credit multipliers.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the Commission shall issue--
                            ``(i) not more than 2 Federal renewable 
                        electricity credits for each megawatt hour of 
                        renewable electricity generated in a community 
                        that the Commission determines is an impacted 
                        community; and
                            ``(ii) not more than 2 Federal renewable 
                        electricity credits for each megawatt hour of 
                        renewable electricity generated on Indian land.
                    ``(B) Adjustment.--Except as provided in 
                subparagraph (C), not later than January 1, 2023, and 
                not less frequently than every 4 years thereafter, the 
                Commission shall review the effect on the aggregate 
                quantity of renewable electricity generated as a result 
                of providing credit multipliers under this paragraph 
                and shall, as necessary and after providing 1 year of 
                notice, reduce the number of Federal renewable 
                electricity credits issued under this paragraph per 
                megawatt hour of renewable electricity generated by any 
                given energy source or facility, but not below one, to 
                ensure that the number is no higher than the Commission 
                determines is necessary to incentivize incremental 
                renewable energy generation in impacted communities and 
                on Indian land.
                    ``(C) Facilities placed in service after 
                enactment.--
                            ``(i) In general.--For any renewable 
                        electricity generation facility placed in 
                        service after the date of enactment of this 
                        section, subparagraph (B) shall not apply for 
                        the first 10 years after the date on which the 
                        facility is placed in service.
                            ``(ii) Initial period.--For each year 
                        during the 10-year period described in clause 
                        (i), the Commission shall issue to the facility 
                        the same number of Federal renewable 
                        electricity credits per megawatt hour generated 
                        as are issued to that facility in the year in 
                        which the facility is placed in service.
                            ``(iii) Subsequent period.--After the 10-
                        year period described in clause (i), the 
                        Commission shall issue Federal renewable 
                        electricity credits to the facility in 
                        accordance with subparagraph (B).
            ``(5) Credits based on qualified hydropower.--For purposes 
        of this subsection, the number of megawatt hours of renewable 
        electricity generation from qualified hydropower shall be 
        calculated--
                    ``(A) based solely on the increase in average 
                annual generation directly resulting from the 
                efficiency improvements or capacity additions described 
                in subsection (a)(5)(A); and
                    ``(B) using the same water flow information used to 
                determine a historic average annual generation baseline 
                for the hydroelectric facility, as certified by the 
                Commission.
            ``(6) Generation from mixed renewable and nonrenewable 
        resources.--If electricity is generated using both a renewable 
        energy resource and an energy source that is not a renewable 
        energy resource (such as cofiring of renewable biomass and 
        fossil fuel), the Commission shall issue Federal renewable 
        electricity credits based on the proportion of the electricity 
        generated that is attributable to the renewable energy 
        resource.
            ``(7) Prohibition against double-counting.--The Commission 
        shall ensure that--
                    ``(A) no Federal renewable electricity credit is 
                used more than once for compliance with this section; 
                and
                    ``(B) except as provided in paragraph (4), not more 
                than 1 Federal renewable electricity credit is issued 
                for any megawatt hour of renewable electricity 
                generated.
            ``(8) Trading.--The lawful holder of a Federal renewable 
        electricity credit may--
                    ``(A) sell, exchange, or transfer the credit;
                    ``(B) submit the credit for compliance under 
                subsection (b); or
                    ``(C) submit the credit for retirement by the 
                Commission.
            ``(9) Banking.--
                    ``(A) In general.--A Federal renewable electricity 
                credit may be submitted in satisfaction of the 
                compliance obligation under subsection (b) for the 
                compliance year in which the credit was issued or for 
                any of the 3 immediately subsequent compliance years.
                    ``(B) Retirement.--The Commission shall retire any 
                Federal renewable electricity credit that has not been 
                retired by April 2 of the calendar year that is 3 years 
                after the calendar year during which the credit was 
                issued.
            ``(10) Retirement.--The Commission shall retire a Federal 
        renewable electricity credit immediately upon submission by the 
        lawful holder of the credit, whether in satisfaction of a 
        compliance obligation under subsection (b) or for another 
        reason.
    ``(f) Alternative Compliance Payments.--
            ``(1) In general.--A retail electricity supplier may 
        satisfy the requirements of subsection (b) in whole or in part 
        by submitting in accordance with this subsection, in lieu of 
        each Federal renewable electricity credit that would otherwise 
        be submitted, an alternative compliance payment equal to $50, 
        adjusted for inflation on January 1 of each year following 
        calendar year 2021, in accordance with regulations promulgated 
        by the Commission.
            ``(2) Payment to state funds.--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, payments made under this subsection 
                shall be made directly to one or more States in which 
                the retail electricity supplier sells electricity, in 
                proportion to the portion of the retail electricity 
                supplier's base quantity that is sold within each 
                applicable State, if--
                            ``(i) the payments are deposited directly 
                        into a fund of the State treasury established 
                        for that purpose; and
                            ``(ii) the State uses the funds in 
                        accordance with paragraphs (3) and (4).
                    ``(B) Noncompliance.--If the Commission determines 
                that a State is in substantial noncompliance with 
                paragraph (3) or (4), the Commission shall direct that 
                any future alternative compliance payments that would 
                otherwise be paid to the State under this subsection 
                shall instead be paid to the Commission and deposited 
                in the Treasury.
