[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1294 Introduced in House (IH)]







108th CONGRESS
  1st Session
                                H. R. 1294

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


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 13, 2003

   Mr. Udall of New Mexico (for himself, Mr. Udall of Colorado, Mr. 
 Waxman, Mr. George Miller of California, Mr. Tierney, Mr. Owens, Mr. 
Hinchey, Mr. Cardin, Mr. Berman, Mr. Leach, and Mr. Pallone) 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 energy portfolio standard for certain 
           retail electric utilities, 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. FEDERAL RENEWABLE PORTFOLIO STANDARD.

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

``SEC. 609. FEDERAL RENEWABLE PORTFOLIO STANDARD.

    ``(a) Minimum Renewable Generation Requirement.--For each calendar 
year beginning in calendar year 2005, each retail electric supplier 
shall submit to the Secretary, not later than April 1 of the following 
calendar year, renewable energy credits in an amount equal to the 
required annual percentage specified in subsection (b).
    ``(b) Required Annual Percentage.--For calendar years 2005 through 
2035, the required annual percentage of the retail electric supplier's 
base amount that shall be generated from renewable energy resources, or 
otherwise credited towards such percentage requirement pursuant to 
subsection (c), shall be the percentage specified in the following 
table:

                                                        Required annual
    ``Calendar Years                                         percentage
                2006.......................................          1 
                2007.......................................          2 
                2008.......................................          3 
                2009.......................................          4 
                2010.......................................          5 
                2011.......................................          6 
                2012.......................................          7 
                2013.......................................          8 
                2014.......................................          9 
                2015.......................................         10 
                2016.......................................         11 
                2017.......................................         12 
                2018.......................................         13 
                2019.......................................         14 
                2020.......................................         15 
                2021.......................................         16 
                2022.......................................         17 
                2023.......................................         18 
                2024.......................................         19 
                2025.......................................         20 
    ``(c) Renewable Energy Credits.--(1) A retail electric supplier may 
satisfy the requirements of subsection (a) through the submission of 
renewable energy credits--
            ``(A) issued to the retail electric supplier under 
        subsection (d);
            ``(B) obtained by purchase or exchange under subsection (e) 
        or (g); or
            ``(C) borrowed under subsection (f).
    ``(2) A renewable energy credit may be counted toward compliance 
with subsection (a) only once.
    ``(d) Issuance of Credits.--(1) The Secretary shall establish by 
rule, not later than 1 year after the date of enactment of this 
section, a program to verify and issue renewable energy credits, track 
their sale, exchange and submission, and enforce the requirements of 
this section.
    ``(2) An entity that generates electric energy through the use of a 
renewable energy resource may apply to the Secretary for the issuance 
of renewable energy credits. The applicant must demonstrate that the 
electric energy will be transmitted onto the grid or, in the case of a 
generation offset, that the electric energy offset would have otherwise 
been consumed on site. The application shall indicate--
                    ``(A) the type of renewable energy resource used to 
                produce the electricity;
                    ``(B) the location where the electric energy was 
                produced; and
                    ``(C) any other information the Secretary 
                determines appropriate.
    ``(3)(A) Except as provided in subparagraphs (B), (C), and (D), the 
Secretary shall issue to each entity that generates electric energy one 
renewable energy credit for each kilowatt hour of electric energy the 
entity generates from the date of enactment of this section and in each 
subsequent calendar year through the use of a renewable energy resource 
at an eligible facility.
    ``(B) For incremental hydropower the renewable energy credits shall 
be calculated based on the expected increase in average annual 
generation resulting from the efficiency improvements or capacity 
additions. The number of credits shall be calculated using the same 
water flow information used to determine a historic average annual 
generation baseline for the hydroelectric facility and certified by the 
Secretary or the Federal Energy Regulatory Commission. The calculation 
of the renewable energy credits for incremental hydropower shall not be 
based on any operational changes at the hydroelectric facility not 
directly associated with the efficiency improvements or capacity 
additions.
    ``(C) The Secretary shall issue two renewable energy credits for 
each kilowatt hour of electric energy generated and supplied to the 
grid in that calendar year through the use of a renewable energy 
resource at an eligible facility located on Indian land. For purposes 
of this paragraph, renewable energy generated by biomass cofired with 
other fuels is eligible for two credits only if the biomass was grown 
on such land.
    ``(D) For electric energy generated by a renewable energy resource 
at an on-site eligible facility, used to offset part or all of the 
