[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 548 Introduced in Senate (IS)]

111th CONGRESS
  1st Session
                                 S. 548

    To amend the Public Utility Regulatory Policies Act of 1978 to 
  establish a Federal energy efficiency resource standard for retail 
   electricity and natural gas distributors, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 9, 2009

  Mr. Schumer 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 energy efficiency resource standard for retail 
   electricity and natural gas distributors, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Save American Energy Act''.

SEC. 2. FINDINGS.

    Congress finds that, in light of the cost-effective energy 
efficiency opportunities that exist across the United States in every 
sector of the economy, retail electricity distributors, retail natural 
gas distributors, and States should--
            (1) consider energy efficiency as a resource in utility 
        planning and procurement activities; and
            (2) seek to achieve all energy efficiency that is available 
        at lower cost than traditional energy supply options.

SEC. 3. PURPOSE.

    The purpose of this Act and the amendments made by this Act is to 
establish a Federal energy efficiency resource standard that sets 
nationwide minimum levels of electricity and natural gas savings to be 
achieved through utility efficiency programs, building energy codes, 
appliance standards, and related efficiency measures.

SEC. 4. ENERGY EFFICIENCY RESOURCE STANDARD FOR RETAIL ELECTRICITY AND 
              NATURAL GAS DISTRIBUTORS.

    (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 ENERGY EFFICIENCY RESOURCE STANDARD FOR RETAIL 
              ELECTRICITY AND NATURAL GAS DISTRIBUTORS.

    ``(a) Definitions.--In this section:
            ``(1) Affiliate.--The term `affiliate', when used with 
        respect to a person, means another person that owns or 
        controls, is owned or controlled by, or is under common 
        ownership control with, the person, as determined under 
        regulations promulgated by the Secretary.
            ``(2) ANSI.--The term `ANSI' means the American National 
        Standards Institute.
            ``(3) ASHRAE.--The term `ASHRAE' means the American Society 
        of Heating, Refrigerating and Air Conditioning Engineers.
            ``(4) Base quantity.--
                    ``(A) In general.--The term `base quantity', when 
                used with respect to a retail electricity distributor 
                or retail natural gas distributor, means, for each year 
                for which a performance standard is established under 
                subsection (c), the average annual quantity of 
                electricity or natural gas delivered by the retail 
                electricity distributor or retail natural gas 
                distributor to retail customers during the 2 calendar 
                years immediately preceding the applicable year.
                    ``(B) Exclusion.--The term `base quantity', when 
                used to determine the base quantity of a retail natural 
                gas distributor, does not include natural gas delivered 
                for purposes of electricity generation.
            ``(5) CHP.--The term `CHP' means combined heat and power.
            ``(6) CHP savings.--The term `CHP savings' means--
                    ``(A) CHP system savings from a combined heat and 
                power system that commences operation after the date of 
                enactment of this section; and
                    ``(B) the increase in CHP system savings from 
                upgrading or replacing, after the date of enactment of 
                this section, a combined heat and power system that 
                commenced operation on or before the date of enactment 
                of this section.
            ``(7) CHP system savings.--The term `CHP system savings' 
        means the electric output, and the electricity saved due to the 
        mechanical output, of a combined heat and power system, 
        adjusted to reflect any increase in fuel consumption by that 
        system as compared to the fuel that would have been required to 
        produce an equivalent useful thermal energy output in a 
        separate thermal-only system, as determined in accordance with 
        regulations promulgated by the Secretary.
            ``(8) Codes and standards savings.--
                    ``(A) In general.--The term `codes and standards 
                savings' means a reduction in end-use electricity or 
                natural gas consumption in the service territory of a 
                retail electricity distributor or a retail natural gas 
                distributor as a result of the adoption and 
                implementation, after the date of enactment of this 
                section, of new or revised appliance and equipment 
                efficiency standards or building energy codes.
