[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 20 Introduced in Senate (IS)]

111th CONGRESS
  2d Session
                                 S. 20

    To amend the Public Utility Regulatory Policies Act of 1978 to 
               establish a Federal clean energy standard.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 29, 2010

  Mr. Graham introduced the following bill; which was read twice and 
       referred to the Committee on Energy and Natural Resources

_______________________________________________________________________

                                 A BILL


 
    To amend the Public Utility Regulatory Policies Act of 1978 to 
               establish a Federal clean energy standard.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Clean Energy Standard Act of 2010''.

SEC. 2. SENSE OF CONGRESS ON CLEAN ENERGY AND ENERGY EFFICIENCY.

    It is the sense of Congress that the Federal Government should 
continue to support the use and expansion of clean energy and energy 
efficiency in--
            (1) the production and use of energy;
            (2) the reduction of greenhouse gas emissions; and
            (3) the reduction of dependence on foreign oil.

SEC. 3. FEDERAL CLEAN ENERGY STANDARD.

    (a) In General.--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 CLEAN ENERGY STANDARD.

    ``(a) Definitions.--In this section:
            ``(1) Advanced coal generation.--The term `advanced coal 
        generation' means the generation of electricity produced from 
        coal by a new or existing coal generating facility that 
        captures and permanently sequesters or stores at least 65 
        percent of greenhouse gases produced by the facility.
            ``(2) Affiliate.--The term `affiliate' when used with 
        respect to a person, means another person that directly or 
        indirectly owns or controls, is owned or controlled by, or is 
        under common ownership or control with, such person, as 
        determined under regulations issued by the Secretary.
            ``(3) Base quantity of electricity.--
                    ``(A) In general.--The term `base quantity of 
                electricity' means the total quantity of electricity 
                sold by an electric utility to electric consumers in a 
                calendar year.
                    ``(B) Exclusions.--The term `base quantity of 
                electricity' does not include--
                            ``(i) electricity generated by a 
                        hydroelectric facility (including a pumped 
                        storage facility but excluding qualified 
                        hydropower) owned by an electric utility or 
                        sold under contract or rate order to an 
                        electric utility to meet the needs of the 
                        retail customers of the utility; or
                            ``(ii) electricity generated through the 
                        incineration of municipal solid waste owned by 
                        an electric utility or sold under contract or 
                        rate order to an electric utility to meet the 
                        needs of the retail customers of the utility.
            ``(4) Biomass.--The term `biomass' means--
                    ``(A) materials, precommercial thinnings, or 
                invasive species from National Forest System land and 
                public lands (as defined in section 103 of the Federal 
                Land Policy and Management Act of 1976 (43 U.S.C. 
                1702)) that--
                            ``(i) are byproducts of preventive 
                        treatments that are removed--
                                    ``(I) to reduce hazardous fuels;
                                    ``(II) to reduce or contain disease 
                                or insect infestation; or
                                    ``(III) to restore ecosystem 
                                health;
                            ``(ii) would not otherwise be used for 
                        higher-value products; and
                            ``(iii) are harvested in accordance with--
                                    ``(I) applicable law and land 
                                management plans; and
                                    ``(II) the requirements for--
                                            ``(aa) old-growth 
                                        maintenance, restoration, and 
                                        management direction of 
                                        paragraphs (2), (3), and (4) of 
                                        subsection (e) of section 102 
                                        of the Healthy Forests 
                                        Restoration Act of 2003 (16 
                                        U.S.C. 6512); and
                                            ``(bb) large-tree retention 
                                        of subsection (f) of that 
                                        section; or
                    ``(B) any organic matter that is available on a 
                renewable or recurring basis from non-Federal land or 
                land belonging to an Indian or Indian tribe that is 
                held in trust by the United States or subject to a 
                restriction against alienation imposed by the United 
                States, including--
                            ``(i) renewable plant material, including--
                                    ``(I) feed grains;
                                    ``(II) other agricultural 
                                commodities;
                                    ``(III) other plants and trees; and
                                    ``(IV) algae; and
                            ``(ii) waste material, other than paper 
                        commonly recycled, including--
                                    ``(I) crop residue;
                                    ``(II) other vegetative waste 
                                material (including wood waste and wood 
                                residues);
                                    ``(III) animal waste and byproducts 
                                (including fats, oils, greases, and 
                                manure); and
                                    ``(IV) food waste and yard waste; 
                                and
                    ``(C) residues and byproducts from wood, pulp, or 
                paper products facilities.