            ``(3) State use of funds.--As a condition of receipt of 
        alternative compliance payments under this subsection, a State 
        shall use the payments exclusively for--
                    ``(A) deploying technologies that generate 
                electricity from renewable energy resources; or
                    ``(B) implementing cost-effective energy efficiency 
                programs to achieve energy savings.
            ``(4) Reporting.--
                    ``(A) In general.--As a condition of receipt of 
                alternative compliance payments pursuant to this 
                subsection, a State shall submit to the Commission an 
                annual report, in accordance with regulations 
                promulgated by the Commission, containing a full 
                accounting of the use of the payments, including a 
                detailed description of the activities funded by the 
                payments and demonstrating compliance with the 
                requirements of this subsection.
                    ``(B) Deadline.--A State shall submit a report 
                under this paragraph--
                            ``(i) not later than 1 year after the date 
                        on which the first alternative compliance 
                        payment is received; and
                            ``(ii) every 1 year thereafter until all 
                        alternative compliance payments are expended.
    ``(g) Information Collection.--The Commission may require any 
retail electricity supplier, renewable electricity generator, or any 
other entity that the Commission determines appropriate, to provide any 
information the Commission determines appropriate to carry out this 
section.
    ``(h) Enforcement and Judicial Review.--
            ``(1) Failure to submit credits.--If any person fails to 
        comply with the requirements of subsection (b) or (f) for a 
        calendar year, the person shall be liable to pay to the 
        Commission a civil penalty equal to the product obtained by 
        multiplying--
                    ``(A) double the alternative compliance payment 
                calculated under subsection (f)(1) for such calendar 
                year; and
                    ``(B) the aggregate quantity of Federal renewable 
                electricity credits or equivalent alternative 
                compliance payments that the person failed to submit in 
                violation of the requirements of subsections (b) and 
                (f) for such calendar year.
            ``(2) Enforcement.--The Commission shall assess a civil 
        penalty under paragraph (1) in accordance with the procedures 
        described in section 31(d) of the Federal Power Act.
            ``(3) Violation of requirement of regulations or orders.--
                    ``(A) In general.--Any person who violates or fails 
                or refuses to comply with any requirement of this 
                section, other than a requirement of subsection (b) or 
                (f), shall be subject to a civil penalty under section 
                316A(b) of the Federal Power Act.
                    ``(B) Assessment.--The penalty under subparagraph 
                (A) shall be assessed by the Commission in the same 
                manner as in the case of a violation referred to in 
                section 316A(b) of that Act.
            ``(4) Judicial review.--
                    ``(A) In general.--Any person aggrieved by a final 
                action taken by the Commission under this section, 
                other than the assessment of a civil penalty under 
                paragraphs (1) through (3), may use the procedures for 
                review described in section 313 of the Federal Power 
                Act.
                    ``(B) Reference.--For purposes of this paragraph, 
                references to an order in section 313 of that Act shall 
                be considered to refer also to all other final actions 
                of the Commission under this section other than the 
                assessment of a civil penalty under paragraphs (1) 
                through (3).
    ``(i) Administration.--Nothing in this section--
            ``(1) diminishes or qualifies any authority of a State, a 
        political subdivision of a State, or an Indian Tribe--
                    ``(A) to adopt or enforce any law or regulation 
                respecting renewable electricity, including any law or 
                regulation establishing requirements that are more 
                stringent than those established by this section, 
                provided that no such law or regulation may relieve any 
                person of any requirement otherwise applicable under 
                this section; or
                    ``(B) to regulate the acquisition and disposition 
                of Federal renewable electricity credits by retail 
                electricity suppliers within the jurisdiction of the 
                State, political subdivision, or Indian Tribe, 
                including the authority to require the retail 
                electricity supplier to acquire and submit to the 
                Commission for retirement Federal renewable electricity 
                credits in excess of those submitted under this 
                section; or
            ``(2) affects the application of or the responsibility for 
        compliance with any other provision of law or regulation.''.

SEC. 3. CLARIFYING STATE AUTHORITY TO ADOPT RENEWABLE 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 production incentive 
        program.--In this subsection, the term `State-approved 
        production incentive program' 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 section 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, a State law or State regulatory 
        authority may set the rates for a sale of electricity by a 
        facility generating renewable energy (as defined in section 
        609(a)) pursuant to a State-approved production incentive 
        program under which the facility voluntarily participates in 
        the State-approved production incentive program.''.

SEC. 4. GUIDELINES FOR DETERMINING QUALIFIED RENEWABLE BIOMASS.

    (a) Definitions.--In this section:
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Environmental Protection Agency.
            (2) Lifecycle greenhouse gas emissions.--
                    (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 potential of the emissions 
                relative to all greenhouse gas emissions.
                    (B) Inclusions.--For purposes of subparagraph (A), 
                the term ``greenhouse gas emissions'' includes--
                            (i) direct emissions; and
                            (ii) significant indirect emissions, 
                        including from--
                                    (I) land use changes and temporal 
                                changes in forest carbon sequestration;
                                    (II) biomass harvests, regrowth, 
                                and avoided decomposition related to 
                                the full fuel lifecycle, including all 
                                stages of fuel and feedstock production 
                                and distribution; and
                                    (III) feedstock generation or 
                                extraction through the distribution and 
                                delivery of the finished fuel to the 
                                ultimate consumer.