                    ``(B) Baselines.--In calculating codes and 
                standards savings--
                            ``(i) the baseline for calculating savings 
                        from building codes shall be the 2006 
                        International Energy Conservation Code for 
                        residential buildings and the ASHRAE/ANSI/IESNA 
                        Standard 90.1 (2004) for commercial buildings, 
                        or the applicable State building code in effect 
                        on the date of enactment of this section, 
                        whichever is more stringent; and
                            ``(ii) the baseline for calculating savings 
                        from appliance standards shall be the average 
                        efficiency of new appliances in the applicable 
                        1 or more categories prior to adoption and 
                        implementation of the new standard.
            ``(9) Combined heat and power system.--The term `combined 
        heat and power system' means a system that uses the same energy 
        source both for the generation of electrical or mechanical 
        power and the production of steam or another form of useful 
        thermal energy, if--
                    ``(A) the system meets such requirements relating 
                to efficiency and other operating characteristics as 
                the Secretary may promulgate by regulation; and
                    ``(B) the net wholesale sales of electricity by the 
                facility will not exceed 50 percent of total annual 
                electric generation by the facility.
            ``(10) Cost-effective.--The term `cost-effective', when 
        used with respect to an energy efficiency measure, means that 
        the measure achieves a net present value of economic benefits 
        over the life of the measure, both directly to the energy 
        consumer and to the economy, that is greater than the net 
        present value of the cost of the measure over the life of the 
        measure, both directly to the energy consumer and to the 
        economy.
            ``(11) Customer facility savings.--The 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 distributor or natural gas 
        distributor, as compared to--
                    ``(A) in the case of new equipment that replaces 
                existing equipment at the end of the useful life of the 
                existing equipment, consumption by new equipment of 
                average efficiency;
                    ``(B) in the case of new equipment that replaces 
                existing equipment with remaining useful life--
                            ``(i) consumption of the existing equipment 
                        for the remaining useful life of the equipment; 
                        and
                            ``(ii) thereafter, consumption of new 
                        equipment of average efficiency;
                    ``(C) in the case of a new facility, consumption at 
                a reference facility of average efficiency; or
                    ``(D) in the case of energy savings measures at a 
                facility not covered by subparagraphs (A) through (C), 
                consumption at the facility during a base year.
            ``(12) Electricity savings.--The term `electricity savings' 
        means reductions in electricity consumption achieved through 
        measures implemented after the date of enactment of this 
        section, as determined in accordance with regulations 
        promulgated by the Secretary, through--
                    ``(A) customer facility savings of electricity, 
                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 promulgated by 
                the Secretary);
                    ``(C) CHP savings; and
                    ``(D) codes and standards savings of electricity.
            ``(13) IESNA.--The term `IESNA' mean the Illuminating 
        Engineering Society of North America.
            ``(14) Natural gas savings.--The term `natural gas savings' 
        means reductions in natural gas consumption from measures 
        implemented after the date of enactment of this section, as 
        determined in accordance with regulations promulgated by the 
        Secretary, through--
                    ``(A) customer facility savings of natural gas, 
                adjusted to reflect any associated increase in 
                electricity consumption or consumption of other fuels 
                at the facility;
                    ``(B) reductions in leakage, operational losses, 
                and consumption of natural gas fuel to operate a gas 
                distribution system, achieved by a retail natural gas 
                distributor, as compared to similar leakage, losses, 
                and consumption during a base period (which shall not 
                be less than 1 year); and
                    ``(C) codes and standards savings of natural gas.
            ``(15) Power pool.--The term `power pool' means an 
        association of 2 or more interconnected electric systems that 
        is recognized by the Commission as having an agreement to 
        coordinate operations and planning for improved reliability and 
        efficiencies, including a Regional Transmission Organization or 
        an Independent System Operator.