            ``(5) Clean energy.--The term `clean energy' means electric 
        energy generated at a facility (including a distributed 
        generation facility) from--
                    ``(A) solar, wind, geothermal, or ocean energy;
                    ``(B) biomass;
                    ``(C) landfill gas;
                    ``(D) qualified hydropower;
                    ``(E) marine and hydrokinetic renewable energy (as 
                defined in section 632 of the Energy Independence and 
                Security Act of 2007 (42 U.S.C. 17211));
                    ``(F) incremental geothermal production;
                    ``(G) coal-mined methane;
                    ``(H) qualified waste-to-energy;
                    ``(I) qualified nuclear energy;
                    ``(J) advanced coal generation;
                    ``(K) eligible retired fossil fuel generation; or
                    ``(L) another clean energy source based on 
                innovative technology, as determined by the Secretary 
                through rulemaking.
            ``(6) Distributed generation facility.--The term 
        `distributed generation facility' means a facility at or near a 
        customer site that provides electric energy to 1 or more 
        customers for purposes other than resale other than to a 
        utility through a net metering arrangement.
            ``(7) Eligible retired fossil fuel generation.--The term 
        `eligible retired fossil fuel generation' means the generation 
        of electricity from any fossil fuel that is--
                    ``(A) produced by a fossil fuel generating facility 
                (including any petroleum coke or oil-fired steam unit 
                or peaking facility) that had average carbon dioxide 
                emissions during the 3-year period ending on the date 
                of retirement in excess of 2,250 pounds per megawatt 
                hour of generation; and
                    ``(B) permanently retired during the period 
                beginning on the date of enactment of this section and 
                ending on January 1, 2015.
            ``(8) Geothermal energy.--The term `geothermal energy' 
        means energy derived from a geothermal deposit (within the 
        meaning of section 613(e)(2) of the Internal Revenue Code of 
        1986).
            ``(9) Incremental cost of compliance.--
                    ``(A) In general.--The term `incremental cost of 
                compliance' means--
                            ``(i) the costs attributable to all retail 
                        sales of electricity incurred in a year by an 
                        electric utility to--
                                    ``(I) generate clean energy 
                                eligible for Federal clean energy 
                                credits;
                                    ``(II) acquire Federal clean energy 
                                credits; or
                                    ``(III) make alternative compliance 
                                payments in order to comply with the 
                                requirements of subsection (b); less
                            ``(ii)(I) the costs the electric utility 
                        would have incurred to serve all of the retail 
                        customers of that electric utility in that year 
                        to generate or acquire additional electricity 
                        not eligible for clean energy credits if the 
                        requirements of subsection (b) did not apply to 
                        the electric utility; and
                            ``(II) the costs of compliance with any 
                        comparable State clean energy requirement.
                    ``(B) Cost of electricity.--In calculating the 
                incremental cost of compliance of an electric utility 
                under this section, the Secretary shall take into 
                account the reduction, if any, in the cost of 
                electricity generated with fossil fuels associated with 
                increased reliance on clean energy generation.
            ``(10) Incremental fossil fuel production.--The term 
        `incremental fossil fuel production' means the incremental 
        quantity of electricity generated at an existing fossil fuel 
        generation facility over the average quantity of electricity 
        generated at the facility during the preceding 3-year period 
        that is attributable to permanent efficiency improvements or 
        capacity additions made on or after the date of enactment of 
        this section, if there is no increase in greenhouse gas 
        emissions associated with the efficiency improvements or 
        capacity additions when compared to the average greenhouse gas 
        emissions during the preceding 3-year period.
            ``(11) Incremental geothermal production.--
                    ``(A) In general.--The term `incremental geothermal 
                production' means, for any year, the excess of--
                            ``(i) the total kilowatt hours of 
                        electricity produced from a facility (including 
                        a distributed generation facility) using 
                        geothermal energy; over
                            ``(ii) the average number of kilowatt hours 
                        produced annually at the facility for 5 of the 
                        previous 7 calendar years before the date of 
                        enactment of this section after eliminating the 
                        highest and the lowest kilowatt hour production 
                        years in that 7-year period.
                    ``(B) Special rule.--A facility described in 
                subparagraph (A) that was placed in service at least 7 
                years before the date of enactment of this section 
                shall, commencing with the year in which that date of 
                enactment occurs, reduce the amount calculated under 
                subparagraph (A)(ii) each year, on a cumulative basis, 
                by the average percentage decrease in the annual 
                kilowatt hour production for the 7-year period 
                described in subparagraph (A)(ii) with such cumulative 
                sum, but not to exceed 30 percent.
            ``(12) Incremental hydropower.--
                    ``(A) In general.--The term `incremental 
                hydropower' means additional energy generated as a 
                result of efficiency improvements or capacity additions 
                made on or after January 1, 1992.
                    ``(B) Exclusion.--The term `incremental hydropower' 
                does not include additional energy generated as a 
                result of operational changes not directly associated 
                with efficiency improvements or capacity additions.
                    ``(C) Measurement and certification.--Efficiency 
                improvements and capacity additions referred to in 
                subparagraph (A) shall be--
                            ``(i) measured on the basis of the same 
                        water flow information used to determine a 
                        historic average annual generation baseline for 
                        the hydroelectric facility; and
                            ``(ii) certified by the Secretary or the 
                        Federal Energy Regulatory Commission.
