[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5967 Introduced in House (IH)]

112th CONGRESS
  2d Session
                                H. R. 5967

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


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 19, 2012

 Mr. Markey (for himself and Mr. Welch) introduced the following bill; 
       which was referred to the Committee on Energy and Commerce

_______________________________________________________________________

                                 A BILL


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

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``American Renewable Energy and 
Efficiency Act''.

SEC. 2. COMBINED EFFICIENCY AND RENEWABLE ELECTRICITY STANDARD.

    (a) In General.--Title VI of the Public Utility Regulatory Policies 
Act of 1978 is amended by adding at the end the following:

``SEC. 610. COMBINED EFFICIENCY AND RENEWABLE ELECTRICITY STANDARD.

    ``(a) Definitions.--For purposes of this section:
            ``(1) 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, at 
                any time after the date of the enactment of this 
                section, upgrading, replacing, expanding, or increasing 
                the utilization of a combined heat and power system 
                that commenced operation on or before the date of 
                enactment of this section.
            ``(2) CHP system savings.--The term `CHP system savings' 
        means the increment of electric output of a 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).
            ``(3) 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, provided that--
                    ``(A) the system meets such requirements relating 
                to efficiency and other operating characteristics as 
                the Commission may promulgate by regulation; and
                    ``(B) the net sales of electricity by the facility 
                to customers not consuming the thermal output from that 
                facility will not exceed 50 percent of total annual 
                electric generation by the facility.
            ``(4) Customer facility savings.--The term `customer 
        facility savings' means a reduction in end-use electricity 
        consumption (including recycled energy savings) at a facility 
        of an end-use consumer of electricity served by a retail 
        electric supplier, as compared to--
                    ``(A) in the case of a new facility, consumption at 
                a reference facility of average efficiency;
                    ``(B) in the case of an existing facility, 
                consumption at such facility during a base period, 
                except as provided in subparagraphs (C) and (D);
                    ``(C) in the case of new equipment that replaces 
                existing equipment with remaining useful life, the 
                projected consumption of the existing equipment for the 
                remaining useful life of such equipment, and 
                thereafter, consumption of new equipment of average 
                efficiency of the same equipment type; and
                    ``(D) 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 of the same equipment type.
            ``(5) Distributed renewable generation facility.--The term 
        `distributed renewable generation facility' means a facility 
        that--
                    ``(A) generates renewable electricity;
                    ``(B) primarily serves 1 or more electricity 
                consumers at or near the facility site; and
                    ``(C) is no greater than 2 megawatts in capacity.
            ``(6) Electricity savings.--The term `electricity savings' 
        means reductions in electricity consumption, relative to 
        business-as-usual projections, achieved through measures 
        implemented after the date of enactment of this section, 
        limited to--
                    ``(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;
                    ``(C) CHP savings; and
                    ``(D) fuel cell savings.
            ``(7) Federal renewable electricity credit.--The term 
        `Federal renewable electricity credit' means a credit, 
        representing one megawatt hour of renewable electricity, issued 
        pursuant to subsection (e).
            ``(8) Fuel cell.--The term `fuel cell' means a device that 
        directly converts the chemical energy of a fuel and an oxidant 
        into electricity by electrochemical processes occurring at 
        separate electrodes in the device.
            ``(9) Fuel cell savings.--The term `fuel cell savings' 
        means the electricity saved by a fuel cell that is installed 
        after the date of enactment of this section, or by upgrading a 
        fuel cell that commenced operation on or before the date of 
        enactment of this section, as a result of the greater 
        efficiency with which the fuel cell transforms fuel into 
        electricity as compared with sources of electricity delivered 
        through the grid, provided that--
                    ``(A) the fuel cell meets such requirements 
                relating to efficiency and other operating 