            ``(16) Recycled energy savings.--The term `recycled energy 
        savings' means a reduction in electricity or natural gas 
        consumption that results from a modification of an industrial 
        or commercial system that commenced operation before the date 
        of enactment of this section, in order to recapture electrical, 
        mechanical, or thermal energy that would otherwise be wasted, 
        as determined in accordance with regulations promulgated by the 
        Secretary.
            ``(17) Reporting period.--The term `reporting period' 
        means--
                    ``(A) calendar year 2012; and
                    ``(B) each successive 2-calendar-year period 
                thereafter.
            ``(18) Retail electricity distributor.--
                    ``(A) In general.--The term `retail electricity 
                distributor' means, for any given calendar year, an 
                electric utility that owns or operates an electric 
                distribution facility and, using the facility, 
                delivered not less than 1,500,000 megawatt-hours of 
                electric energy to electric consumers for purposes 
                other than resale during the most recent 2-calendar-
                year period for which data are available.
                    ``(B) Administration.--For purposes of determining 
                whether an electric utility qualifies as a retail 
                electricity distributor under subparagraph (A)--
                            ``(i) deliveries by any affiliate of an 
                        electric utility to electric consumers for 
                        purposes other than resale shall be considered 
                        to be deliveries by the electric utility; and
                            ``(ii) deliveries by any electric utility 
                        to a lessee, tenant, or affiliate of the 
                        electric utility shall not be treated as 
                        deliveries to electric consumers.
            ``(19) Retail natural gas distributor.--
                    ``(A) In general.--The term `retail natural gas 
                distributor' means, for any given calendar year, a 
                local distribution company (as that term is defined in 
                section 2 of the Natural Gas Policy Act of 1978 (15 
                U.S.C. 3301)), that delivered to natural gas consumers 
                more than 5,000,000,000 cubic feet of natural gas 
                during the most recent 2-calendar-year period for which 
                data are available.
                    ``(B) Administration.--For purposes of determining 
                whether a person qualifies as a retail natural gas 
                distributor under subparagraph (A)--
                            ``(i) deliveries of natural gas by any 
                        affiliate of a local distribution company to 
                        consumers for purposes other than resale shall 
                        be considered to be deliveries by the local 
                        distribution company; and
                            ``(ii) deliveries of natural gas to a 
                        lessee, tenant, or affiliate of a local 
                        distribution company shall not be treated as 
                        deliveries to natural gas consumers.
            ``(20) Third-party efficiency provider.--The term `third-
        party efficiency provider' means any retailer, building owner, 
        energy service company, financial institution or other 
        commercial, industrial or nonprofit entity that is capable of 
        providing electricity savings or natural gas savings in 
        accordance with subsections (d) and (e).
    ``(b) Establishment of Program.--
            ``(1) Regulations.--Not later than 1 year after the date of 
        enactment of this section, the Secretary shall, by regulation, 
        establish a program to implement and enforce the requirements 
        of this section, including--
                    ``(A) measurement and verification procedures and 
                standards under subsection (e);
                    ``(B) requirements under which retail electricity 
                distributors and retail natural gas distributors shall 
                demonstrate, document, and report compliance with the 
                performance standards established under subsection (c) 
                and estimate the impact of the standards on current and 
                future electricity and natural gas use in the service 
                territories of the retail electricity distributors and 
                retail natural gas distributors, respectively; and
                    ``(C) requirements governing applications for, and 
                implementation of, delegated State administration under 
                subsection (g).
            ``(2) Coordination with state programs.--In establishing 
        and implementing the program established under this section, 
        the Secretary shall, to the maximum extent practicable, 
        preserve the integrity, and incorporate the best practices, of 
        existing State energy efficiency programs.
