1.Energy efficiency resource standard for retail electricity and natural gas distributorsTitle 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:
610.Energy efficiency resource standard for retail electricity and natural gas distributors
(a)In this section:
(1)The term base quantity, with respect to a retail electricity or natural gas distributor, means the total quantity of electric energy or natural gas delivered by the retail electricity or natural gas distributor to retail customers (other than to an electricity distributor for purposes of electric generation) during the most recent calendar year for which information is available.
(2)
(A)The term CHP savings means the increment of electric output of a new combined heat and power system that is attributable to the higher efficiency of the combined system (as compared to the efficiency of separate production of the electric and thermal outputs), as determined in accordance with such regulations as the Secretary may promulgate.
(B)For purposes of subparagraph (A), the term new combined heat and power system means a system that uses the same energy source for the generation of electrical or mechanical power and the production of steam or another form of useful thermal energy, if—
(i)the facility at which the system is used meets such requirements relating to efficiency and other operating characteristics as the Secretary may promulgate by regulation;
(ii)the net wholesale sales of electricity by the facility will not exceed 50 percent of total annual electric generation by the facility; and
(iii)the facility commences operation after June 30, 2007.
(3)Customer facility savingsThe term customer facility savings means a reduction in end-use electricity or natural gas consumption (including recycled energy savings) at a facility of an end-use consumer of electricity or natural gas served by a retail electricity or natural gas distributor, as compared to—
(A)consumption at that facility during a base year;
(B)in the case of new equipment, regardless of whether the new equipment replaces existing equipment at the end of the useful life of the existing equipment, consumption by the new equipment of average efficiency; or
(C)in the case of a new facility, consumption at a reference facility.
(4)The term electricity savings means, as determined in accordance with such regulations as the Secretary may promulgate—
(A)customer facility savings of electricity consumption, adjusted to reflect any associated increase in fuel consumption at the facility;
(B)reductions in distribution system losses of electricity achieved by a retail electricity distributor, as compared to losses attributable to new or replacement distribution system equipment of average efficiency (as defined in regulations to be promulgated by the Secretary); and
(C)CHP savings.
(5)The term natural gas savings means, as determined in accordance with such regulations as the Secretary may promulgate—
(A)customer facility savings of natural gas, adjusted to reflect any associated increase in electricity consumption at the facility; and
(B)reductions in leakage, operational losses, and gas fuel consumption in the operation of a gas distribution system achieved by a retail gas distributor, as compared to similar losses during a base year.
(6)The term recycled energy savings means a reduction in electricity or natural gas consumption that is attributable to electrical or mechanical power (or both), or thermal energy, produced by modifying an industrial or commercial system that was in operation before July 1, 2007, in order to recapture energy that would otherwise be wasted.
(7)Retail electricity or natural gas distributorThe term retail electricity or natural gas distributor means a person or Federal or State agency that—
(A)owns or operates an electric or natural gas distribution facility; and
(B)using the facility, delivers to consumers of the energy that are not affiliated with, and that are not lessees or tenants of, the person or agency, during the most recent calendar year for which data are available—
(i)more than 800,000 megawatt hours of electricity; or
(ii)more than 1,000,000,000 cubic feet of natural gas.
(8)Verified electricity or natural gas savingsThe term verified electricity or natural gas savings means electricity savings or natural gas savings that meet the requirements of subsection (c).
(b)
(1)For calendar year 2010, and each calendar year thereafter, each retail electricity or natural gas distributor shall submit to the Secretary, by not later than March 31 of the calendar year after the applicable calendar year, a number of credits issued under subsection (d) equal to the following percentages of the base quantity of the retail electricity or natural gas distributor applicable to the calendar year:
YearElectricity credits (%)Natural gas credits (%)
20100.50.3
20111.250.6
20122.01.0
20133.01.5
20144.02.0
20155.02.5
20166.03.0
20177.03.5
20188.04.0
20199.04.5
202010.05.0.
(2)Subsequent calendar yearsFor calendar year 2021 and each calendar year thereafter, each retail electricity or natural gas distributor shall submit to the Secretary, by not later than March 31 of the calendar year after the applicable calendar year, a number of credits issued under subsection (d) equal to such a percentage of the base quantity of the retail electricity or natural gas distributor as the Secretary may determine, by regulation, but in no case less than the applicable percentage for calendar year 2020.
(c)Measurement and verification of savingsNot later than June 30, 2009, the Secretary shall promulgate regulations regarding measurement and verification of electricity and natural gas savings under this section, including—
(1)procedures and standards for defining and measuring electricity savings and natural gas savings that will be eligible to receive credits under subsection (d)(2), which shall—
(A)specify the types of energy efficiency and energy conservation measures that will be eligible for the credits;
(B)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;
(C)account for the useful life of electricity savings measures;
(D)include deemed savings values for specific, commonly-used efficiency measures;
(E)specify the extent to which electricity savings and natural gas savings attributable to measures carried out before July 1, 2007, are eligible to receive credits under this section; and
(F)exclude savings that—
(i)are not properly attributable to measures carried out by the entity seeking the credit (or a designated agent of the entity); or
(ii)have already been credited under this section to another entity; and
(2)procedures and standards for third-party verification of reported electricity savings or natural gas savings.