                characteristics as the Commission may promulgate by 
                regulation; and
                    ``(B) the net sales of electricity from the fuel 
                cell to customers not consuming the thermal output from 
                the fuel cell, if any, do not exceed 50 percent of the 
                total annual electricity generation by the fuel cell.
            ``(10) Qualified hydropower.--The term `qualified 
        hydropower' means--
                    ``(A) energy produced from increased efficiency 
                achieved, or additions of capacity made, on or after 
                January 1, 2001, at a hydroelectric facility that was 
                placed in service before that date and does not include 
                additional energy generated as a result of operational 
                changes not directly associated with efficiency 
                improvements or capacity additions; or
                    ``(B) energy produced from generating capacity 
                added to a dam on or after January 1, 2001, provided 
                that the Commission certifies that--
                            ``(i) the dam was placed in service before 
                        the date of the enactment of this section and 
                        was operated for flood control, navigation, or 
                        water supply purposes and was not producing 
                        hydroelectric power prior to the addition of 
                        such capacity;
                            ``(ii) the hydroelectric project installed 
                        on the dam is licensed (or is exempt from 
                        licensing) by the Commission and is in 
                        compliance with the terms and conditions of the 
                        license or exemption, and with other applicable 
                        legal requirements for the protection of 
                        environmental quality, including applicable 
                        fish passage requirements; and
                            ``(iii) the hydroelectric project installed 
                        on the dam 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 or exemption 
                        requirements that require changes in water 
                        surface elevation for the purpose of improving 
                        the environmental quality of the affected 
                        waterway.
            ``(11) Recycled energy savings.--The term `recycled energy 
        savings' means a reduction in electricity 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.
            ``(12) Renewable biomass.--The term `renewable biomass' 
        means any of the following:
                    ``(A) Crops, crop byproducts, or crop residues 
                harvested from actively managed or fallow agricultural 
                land that was cleared prior to the date of enactment of 
                this section and is nonforested.
                    ``(B) Planted trees, brush, slash, and all residues 
                from an actively managed tree plantation located on 
                land that was cleared prior to the date of enactment of 
                this section and is not Federal land.
                    ``(C) Precommercial-sized thinnings, slash, brush, 
                and residue from milled trees, from forested land that 
                is not--
                            ``(i) old-growth or mature forest;
                            ``(ii) identified under a State Natural 
                        Heritage Program as rare, imperiled, or 
                        critically imperiled; or
                            ``(iii) Federal land.
                    ``(D) Algae.
                    ``(E) Nonhazardous plant matter derived from waste 
                such as separated yard waste, landscape right-of-way 
                trimmings, or food waste (but not municipal solid 
                waste, recyclable waste paper, painted, treated or 
                pressurized wood, or wood contaminated with plastic or 
                metals).
                    ``(F) Animal waste or animal byproducts, including 
                products of animal waste digesters.
                    ``(G) Vegetative matter removed from within 200 
                yards of any manmade structure or campground.
                    ``(H) Slash and precommercial-sized thinnings 
                harvested--
                            ``(i) in environmentally sustainable 
                        quantities, as determined by the appropriate 
                        Federal land manager; and
                            ``(ii) from National Forest System land or 
                        public lands (as defined in section 103 of the 
                        Federal Land Policy and Management Act of 1976 
                        (43 U.S.C. 1702)), other than--
                                    ``(I) components of the National 
                                Wilderness Preservation System 
                                established under the Wilderness Act 
                                (16 U.S.C. 1131 et seq.);
                                    ``(II) Wilderness Study Areas, as 