    ``(c) Performance Standards.--
            ``(1) Compliance obligation.--Not later than April 1 of the 
        calendar year immediately following each reporting period--
                    ``(A) each retail electricity distributor shall 
                submit to the Secretary a report, in accordance with 
                regulations promulgated by the Secretary, demonstrating 
                that the retail electricity distributor has achieved 
                cumulative electricity savings (adjusted to account for 
                any attrition of savings measures implemented in prior 
                years) in each calendar year that are least equal to 
                the applicable percentage, established under paragraph 
                (2), (3), or (4), of the base quantity of the retail 
                electricity distributor; and
                    ``(B) each retail natural gas distributor shall 
                submit to the Secretary a report, in accordance with 
                regulations promulgated by the Secretary, demonstrating 
                that the retail natural gas distributor has achieved 
                cumulative natural gas savings (adjusted to account for 
                any attrition of savings measures implemented in prior 
                years) in each calendar year that are at least equal to 
                the applicable percentage, established under paragraph 
                (2), (3), or (4), of the base quantity of the retail 
                natural gas distributor.
            ``(2) Standards for 2012 through 2020.--For purposes of 
        paragraph (1), for each of calendar years 2012 through 2020, 
        the applicable percentages shall be as follows:


------------------------------------------------------------------------
                          Cumulative Electricity  Cumulative Natural Gas
    ``Calendar Year         Savings Percentage      Savings Percentage
------------------------------------------------------------------------
                 2012                     1.00                    0.75
------------------------------------------------------------------------
                 2013                     2.00                    1.50
------------------------------------------------------------------------
                 2014                     3.25                    2.50
------------------------------------------------------------------------
                 2015                     4.50                    3.50
------------------------------------------------------------------------
                 2016                     6.00                    4.75
------------------------------------------------------------------------
                 2017                     7.50                    6.00
------------------------------------------------------------------------
                 2018                    10.00                    7.25
------------------------------------------------------------------------
                 2019                    12.50                    8.50
------------------------------------------------------------------------
                 2020                    15.00                  10.00.
------------------------------------------------------------------------

            ``(3) Subsequent years.--
                    ``(A) Calendar years 2021 through 2030.--Not later 
                than December 31, 2018, the Secretary shall promulgate 
                regulations establishing performance standards 
                (expressed as applicable percentages of base quantity 
                for both cumulative electricity savings and cumulative 
                natural gas savings) for each of calendar years 2021 
                through 2030.
                    ``(B) Subsequent extensions.--Except as provided in 
                subparagraph (A), not later than December 31 of the 
                penultimate reporting period for which performance 
                standards have been established under this paragraph, 
                the Secretary shall promulgate regulations establishing 
                performance standards (expressed as applicable 
                percentages of base quantity for both cumulative 
                electricity savings and cumulative natural gas savings) 
                for the 10-calendar-year period following the last 
                calendar year for which performance standards 
                previously were established.
                    ``(C) Requirements.--
                            ``(i) In general.--Subject to clause (ii), 
                        the Secretary shall establish standards under 
                        this paragraph at levels that reflect the 
                        maximum achievable level of cost-effective 
                        energy efficiency potential, taking into 
                        account--
                                    ``(I) cost-effective energy savings 
                                achieved by leading retail electricity 
                                distributors and retail natural gas 
                                distributors;
                                    ``(II) opportunities for new codes 
                                and standard savings;
                                    ``(III) technology improvements; 
                                and
                                    ``(IV) other indicators of cost-
                                effective energy efficiency potential.
                            ``(ii) Minimum percentage.--In no case 
                        shall the applicable percentages for any 
                        calendar year be lower than the applicable 
                        percentage for calendar year 2020 (including 
                        any increase in the standard for calendar year 
                        2020 pursuant to paragraph (4)).
            ``(4) Midcourse review and adjustment of standards.--
                    ``(A) In general.--Not later than December 31, 
                2014, and at 10-year intervals thereafter, the 
                Secretary shall--
                            ``(i) review the most recent standards 
                        established under paragraph (2) or (3); and
                            ``(ii) by regulation, increase the 
                        standards if the Secretary determines that 
                        additional cost-effective energy efficiency 
                        potential is achievable, taking into account 
                        the factors described in paragraph (3)(C).