(d)Credit and trading system
(1)
(A)Not later than June 30, 2009, the Secretary shall promulgate regulations regarding—
(i)the issuance of credits under this section;
(ii)a national credit trading system; and
(iii)a system for independent monitoring of the market for the credits.
(B)In promulgating regulations under subparagraph (A), the Secretary may establish such limitations as the Secretary determines to be appropriate with respect to the extent to which a retail electricity or natural gas distributor may achieve compliance with subsection (b) by submitting credits issued for electricity or natural gas savings that are not customer facility savings at a facility served by the retail electricity or natural gas distributor.
(C)In promulgating regulations under subparagraph (A), the Secretary shall provide for the issuance of appropriate credits for the mechanical output of new combined heat and power systems.
(2)In accordance with the regulations promulgated under paragraph (1), the Secretary shall issue credits for—
(A)verified electricity and natural gas savings achieved by a retail electricity or natural gas distributor in a certain calendar year; and
(B)verified electricity and natural gas savings achieved by other entities (including State agencies), if—
(i)
(I)no retail electricity or natural gas distributor paid a substantial portion of the cost of achieving the savings; or
(II)if a retail electricity or natural gas distributor paid a substantial portion of the cost of achieving the savings, the retail electricity or natural gas distributor has waived any entitlement to the credit; and
(ii)the measures used to achieve the verified electricity and natural gas savings were installed or placed in operation by the entity seeking certification (or a designated agent of the entity).
(3)A credit issued by the Secretary under this subsection shall have a value of—
(A)1,000 kilowatt-hours, in the case of an electricity savings credit; or
(B)10 therms, in the case of a natural gas savings credit.
(4)
(A)Subject to subparagraph (B), the Secretary shall charge the recipient of a credit under this section a fee in an amount equal to, as determined by the Secretary, the administrative costs of issuing, recording, monitoring the sale or exchange of, and receiving the credit.
(B)Notwithstanding subparagraph (A), the amount of a fee under this paragraph shall be not more than, as applicable—
(i)$1 for a electric credit; or
(ii)$0.10 for a natural gas credit.
(C)The Secretary shall use fees received under this paragraph for the administrative costs of carrying out this subsection.
(5)In accordance with regulations promulgated under paragraph (1), any entity that receives a credit under this section may—
(A)sell or transfer the credit to any other entity; or
(B)use the credit to achieve compliance with the performance standard under subsection (b).
(e)In lieu of submitting credits to achieve compliance with an applicable performance standard under subsection (b) for a calendar year, a retail electricity or natural gas distributor may pay to the Secretary, by not later than March 31 of the following calendar year, a buyout fee in an amount equal to, as adjusted for inflation in accordance with such regulations as the Secretary may promulgate—
(1)$20 for each electricity savings credit otherwise required to be submitted by the retail electricity or natural gas distributor; or
(2)$2 for each natural gas savings credit otherwise required to be submitted by the retail electricity or natural gas distributor.
(f)On receipt of an application from the Governor of a State, the Secretary may authorize the State to administer and enforce an energy efficiency program in the State in lieu of the program under this section, if the Secretary determines that the State program will achieve electricity savings and natural gas savings at least equivalent to the electricity savings and natural gas savings that would be required to be achieved by electricity and natural gas distributors in the State under this section.
(g)In accordance with section 13 of the Federal Energy Administration Act of 1974 (15 U.S.C. 774), the Secretary may require any retail electricity or natural gas distributor or other entity that receives a credit under this section, and any other entity as the Secretary determines to be necessary, to provide such information and reports, and access to any records or facility of the entity, as the Secretary determines to be appropriate to carry out this section.
(h)
(1)Failure to submit creditsExcept in a case in which a State program is carried out in lieu of the program under this section under subsection (f), if a retail electricity or natural gas distributor fails to submit to the Secretary any credit required for compliance with the applicable performance standard under subsection (b), or to pay to the Secretary an applicable buyout payment under subsection (e), the Secretary shall assess against the retail electricity or natural gas distributor a civil penalty for each such failure in an amount equal to, as adjusted for inflation in accordance with such regulations as the Secretary may promulgate—
(A)$100 for each electricity savings credit or buyout payment failed to be made by the retail electricity or natural gas distributor; or
(B)$10 for each natural gas savings credit or buyout payment failed to be made by the retail electricity or natural gas distributor.
(2)The procedures under section 31(c) of the Federal Power Act (16 U.S.C. 823b(c)) shall apply to a civil penalty assessed under paragraph (1).
(i)Nothing in this section supersedes or otherwise affects any State or local law (including regulations) relating to electricity savings or natural gas savings, to the extent that the State or local law requires equal or greater electricity savings or natural gas saving than the savings required by this section. .