    (b) Guidelines.--Not later than 1 year after the date of enactment 
of this Act, the Administrator shall, recognizing the recommendations 
of, and coordinating with, the Scientific Advisory Board of the 
Environmental Protection Agency regarding the accounting of biogenic 
carbon dioxide emissions, and after notice and public comment, issue 
guidelines for calculating lifecycle greenhouse gas emissions for 
renewable biomass (as that term is defined in section 610(a) of the 
Public Utility Regulatory Policies Act of 1978, as added by this Act).

SEC. 5. ENERGY EFFICIENCY RESOURCE STANDARD FOR RETAIL ELECTRICITY AND 
              NATURAL GAS SUPPLIERS.

    (a) In General.--Title VI of the Public Utility Regulatory Policies 
Act of 1978 (16 U.S.C. 2601 et seq.) is further amended by adding at 
the end the following:

``SEC. 611. 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, means another person that owns or 
        controls, is owned or controlled by, or is under common 
        ownership control with, that person, as determined under 
        regulations promulgated by the Secretary.
            ``(2) ASHRAE, ansi, and iesna.--The terms `ASHRAE', `ANSI', 
        and `IESNA' mean the American Society of Heating, Refrigerating 
        and Air Conditioning Engineers, the American National Standards 
        Institute, and the Illuminating Engineering Society of North 
        America, respectively.
            ``(3) Base quantity.--
                    ``(A) In general.--The term `base quantity', with 
                respect to a retail electricity supplier 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 delivered by the retail electricity 
                supplier to electric consumers, or quantity of natural 
                gas delivered by the retail natural gas supplier to 
                natural gas consumers, during the 3 calendar years 
                immediately preceding the year that compliance is 
                required under subsection (c)(1).
                    ``(B) Exclusion.--The term `base quantity', with 
                respect to a retail natural gas supplier, 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 operation after the date of 
                enactment of this section; 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 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 output in a 
        separate thermal-only system, as determined in accordance with 
        regulations promulgated by the Secretary.
            ``(6) Codes and standards savings.--The term `codes and 
        standards savings' means a reduction in electricity or natural 
        gas consumption as a result of the adoption and implementation, 
        after the date of enactment of this section, of new or revised 
        appliance and equipment efficiency standards or building energy 
        codes.
            ``(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 characteristics that the 
                Secretary promulgates by regulation; and
                    ``(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-effective', with 
        respect to an energy efficiency program, means that the program 
        achieves a net present value of economic benefits over the life 
        of the implemented measures, both directly to the energy 
        consumer and to the economy, that is greater than the net 
        present value of the cost of the program over the life of the 
        program, both directly to the energy consumer and to the 
        economy, using the societal benefit-cost test calculated using 
        the lower of a utility weighted average cost of capital or a 
        social discount rate of 3 percent.
            ``(9) Customer facility savings.--The term `customer 
        facility savings' means a reduction in electricity, or natural 
        gas consumption, including waste heat energy savings, at a 
        facility of an electricity consumer served by a retail 
        electricity supplier or a natural gas consumer served by a 
        natural gas supplier, as compared to--
                    ``(A) in the case of new equipment that replaces 
                existing equipment with remaining useful life--
                            ``(i) consumption of 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;
                    ``(B) in the case of new equipment other than new 
                equipment described in subparagraph (A), consumption by 
                new equipment of average efficiency of the same 
                equipment type;
                    ``(C) in the case of consumption, other than 
                consumption described in subparagraphs (A) and (B), at 
                an existing facility, consumption at the facility 
                during a base period of not less than 1 year; and
                    ``(D) in the case of consumption, other than 
                consumption described in subparagraphs (A) and (B), at 
                a new facility, consumption at a reference new facility 
                of average efficiency for new facilities of the same 
                type.
            ``(10) Electricity savings.--The term `electricity savings' 
        means reductions in electricity consumption or losses, as 
        determined in accordance with regulations promulgated by the 
        Secretary, that--
                    ``(A) are achieved through measures implemented 
                after the date of enactment of this section;
                    ``(B) are additional to business-as-usual customer 
                purchase practices and distribution system efficiency;
                    ``(C) the retail electricity supplier claiming or 
                transferring the electricity savings has played a 
                significant role in achieving;
                    ``(D) occur in the service territory of the retail 
                electricity supplier claiming or transferring the 
                electricity savings; and
                    ``(E) are limited to--
                            ``(i) customer facility savings of 
                        electricity, 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 
                        that would occur with new distribution system 
                        equipment of average efficiency;
                            ``(iii) CHP savings;
                            ``(iv) codes and standards savings of 
                        electricity; and
                            ``(v) fuel-switching energy savings that 
                        results in net savings of electricity.
            ``(11) Fuel-switching energy savings.--
                    ``(A) In general.--The term `fuel-switching energy 
                savings' means net energy savings, calculated in 
                accordance with subparagraph (B), from consumer 
                switches from 1 energy source to another, as determined 
                in accordance with regulations promulgated by the 
                Secretary.
                    ``(B) Calculation.--For purposes of calculating net 
                energy savings under subparagraph (A)--
                            ``(i) electricity consumption shall be 
                        evaluated based on the average additional 
                        quantity of fuel burned at power plants to 
                        supply each additional kilowatt-hour of 
                        electricity consumption in the region;
                            ``(ii) electricity and natural gas 
                        consumption shall include losses in the 
                        transmission and distribution systems; and
                            ``(iii) fuel-switching that does not result 
                        in net cost savings to the consumer shall not 
                        be counted.