                    ``(B) Lead time.--If the Secretary revises 
                standards under this paragraph, the regulations shall 
                provide adequate lead time to ensure that compliance 
                with the increased standards is feasible.
            ``(5) Delay of submission for first reporting period.--
                    ``(A) In general.--Notwithstanding paragraphs (1) 
                and (2), for the 2012 reporting period, the Secretary 
                may accept a request from a retail electricity 
                distributor or a retail natural gas distributor to 
                delay the required submission of documentation of part 
                or all of the required savings for up to 2 years.
                    ``(B) Plan.--The request for delay shall include a 
                plan for coming into full compliance by the end of the 
                2013-2014 reporting period.
    ``(d) Transfers of Electricity or Natural Gas Savings.--
            ``(1) Bilateral contracts for savings transfers.--Subject 
        to the other provisions of this subsection, a retail 
        electricity distributor or retail natural gas distributor may 
        use electricity savings or natural gas savings purchased, 
        pursuant to a bilateral contract, from another retail 
        electricity distributor or retail natural gas distributor, a 
        State, or a third-party efficiency provider to meet the 
        applicable performance standard under subsection (c).
            ``(2) Requirements.--Electricity or natural gas savings 
        purchased and used for compliance pursuant to this subsection 
        shall be--
                    ``(A) measured and verified in accordance with the 
                procedures specified under subsection (e);
                    ``(B) reported in accordance with subsection (c); 
                and
                    ``(C) achieved within the same State as is served 
                by the retail electricity distributor or retail natural 
                gas distributor.
            ``(3) Exception.--Notwithstanding paragraph (2)(C), a State 
        regulatory authority may authorize a retail electricity 
        distributor or a retail natural gas distributor regulated by 
        the State regulatory authority to purchase savings achieved in 
        a different State, if--
                    ``(A) the savings are achieved within the same 
                power pool; and
                    ``(B) the State regulatory authority that regulates 
                the purchaser oversees the measurement and verification 
                of the savings pursuant to the procedures and standards 
                applicable in the State of the purchaser.
            ``(4) Regulatory approval.--Nothing in this subsection 
        limits or affects the authority of a State regulatory authority 
        to require a retail electricity distributor or retail natural 
        gas distributor that is regulated by the State regulatory 
        authority to obtain the authorization or approval of the State 
        regulatory authority for a contract for transfer of savings 
        under this subsection.
            ``(5) Limitations.--In the interest of optimizing 
        achievement of cost-effective efficiency potential, the 
        Secretary may prescribe such limitations as the Secretary 
        determines appropriate with respect to the proportion of the 
        compliance obligation of a retail electricity or natural gas 
        distributor, under the applicable performance standards under 
        subsection (c), that may be met using electricity or natural 
        gas savings that are purchased under this subsection.
    ``(e) Measurement and Verification of Savings.--The regulations 
promulgated under subsection (b) shall include--
            ``(1) procedures and standards for defining and measuring 
        electricity savings and natural gas savings that can be counted 
        towards the performance standards established under subsection 
        (c), which shall--
                    ``(A) specify the types of energy efficiency and 
                energy conservation measures that can be counted;
                    ``(B) require that energy consumption estimates for 
                customer facilities or parts 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 measures;
                    ``(D) include considered savings values for 
                specific, commonly used measures;
                    ``(E) allow for savings from a program to be 
                estimated based on extrapolation from a representative 
                sample of participating customers;
                    ``(F) include procedures for counting CHP savings 
                and recycled energy savings;
                    ``(G) establish methods for calculating codes and 
                standards savings, including the use of verified 
                compliance rates;
                    ``(H) count only measures and savings that are 
                additional to business-as-usual practices;
                    ``(I) except in the case of codes and standards 
                savings, ensure that the retail electricity distributor 
                or retail natural gas distributor claiming the savings 
                played a significant role in achieving the savings 
                (including through the activities of a designated agent 
                of the distributor or through the purchase of 
                transferred savings);
                    ``(J) avoid double-counting of savings used for 
                compliance with this section, including transferred 
                savings; and
                    ``(K) include savings from programs administered by 
                the retail electric or natural gas distributor that are 
                funded by State, Federal, or other sources; and
            ``(2) procedures and standards for third-party verification 
        of reported electricity savings or natural gas savings.