                                identified by the Bureau of Land 
                                Management;
                                    ``(III) inventoried roadless areas 
                                and all unroaded areas of at least 
                                5,000 acres;
                                    ``(IV) old growth and late seral 
                                stands;
                                    ``(V) components of the National 
                                Landscape Conservation System 
                                administered by the Bureau of Land 
                                Management; and
                                    ``(VI) national monuments.
            ``(13) Renewable electricity.--The term `renewable 
        electricity' means electricity generated (including by means of 
        a fuel cell) from a renewable energy resource.
            ``(14) Renewable energy resource.--The term `renewable 
        energy resource' means each of the following:
                    ``(A) Wind energy.
                    ``(B) Solar energy.
                    ``(C) Geothermal energy.
                    ``(D) Renewable biomass.
                    ``(E) Biogas derived exclusively from renewable 
                biomass.
                    ``(F) Biofuels derived exclusively from renewable 
                biomass.
                    ``(G) Qualified hydropower.
                    ``(H) Marine and hydrokinetic renewable energy, as 
                that term is defined in section 632 of the Energy 
                Independence and Security Act of 2007 (42 U.S.C. 
                17211).
                    ``(I) Landfill gas.
            ``(15) Retail electric supplier.--
                    ``(A) In general.--The term `retail electric 
                supplier' means, for any given year, an electric 
                utility that sold not less than 1,000,000 megawatt 
                hours of electric energy to electric consumers for 
                purposes other than resale during the preceding 
                calendar year.
                    ``(B) Inclusions and limitations.--For purposes of 
                determining whether an electric utility qualifies as a 
                retail electric supplier under subparagraph (A)--
                            ``(i) the sales of any affiliate of an 
                        electric utility to electric consumers, other 
                        than sales to the affiliate's lessees or 
                        tenants, for purposes other than resale shall 
                        be considered to be sales of such electric 
                        utility; and
                            ``(ii) sales by any electric utility to an 
                        affiliate, lessee, or tenant of such electric 
                        utility shall not be treated as sales to 
                        electric consumers.
                    ``(C) Affiliate.--For purposes of this paragraph, 
                the term `affiliate' when used in relation 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 promulgated by the 
                Commission.
            ``(16) Retail electric supplier's base amount.--The term 
        `retail electric supplier's base amount' means the total amount 
        of electric energy sold by the retail electric supplier, 
        expressed in megawatt hours, to electric customers for purposes 
        other than resale during the relevant calendar year, 
        excluding--
                    ``(A) electricity generated by a hydroelectric 
                facility, other than qualified hydropower;
                    ``(B) electricity generated by the combustion of 
                municipal solid waste;
                    ``(C) electricity generated by a nuclear generating 
                unit placed in service after the date of enactment of 
                this section; and
                    ``(D) the proportion of electricity generated by a 
                fossil-fueled generating unit that is equal to the 
                proportion of greenhouse gases produced by such unit 
                that are captured and geologically sequestered.
            ``(17) Retire and retirement.--The terms `retire' and 
        `retirement' with respect to a Federal renewable electricity 
        credit, means to disqualify such credit for any subsequent use 
        under this section, regardless of whether the use is a sale, 
        transfer, exchange, or submission in satisfaction of a 
        compliance obligation.
            ``(18) 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 in accordance with the 
        requirements of this section.
            ``(19) Total annual electricity savings.--The term `total 
        annual electricity savings' means electricity savings during a 
        specified calendar year from measures implemented since the 
        date of the enactment of this section, taking into account 
        verified measure lifetimes or verified annual savings attrition 
        rates, as determined in accordance with such regulations as the 
        Commission may promulgate and measured in megawatt hours.
    ``(b) Annual Compliance Obligation.--
            ``(1) In general.--For each of calendar years 2014 through 