            ``(12) Natural gas savings.--The term `natural gas savings' 
        means reductions in natural gas consumption or losses, as 
        determined in accordance with regulations promulgated by the 
        Secretary, that--
                    ``(A) are achieved through measures implemented 
                after the date of enactment of this section;
                    ``(B) are additional to business-as-usual customer 
                purchase practices and distribution system efficiency;
                    ``(C) the retail natural gas supplier claiming or 
                transferring the natural gas savings has played a 
                significant role in achieving;
                    ``(D) occur in the service territory of the retail 
                natural gas supplier claiming or transferring the 
                natural gas savings; and
                    ``(E) are limited to--
                            ``(i) customer facility savings of natural 
                        gas, adjusted to reflect any associated 
                        increase in electricity consumption or 
                        consumption of other fuels at the facility;
                            ``(ii) reductions in leakage, operational 
                        losses, and consumption of natural gas 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) codes and standards savings of 
                        natural gas; and
                            ``(iv) fuel-switching energy savings that 
                        results in net savings of natural gas.
            ``(13) Performance standard.--The term `performance 
        standard' means a standard--
                    ``(A) established for a calendar year for 
                cumulative electricity savings or cumulative natural 
                gas savings that is expressed as a percentage of base 
                quantity; and
                    ``(B) for each of calendar years 2021 through 2035, 
                that is labeled as cumulative electricity savings 
                percentage or cumulative natural gas savings, as 
                applicable, in the table under subsection (c)(2).
            ``(14) 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 System 
        Operator, as determined by the Secretary.
            ``(15) Reporting period.--The term `reporting period' 
        means--
                    ``(A) calendar years 2021 through 2023; and
                    ``(B) each successive 2-calendar-year period 
                thereafter.
            ``(16) Retail electricity supplier.--
                    ``(A) In general.--The term `retail electricity 
                supplier' means, for any calendar year, an electric 
                utility that delivered not fewer than 1,000,000 
                megawatt hours of electricity 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 the 
                        electric utility to electric consumers for 
                        purposes other than resale shall be considered 
                        to be deliveries by the electric utility; and
                            ``(ii) deliveries by any electric utility 
                        to a lessee, tenant, or affiliate of the 
                        electric utility shall not be considered to be 
                        deliveries to electric consumers.
            ``(17) Retail natural gas supplier.--
                    ``(A) In general.--The term `retail natural 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), that delivered to 
                natural 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)--
                            ``(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 
                        lessee, tenant, or affiliate of a local 
                        distribution company shall not be considered to 
                        be deliveries to natural gas consumers.
            ``(18) State regulatory authority.--The term `State 
        regulatory authority' means any State agency which has 
        ratemaking authority with respect to--
                    ``(A) the sale of natural gas by any gas utility 
                (other than by such State agency); or
                    ``(B) the sale of electric energy by any electric 
                utility (other than such State agency), and in the case 
                of an electric utility with respect to which the 
                Tennessee Valley Authority has ratemaking authority, 
                such term means the Tennessee Valley Authority.
            ``(19) Third-party efficiency provider.--The term `third-
        party efficiency provider' means any retailer, building owner, 
        energy service company, financial institution, or other 
        commercial, industrial, or nonprofit entity that is capable of 
        providing electricity savings or natural gas savings in 
        accordance with subsections (d) and (e).
            ``(20) 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 system that commenced 
                operation before the date of enactment of this section, 
                in order to recapture electrical, mechanical, or 
                thermal energy that would otherwise be wasted, as 
                determined in accordance with regulations promulgated 
                by the Secretary.
                    ``(B) Inclusion.--Waste heat energy savings shall 
                be included as part of customer facility savings.
    ``(b) Establishment.--
            ``(1) Regulations.--Not later than 1 year after the date of 
        enactment of this section, the Secretary shall, by regulation, 
        establish a program to implement and enforce the requirements 
        of this section, including by--
                    ``(A) establishing measurement and verification 
                procedures and standards under subsection (e);
                    ``(B) establishing requirements under which retail 
                electricity suppliers and retail natural gas suppliers 
                shall--
                            ``(i) demonstrate, document, and report the 
                        compliance of the retail electricity suppliers 
                        and retail natural gas suppliers with the 
                        performance standards under subsection (c); and
                            ``(ii) estimate the impact of the 
                        performance standards on current and future 
                        electricity and natural gas consumption in the 
                        service territories of the suppliers; and
                    ``(C) establishing requirements governing 
                applications for, and implementation of, State programs 
                under subsection (g).
            ``(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.
    ``(c) Performance Standards.--
            ``(1) Compliance obligation.--Not later than May 1 of the 
        calendar year immediately following 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 such retail electricity supplier has achieved 
                cumulative electricity savings (adjusted to account for 
                any attrition of savings from measures implemented in 
                prior years) in each calendar year of such reporting 
                period that are equal to or greater than the applicable 
                performance standard; and
                    ``(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 supplier has achieved 
                cumulative natural gas savings from measures (adjusted 
                to account for any attrition of savings measures 
                implemented in prior years) in each calendar year of 
                such reporting period that are equal to or greater than 
                the applicable performance standard.