            ``(13) Incremental nuclear production.--The term 
        `incremental nuclear production' means the incremental quantity 
        of energy generated by an existing nuclear facility over the 
        average quantity of energy generated at the facility during the 
        preceding 3-year period that is attributable to permanent 
        efficiency improvements or capacity additions made on or after 
        the date of enactment of this section.
            ``(14) Indian land.--The term `Indian land' has the meaning 
        given the term in section 2601 of the Energy Policy Act of 1992 
        (25 U.S.C. 3501).
            ``(15) Qualified hydropower.--
                    ``(A) In general.--The term `qualified hydropower' 
                means--
                            ``(i) incremental hydropower;
                            ``(ii) additions of capacity made on or 
                        after January 1, 2001, or the effective 
                        commencement date of an existing applicable 
                        State clean or renewable electricity standard 
                        program at an existing nonhydroelectric dam, 
                        if--
                                    ``(I) the hydroelectric project 
                                installed on the nonhydroelectric dam--
                                            ``(aa) is licensed by the 
                                        Federal Energy Regulatory 
                                        Commission, or is exempt from 
                                        licensing, and is in compliance 
                                        with the terms and conditions 
                                        of the license or exemption; 
                                        and
                                            ``(bb) meets all other 
                                        applicable environmental, 
                                        licensing, and regulatory 
                                        requirements, including 
                                        applicable fish passage 
                                        requirements;
                                    ``(II) the nonhydroelectric dam--
                                            ``(aa) was placed in 
                                        service before the date of 
                                        enactment of this section;
                                            ``(bb) was operated for 
                                        flood control, navigation, or 
                                        water supply purposes; and
                                            ``(cc) did not produce 
                                        hydroelectric power as of the 
                                        date of enactment of this 
                                        section; and
                                    ``(III) the hydroelectric project 
                                is operated so that the water surface 
                                elevation at any given location and 
                                time that would have occurred in the 
                                absence of the hydroelectric project is 
                                maintained, subject to any license 
                                requirements imposed under applicable 
                                law that change the water surface 
                                elevation for the purpose of improving 
                                the environmental quality of the 
                                affected waterway, as certified by the 
                                Federal Energy Regulatory Commission; 
                                and
                            ``(iii) in the case of the State of 
                        Alaska--
                                    ``(I) energy generated by a small 
                                hydroelectric facility that produces 
                                less than 50 megawatts;
                                    ``(II) energy from pumped storage; 
                                and
                                    ``(III) energy from a lake tap.
                    ``(B) Standards.--Nothing in this paragraph or the 
                application of this paragraph shall affect the 
                standards under which the Federal Energy Regulatory 
                Commission issues licenses for and regulates hydropower 
                projects under part I of the Federal Power Act (16 
                U.S.C. 791a et seq.).
            ``(16) Qualified nuclear energy.--The term `qualified 
        nuclear energy' means energy from a nuclear generating unit 
        placed in service on or after the date of enactment of this 
        section.
            ``(17) Qualified waste-to-energy.--The term `qualified 
        waste-to-energy' means energy from the combustion of post-
        recycled municipal solid waste, or from the gasification or 
        pyrolization of such waste and the combustion of the resulting 
        gas at the same facility, if the owner or operator of the 
        facility generating electricity from the energy provides to the 
        Secretary, on an annual basis--
                    ``(A) a certification that the facility is in 
                compliance with all applicable Federal and State 
                environmental permits;
                    ``(B) in the case of a facility that commences 
                operation before the date of enactment of this section, 
                a certification that the facility meets emissions 
                standards promulgated under section 112 or 129 of the 
                Clean Air Act (42 U.S.C. 7412, 7429) that apply as of 
                the date of enactment of this section to new facilities 
                within the relevant source category; and
                    ``(C) in the case of the combustion, pyrolization, 
                or gasification of municipal solid waste, a 
                certification that each local government unit from 
                which such waste originates operates, participates in 
                the operation of, contracts for, or otherwise provides 
                for, recycling services for residents of the local 
                government unit.
    ``(b) Clean Energy and Energy Efficiency Requirement.--
            ``(1) Requirement.--
                    ``(A) In general.--Subject to subparagraph (B), 
                each electric utility that sells electricity to 
                electric consumers for a purpose other than resale 
                shall obtain a percentage of the base quantity of 
                electricity the electric utility sells to electric 
                consumers in any calendar year from clean energy or 
                energy efficiency.
                    ``(B) Percentage.--Except as provided in section 
                611, the percentage obtained in a calendar year under 
                subparagraph (A) shall not be less than the amount 
                specified in the following table:


``Calendar year:                         Minimum annual percentage:
  2013 and 2014........................  13
  2015 through 2019....................  15
  2020 through 2024....................  20
  2025 through 2029....................  25
  2030 through 2034....................  30
  2035 through 2039....................  35
  2040 through 2044....................  40
  2045 through 2049....................  45
  2050.................................  50.