    ``(f) Enforcement and Judicial Review.--
            ``(1) Review of retail distributor reports.--
                    ``(A) In general.--The Secretary shall review each 
                report submitted to the Secretary by a retail 
                electricity distributor or retail natural gas 
                distributor under subsection (c) to verify that the 
                applicable performance standards under that subsection 
                have been met.
                    ``(B) Exclusions.--In determining compliance with 
                the applicable performance standards, the Secretary 
                shall exclude reported electricity savings or natural 
                gas savings that are not adequately demonstrated and 
                documented, in accordance with the regulations 
                promulgated under subsections (c), (d), and (e).
            ``(2) Penalty for failure to document adequate savings.--If 
        a retail electricity distributor or a retail natural gas 
        distributor fails to demonstrate compliance with an applicable 
        performance standard under subsection (c) or to pay to the 
        State an applicable alternative compliance payment under 
        subsection (g)(4), the Secretary shall assess against the 
        retail electricity distributor or retail 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 per megawatt-hour of electricity savings 
                or alternative compliance payment that the retail 
                electricity distributor failed to achieve or make, 
                respectively; or
                    ``(B) $10 per million Btu of natural gas savings or 
                alternative compliance payment that the retail natural 
                gas distributor failed to achieve or make, 
                respectively.
            ``(3) Offsetting state penalties.--The Secretary shall 
        reduce the amount of any penalty under paragraph (2) by the 
        amount paid by the applicable retail electricity distributor or 
        retail natural gas distributor to a State for failure to comply 
        with the requirements of a State energy efficiency resource 
        standard during the same compliance period, if the State 
        standard is--
                    ``(A) comparable in type to the Federal standard 
                established under this section; and
                    ``(B) more stringent than the applicable 
                performance standards under subsection (c).
            ``(4) Enforcement procedures.--The Secretary shall assess a 
        civil penalty, as provided under paragraph (1), in accordance 
        with the procedures described in section 333(d) of the Energy 
        Policy and Conservation Act (42 U.S.C. 6303(d)).
            ``(5) Judicial review.--
                    ``(A) In general.--Any person who will be adversely 
                affected by a final action taken by the Secretary under 
                this section, other than the assessment of a civil 
                penalty, may use the procedures for review described in 
                section 336(b) of the Energy Policy and Conservation 
                Act (42 U.S.C. 6306(b)).
                    ``(B) Administration.--For purposes of this 
                paragraph, references to a rule in section 336(b) of 
                the Energy Policy and Conservation Act (42 U.S.C. 
                6306(b)) shall be considered to refer also to all other 
                final actions of the Secretary under this section other 
                than the assessment of a civil penalty.
    ``(g) State Administration.--
            ``(1) In general.--On receipt of an application from the 
        Governor of a State (including, for purposes of this 
        subsection, the Mayor of the District of Columbia), the 
        Secretary may delegate to the State the administration of this 
        section within the territory of the State if the Secretary 
        determines that the State will implement an energy efficiency 
        program that meets or exceeds the requirements of this section, 
        including--
                    ``(A) achieving electricity savings and natural gas 
                savings at least as great as the savings required under 
                the applicable performance standards established under 
                subsection (c);
                    ``(B) reviewing reports and verifying electricity 
                savings and natural gas savings achieved in the State 
                (including savings transferred from outside the State); 
                and
                    ``(C) collecting any alternative compliance 
                payments under paragraph (4) and using the payments to 
                implement cost-effective efficiency programs.
            ``(2) Secretarial determination.--The Secretary shall make 
        a substantive determination approving or disapproving a State 
        application, after public notice and comment, not later than 
        180 days after the date of receipt of a complete application.
