Federal renewable portfolio standard

(a)

In general

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

610.

Federal renewable portfolio standard

(a)

Definitions

For purposes of this section: (1)

Biomass

The term biomass means— (A)cellulosic (plant fiber) organic materials from a plant that is planted for the purpose of being used to produce energy; (B)nonhazardous, plant or algal matter waste materials that is segregated from other waste materials and is derived from— (i)an agricultural crop, crop byproduct or residue resource; (ii)waste such as landscape or right-of-way trimmings, but not including— (I)municipal solid waste; (II)recyclable postconsumer waste paper; (III)painted, treated, or pressurized wood; (IV)wood contaminated with plastic or metals; or (iii)gasified animal waste; (iv)landfill methane; and (C)with respect to material removed from National Forest System lands the term includes only organic material from— (i)precommercial thinnings; (ii)slash; (iii)brush; and (iv)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, tidal, 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. (b)

Minimum renewable generation requirement

For each calendar year beginning in calendar year 2010, 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 (c). (c)

Required annual percentage

For calendar years 2010 through 2039, 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 (d), shall be the percentage specified in the following table: Required annual Calendar Yearspercentage 20101 20112 20124 20136 20148 201510 201612 201714 201816 201918 2020 and thereafter20.

(d)

Renewable energy credits

(1)A retail electric supplier may satisfy the requirements of subsection (b) through the submission of renewable energy credits— (A)issued to the retail electric supplier under subsection (e); (B)obtained by purchase or exchange under subsection (f) or (h); or (C)borrowed under subsection (j). (2)A renewable energy credit may be counted toward compliance with subsection (b) only once. (e)

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 to such customer 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 (j). 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)

Eligibility

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. (g)

Contracts under section 210

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. (h)

Existing facility offsets

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. (i)

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 (e)(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. (j)

Renewable energy credit borrowing

At any time before the end of calendar year 2012, a retail electric supplier that has reason to believe it will not have sufficient renewable energy credits to comply with subsection (b) 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 (b) for calendar year 2012 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 (b) 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 (b), by calendar year 2020 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 (k) for violation of the requirements of subsection (b) for each calendar year involved.

(k)

Enforcement

A retail electric supplier that does not submit renewable energy credits as required under subsection (b) 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 (e). On January 1 of each year following calendar year 2006, the Secretary shall adjust for inflation the penalty for such calendar year, based on the Gross Domestic Product Implicity Price Deflator. (l)

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 2006, the Secretary shall adjust for inflation the price charged per credit for such calendar year, based on the Gross Domestic Product Implicit Price Deflator. (m)

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. (n)

Environmental savings clause

Incremental hydropower shall be subject to all applicable environmental laws and licensing and regulatory requirements. (o)

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. (p)

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 (b) 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 (b), 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 (b); 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 (b).

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.

(q)

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. (r)

Program review

The Secretary shall enter into a contract with the National Academy of Sciences to conduct a comprehensive evaluation of all aspects of the Renewable Portfolio Standard program, within 8 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 and sources of renewable energy 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 evaluation and any recommendations for modifications and improvements to the program to Congress not later than January 1, 2016.

(s)

Program improvements

Using the results of the evaluation under subsection (p), the Secretary shall by rule, within 6 months of the completion of the evaluation, 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. (t)

State renewable energy account program

(1)The Secretary shall establish, not later than December 31, 2009, 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 Secretary of the Treasury. (3)Proceeds deposited in the State renewable energy account shall be used by the Secretary, subject to annual appropriations, 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.

(b)

Table of contents

The table of contents for such title is amended by adding the following new item at the end:

Sec. 610. Federal renewable portfolio standard.

(c)

Sunset

Section 610 of such title and the item relating to such section 610 in the table of contents for such title are each repealed as of December 31, 2039.