 

            ``(2) Means of compliance.--An electric utility shall meet 
        the requirements of paragraph (1) by--
                    ``(A) submitting to the Secretary clean energy 
                credits issued under subsection (c);
                    ``(B) submitting Federal energy efficiency credits 
                issued under subsection (i), except that those credits 
                may not be used to meet more than 25 percent of the 
                requirements under paragraph (1) in any calendar year;
                    ``(C) making alternative compliance payments to the 
                Secretary at the rate of 3.5 cents per kilowatt hour 
                (as adjusted for inflation under subsection (g)) if the 
                electric utility does not elect to petition the 
                Secretary to waive the requirements under subsection 
                (d)(3)(C); or
                    ``(D) a combination of activities described in 
                subparagraphs (A), (B), and (C).
            ``(3) Phase-in.--The Secretary shall prescribe, by 
        regulation, a reasonable phase-in of the requirements of 
        paragraph (1) as the requirements apply to an electric utility 
        that becomes subject to this section on or after January 1, 
        2013.
    ``(c) Federal Clean Energy and Energy Efficiency Credit Trading 
Programs.--
            ``(1) In general.--Not later than January 1, 2011, the 
        Secretary shall establish a Federal clean energy credit trading 
        program, and a Federal energy efficiency credit trading 
        program, under which electric utilities shall submit to the 
        Secretary Federal clean energy credits and Federal energy 
        efficiency credits to certify the compliance of the electric 
        utilities with subsection (b)(1).
            ``(2) Administration.--As part of the program, the 
        Secretary shall--
                    ``(A) issue clean energy credits to generators of 
                electric energy from clean energy, regardless of 
                whether the energy is transmitted over the national 
                interstate transmission system;
                    ``(B) to the extent that clean sources of 
                electricity are used in combination with other sources 
                of energy, issue credits only to the extent that the 
                electricity generated is from clean energy resources;
                    ``(C) issue clean energy credits to electric 
                utilities associated with State clean energy standard 
                compliance mechanisms pursuant to subsection (h);
                    ``(D) issue energy efficiency credits pursuant to 
                subsection (i);
                    ``(E) subject to subparagraph (F), ensure that a 
                kilowatt hour, including the associated clean energy 
                credit or energy efficiency credit, shall be used only 
                once for purposes of compliance with this Act;
                    ``(F) allow double credits for generation from 
                facilities on Indian land, and triple credits for 
                generation from small clean energy distributed 
                generators no larger than 1 megawatt, except that no 
                distributed clean energy generation facilities on 
                Indian land shall receive a greater number of credits 
                than triple credits;
                    ``(G) ensure that, with respect to a purchaser 
                that, as of the date of enactment of this section, has 
                a purchase agreement from a clean energy facility 
                placed in service before that date, the credit 
                associated with the generation of clean energy under 
                the contract is issued to the purchaser of the electric 
                energy to the extent that the contract does not already 
                provide for the allocation of the Federal credit;
                    ``(H) in the case of eligible retired fossil fuel 
                generation, issue 0.25 credits per kilowatt hour during 
                the 3 year-period beginning on the date of retirement 
                based on the average annual quantity of electricity 
                generated by eligible retired fossil fuel generation 
                during the final 3 years of operation of the facility;
                    ``(I) calculate the quantity of clean energy 
                credits issued for advanced coal generation, which 
                shall be equal to the product obtained by multiplying--
                            ``(i) the kilowatt hours of electricity 
                        generated by a facility and supplied to the 
                        grid during the prior year; by
                            ``(ii) during the same year, the ratio of--
                                    ``(I) the quantity of carbon 
                                dioxide captured from the facility and 
                                sequestered; bears to
                                    ``(II) the sum of--
                                            ``(aa) the quantity of 
                                        carbon dioxide captured from 
                                        the facility and sequestered; 
                                        and
                                            ``(bb) the quantity of 
                                        carbon dioxide emitted from the 
                                        facility;
                    ``(J) issue double clean energy credits in the case 
                of the first 5 new advanced coal generation facilities 
                that permanently sequester a minimum of 1,000,000 tons 
                per year of carbon dioxide into deep geologic 
                formations;
                    ``(K) issue double credits in the case of the first 
                5 retrofitted coal plants that are advanced coal 
                generators, if the retrofitted facilities capture at 
                least 200 MWe equivalent of flue gas and sequester 
                carbon dioxide into deep geologic formations;
                    ``(L) in the case of credits issued under 
                subparagraphs (J) and (K), if the qualifying project 
                uses captured carbon dioxide for purposes of enhanced 
                hydrocarbon recovery, reduce the credits by .25; and
                    ``(M) issue clean energy credits for the useful 
                electric and thermal output from a facility that 
                produces the output from biomass, using a system under 
                which--
                            ``(i) in the case of efficiency that is 
                        less than 50 percent, 1 clean energy credit is 
                        awarded;
                            ``(ii) in the case of efficiency that is 50 
                        percent or more but less than 70 percent, 1.1 
                        clean energy credits are awarded for the same 
                        unit output;
                            ``(iii) in the case of efficiency that is 
                        70 percent or more but less than 90 percent, 
                        1.25 clean energy credits are awarded for the 
                        same unit output; and
                            ``(iv) in the case of efficiency that is 90 
                        percent or more, 1.5 clean energy credits are 
                        awarded for the same unit output.