            ``(3) Alternative measurement and verification procedures 
        and standards.--As part of an application submitted under 
        paragraph (1), a State may request to use alternative 
        measurement and verification procedures and standards to the 
        procedures and standards established under subsection (e), if 
        the State demonstrates that the alternative procedures and 
        standards provide a level of accuracy of measurement and 
        verification that is at least equivalent to the Federal 
        procedures and standards promulgated under subsection (e).
            ``(4) Alternative compliance payments.--
                    ``(A) In general.--As part of an application 
                submitted under paragraph (1), a State may permit 
                retail electricity distributors or retail natural gas 
                distributors to pay to the State, by not later than 
                April 1 of the calendar year immediately following the 
                applicable reporting period, an alternative compliance 
                payment in an amount equal to, as adjusted for 
                inflation in accordance with such regulations as the 
                Secretary may promulgate, not less than--
                            ``(i) $50 per megawatt-hour of electricity 
                        savings needed to make up any deficit with 
                        regard to a compliance obligation under the 
                        applicable performance standard; or
                            ``(ii) $5 per million Btu of natural gas 
                        savings needed to make up any deficit with 
                        regard to a compliance obligation under the 
                        applicable performance standard.
                    ``(B) Use of payments.--
                            ``(i) In general.--Alternative compliance 
                        payments collected by a State pursuant to 
                        subparagraph (A) shall be used by the State to 
                        administer the delegated authority of the State 
                        under this section and to implement cost-
                        effective energy efficiency programs.
                            ``(ii) Programs.--The programs shall--
                                    ``(I) to the maximum extent 
                                practicable, achieve electricity 
                                savings and natural gas savings in the 
                                State sufficient to make up the deficit 
                                associated with the alternative 
                                compliance payments; and
                                    ``(II) be measured and verified in 
                                accordance with the applicable 
                                procedures and standards under 
                                subsection (e) or paragraph (3), as the 
                                case may be.
            ``(5) Review of state implementation.--
                    ``(A) Periodic review.--Every 2 years, the 
                Secretary shall review State implementation of this 
                section for conformance with the requirements of this 
                section in approximately \1/2\ of the States that have 
                received approval under this subsection to administer 
                the program, such that each State shall be reviewed at 
                least every 4 years.
                    ``(B) Report.--To facilitate the review, the 
                Secretary may require the State to submit a report 
                demonstrating the compliance of the State with the 
                requirements of this section, including--
                            ``(i) reports submitted by retail 
                        electricity distributors and retail natural gas 
                        distributors to the State demonstrating 
                        compliance with applicable performance 
                        standards;
                            ``(ii) the impact of the standards on 
                        projected electricity and natural gas demand 
                        within the State;
                            ``(iii) an accounting of the use of 
                        alternative compliance payments by the State 
                        and the resulting electricity savings and 
                        natural gas savings achieved; and
                            ``(iv) such other information as the 
                        Secretary determines appropriate.
                    ``(C) Review on petition.--Notwithstanding 
                subparagraph (A), on receipt of a public petition 
                containing credible allegation of substantial 
                deficiencies, the Secretary shall promptly review the 
                implementation by the State of delegated authority 
                under this section.
                    ``(D) Deficiencies.--
                            ``(i) In general.--If deficiencies are 
                        found in a review under this paragraph, the 
                        Secretary shall--
                                    ``(I) notify the State; and
                                    ``(II) direct the State to correct 
                                the deficiencies and to report to the 
                                Secretary on progress not later than 
                                180 days after the date of the receipt 
                                of review results.
                            ``(ii) Substantial deficiencies.--If the 
                        deficiencies are substantial, the Secretary 
                        shall--
                                    ``(I) disallow such reported 
                                savings as the Secretary determines are 
                                not credible due to deficiencies;
                                    ``(II) re-review the State not 
                                later than 2 years after the date of 
                                the original review; and
                                    ``(III) if substantial deficiencies 
                                remain uncorrected after the review 
                                provided for under subclause (II), 
                                revoke the authority of the State to 
                                administer the program established 
                                under this section.