        2040, not later than March 31 of the following calendar year, 
        each retail electric supplier shall submit to the Commission an 
        amount of Federal renewable electricity credits and 
        demonstrated total annual electricity savings that, in the 
        aggregate, is equal to such retail electric supplier's annual 
        combined target as set forth in subsection (d), except as 
        otherwise provided in subsection (g).
            ``(2) Demonstration of savings.--For purposes of this 
        subsection, submission of demonstrated total annual electricity 
        savings means submission of a report that demonstrates, in 
        accordance with the requirements of subsection (f), the total 
        annual electricity savings achieved by the retail electric 
        supplier within the relevant compliance year.
            ``(3) Renewable electricity credits portion.--Except as 
        provided in paragraph (4), each retail electric supplier must 
        submit Federal renewable electricity credits equal to at least 
        three quarters of the retail electric supplier's annual 
        combined target.
            ``(4) State petition.--
                    ``(A) In general.--Upon written request from the 
                Governor of any State (including, for purposes of this 
                paragraph, the Mayor of the District of Columbia), the 
                Commission shall increase, to not more than half, the 
                proportion of the annual combined targets of retail 
                electric suppliers located within such State that may 
                be met through submission of demonstrated total annual 
                electricity savings, provided that such increase shall 
                be effective only with regard to the portion of a 
                retail electric supplier's annual combined target that 
                is attributable to electricity sales within such State.
                    ``(B) Contents.--A Governor's request under this 
                paragraph shall include an explanation of the 
                Governor's rationale for determining, after 
                consultation with the relevant State regulatory 
                authority and other retail electricity ratemaking 
                authorities within the State, to make such request. The 
                request shall specify the maximum proportion of annual 
                combined targets (not more than half) that can be met 
                through demonstrated total annual electricity savings, 
                and the period for which such proportion shall be 
                effective.
                    ``(C) Revision.--The Governor of any State may, 
                after consultation with the relevant State regulatory 
                authority and other retail electricity ratemaking 
                authorities within the State, submit a written request 
                for revocation or revision of a previous request 
                submitted under this paragraph. The Commission shall 
                grant such request, provided that--
                            ``(i) any revocation or revision shall not 
                        apply to the combined annual target for any 
                        year that is any earlier than 2 calendar years 
                        after the calendar year in which such request 
                        is submitted, so as to provide retail electric 
                        suppliers with adequate notice of such change; 
                        and
                            ``(ii) any revision shall meet the 
                        requirements of subparagraph (A).
    ``(c) Establishment of Program.--Not later than 1 year after the 
date of enactment of this section, the Commission shall promulgate 
regulations to implement and enforce the requirements of this section. 
In promulgating such regulations, the Commission shall, to the extent 
practicable--
            ``(1) preserve the integrity, and incorporate best 
        practices, of existing State and tribal renewable electricity 
        and energy efficiency programs;
            ``(2) rely upon existing and emerging State, tribal, or 
        regional tracking systems that issue and track non-Federal 
        renewable electricity credits; and
            ``(3) cooperate with the States and Indian tribes to 
        facilitate coordination between State, tribal, and Federal 
        renewable electricity and energy efficiency programs and to 
        minimize administrative burdens and costs to retail electric 
        suppliers.
    ``(d) Annual Compliance Requirement.--
            ``(1) Annual combined targets.--For each of calendar years 
        2014 through 2040, a retail electric supplier's annual combined 
        target shall be the product of--
                    ``(A) the required annual percentage for such year, 
                as set forth in paragraph (2); and
                    ``(B) the retail electric supplier's base amount 
                for such year.
            ``(2) Required annual percentage.--For each of calendar 
        years 2014 through 2040, the required annual percentage shall 
        be as follows:

                                                        Required annual
``Year:                                                     percentage:
        2014...................................................      8 
        2015...................................................     10 
        2016...................................................     12 
        2017...................................................     14 
        2018...................................................     16 
        2019...................................................     18 
        2020...................................................     20 
        2021...................................................     22 
        2022...................................................     24 
        2023...................................................     26 
        2024...................................................     28 
        2025...................................................     30 
        2026...................................................     32 
        2027...................................................     34 
        2028...................................................     36 
        2029...................................................     38 
        2030...................................................     40 
        2031...................................................     42 
        2032...................................................     44 
        2033...................................................     46 
        2034...................................................     48 
        2035 through 2040......................................     50.
    ``(e) Federal Renewable Electricity Credits.--
            ``(1) In general.--The regulations promulgated under this 
        section shall include provisions governing the issuance, 
        tracking, and verification of Federal renewable electricity 
        credits. Except as provided in paragraphs (2), (3), and (4) of 
        this subsection, the Commission shall issue to each generator 
        of renewable electricity, 1 Federal renewable electricity 
        credit for each megawatt hour of renewable electricity 
        generated by such generator after December 31, 2013. The 
        Commission shall assign a unique serial number to each Federal 
        renewable electricity credit.
            ``(2) Generation from certain state renewable electricity 
        programs.--Where renewable electricity is generated with the 
        support of payments from a retail electric supplier pursuant to 
        a State renewable electricity program (whether through State 
        alternative compliance payments or through payments to a State 
        renewable electricity procurement fund or entity), the 
        Commission shall issue Federal renewable electricity credits to 
        such retail electric supplier for the proportion of the 
        relevant renewable electricity generation that is attributable 
        to the retail electric supplier's payments, as determined 
        pursuant to regulations issued by the Commission. For any 
        remaining portion of the relevant renewable electricity 
        generation, the Commission shall issue Federal renewable 
        electricity credits to the generator, as provided in paragraph 
        (1), except that in no event shall more than 1 Federal 
        renewable electricity credit be issued for the same megawatt 
        hour of electricity. In determining how Federal renewable 
        electricity credits will be apportioned among retail electric 
        suppliers and generators in such circumstances, the Commission 
        shall consider information and guidance furnished by the 
        relevant State or States.
            ``(3) Certain power sales contracts.--Except as otherwise 
        provided in paragraph (2), when a generator has sold renewable 
        electricity to a retail electric supplier under a contract for 
        power from a facility placed in service before the date of 
        enactment of this section, and the contract does not provide 
        for the determination of ownership of the Federal renewable 
        electricity credits associated with such generation, the 
        Commission shall issue such Federal renewable electricity 
        credits to the retail electric supplier for the duration of the 
        contract.
            ``(4) Credit multiplier for distributed renewable 
        generation.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the Commission shall issue 3 Federal 
                renewable electricity credits for each megawatt hour of 
                renewable electricity generated by a distributed 
                renewable generation facility.
                    ``(B) Adjustment.--Except as provided in 
                subparagraph (C), not later than January 1, 2016, and 
                not less frequently than every 4 years thereafter, the 
                Commission shall review the effect of this paragraph 
                and shall, as necessary, reduce the number of Federal 
                renewable electricity credits per megawatt hour issued 
                under this paragraph for any given energy source or 
                technology, but not below 1, to ensure that such number 
                is no higher than the Commission determines is 
                necessary to make distributed renewable generation 
                facilities using such source or technology cost 
                competitive with other sources of renewable electricity 
                generation.
                    ``(C) Facilities placed in service after 
                enactment.--For any distributed renewable generation 
                facility placed in service after the date of enactment 
                of this section, subparagraph (B) shall not apply for 
                the first 10 years after the date on which the facility 
                is placed in service. For each year during such 10-year 
                period, the Commission shall issue to the facility the 
                same number of Federal renewable electricity credits 
                per megawatt hour as are issued to that facility in the 
                year in which such facility is placed in service. After 
                such 10-year period, the Commission shall issue Federal 
                renewable electricity credits to the facility in 
                accordance with the current multiplier as determined 
                pursuant to subparagraph (B).
            ``(5) Credits based on qualified hydropower.--For purposes 
        of this subsection, the number of Federal renewable electricity 