            ``(3) Clean energy credit borrowing.--At any time before 
        the end of calendar year 2015 and any subsequent calendar year, 
        an electric utility that has reason to believe the electric 
        utility will not have sufficient clean energy credits to comply 
        with subsection (b) may--
                    ``(A) submit to the Secretary a plan that 
                demonstrates that the electric utility, as a 
                consequence of having facilities under construction at 
                the time the plan is submitted, will earn sufficient 
                clean energy credits during the subsequent 3 calendar 
                years to meet the requirements of subsection (b) for 
                calendar year 2015 and the subsequent calendar years 
                affected; and
                    ``(B) on approval of the plan by the Secretary, 
                apply clean energy credits that the plan demonstrates 
                will be earned during the subsequent 3 calendar years 
                to meet the requirements of subsection (b) for each 
                calendar year affected.
            ``(4) Credit trading and banking.--
                    ``(A) In general.--An electric utility that holds 
                clean energy credits in excess of the quantity of 
                credits needed to comply with subsection (b) may 
                transfer the credits to another electric utility in the 
                same utility holding company system or sell the credits 
                to another electric utility.
                    ``(B) Carrying forward.--A clean energy credit for 
                any year that is not used to satisfy the minimum clean 
                energy requirements of subsection (b) for that year may 
                be carried forward for use in any subsequent year.
            ``(5) Delegation of market function.--
                    ``(A) In general.--The Secretary may delegate to--
                            ``(i) an appropriate market-making entity 
                        the administration of a national clean energy 
                        credit market and a national energy efficiency 
                        credit market for purposes of creating a 
                        transparent national market for the sale or 
                        trade of clean energy credits and energy 
                        efficiency credits; and
                            ``(ii) regional entities the tracking of 
                        dispatch of clean energy generation.
                    ``(B) Administration.--Any delegation under 
                subparagraph (A) shall ensure that the tracking and 
                reporting of information concerning the dispatch of 
                clean energy generation is transparent, verifiable, and 
                independent of any generation or load interests with 
                obligations under this section.
    ``(d) Enforcement.--
            ``(1) Civil penalties.--Any electric utility that fails to 
        meet the requirements of subsection (b) shall be subject to a 
        civil penalty.
            ``(2) Amount of penalty.--The amount of the civil penalty 
        shall be equal to the product obtained by multiplying--
                    ``(A) the number of kilowatt hours of electric 
                energy sold to electric consumers in violation of 
                subsection (b); by
                    ``(B) 200 percent of the value of the alternative 
                compliance payment, as adjusted for inflation under 
                subsection (g).
            ``(3) Mitigation or waiver.--
                    ``(A) Penalty.--
                            ``(i) In general.--The Secretary shall 
                        mitigate or waive a civil penalty under this 
                        subsection if the electric utility is unable to 
                        comply with subsection (b) due to a reason 
                        outside of the reasonable control of the 
                        electric utility.
                            ``(ii) Amount.--The Secretary shall reduce 
                        the amount of any penalty determined under 
                        paragraph (2) by the amount paid by the 
                        electric utility to a State for failure to 
                        comply with the requirement of a State clean or 
                        renewable energy program if the State 
                        requirement is greater than the applicable 
                        requirement of subsection (b).
                    ``(B) Requirement.--The Secretary may waive the 
                requirements of subsection (b) for a period of up to 5 
                years with respect to an electric utility if the 
                Secretary determines that the electric utility cannot 
                meet the requirements due to a hurricane, tornado, 
                fire, flood, earthquake, ice storm, or other natural 
                disaster or act of God beyond the reasonable control of 
                the utility.
                    ``(C) Ratepayer protection.--
                            ``(i) In general.--Subject to clause (ii), 
                        effective beginning June 1, 2013, and not later 
                        than June 1 of each year thereafter, an 
                        electric utility may petition the Secretary to 
                        waive, for the following compliance year, all 
                        or part of the requirements of subsection (b) 
                        in order to limit the rate impact of the 
                        incremental cost of compliance of the electric 
                        utility to not more than 4 percent per retail 
                        customer in any year.
                            ``(ii) Requirements.--
                                    ``(I) Exhaustion of 
                                opportunities.--The Secretary may waive 
                                all or part of the requirements of 
                                subsection (b) only on a demonstration 
                                by the petitioner that the petitioner 
                                has exhausted all opportunities under 
                                this section to comply with the 
                                requirements of subsection (b).