customer's requirements for electric energy, the Secretary shall issue 
three renewable energy credits for each kilowatt hour generated.
    ``(E) In the case of a retail electric supplier that is subject to 
a State renewable standard program that--
            ``(i) requires the generation of electricity from renewable 
        energy; or
            ``(ii) provides for alternative compliance payments in 
        satisfaction of applicable State requirements under the 
        program,
the Secretary shall issue an amount of renewable energy credits equal 
to the amount of renewable energy credits that the Secretary would have 
issued had a payment of the same amount been made to the Secretary 
under subsection (g). Such renewable energy credits may be applied 
against the retail electric supplier's own required annual percentage 
or may be transferred for use only by an associate company of the 
retail electric supplier.
    ``(F) To be eligible for a renewable energy credit, the unit of 
electric energy generated through the use of a renewable energy 
resource may be sold or may be used by the generator. If both a 
renewable energy resource and a non-renewable energy resource are used 
to generate the electric energy, the Secretary shall issue renewable 
energy credits based on the proportion of the renewable energy 
resources used. The Secretary shall identify renewable energy credits 
by type and date of generation.
    ``(4) When a generator sells electric energy generated through the 
use of a renewable energy resource to a retail electric supplier under 
a contract subject to section 210 of this Act, the retail electric 
supplier is treated as the generator of the electric energy for the 
purposes of this section or the duration of the contract.
    ``(5) The Secretary shall issue renewable energy credits for 
existing facility offsets to be applied against a retail electric 
supplier's required annual percentage. Such credits are not tradeable 
and may be used only in the calendar year generation actually occurs.
    ``(e) Renewable Energy Credit Trading.--A renewable energy credit, 
may be sold, transferred or exchanged by the entity to whom issued or 
by any other entity who acquires the renewable energy credit, except 
for those renewable energy credits issued pursuant to subsection 
(d)(3)(E). A renewable energy credit for any year that is not used to 
satisfy the minimum renewable generation requirement of subsection (a) 
for that year may be carried forward for use within the next 4 years.
    ``(f) Renewable Energy Credit Borrowing.--At any time before the 
end of calendar year 2005, a retail electric supplier that has reason 
to believe it will not have sufficient renewable energy credits to 
comply with subsection (a) may--
            ``(1) submit a plan to the Secretary demonstrating that the 
        retail electric supplier will earn sufficient credits within 
        the next 3 calendar years which, when taken into account, will 
        enable the retail electric supplier to meet the requirements of 
        subsection (a) for calendar year 2005 and the subsequent 
        calendar years involved; and
            ``(2) upon the approval of the plan by the Secretary, apply 
        renewable energy credits that the plan demonstrates will be 
        earned within the next 3 calendar years to meet the 
        requirements of subsection (a) for each calendar year involved.
The retail electric supplier must repay all of the borrowed renewable 
energy credits by submitting an equivalent number of renewable energy 
credits, in addition to those otherwise required under subsection (a), 
by calendar year 2008 or any earlier deadlines specified in the 
approved plan. Failure to repay the borrowed renewable energy credits 
shall subject the retail electric supplier to civil penalties under 
subsection (h) for violation of the requirements of subsection (a) for 
each calendar year involved.
    ``(g) Credit Cost Cap.-- The Secretary shall offer renewable energy 
credits for sale at the lesser of 3 cents per kilowatt-hour or 200 
percent of the average market value of renewable credits for the 
applicable compliance period. On January 1 of each year following 
calendar year 2005, the Secretary shall adjust for inflation the price 
charged per credit for such calendar year, based on the Gross Domestic 
Product Implicit Price Deflator.
    ``(h) Enforcement.--A retail electric supplier that does not submit 
renewable energy credits as required under subsection (a) shall be 
liable for the payment of a civil penalty. That penalty shall be 
calculated on the basis of the number of renewable energy credits not 
submitted, multiplied by the lesser of 4.5 cents or 300 percent of the 
average market value of credits for the compliance period. Any such 
penalty shall be due and payable without demand to the Secretary as 
provided in the regulations issued under subsection (d).
    ``(i) Information Collection.--The Secretary may collect the 
information necessary to verify and audit--
            ``(1) the annual electric energy generation and renewable 
        energy generation of any entity applying for renewable energy 
        credits under this section;
            ``(2) the validity of renewable energy credits submitted by 
        a retail electric supplier to the Secretary; and
            ``(3) the quantity of electricity sales of all retail 
        electric suppliers.
    ``(j) Environmental Savings Clause.--Incremental hydropower shall 
be subject to all applicable environmental laws and licensing and 
regulatory requirements.
    ``(k) Existing Programs.--(1) This section does not preclude a 
State from imposing additional renewable energy requirements in that 
State, including specifying eligible technologies under such State 
requirements.
    ``(2) In the rule establishing this program, the Secretary shall 
incorporate common elements of existing renewable energy programs, 
including state programs, to ensure administrative ease, market 
transparency and effective enforcement. The Secretary shall work with 
the States to minimize administrative burdens and costs and to avoid 
duplicating compliance charges to retail electric suppliers.
    ``(l) Definitions.--For purposes of this section:
            ``(1) Biomass.--The term `biomass' means any organic 
        material that is available on a renewable or recurring basis, 
        including dedicated energy crops, trees grown for energy 
        production, wood waste and wood residues, plants (including 
        aquatic plants, grasses, and agricultural crops), residues, 
        fibers, animal wastes and other organic waste materials (but 
        not including unsegregated municipal solid waste (garbage)), 
        and fats and oils, except that with respect to material removed 
        from National Forest System lands the term includes only 
        organic material from--
                    ``(A) precommercial thinnings;
                    ``(B) slash;
                    ``(C) brush; and
                    ``(D) mill residues.
            ``(2) Eligible facility.--The term `eligible facility' 
        means--
                    ``(A) a facility for the generation of electric 
                energy from a renewable energy resource that is placed 
                in service on or after the date of enactment of this 
                section or the effective date of the applicable State 
                renewable portfolio standard program; or
                    ``(B) a repowering or cofiring increment that is 
                placed in service on or after the date of enactment of 
                this section or the effective date of the applicable 
                State renewable portfolio standard program, at a 
                facility for the generation of electric energy from a 
                renewable energy resource that was placed in service 
                before that date.
            ``(3) Existing facility offset.--The term `existing 
        facility offset' means renewable energy generated from an 
        existing facility, not classified as an eligible facility, that 
        is owned or under contract, directly or indirectly, to a retail 
        electric supplier on the date of enactment of this section.
            ``(4) Incremental hydropower.--The term `incremental 
        hydropower' means additional generation that is achieved from 
        increased efficiency or additions of capacity on or after the 
        date of enactment of this section or the effective date of the 
        applicable State renewable portfolio standard program, at a 
hydroelectric facility that was placed in service before that date.
            ``(5) Indian land.--The term `Indian land' means--
                    ``(A) any land within the limits of any Indian 
                reservation, pueblo, or rancheria;
                    ``(B) any land not within the limits of any Indian 
                reservation, pueblo, or rancheria title to which was on 
                the date of enactment of this paragraph either held by 
                the United States for the benefit of any Indian tribe 
                or individual or held by any Indian tribe or individual 
                subject to restriction by the United States against 
                alienation;
                    ``(C) any dependent Indian community; and
                    ``(D) any land conveyed to any Alaska Native 
                corporation under the Alaska Native Claims Settlement 
                Act.
            ``(6) Indian tribe.--The term `Indian tribe' means any 
        Indian tribe, band, nation, or other organized group or 
        community, including any Alaskan Native village or regional or 
        village corporation as defined in or established pursuant to 
        the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et 
        seq.), which is recognized as eligible for the special programs 
        and services provided by the United States to Indians because 
        of their status as Indians.
            ``(7) Renewable energy.--The term `renewable energy' means 
        electric energy generated by a renewable energy resource.
            ``(8) Renewable energy resource.--The term `renewable 
        energy resource' means solar (including solar water heating), 
        wind, ocean, geothermal energy, biomass, landfill gas, or 
        incremental hydropower.
            ``(9) Repowering or cofiring increment.--The term 
        `repowering or cofiring increment' means--
                    ``(A) the additional generation from a modification 
                that is placed in service on or after the date of 
                enactment of this section or the effective date of the 
                applicable State renewable portfolio standard program, 
                to expand electricity production at a facility used to 
                generate electric energy from a renewable energy 
                resource or to cofire biomass that was placed in 
                service before the date of enactment of this section or 
                the effective date of the applicable State renewable 
                portfolio standard program; or
                    ``(B) the additional generation above the average 
                generation in the 3 years preceding the date of 
                enactment of this section or the effective date of the 
                applicable State renewable portfolio standard program, 
                to expand electricity production at a facility used to 
                generate electric energy from a renewable energy 
                resource or to cofire biomass that was placed in 
                service before the date of enactment of this section or 
                the effective date of the applicable State renewable 
                portfolio standard program.
            ``(10) Retail electric supplier.--The term `retail electric 
        supplier' means a person that sells electric energy to electric 
        consumers and sold not less than 1,000,000 megawatt-hours of 
        electric energy to electric consumers for purposes other than 
        resale during the preceding calendar year; except that such 
        term does not include the United States, a State or any 
        political subdivision of a State, or any agency, authority, or 
        instrumentality of any one or more of the foregoing, or a rural 
        electric cooperative.
            ``(11) Retail electric supplier's base amount.--The term 