            ``(6) Calls for revision of state applications.--As a 
        condition of maintaining the delegated authority of a State to 
        administer this section, the Secretary may require the State to 
        submit a revised application under paragraph (1) if the 
        Secretary has--
                    ``(A) promulgated new or revised performance 
                standards under subsection (c);
                    ``(B) promulgated new or substantially revised 
                measurement and verification procedures and standards 
                under subsection (e); or
                    ``(C) otherwise substantially revised the program 
                established under this section.
    ``(h) Information and Reports.--In accordance with section 13 of 
the Federal Energy Administration Act of 1974 (15 U.S.C. 772), the 
Secretary may require any retail electricity distributor, any retail 
natural gas distributor, any third-party efficiency provider, or such 
other entities as the Secretary considers appropriate, to provide any 
information the Secretary determines appropriate to carry out this 
section.
    ``(i) State Law.--Nothing in this section diminishes or qualifies 
any authority of a State or political subdivision of a State to adopt 
or enforce any law (including a regulation) respecting electricity 
savings or natural gas savings, including any law (including a 
regulation) establishing energy efficiency requirements that are more 
stringent than the requirements established under this section, except 
that no such law or regulation may relieve any person of any 
requirement otherwise applicable under this section.
    ``(j) Program Review.--
            ``(1) National academy of sciences review.--The Secretary 
        shall offer to enter into a contract with the National Academy 
        of Sciences under which the Academy shall, not later than July 
        1, 2017, and every 10 years thereafter, submit to the Secretary 
        and to Congress a comprehensive evaluation of all aspects of 
        the program established under this section, including--
                    ``(A) an evaluation of the effectiveness of the 
                program, including the specific design elements of the 
                program, in increasing the efficiency of retail natural 
                gas and electricity distribution and consumption;
                    ``(B) the opportunities for additional technologies 
                and sources of efficiency that have emerged since the 
                date of enactment of this section;
                    ``(C) the impact of the program on the reliability 
                of electricity and natural gas supply;
                    ``(D) the net benefits or costs of the program to 
                the national and State economies, including the effects 
                of the program on--
                            ``(i) electricity and natural gas demand 
                        and prices;
                            ``(ii) economic development benefits of 
                        investment;
                            ``(iii) environmental benefits; and
                            ``(iv) avoided costs related to 
                        environmental and congestion mitigation 
                        investments that otherwise would have been 
                        required;
                    ``(E) an assessment of the benefits and costs of 
                increasing the performance standards established under 
                subsection (c);
                    ``(F) the feasibility, advantages, and 
                disadvantages of alternative models for demonstrating 
                compliance with a Federal energy efficiency resource 
                standard, including--
                            ``(i) establishing a national trading 
                        system for energy efficiency credits; or
                            ``(ii) demonstrating compliance through 
                        actual reductions in delivery or sales of 
                        electricity and natural gas, rather than on 
                        program savings; and
                    ``(G) recommendations regarding potential changes 
                to this section, to regulations and procedures for 
                implementing this section, or to related public 
                policies.
            ``(2) Recommendations to congress.--Not later than January 
        1, 2018, and every 10 years thereafter, the Secretary shall 
        submit to the Committee on Energy and Commerce of the House of 
        Representatives and the Committee on Energy and Natural 
        Resources of the Senate a report making recommendations for 
        modifications and improvements to the program established under 
        this section and any related programs, including an explanation 
        of the inconsistencies, if any, between the recommendations of 
        the Secretary and recommendations included in the National 
        Academy of Sciences evaluation under paragraph (1).''.
    (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. 609. Rural and remote communities electrification grants.
``Sec. 610. Federal energy efficiency resource standard.''.
                                 <all>