[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5889 Introduced in House (IH)]
<DOC>
117th CONGRESS
1st Session
H. R. 5889
To amend title VI of the Public Utility Regulatory Policies Act of 1978
to establish a Federal energy efficiency resource standard for retail
electricity suppliers and retail natural gas suppliers, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 4, 2021
Mr. Welch (for himself and Ms. Clarke of New York) 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 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 Energy
Efficiency Act''.
(b) Findings.--Congress finds that--
(1) the Federal energy efficiency resource standard
established by section 610 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
(2) 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. ENERGY EFFICIENCY RESOURCE STANDARD FOR RETAIL ELECTRICITY AND
NATURAL GAS SUPPLIERS.
Title VI of the Public Utility Regulatory Policies Act of 1978 (16
U.S.C. 2601 et seq.) is amended by adding at the end the following:
``SEC. 610. 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 specified or
established under subsection (c), the average annual
quantity of electricity delivered by the retail
electricity supplier to electric consumers, or the
average annual quantity of natural gas delivered by the
retail natural gas supplier to 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 the
applicable facility do not exceed 50 percent of total
annual electric generation by the facility.
``(8) Cost-effective.--The term `cost-effective' means,
with respect to an energy efficiency program, 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. The cost-effectiveness of an energy efficiency program
shall be calculated using a societal benefit-cost test that
uses 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 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--
``(i) customer purchase practices; and
``(ii) 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
result 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 one 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) Gas consumer.--The term `gas consumer' has the
meaning given such term in section 302.
``(13) 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--
``(i) customer purchase practices; and
``(ii) 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.
``(14) 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
percentage, as applicable, in the table under
subsection (c)(2).
``(15) 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.
``(16) Reporting period.--The term `reporting period'
means--
``(A) calendar years 2021 through 2023; and
``(B) each successive 2-calendar-year period
thereafter.
``(17) 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.
``(18) Retail natural gas supplier.--
``(A) In general.--The term `retail natural gas
supplier' means, for any calendar year, a local
distribution company (as defined in section 2 of the
Natural Gas Policy Act of 1978), that delivered to 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 local distribution company
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 gas consumers.
``(19) 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.
``(20) 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).
``(21) 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 such retail natural gas supplier has achieved
cumulative natural gas 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.
``(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 2.25 1.25
------------------------------------------------------------------------
2023 3.75 2.00
------------------------------------------------------------------------
2024 5.25 3.00
------------------------------------------------------------------------
2025 7.00 4.00
------------------------------------------------------------------------
2026 9.00 5.00
------------------------------------------------------------------------
2027 11.00 5.50
------------------------------------------------------------------------
2028 13.00 7.00
------------------------------------------------------------------------
2029 15.00 8.50
------------------------------------------------------------------------
2030 17.00 10.00
------------------------------------------------------------------------
2031 19.00 12.00
------------------------------------------------------------------------
2032 21.00 14.00
------------------------------------------------------------------------
2033 23.00 16.00
------------------------------------------------------------------------
2034 25.00 18.00
------------------------------------------------------------------------
2035 27.00 20.00
------------------------------------------------------------------------
``(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 or
established under this subsection, any savings in excess of the
performance standard may be applied toward performance
standards specified or established 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 energy 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
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
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 2021
International Energy
Conservation Code for
residential buildings,
or the ASHRAE/ANSI/
IESNA Standard 90.1-
2019 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 one 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
methods 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 seek 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 demonstrate.--If a retail
electricity supplier or a retail natural gas supplier that is
subject to the requirements of the Federal program established
under this section fails to demonstrate compliance with an
applicable performance standard under subsection (c), or a
retail electricity supplier or a retail natural gas supplier
that is subject to the requirements of a State program approved
pursuant to subsection (g) fails to comply with a requirement
to achieve electricity savings or natural gas savings under
such State program, 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 performance
standards under subsection (c); 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 Programs.--
``(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
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 energy 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 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 required under
the applicable State program; or
``(ii) $5 per million Btu of natural gas
savings needed to make up any deficit in
achieving natural gas savings required under
the applicable State program.
``(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) 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.
``(j) Sense of Congress Regarding Cost Recovery, Fixed Cost
Recovery, and Shareholder Incentives.--It is the sense of Congress that
each State regulatory authority is encouraged to review the rules and
regulations of the State regulatory authority to ensure that retail
electric suppliers and retail natural gas suppliers 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.''.
SEC. 3. 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 energy efficiency resource standard for retail
electricity and natural gas suppliers.''.
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