            ``(2) Performance standards for 2021 through 2035.--For 
        each of calendar years 2021 through 2035, the performance 
        standards are as follows:


------------------------------------------------------------------------
                          Cumulative Electricity  Cumulative Natural Gas
    ``Calendar Year         Savings Percentage       Savings Percentage
------------------------------------------------------------------------
                 2021                     1.00                    0.50
------------------------------------------------------------------------
                 2022                     2.00                    1.25
------------------------------------------------------------------------
                 2023                     3.00                    2.00
------------------------------------------------------------------------
                 2024                     4.25                    3.00
------------------------------------------------------------------------
                 2025                     5.50                    4.00
------------------------------------------------------------------------
                 2026                     7.00                    5.00
------------------------------------------------------------------------
                 2027                     8.50                    6.00
------------------------------------------------------------------------
                 2028                    10.00                    7.00
------------------------------------------------------------------------
                 2029                    11.50                    8.00
------------------------------------------------------------------------
                 2030                    13.00                    9.00
------------------------------------------------------------------------
                 2031                    14.75                   10.00
------------------------------------------------------------------------
                 2032                    16.50                   11.00
------------------------------------------------------------------------
                 2033                    18.25                   12.00
------------------------------------------------------------------------
                 2034                    20.00                   13.00
------------------------------------------------------------------------
                 2035                    22.00                   14.00
------------------------------------------------------------------------

            ``(3) Subsequent years.--
                    ``(A) Calendar years 2036 through 2045.--Not later 
                than December 31, 2033, the Secretary shall promulgate 
                regulations establishing performance standards for each 
                of calendar years 2036 through 2045.
                    ``(B) Subsequent extensions.--Except as provided in 
                subparagraph (A), not later than the last day of the 
                penultimate reporting period for which performance 
                standards have been established under this paragraph, 
                the Secretary shall promulgate regulations establishing 
                performance standards for the 10-calendar-year period 
                following the last calendar year for which performance 
                standards previously were established.
                    ``(C) Requirements.--The Secretary shall establish 
                performance 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 
                        suppliers and retail natural gas suppliers;
                            ``(ii) opportunities for new codes and 
                        standards savings;
                            ``(iii) technology improvements; and
                            ``(iv) other indicators of cost-effective 
                        energy efficiency potential.
                    ``(D) Minimum percentage.--In no case shall a 
                performance standard established under this paragraph 
                for any calendar year be less than the applicable 
                performance standard for calendar year 2035 (including 
                any increase in the standard for calendar year 2035 
                established pursuant to paragraph (4)).
            ``(4) Midcourse review and adjustment of performance 
        standards.--
                    ``(A) In general.--Not later than December 31, 
                2029, and at 10-year intervals thereafter, the 
                Secretary shall--
                            ``(i) review the most recent performance 
                        standards established under paragraph (2) or 
                        (3); and
                            ``(ii) increase the performance standards 
                        by regulation if the Secretary determines that 
                        additional cost-effective energy efficiency 
                        potential is achievable, taking into account 
                        the requirements described in paragraph (3)(C).
                    ``(B) Lead time.--If the Secretary revises 
                performance standards under this paragraph, the 
                regulations shall provide adequate lead time to ensure 
                that compliance with the increased performance 
                standards is feasible.
            ``(5) Delay of submission for first reporting period.--
                    ``(A) In general.--Notwithstanding paragraphs (1) 
                and (2), for the first 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 request for delay 
                under subparagraph (A) shall include a plan for coming 
                into full compliance by the end of the second reporting 
                period.
            ``(6) Applying unused savings to future years.--If 
        electricity savings or natural gas savings achieved by a retail 
        electricity supplier or retail natural gas supplier in a year 
        exceed the applicable performance standard specified under this 
        subsection, any savings in excess of the performance standard 
        may be applied toward performance standards specified for any 
        of the 2 immediately subsequent compliance years.
    ``(d) Transfers of Electricity or Natural Gas Savings.--
            ``(1) Bilateral contracts for savings transfers.--Subject 
        to the limitations of this subsection, a retail electricity 
        supplier or retail natural gas supplier may use electricity 
        savings or natural gas savings purchased pursuant to a 
        bilateral contract from another retail electricity supplier or 
        retail natural gas supplier, a State, or a third-party 
        efficiency provider to meet the applicable performance standard 
        under subsection (c).
            ``(2) Requirements.--Electricity savings or natural gas 
        savings purchased and used for compliance under this subsection 
        shall be--
                    ``(A) measured and verified in accordance with 
                subsection (e);
                    ``(B) reported in accordance with subsection (c); 
                and
                    ``(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 supplier 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 measurement 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 regulated by the State regulatory authority to 
        obtain the authorization or approval of the State regulatory 
        authority of a contract for transfer of electricity savings or 
        natural gas savings under this subsection.
            ``(5) Limitations.--To optimize the achievement of cost-
        effective efficiency potential, the Secretary may prescribe 
        such limitations as the Secretary determines appropriate with 
        respect to the proportion of the compliance obligation of a 
        retail electricity or natural gas supplier under the applicable 
        performance standards under subsection (c) that may be met 
        using electricity savings or natural gas savings that are 
        purchased under this subsection.