        credits issued for qualified hydropower shall be calculated--
                    ``(A) based solely on the increase in average 
                annual generation directly resulting from the 
                efficiency improvements or capacity additions described 
                in subsection (a)(10)(A); and
                    ``(B) using the same water flow information used to 
                determine a historic average annual generation baseline 
                for the hydroelectric facility, as certified by the 
                Commission.
            ``(6) Generation from mixed renewable and nonrenewable 
        resources.--If electricity is generated using both a renewable 
        energy resource and an energy source that is not a renewable 
        energy resource (as, for example, in the case of co-firing of 
        renewable biomass and fossil fuel), the Commission shall issue 
        Federal renewable electricity credits based on the proportion 
        of the electricity that is attributable to the renewable energy 
        resource.
            ``(7) Prohibition against double-counting.--The Commission 
        shall ensure that--
                    ``(A) no Federal renewable electricity credit is 
                used more than once for compliance with this section; 
                and
                    ``(B) except as provided in paragraph (4), no more 
                than 1 Federal renewable electricity credit is issued 
                for any megawatt hour of renewable electricity.
            ``(8) Trading.--The lawful holder of a Federal renewable 
        electricity credit may sell, exchange, transfer, submit for 
        compliance in accordance with subsection (b), or submit such 
        credit for retirement by the Commission.
            ``(9) Banking.--A Federal renewable electricity credit may 
        be submitted in satisfaction of the compliance obligation set 
        forth in subsection (b) for the compliance year in which the 
        credit was issued or for any of the 3 immediately subsequent 
        compliance years. The Commission shall retire any Federal 
        renewable electricity credit that has not been retired by April 
        2 of the calendar year that is 3 years after the calendar year 
        in which the credit was issued.
            ``(10) Retirement.--The Commission shall retire a Federal 
        renewable electricity credit immediately upon submission by the 
        lawful holder of such credit, whether in satisfaction of a 
        compliance obligation under subsection (b) or on some other 
        basis.
    ``(f) Electricity Savings.--
            ``(1) Standards for measurement of savings.--As part of the 
        regulations promulgated under this section, the Commission 
        shall prescribe standards and protocols for defining and 
        measuring electricity savings and total annual electricity 
        savings that can be counted towards the compliance obligation 
        set forth in subsection (b). Such protocols and standards 
        shall, at minimum--
                    ``(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 portions of facilities in the 
                applicable base and current years be adjusted, as 
                appropriate, to account for changes in weather, level 
                of production, and building area;
                    ``(C) account for the useful life of measures;
                    ``(D) include deemed 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, 
                recycled energy savings, and fuel cell savings;
                    ``(G) count only measures and savings that are 
                additional to business-as-usual practices;
                    ``(H) include procedures for documenting measurable 
                and verifiable electricity savings achieved as a result 
                of programs that address market barriers to energy-
                saving goods and services and result in long-term 
                changes in the market for such goods and services;
                    ``(I) include procedures for counting electricity 
                savings achieved by solar water heating and solar light 
                pipe technology that has the capability to provide 
                measurable data on the amount of megawatt-hours 
                displaced;
                    ``(J) establish methods for calculating codes and 
                standard savings, including the use of verified 
                compliance rates;
                    ``(K) avoid double-counting of savings used for 
                compliance with this section, including savings that 
                are transferred pursuant to paragraph (3);
                    ``(L) ensure that, except as provided in 
                subparagraph (N), the retail electric supplier claiming 
                the savings played a significant role in achieving the 
                savings (including through the activities of a 
                designated agent of the supplier or through the 
                purchase of transferred savings);
                    ``(M) include savings from programs administered by 
                a retail electric supplier (or a retail electricity 
                distributor that is not a retail electric supplier) 
                that are funded by State, Federal, or other sources; 
                and
                    ``(N) in any State in which the State regulatory 
                authority has designated 1 or more entities to 
                administer electric ratepayer-funded efficiency 
                programs approved by such State regulatory authority, 
                provide that electricity savings achieved through such 
                programs shall be distributed equitably among retail 
                electric suppliers in accordance with the direction of 
                the relevant State regulatory authority.
            ``(2) Standards for third-party verification of savings.--
        The regulations promulgated under this section shall establish 
        procedures and standards requiring third-party verification of 
        all reported electricity savings, including requirements for 
        accreditation of third-party verifiers to ensure that such 
        verifiers are professionally qualified and have no conflicts of 
        interest.
            ``(3) Transfers of savings.--
                    ``(A) Bilateral contracts for savings transfers.--
                Subject to the limitations of this paragraph, a retail 
                electric supplier may use electricity savings 
                transferred, pursuant to a bilateral contract, from 
                another retail electric supplier, an owner of an 