                                    ``(II) Limitations.--Any waiver 
                                granted by the Secretary under this 
                                subparagraph shall be limited to the 
                                maximum extent practicable while 
                                ensuring that the increased cost of 
                                compliance does not exceed 4 percent 
                                per retail customer for any year.
                    ``(D) Variance.--A State public utility commission 
                or electric utility may submit an application to the 
                Secretary that requests a variance from the 
                requirements of subsection (b) for 1 or more calendar 
                years (including suspension or reduction of the 
                requirements) on the basis of transmission constraints 
                preventing delivery of clean energy.
            ``(4) Procedure for assessing penalty.--The Secretary shall 
        assess a civil penalty under this subsection in accordance with 
        the procedures prescribed by section 333(d) of the Energy 
        Policy and Conservation Act (42 U.S.C. 6303(d)).
    ``(e) Alternative Compliance Payments.--
            ``(1) In general.--An electric utility may satisfy the 
        requirements of subsection (b), in whole or in part, by 
        submitting in accordance with this subsection, in lieu of each 
        Federal clean energy credit or megawatt hour of demonstrated 
        total annual electricity savings that would otherwise be due, a 
        payment equal to the amount required under subsection (b) in 
        accordance with such regulations as the Secretary may 
        promulgate.
            ``(2) Payment to state funds.--Payments made under this 
        subsection shall be made directly to the 1 or more States in 
        which the electric utility is located, in proportion to the 
        base quantity of a retail electric supplier that is within each 
        applicable State, if the payments are deposited directly into a 
        fund within the treasury of the State for use in accordance 
        with paragraph (3).
            ``(3) Use of grants.--The Governor of any State may expend 
        amounts in a State clean energy escrow account solely for 
        purposes of--
                    ``(A) increasing the quantity of electric energy 
                produced from a clean energy source in the State, 
                including nuclear and advanced coal technologies for 
                carbon capture and sequestration;
                    ``(B) promoting the deployment and use of electric 
                drive vehicles in the State, including the development 
                of electric drive vehicles and batteries; and
                    ``(C) offsetting the costs of carrying out this 
                section paid by electric consumers in the State 
                through--
                            ``(i) direct grants to electric consumers; 
                        or
                            ``(ii) energy efficiency investments.
            ``(4) Information and reports.--As a condition of providing 
        payments to a State under this subsection, the Secretary may 
        require the Governor to keep such accounts or records, and 
        furnish such information and reports, as the Secretary 
        determines are necessary and appropriate for determining 
        compliance with this subsection.
    ``(f) Exemptions.--
            ``(1) In general.--During any calendar year, this section 
        shall not apply to an electric utility--
                    ``(A) that sold less than 4,000,000 megawatt hours 
                of electric energy to electric consumers during the 
                preceding calendar year, except that sales to an 
                affiliate, lessee, or tenant of the electric utility 
                shall not be treated as sales to electric consumers 
                under this paragraph; or
                    ``(B) in Hawaii.
            ``(2) Administration.--
                    ``(A) Voluntary coverage.--Paragraph (1) shall not 
                apply to an electric utility described in paragraph (1) 
                that voluntary elects to be covered by this section.
                    ``(B) Sale of clean energy credits.--An electric 
                utility that is not covered by this section and has not 
                elected to be covered by this section shall not be 
                eligible to sell any credits generated pursuant to this 
                section to any other person.
    ``(g) Inflation Adjustment.--Not later than December 31 of each 
year beginning in 2011, the Secretary shall adjust for inflation the 
rate of the alternative compliance payment under subsection (b)(2)(C).
    ``(h) State Programs.--
            ``(1) In general.--Subject to paragraph (2), nothing in 
        this section diminishes any authority of a State or political 
        subdivision of a State to adopt or enforce any law or 
        regulation respecting clean energy or energy efficiency, or the 
        regulation of electric utilities.
            ``(2) Compliance.--Except as provided in subsection (d)(3), 
        no such law or regulation shall relieve any person of any 
        requirement otherwise applicable under this section.
            ``(3) Coordination.--The Secretary, in consultation with 
        States having such clean energy and energy efficiency programs, 
        shall, to the maximum extent practicable, facilitate 
        coordination between the Federal program and State programs.
            ``(4) Regulations.--
                    ``(A) In general.--The Secretary, in consultation 
                with States, shall promulgate regulations to ensure 
                that an electric utility that is subject to the 
                requirements of this section and is subject to a State 
                renewable energy or clean energy standard receives 
                clean energy credits if--
                            ``(i) the electric utility complies with 
                        the State standard by generating or purchasing 
                        clean energy or renewable energy certificates 
                        or credits representing clean energy; or
                            ``(ii) the State imposes or allows other 
                        mechanisms for achieving the State standard, 
                        including the payment of taxes, fees, 
                        surcharges, or other financial obligations.