    ``(e) Evaluation, Measurement, and Verification of Savings.--
            ``(1) Regulations.--The regulations promulgated 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-Effectiveness of 
                        Energy Efficiency Resources, developed by the 
                        National Efficiency Screening Project; and
                            ``(iii) other best practices recognized in 
                        the energy efficiency industry; and
                    ``(B) include--
                            ``(i) procedures and standards for 
                        evaluating, measuring, and verifying 
                        electricity savings and natural gas savings 
                        that count towards 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 
                                consumption estimates for customer 
                                facilities or portions of facilities in 
                                the applicable base and current years 
                                be adjusted, as appropriate, to account 
                                for changes in weather, level of 
                                production, and building area;
                                    ``(III) do not prevent overall load 
                                growth due to beneficial 
                                electrification;
                                    ``(IV) account for the useful life 
                                of energy efficiency and energy 
                                conservation measures;
                                    ``(V) allow for savings from a 
                                program to be estimated based on 
                                extrapolation from a representative 
                                sample of participating customers;
                                    ``(VI) include procedures for 
                                calculating and documenting CHP 
                                savings, fuel-switching energy savings, 
                                and waste heat energy savings;
                                    ``(VII) establish methods for 
                                calculating codes and standards energy 
                                savings, including--
                                            ``(aa) the use of verified 
                                        compliance rates;
                                            ``(bb) requiring that the 
                                        baseline for calculating 
                                        savings from building energy 
                                        codes shall be the more 
                                        stringent of--

                                                    ``(AA) the 2018 
                                                International Energy 
                                                Conservation Code for 
                                                residential buildings, 
                                                or the ASHRAE/ANSI/ 
                                                IESNA Standard 90.1-
                                                2016 for commercial 
                                                buildings; or

                                                    ``(BB) the 
                                                applicable State 
                                                building code in effect 
                                                on the date of 
                                                enactment of this 
                                                section; and

                                            ``(cc) requiring that the 
                                        baseline for calculating 
                                        savings from appliance and 
                                        equipment standards shall be 
                                        the average efficiency of new 
                                        appliances and equipment in the 
                                        applicable one or more 
                                        categories prior to the 
                                        adoption and implementation of 
                                        the new standard;
                                    ``(VIII) include procedures for 
                                calculating and documenting--
                                            ``(aa) customer facility 
                                        savings and reductions in 
                                        distribution system losses of 
                                        electricity and natural gas 
                                        that are achieved as a result 
                                        of smart grid deployment, as 
                                        described in section 1301 of 
                                        the Energy Independence and 
                                        Security Act of 2007; and
                                            ``(bb) reductions in 
                                        natural gas distribution system 
                                        losses attributable to pipeline 
                                        repair and replacement 
                                        programs;
                                    ``(IX) count only measures and 
                                savings that are additional to 
                                business-as-usual customer purchase 
                                practices;
                                    ``(X) ensure that the retail 
                                electricity supplier or retail natural 
                                gas supplier claiming the electricity 
                                savings 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);
                                    ``(XI) avoid double-counting of 
                                savings used for compliance with this 
                                section, including transferred savings;
                                    ``(XII) include electricity savings 
                                or natural gas savings from programs 
                                administered by retail electricity 
                                suppliers or natural gas suppliers that 
                                are funded by Federal, State, or other 
                                sources, unless the funding source 
                                specifies otherwise;
                                    ``(XIII) credit large customer 
                                self-directed electricity savings or 
                                natural gas savings to the retail 
                                electricity supplier or retail natural 
                                gas supplier if the large customer 
                                receives incentives or rate reductions 
                                from the retail electricity supplier or 
                                retail natural gas supplier for self-
                                directed energy efficiency 
                                improvements;
                                    ``(XIV) include guidance, as 
                                appropriate, for additional alternative 
                                approaches to evaluate electricity 
                                savings and natural gas savings for 
                                large commercial and industrial 
                                customers in energy-intensive 
                                industries that are subject to 
                                international competition;
                                    ``(XV) include procedures for 
                                counting electricity savings and 
                                natural gas savings achieved by solar 
                                heating and cooling technologies, solar 
                                light pipe technology, geothermal heat 
                                pumps, and other technologies utilizing 
                                renewable resources that do not produce 
                                electricity or gaseous fuel and reduce 
                                on-site energy consumption;
                                    ``(XVI) include procedures for 
                                counting electricity savings and 
                                natural gas savings achieved by 
                                weatherization measures, such as 
                                installing mechanical insulation, 
                                repairing or replacing heating and 
                                cooling systems, repairing or replacing 
                                windows and doors, performing air 
                                sealing, and replacing lights and 
                                appliances with more energy efficient 
                                models;
                                    ``(XVII) include procedures for 
                                counting electricity savings and 
                                natural gas savings achieved from 
                                increased utilization of mechanical 
                                insulation for new, retrofit, and 
                                maintenance construction for 
                                commercial, industrial, public, and 
                                nonprofit buildings and facilities;
                                    ``(XVIII) in any State in which the 
                                State regulatory authority has 
                                designated 1 or more entities to 
                                administer electric ratepayer-funded 
                                efficiency programs approved by the 
                                State regulatory authority, provide 
                                that electricity savings and natural 
                                gas savings achieved through those 
                                programs shall be distributed 
                                proportionally among retail electricity 
                                suppliers and retail natural gas 
                                suppliers;
                                    ``(XIX) include guidance for retail 
                                electricity suppliers and retail 
                                natural gas suppliers to calculate and 
                                document business-as-usual consumption 
                                projections;
                                    ``(XX) include guidance for 
                                estimating savings using information 
                                from the database established under 
                                paragraph (3) based on similar measures 
                                and programs in other settings with 
                                appropriate adjustments, as necessary; 
                                and
                                    ``(XXI) incorporate advances in the 
                                science of policy evaluation, such as 
                                the use of--
                                            ``(aa) randomized control 
                                        trials;
                                            ``(bb) other experimental 
                                        and quasi-experimental 
                                        approaches; and
                                            ``(cc) large data sets and 
                                        machine learning techniques; 
                                        and
                            ``(ii) procedures and standards for third-
                        party verification of reported electricity 
                        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 offer 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;
                    ``(B) identify approaches in program evaluation 
                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 report 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 evaluation database.--
                    ``(A) In general.--The Secretary shall establish 
                and maintain a searchable public database, accessible 
                on the website of the Department of Energy, that 
                contains a list of randomized control trials and other 
                experimental or quasi-experimental evaluations of 
                energy efficiency programs.