                electric distribution facility that is not a retail 
                electric supplier, a State, or a third-party efficiency 
                provider to meet the applicable compliance obligation 
                under subsection (b).
                    ``(B) Requirements.--Electricity savings 
                transferred and used for compliance pursuant to this 
                paragraph shall be--
                            ``(i) measured and verified in accordance 
                        with the procedures specified under this 
                        subsection;
                            ``(ii) reported in accordance with 
                        paragraph (4) of this subsection; and
                            ``(iii) achieved within the same State as 
                        is served by the retail electric supplier.
                    ``(C) Regulatory approval.--Nothing in this 
                paragraph shall limit or affect the authority of a 
                State regulatory authority to require a retail electric 
                supplier that is regulated by such authority to obtain 
                such authority's authorization or approval of a 
                contract for transfer of savings under this paragraph.
            ``(4) Reporting savings.--
                    ``(A) Requirements.--The regulations promulgated 
                under this section shall establish requirements 
                governing the submission of reports to demonstrate, in 
                accordance with the protocols and standards for 
                measurement and third-party verification established 
                under this subsection, the total annual electricity 
                savings achieved by a retail electric supplier within 
                the relevant year.
                    ``(B) Review and approval.--The Commission shall 
                review each report submitted to the Commission by a 
                retail electric supplier and shall exclude any 
                electricity savings that have not been adequately 
                demonstrated in accordance with the requirements of 
                this subsection.
            ``(5) State administration.--
                    ``(A) Delegation of authority.--Upon receipt of an 
                application from the Governor of a State (including, 
                for purposes of this subsection, the Mayor of the 
                District of Columbia), the Commission may delegate to 
                the State the authority to review and verify reported 
                electricity savings for purposes of determining 
                demonstrated total annual electricity savings that may 
                be counted towards a retail electric supplier's 
                compliance obligation under subsection (b). The 
                Commission shall make a substantive determination 
                approving or disapproving a State application under 
                this subparagraph, after notice and comment, within 180 
                days of receipt of a complete application.
                    ``(B) Alternative measurement and verification 
                procedures and standards.--As part of an application 
                submitted under subparagraph (A), a State may request 
                to use alternative measurement and verification 
                procedures and standards to those specified in 
                paragraphs (1) and (2), provided the State demonstrates 
                that such alternative procedures and standards provide 
                a level of accuracy of measurement and verification at 
                least equivalent to the Federal procedures and 
                standards promulgated under paragraphs (1) and (2).
                    ``(C) Review of state implementation.--The 
                Commission shall, not less frequently than once every 4 
                years, review each State's implementation of delegated 
                authority under this paragraph to ensure conformance 
                with the requirements of this section. The Commission 
                may, at any time, revoke the delegation of authority 
                under this section upon a finding that the State is not 
                implementing its delegated responsibilities in 
                conformity with this paragraph. As a condition of 
                maintaining its delegated authority under this 
                paragraph, the Commission may require a State to submit 
                a revised application under subparagraph (A) if the 
                Commission has--
                            ``(i) promulgated new or substantially 
                        revised measurement and verification procedures 
                        and standards under this subsection; or
                            ``(ii) otherwise substantially revised the 
                        program established under this section.
    ``(g) Alternative Compliance Payments.--
            ``(1) In general.--A retail electric supplier may satisfy 
        the requirements of subsection (b) in whole or in part by 
        submitting in accordance with this subsection, in lieu of each 
        Federal renewable electricity credit or megawatt hour of 
        demonstrated total annual electricity savings that would 
        otherwise be due, a payment equal to $50, adjusted for 
        inflation on January 1 of each year following calendar year 
        2014, in accordance with such regulations as the Commission may 
        promulgate.
            ``(2) Payment to state funds.--Except as otherwise provided 
        in this paragraph, payments made under this subsection shall be 
        made directly to the State or States in which the retail 
        electric supplier sells electric energy, in proportion to the 
        portion of the retail electric supplier's base amount that is 
        sold within each relevant State, provided that such payments 
        are deposited directly into a fund in the State treasury 
        established for this purpose and that the State uses such funds 
        in accordance with paragraphs (3) and (4). If the Commission 
        determines at any time that a State is in substantial 
        noncompliance with paragraph (3) or (4), the Commission shall 
        direct that any future alternative compliance payments that 
        would otherwise be paid to such State under this subsection 
        shall instead be paid to the Commission and deposited in the 
        United States Treasury.
            ``(3) State use of funds.--As a condition of receipt of 
        alternative compliance payments pursuant to this subsection, a 