        `retail electric supplier's base amount' means the total amount 
        of electric energy sold by the retail electric supplier, 
        expressed in terms of kilowatt hours, to electric customers for 
        purposes other than resale during the most recent calendar year 
        for which information is available, excluding electric energy 
        generated by a hydroelectric facility.
    ``(m) Recovery of Costs.--An electric utility whose sales of 
electric energy are subject to rate regulation, including any utility 
whose rates are regulated by the Commission and any State regulated 
electric utility, shall not be denied the opportunity to recover the 
full amount of the prudently incurred incremental cost of renewable 
energy obtained to comply with the requirements of subsection (a) for 
sales to electric customers which are subject to rate regulation, 
notwithstanding any other law, regulation, rule, administrative order 
or any agreement between the electric utility and either the Commission 
or a State regulatory authority. For the purpose of this subsection, 
the term `incremental cost of renewable energy' means--
            ``(1) the additional cost to the electric utility for the 
        purchase or generation of renewable energy to satisfy the 
        minimum renewable generation requirement of subsection (a), as 
        compared to the cost of the electric energy the electric 
        utility would generate or purchase from another source but for 
the requirements of subsection (a); and
            ``(2) the cost to the electric utility for acquiring by 
        purchase or exchange renewable energy credits to satisfy the 
        minimum renewable generation requirement of subsection (a).
For purposes of this subsection, the definitions in section 3 of this 
Act shall apply to the terms `electric utility', `State regulated 
electric utility', `State agency', `Commission', and `State regulatory 
authority'.
    ``(n) Voluntary Participation.--The Secretary shall encourage 
federally-owned utilities, municipally-owned utilities and rural 
electric cooperatives that sell electric energy to electric consumers 
for purposes other than resale to participate in the renewable 
portfolio standard program. A municipally-owned utility or rural 
electric cooperative that owns or has under contract a facility for the 
generation of electric energy from a renewable energy resource may not 
sell or trade renewable energy credits generated by such resource 
unless it participates in the renewable portfolio standard program 
under the same terms and conditions as retail electric suppliers.
    ``(o) Program Review.--The Secretary shall conduct a comprehensive 
evaluation of all aspects of the Renewable Portfolio Standard program, 
within 10 years of enactment of this section. The study shall include 
an evaluation of--
            ``(1) the effectiveness of the program in increasing the 
        market penetration and lower the cost of the eligible renewable 
        technologies;
            ``(2) the opportunities for any additional technologies 
        emerging since enactment of this section;
            ``(3) the impact on the regional diversity and reliability 
        of supply sources, including the power quality benefits of 
        distributed generation;
            ``(4) the regional resource development relative to 
        renewable potential and reasons for any under investment in 
        renewable resources; and
            ``(5) the net cost/benefit of the renewable portfolio 
        standard to the national and state economies, including retail 
        power costs, economic development benefits of investment, 
        avoided costs related to environmental and congestion 
        mitigation investments that would otherwise have been required, 
        impact on natural gas demand and price, effectiveness of green 
        marketing programs at reducing the cost of renewable resources.
The Secretary shall transmit the results of the program review and any 
recommendations for modifications and improvements to the program to 
Congress not later than January 1, 2012.
    ``(p) Program Improvements.--Using the results of the review under 
subsection (o), the Secretary shall by rule, within 6 months of the 
completion of the review, make such modifications to the program as may 
be necessary to improve the efficiency of the program and maximize the 
use of renewable energy under the program.
    ``(q) State Renewable Energy Account Program.--(1) The Secretary 
shall establish, not later than December 31, 2005, a State renewable 
energy account program.
    ``(2) All money collected by the Secretary from the sale of 
renewable energy credits shall be deposited into the state renewable 
energy account established pursuant to this subsection. The State 
renewable energy account shall be held by the Secretary and shall not 
be transferred to the Treasury Department.
    ``(3) Proceeds deposited in the state renewable energy account 
shall be used by the Secretary for a program to provide grants to the 
State agency responsible for developing State energy conservation plans 
under section 363 of the Energy Policy and Conservation Act (42 U.S.C. 
6322) for the purposes of promoting renewable energy production and 
providing energy assistance and weatherization services to low-income 
consumers.
    ``(4) The Secretary may issue guidelines and criteria for grants 
awarded under this subsection. At least 75 percent of the funds 
provided to each State shall be used for promoting renewable energy 
production. The funds shall be allocated to the states on the basis of 
retail electric sales subject to the Renewable Portfolio Standard under 
this section or through voluntary participation. To the extent Federal 
credits have been issued without payment due to reciprocity with state 
programs under subsection (d)(3)(E), deductions shall be made from the 
relevant state's allocation. State energy offices receiving grants 
under this section shall maintain such records and evidence of 
compliance as the Secretary may require.
    ``(r) Sunset.--This section expires December 31, 2035.''.
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