                    ``(B) Requirements.--Each trial or evaluation 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 evaluation 
                        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.--
            ``(1) Review of retail supplier reports.--
                    ``(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 (c) to verify that the applicable 
                performance standards under subsection (c) have been 
                met.
                    ``(B) Exclusion.--In determining compliance with 
                the applicable performance standards under subsection 
                (c), the Secretary shall exclude reported electricity 
                savings or natural gas savings that are not adequately 
                demonstrated and documented, in accordance with the 
                regulations promulgated under this section.
            ``(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 (c), or to pay to the State an 
        applicable alternative compliance payment under subsection (g), 
        the Secretary shall assess against the retail electricity 
        supplier or retail natural gas supplier a civil penalty in an 
        amount 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 relevant retail electricity supplier or 
        retail natural gas supplier to a State for failure to comply 
        with the requirements of a State energy efficiency resource 
        standard during the same compliance period, if the State 
        standard--
                    ``(A) is comparable in type to the Federal 
                performance standard established under this section; 
                and
                    ``(B) is more stringent than the applicable 
                performance standard under subsection (c).
            ``(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 natural gas 
                        suppliers in a State under paragraph (2); bears 
                        to
                            ``(ii) the total amount of penalty payments 
                        collected by the Secretary under that 
                        paragraph.
                    ``(B) Use of payments.--Penalty payments collected 
                under paragraph (2) by the Secretary shall be--
                            ``(i) provided to each State at the covered 
                        rate for the State; and
                            ``(ii) used by the State to implement cost-
                        effective energy efficiency programs that--
                                    ``(I) to the maximum extent 
                                practicable, achieve electricity 
                                savings and natural gas savings in the 
                                State sufficient to make up the deficit 
                                associated with the penalty payments; 
                                and
                                    ``(II) are measured and verified in 
                                accordance with the applicable 
                                procedures and standards established 
                                under subsection (e).
            ``(5) Enforcement procedures.--The Secretary 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.
            ``(6) Judicial review.--
                    ``(A) In general.--Any person adversely affected by 
                a final action taken by the Secretary under this 
                section, other than the assessment of a civil penalty, 
                may use the procedures for review described in section 
                336(b) of the Energy Policy and Conservation Act.
                    ``(B) Reference.--In this paragraph, references to 
                a rule in section 336(b) of the Energy Policy and 
                Conservation Act shall be considered to refer also to 
                all other final actions of the Secretary under this 
                section other than the assessment of a civil penalty.
    ``(g) State Administration.--
            ``(1) In general.--Upon receipt of an application from the 
        Governor of a State (including the Mayor of the District of 
        Columbia), the Secretary may authorize the State to implement a 
        State energy efficiency program in lieu of the Federal program 
        established under subsection (b) if the Secretary determines 
        that the requirements of such State program meet or exceed the 
        requirements of such Federal program, including--
                    ``(A) achieving electricity savings and natural gas 
                savings that are equal to or greater than savings 
                required under the applicable performance standards 
                established under subsection (c);
                    ``(B) reviewing reports and verifying electricity 
                savings and natural gas savings achieved in the State 
                (including savings transferred from outside the State); 
                and
                    ``(C) if applicable, 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 complete application is received by 
        the Secretary under this subsection, the Secretary after public 
        notice and opportunity for comment shall determine whether to 
        approve or disapprove such application.
            ``(3) Alternative measurement and verification procedures 
        and standards.--As part of an application pursuant to paragraph 
        (1), a State may request to use alternative measurement and 
        verification procedures and standards from the procedures and 
        standards described in subsection (e), if the State 
        demonstrates that the alternative 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 (e).
            ``(4) Alternative compliance payments.--
                    ``(A) In general.--As part of an application 
                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 immediately following the 
                applicable reporting period, an alternative compliance 
                payment in an amount equal to, as adjusted for 
                inflation in accordance with such regulations as the 
                Secretary may promulgate, not less than--
                            ``(i) $50 per megawatt hour of electricity 
                        savings needed to make up any deficit in 
                        achieving electricity savings that would 
                        otherwise be required under the applicable 
                        performance standard established under 
                        subsection (c); or
                            ``(ii) $5 per million Btu of natural gas 
                        savings needed to make up any deficit in 
                        achieving natural gas savings that would 
                        otherwise be required under the applicable 
                        performance standard established under 
                        subsection (c).