                    ``(B) Amount of credits.--The amount of credits 
                received by an electric utility under this subsection 
                shall equal--
                            ``(i) in the case of subparagraph (A)(i), 
                        the quantity of clean energy resulting from the 
                        generation or purchase by the electric utility 
                        of clean energy; and
                            ``(ii) in the case of subparagraph (A)(ii), 
                        the pro rata share of the electric utility, 
                        based on the contributions to the mechanism 
                        made by the electric utility or customers of 
                        the electric utility, in the State, of the 
                        quantity of clean energy resulting from those 
                        mechanisms.
                    ``(C) Prohibition on double counting.--The 
                regulations promulgated under this paragraph shall 
                ensure that a kilowatt hour associated with a clean 
                energy credit issued pursuant to this subsection shall 
                not be used for compliance with this section more than 
                once.
    ``(i) Energy Efficiency Credits.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Customer facility savings.--The term 
                `customer facility savings' means a reduction in the 
                consumption of end-use electricity at a facility of an 
                end-use consumer of electricity served by an electric 
                utility, as compared to--
                            ``(i) consumption at the facility during a 
                        base year, taking into account reductions 
                        attributable to causes other than energy 
                        efficiency investments (such as economic 
                        downturns, reductions in customer base, 
                        favorable weather conditions, or other such 
                        causes); or
                            ``(ii) 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 similar equipment of average 
                        efficiency available for purchase at the time 
                        that new equipment is acquired.
                    ``(B) Electricity savings.--The term `electricity 
                savings' means--
                            ``(i) customer facility savings of 
                        electricity consumption 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 distributor, as compared to losses 
                        attributable to new or replacement distribution 
                        system equipment of average efficiency (as 
                        defined by the Secretary by regulation); and
                            ``(iii) the output of new combined heat and 
                        power systems, to the extent provided under 
                        paragraph (5).
                    ``(C) Qualified electricity savings.--The term 
                `qualified electricity savings' means electricity 
                saving that meet the measurement and verification 
                requirements of paragraph (4).
            ``(2) Petition.--On petition by the Governor of a State or, 
        in the case of the power service area of the Tennessee Valley 
        Authority, the Board of Directors of the Tennessee Valley 
        Authority, the Secretary shall allow up to 25 percent of the 
        requirements of an electric utility under subsection (b)(1) 
        associated with the sales of electricity of the utility in the 
        State to be met by submitting Federal energy efficiency credits 
        issued pursuant to this subsection.
            ``(3) Issuance of energy efficiency credits.--
                    ``(A) In general.--The Secretary shall issue energy 
                efficiency credits for qualified electricity savings 
                achieved in States described in paragraph (2) in 
                accordance with this subsection.
                    ``(B) Qualified electricity savings.--Subject to 
                subparagraph (C), in accordance with regulations 
                promulgated by the Secretary, the Secretary shall issue 
                credits for--
                            ``(i) qualified electricity savings 
                        achieved by an electric utility on or after the 
                        date of enactment of this section; and
                            ``(ii) qualified electricity savings 
                        achieved by other entities (including State 
                        agencies) on or after the date of enactment of 
                        this section if--
                                    ``(I) the measures used to achieve 
                                the qualified electricity savings were 
                                installed or placed in operation by the 
                                entity seeking the credit; and
                                    ``(II) an electric utility eligible 
                                to receive efficiency credits did not 
                                pay a substantial portion of the cost 
                                of achieving the qualified electricity 
                                savings (unless the utility has waived 
                                any entitlement to the credit).
                    ``(C) Standards.--No credits shall be issued for 
                electricity savings achieved as a result of compliance 
                with a national, State, or local building, equipment, 
                or appliance efficiency standard.
            ``(4) Measurement and verification of electricity 
        savings.--Not later than January 2012, the Secretary shall 
        promulgate regulations regarding the measurement and 
        verification of electricity savings under this subsection, 
        including regulations covering--
                    ``(A) procedures and standards for defining and 
                measuring electricity savings that will be eligible to 
                receive credits under paragraph (3), which shall--
                            ``(i) specify the types of energy 
                        efficiency and energy conservation that will be 
                        eligible for the credits;
                            ``(ii) require that energy consumption 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) account for the useful life of 
                        electricity savings measures;
                            ``(iv) include specified electricity 
                        savings values for specific, commonly-used 
                        efficiency measures; and
                            ``(v) exclude electricity savings that--
                                    ``(I) are not properly attributable 
                                to measures carried out by the entity 
                                seeking the credit;
                                    ``(II) have already been credited 
                                under this section to another entity; 
                                or
                                    ``(III) do not result from actions 
                                not intended to achieve electricity 
                                savings;
                    ``(B) procedures and standards for third party 
                verification of reported electricity savings; and
                    ``(C) such requirements for information, reports, 
                and access to facilities as may be necessary to carry 
                out this subsection.