        State shall use such payments exclusively for the purposes of--
                    ``(A) deploying technologies that generate 
                electricity from renewable energy resources; or
                    ``(B) implementing cost-effective energy efficiency 
                programs to achieve electricity savings.
            ``(4) Reporting.--
                    ``(A) In general.--As a condition of receipt of 
                alternative compliance payments pursuant to this 
                subsection, a State shall submit to the Commission an 
                annual report, in accordance with such regulations as 
                the Commission may prescribe, containing a full 
                accounting of the use of such payments, including a 
                detailed description of the activities funded thereby 
                and demonstrating compliance with the requirements of 
                this subsection.
                    ``(B) Deadline.--A State submitting a report under 
                this paragraph shall do so--
                            ``(i) not later than 12 months after the 
                        date on which the first alternative compliance 
                        payment is received; and
                            ``(ii) every 12 months thereafter until all 
                        such payments are expended.
    ``(h) Information Collection.--The Commission may require any 
retail electric supplier, renewable electricity generator, or such 
other entities as the Commission determines appropriate, to provide any 
information the Commission determines appropriate to carry out this 
section. Failure to submit such information or submission of false or 
misleading information under this subsection shall be a violation of 
this section.
    ``(i) Enforcement and Judicial Review.--
            ``(1) Failure to submit credits or demonstrate savings.--If 
        any person fails to comply with the requirements of subsection 
        (b) or (g), such person shall be liable to pay to the 
        Commission a civil penalty equal to the product of--
                    ``(A) double the alternative compliance payment 
                calculated under subsection (g)(1), and
                    ``(B) the aggregate quantity of Federal renewable 
                electricity credits, total annual electricity savings, 
                or equivalent alternative compliance payments that the 
                person failed to submit in violation of the 
                requirements of subsections (b) and (g).
            ``(2) Enforcement.--The Commission shall assess a civil 
        penalty under paragraph (1) in accordance with the procedures 
        described in section 31(d) of the Federal Power Act (16 U.S.C. 
        823b(d)).
            ``(3) Violation of requirement of regulations or orders.--
        Any person who violates, or fails or refuses to comply with, 
        any requirement of a regulation promulgated or order issued 
        under this section shall be subject to a civil penalty under 
        section 316A(b) of the Federal Power Act (16 U.S.C. 825o-1(b)). 
        Such penalty shall be assessed by the Commission in the same 
        manner as in the case of a violation referred to in section 
        316A(b) of such Act.
            ``(4) Judicial review.--Any person aggrieved by a final 
        action taken by the Commission under this section, other than 
        the assessment of a civil penalty under paragraphs (1) through 
        (3), may use the procedures for review described in section 313 
        of the Federal Power Act (16 U.S.C. 825l). For purposes of this 
        paragraph, references to an order in section 313 of such Act 
        shall be deemed to refer also to all other final actions of the 
        Commission under this section other than the assessment of a 
        civil penalty under paragraphs (1) through (3).
    ``(j) Savings Provisions.--Nothing in this section shall--
            ``(1) diminish or qualify any authority of a State, a 
        political subdivision of a State, or an Indian tribe to--
                    ``(A) adopt or enforce any law or regulation 
                respecting renewable electricity or energy efficiency, 
                including any law or regulation establishing 
                requirements more stringent than those established by 
                this section, provided that no such law or regulation 
                may relieve any person of any requirement otherwise 
                applicable under this section; or
                    ``(B) regulate the acquisition and disposition of 
                Federal renewable electricity credits by retail 
                electric suppliers within the jurisdiction of such 
                State, political subdivision, or Indian tribe, 
                including the authority to require such retail electric 
                supplier to acquire and submit to the Secretary for 
                retirement Federal renewable electricity credits in 
                excess of those submitted under this section; or
            ``(2) affect the application of, or the responsibility for 
        compliance with, any other provision of law or regulation, 
        including environmental and licensing requirements.
    ``(k) Sunset.--This section expires on December 31, 2041.''.
    (b) Conforming Amendment.--The table of contents set forth in 
section 1(b) of the Public Utility Regulatory Policies Act of 1978 is 
amended by inserting after the item relating to section 608 the 
following:

``Sec. 609. Rural and remote communities electrification grants.
``Sec. 610. Combined efficiency and renewable electricity standard.''.

SEC. 3. CLARIFYING STATE AUTHORITY TO ADOPT RENEWABLE ENERGY 
              INCENTIVES.

    Section 210 of the Public Utility Regulatory Policies Act of 1978 
(16 U.S.C. 824a-3) is amended by adding at the end thereof:
    ``(o) Clarification of State Authority To Adopt Renewable Energy 
Incentives.--Notwithstanding any other provision of this Act or the 
Federal Power Act, a State legislature or regulatory authority may set 
the rates for a sale of electric energy by a facility generating 
electric energy from renewable energy sources pursuant to a State-
approved production incentive program under which the facility 
voluntarily sells electric energy. For purposes of this subsection, 
`State-approved production incentive program' means a requirement 
imposed pursuant to State law, or by a State regulatory authority 
acting within its authority under State law, that an electric utility 
purchase renewable energy (as defined in section 609 of this Act) at a 
specified rate.''.
                                 <all>