                    ``(B) Use of payments.--Alternative compliance 
                payments collected by a State under subparagraph (A) 
                shall be used by the State to implement the State 
                program authorized under this section and to implement 
                cost-effective energy efficiency programs that--
                            ``(i) to the maximum extent practicable, 
                        achieve electricity savings and natural gas 
                        savings in the State sufficient to make up the 
                        deficit associated with the alternative 
                        compliance payments; and
                            ``(ii) can be measured and verified in 
                        accordance with the applicable procedures and 
                        standards under subsection (e) or paragraph 
                        (3), as applicable.
            ``(5) Review of state program.--
                    ``(A) Periodic review.--Every 2 years, the 
                Secretary shall review State programs authorized under 
                this section in approximately \1/2\ of the States with 
                such authorized State programs, so that each such State 
                program shall be reviewed at least every 4 years.
                    ``(B) Report.--To facilitate review under 
                subparagraph (A), the Secretary may require a State to 
                submit a report demonstrating the State program 
                authorized under this section meets the requirements of 
                this section, including--
                            ``(i) reports submitted by retail 
                        electricity suppliers and retail natural gas 
                        suppliers to the State demonstrating compliance 
                        with applicable requirements;
                            ``(ii) the impact of applicable 
                        requirements on projected electricity and 
                        natural gas demand within the State;
                            ``(iii) an accounting of the use of 
                        alternative 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.--Notwithstanding 
                subparagraph (A), upon receipt of a public petition 
                containing credible allegation of substantial 
                deficiencies of a State program authorized under this 
                section, the Secretary shall promptly re-review the 
                State program.
                    ``(D) Deficiencies.--
                            ``(i) In general.--In completing a review 
                        of a State program authorized under this 
                        section, if the Secretary finds deficiencies, 
                        the Secretary shall--
                                    ``(I) notify the State of the 
                                deficiencies;
                                    ``(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 Secretary 
                        shall--
                                    ``(I) disallow the reported 
                                electricity savings or natural gas 
                                savings that the Secretary determines 
                                are not credible due to deficiencies;
                                    ``(II) re-review the State program 
                                2 years after the date on which the 
                                original review was completed; and
                                    ``(III) if substantial deficiencies 
                                remain uncorrected after the review 
                                provided for under subclause (II), 
                                revoke the authorization for the State 
                                to implement a State program under this 
                                section.
            ``(6) Calls for revision of state applications.--As a 
        condition of maintaining the authorization to implement a State 
        program under this section, the Secretary may require the State 
        to submit a revised application under paragraph (1) if the 
        Secretary has--
                    ``(A) established new or revised performance 
                standards under subsection (c);
                    ``(B) promulgated new or substantially revised 
                measurement and verification procedures and standards 
                under subsection (e); or
                    ``(C) otherwise substantially revised the Federal 
                program established under this section.
    ``(h) Information and Reports.--In accordance with section 13 of 
the Federal Energy Administration Act of 1974, the Secretary may 
require any retail electricity supplier, retail natural gas supplier, 
third-party efficiency provider, or any other entity that the Secretary 
determines appropriate, to provide any information the Secretary 
determines appropriate to carry out this section.
    ``(i) Cost Recovery, Fixed Cost Recovery, and Shareholder 
Incentives.--Each State regulatory authority is encouraged to review 
the rules and regulations of the State regulatory authority to ensure 
that utilities under its jurisdiction can--
            ``(1) recover the direct costs of energy efficiency 
        programs;
            ``(2) fully recover authorized fixed costs, including lost 
        margins from lower annual sales due to energy efficiency 
        programs; and
            ``(3) earn an incentive for shareholders if the energy 
        efficiency standards are achieved.
    ``(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 respecting electricity savings or 
natural gas savings, including any law or regulation establishing 
energy efficiency requirements 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.''.

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 National Academy of Sciences shall, not later than July 1, 
2025, and every 10 years thereafter, submit to Congress, the Federal 
Energy Regulatory Commission, and the Secretary of Energy a 
comprehensive evaluation of the implementation (including outcomes) of 
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 implementation of 
        such sections, including the specific design elements used in 
        increasing the efficiency of retail natural gas and electricity 
        distribution and consumption and increasing the deployment of 
        renewable electricity 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 implementation of such sections on the 
        reliability of electricity and natural gas supply;
            (4) the net benefits or costs of the implementation of such 
        sections to the United States and the States, including--
                    (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 otherwise would 
                have been required;
            (5) an assessment of the benefits and costs of increasing 
        the performance standards established under section 611(c) of 
        the Public Utility Regulatory Policies Act of 1978 (as added by 
        this Act);
            (6) the feasibility, advantages, and disadvantages of 
        alternative models for demonstrating compliance with a Federal 
        energy efficiency resource standard, including--
                    (A) establishing a national trading system for 
                energy efficiency credits; or
                    (B) demonstrating compliance through reductions in 
                the projected amount of electricity and natural gas 
                delivered by retail electricity suppliers and retail 
                natural gas suppliers, rather than on measured and 
                verified electricity savings and natural gas savings; 
                and
            (7) recommendations regarding potential changes to 
        implementing such sections, including changes to regulations 
        and procedures, or to related public policies.
    (b) Recommendations to Congress.--Not later than January 1, 2026, 
and every 10 years thereafter, the Secretary of Energy shall submit to 
the Committee on Energy and Commerce of the House of Representatives 
and the Committee on Energy and Natural Resources of the Senate a 
report making recommendations for modifications and improvements to 
implementation of 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 Energy and the recommendations included in the most recent 
evaluation by the National Academy of Sciences under subsection (a).

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.''.
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