            ``(5) Combined heat and power.--
                    ``(A) In general.--Under regulations promulgated by 
                the Secretary, the increment of electricity 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), shall be considered 
                electricity savings under this subsection.
                    ``(B) Existing systems.--In addition to 
                subparagraph (A), the regulations shall apply to the 
                increment of electricity output of an existing combined 
                heat and power system that is attributable to permanent 
                efficiency improvements or capacity additions.
            ``(6) Incremental nuclear and incremental fossil fuel 
        production.--
                    ``(A) In general.--Subject to subparagraph (B), 
                under regulations promulgated by the Secretary, the 
                increment of electricity output attributable to 
                incremental nuclear production and incremental fossil 
                fuel production shall be considered electricity savings 
                under this subsection.
                    ``(B) Limitation.--The increment of electricity 
                output described in subparagraph (A) shall meet not 
                more than 10 percent of the total obligation of an 
                electric utility under subsection (b).
    ``(j) Biomass Harvesting and Sustainability.--The provisions of 
this section relating to biomass shall be administered in accordance 
with section 203(e) of the Energy Policy Act of 2005 (42 U.S.C. 
15852(e)).
    ``(k) Loans for Projects To Comply With Federal Clean Energy 
Standard.--
            ``(1) Purposes.--The purposes of this subsection are--
                    ``(A) to reduce the cost incurred by electric 
                utilities in complying with the requirements of this 
                section; and
                    ``(B) to minimize the impact of the requirements on 
                electricity rates for consumers.
            ``(2) Loans.--The Secretary shall make loans available to 
        electric utilities to carry out qualified projects approved by 
        the Secretary to comply with the requirements of this section.
            ``(3) Qualified projects.--
                    ``(A) In general.--A loan may be made under this 
                subsection for a project--
                            ``(i) to construct a clean energy 
                        generation facility;
                            ``(ii) to install an energy efficiency or 
                        electricity demand reduction technology; or
                            ``(iii) to carry out any other project 
                        approved by the Secretary that the Secretary 
                        determines is consistent with the purposes of 
                        this subsection.
                    ``(B) Disapproval.--The Secretary may disapprove an 
                application for a loan for a project under this 
                subsection if the Secretary determines that--
                            ``(i) the revenues generated under the 
                        project are unlikely to be sufficient to cover 
                        the repayment obligations of the proposed loan; 
                        or
                            ``(ii) the project is not otherwise 
                        consistent with the purposes of this 
                        subsection.
            ``(4) Terms.--A loan made by the Secretary to an electric 
        utility under this subsection shall--
                    ``(A) be for a term of not to exceed 30 years; and
                    ``(B) bear an annual interest rate that is 50 basis 
                points more than the Federal funds rate established by 
                the Board of Governors of the Federal Reserve System.
            ``(5) Priority.--Notwithstanding any other provision of 
        law, the debt to the Federal Government under a loan made to an 
        electric utility under this subsection shall have priority in 
        any case in which the electric utility files for bankruptcy 
        protection under title 11, United States Code.
            ``(6) Authorization of appropriations.--There are 
        authorized to be appropriated such sums as are necessary to 
        carry out this subsection.
    ``(l) Reconsideration.--
            ``(1) Review.--
                    ``(A) In general.--Not later than January 15, 2017, 
                and every 5 years thereafter, the Secretary shall 
                review and make recommendations to Congress on the 
                program established under this section.
                    ``(B) Analysis.--The review shall analyze whether--
                            ``(i) the program established under this 
                        section has contributed to an economically 
                        harmful increase in electricity rates in 
                        regions of the United States;
                            ``(ii) the program has resulted in net 
                        economic benefits for the United States; and
                            ``(iii) new technologies and clean energy 
                        sources will advance the purposes of this 
                        section.
            ``(2) Recommendations.--The Secretary shall submit to 
        Congress recommendations on whether--
                    ``(A) the percentage of energy efficiency credits 
                eligible to be submitted under subsection (b)(1) should 
                be increased or decreased;
                    ``(B) the percentage of clean energy electricity 
                required under subsection (b)(1) should be increased or 
                decreased; and
                    ``(C) the definition of `clean energy' should be 
                expanded to reflect advances in technology or 
                previously unavailable sources of clean or renewable 
                energy.
            ``(3) Report.--Not later than January 15, 2017, the 
        Secretary shall submit to Congress a report that describes any 
        recommendations of the Secretary on changes to the program 
        established under this section.
    ``(m) Regulations.--Not later than 1 year after the date of 
enactment of this section, the Secretary shall promulgate regulations 
implementing this section.
    ``(n) Termination of Authority.--This section and the authority 
provided by this section terminate on December 31, 2050.''.
    (b) Table of Contents 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. 610. Federal clean energy standard.''.
                                 <all>