II 114th CONGRESS 1st Session S. 259 IN THE SENATE OF THE UNITED STATES January 27, 2015 Mr. Hoeven (for himself and Ms. Klobuchar ) introduced the following bill; which was read twice and referred to the Committee on Energy and Natural Resources A BILL To modify the efficiency standards for grid-enabled water heaters.

1. Grid-enabled water heaters Part B of title III of the Energy Policy and Conservation Act ( 42 U.S.C. 6291 et seq. ) is amended— (1) in section 325(e) ( 42 U.S.C. 6295(e) ), by adding at the end the following: (6) Additional standards for grid-enabled water heaters (A) Definitions In this paragraph: (i) Activation lock The term activation lock means a control mechanism (either a physical device directly on the water heater or a control system integrated into the water heater) that is locked by default and contains a physical, software, or digital communication that must be activated with an activation key to enable the product to operate at its designed specifications and capabilities and without which activation the product will provide not greater than 50 percent of the rated first hour delivery of hot water certified by the manufacturer. (ii) Grid-enabled water heater The term grid-enabled water heater means an electric resistance water heater that— (I) has a rated storage tank volume of more than 75 gallons; (II) is manufactured on or after April 16, 2015; (III) has— (aa) an energy factor of not less than 1.061 minus the product obtained by multiplying— (AA) the rated storage volume of the tank, expressed in gallons; and (BB) 0.00168; or (bb) an equivalent alternative standard prescribed by the Secretary and developed pursuant to paragraph (5)(E); (IV) is equipped by the manufacturer with an activation lock; and (V) bears a permanent label applied by the manufacturer that— (aa) is made of material not adversely affected by water; (bb) is attached by means of non-water-soluble adhesive; and (cc) advises purchasers and end-users of the intended and appropriate use of the product with the following notice printed in 16.5 point Arial Narrow Bold font: IMPORTANT INFORMATION: This water heater is intended only for use as part of an electric thermal storage or demand response program. It will not provide adequate hot water unless enrolled in such a program and activated by your utility company or another program operator. Confirm the availability of a program in your local area before purchasing or installing this product. . (B) Requirement The manufacturer or private labeler shall provide the activation key for a grid-enabled water heater only to a utility or other company that operates an electric thermal storage or demand response program that uses such a grid-enabled water heater. (C) Reports (i) Manufacturers The Secretary shall require each manufacturer of grid-enabled water heaters to report to the Secretary annually the quantity of grid-enabled water heaters that the manufacturer ships each year. (ii) Operators The Secretary shall require utilities and other demand response and thermal storage program operators to report annually the quantity of grid-enabled water heaters activated for their programs using forms of the Energy Information Agency or using such other mechanism that the Secretary determines appropriate after an opportunity for notice and comment. (iii) Confidentiality requirements The Secretary shall treat shipment data reported by manufacturers as confidential business information. (D) Publication of information (i) In general In 2017 and 2019, the Secretary shall publish an analysis of the data collected under subparagraph (C) to assess the extent to which shipped products are put into use in demand response and thermal storage programs. (ii) Prevention of product diversion If the Secretary determines that sales of grid-enabled water heaters exceed by 15 percent or greater the quantity of such products activated for use in demand response and thermal storage programs annually, the Secretary shall, after opportunity for notice and comment, establish procedures to prevent product diversion for non-program purposes. (E) Compliance (i) In general Subparagraphs (A) through (D) shall remain in effect until the Secretary determines under this section that— (I) grid-enabled water heaters do not require a separate efficiency requirement; or (II) sales of grid-enabled water heaters exceed by 15 percent or greater the quantity of such products activated for use in demand response and thermal storage programs annually and procedures to prevent product diversion for non-program purposes would not be adequate to prevent such product diversion. (ii) Effective date If the Secretary exercises the authority described in clause (i) or amends the efficiency requirement for grid-enabled water heaters, that action will take effect on the date described in subsection (m)(4)(A)(ii). (iii) Consideration In carrying out this section with respect to electric water heaters, the Secretary shall consider the impact on thermal storage and demand response programs, including any impact on energy savings, electric bills, peak load reduction, electric reliability, integration of renewable resources, and the environment. (iv) Requirements In carrying out this paragraph, the Secretary shall require that grid-enabled water heaters be equipped with communication capability to enable the grid-enabled water heaters to participate in ancillary services programs if the Secretary determines that the technology is available, practical, and cost-effective. ; and (2) in section 332(a) ( 42 U.S.C. 6302(a) )— (A) in paragraph (5), by striking or at the end; (B) in the first paragraph (6), by striking the period at the end and inserting a semicolon; (C) by redesignating the second paragraph (6) as paragraph (7); (D) in subparagraph (B) of paragraph (7) (as so redesignated), by striking the period at the end and inserting ; or ; and (E) by adding at the end the following: (8) for any person to— (A) activate an activation lock for a grid-enabled water heater with knowledge that such water heater is not used as part of an electric thermal storage or demand response program; (B) distribute an activation key for a grid-enabled water heater with knowledge that such activation key will be used to activate a grid-enabled water heater that is not used as part of an electric thermal storage or demand response program; (C) otherwise enable a grid-enabled water heater to operate at its designed specification and capabilities with knowledge that such water heater is not used as part of an electric thermal storage or demand response program; or (D) knowingly remove or render illegible the label of a grid-enabled water heater described in section 325(e)(6)(A)(ii)(V). ; (3) in section 333(a) ( 42 U.S.C. 6303(a) )— (A) in the second sentence, by striking section 332(a)(5) and inserting paragraph (5), (6), (7), or (8) of section 332(a) ; and (B) in the fourth sentence, by striking paragraph (1), (2), or (5) of section 332(a) and inserting paragraph (1), (2), (5), (6), (7), or (8) of section 332(a) ; and (4) in section 334 ( 42 U.S.C. 6304 )— (A) in the second sentence, by striking section 332(a)(5) and inserting paragraph (5), (6), (7), or (8) of section 332(a) ; and (B) in the third sentence, by striking section 332(a)(6) and inserting section 332(a)(7) .