[Congressional Record Volume 158, Number 33 (Thursday, March 1, 2012)]
[Senate]
[Pages S1196-S1199]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN (for himself, Mr. Wyden, Mr. Sanders, Mr. Udall 
        of Colorado, Mr. Franken, Mr. Coons, Mr. Kerry, Mr. Whitehouse, 
        and Mr. Udall of New Mexico):
  S. 2146. A bill to amend the Public Utility Regulatory Policies Act 
of 1978 to create a market-oriented standard for clean electric energy 
generation, and for other purposes; to the Committee on Energy and 
Natural Resources.
  Mr. BINGAMAN. Mr. President, let me take a few minutes to describe 
this legislation for my colleagues and, hopefully, urge them to 
seriously consider the legislation. It is introduced by me with several 
cosponsors: Senator Wyden, Senator Sanders, Senator Mark Udall of 
Colorado, Senator Franken, Senator Coons, Senator Kerry, Senator 
Whitehouse, and Senator Tom Udall from my home State of New Mexico. All 
of those individuals strongly support what we are trying to do in this 
legislation.
  I particularly want to thank the staff of the Senate Energy Committee 
for the hard work they put into developing this proposal, and 
particularly Kevin Rennert, who worked very hard on this proposal and 
got a lot of very useful input from many sectors and many individuals.
  This is a simple plan to modernize the power sector and guide it 
toward a future in which more and more of our electricity is generated 
with cleaner and cleaner energy. The purpose of the legislation is to 
make sure that, as we continue to grow and power our economy, we 
leverage the clean resources we have available today and also provide a 
continuing incentive to develop the cheaper, cleaner technologies that 
will be needed in the future.
  We want to make sure we drive continued diversity in our energy 
sources and allow every region of the country to deploy clean energy 
using the appropriate resources for that region. We want to make sure 
we do all of this in a way that supports homegrown innovation and 
manufacturing and that keeps us competitive in the global clean energy 
economy. The plan we are putting forward with this legislation would 
implement a clean energy standard, or CES for short.
  Let me describe how it works. Starting in 2015, the largest utilities 
in the country would meet the clean energy standard by showing that a 
certain percentage of the electricity they sell is produced from clean 
energy sources. The initial percentage for 2015 is within the 
capabilities of those utilities today, and each year after 2015 they 
would be required to sell a little bit more of their electricity from 
clean sources. They can do so either by making incremental adjustments 
to their own energy mix to become cleaner and more efficient or by 
purchasing clean energy from those who provide it at the lowest cost or 
by purchasing credits on an open and transparent market.
  To be considered clean, a generator must either be a zero carbon 
source of energy, such as, renewables and nuclear power, or a generator 
must have a lower carbon intensity than a modern, efficient coal plant. 
By carbon intensity, I mean the amount of carbon dioxide emitted per 
megawatt hour of electricity generated. Generators with low or no 
carbon intensity receive credits based on that criterion.
  For example, renewables will receive a full credit per megawatt hour. 
Most natural gas generators would qualify for something around a half 
credit, and the more efficient natural gas generators would be 
incentivized compared to less efficient generators. A coal powerplant 
would receive some credits if it lowered its carbon intensity by 
installing carbon-capture technologies, by co-firing with renewable 
biomass.
  Accounting for clean in this way means the cleanest resources have 
the greatest incentive. Also, it means every generator has a continuing 
incentive to become even more efficient. As the standard increases over 
time, the generation fleet will transition naturally toward cleaner and 
cleaner sources to meet it. The clean energy standard sets an overall 
goal for clean energy, but the optimal and the cheapest set of 
technologies to use will be determined by the free market. The rate of 
transition is predictable and it is achievable and the rules of the 
road are transparent and they are clear.
  In addition to driving cleaner electricity generation in the power 
sector, the clean energy standard also rewards industrial efficiency. 
Combined heat and power units generate electricity while also capturing 
and using the heat for other purposes, and these units are treated as 
clean generators under this proposal for the clean energy standard. 
This will help to deploy this kind of efficiency throughout our country 
and will provide another source of inexpensive clean energy.
  Let me also describe what this proposal does not do. The clean energy 
standard does not put a limit on overall emissions. It does not limit 
the growth of electricity generation to meet the demands of a growing 
economy. All that the clean energy standard requires is that the 
generation we do use in future years and that we add to our fleet 
gradually becomes cleaner over time.
  The clean energy standard does not cost the government anything, and 
it does not raise money for the government to use either. If any money 
does come to the Treasury as a result of the program because of refusal 
to participate or to comply, that money would go directly back to the 
particular State from which it came to fund energy-efficiency programs.
  Finally, the clean energy standard will not hurt the economy. This 
past fall I asked the Energy Information Administration to analyze a 
number of clean energy standard policy options. The results of their 
study showed a properly designed clean energy standard would have 
almost zero impact on gross domestic product growth and little or no 
impact on nationally averaged electricity rates for the first decade of 
the program. The Energy Information Administration analysis did show 
that a clean energy standard would result in a substantial deployment 
of new clean energy and carbon reductions between 20 percent and 40 
percent in the power sector by 2035, which is the timeframe provided 
for in the proposal.
  I have asked the Energy Information Administration to update their 
modeling to reflect this final proposal that we are introducing today, 
and when they have completed that analysis in the next few weeks I plan 
to hold hearings on the proposal to further explore the benefits and 
effects of the clean energy standard in the Energy Committee.
  The goal of the clean energy standard is ambitious. It is a doubling 
of clean energy production in this country by 2035. But analysis has 
shown that the goal is achievable and affordable. Meeting the clean 
energy standard will yield substantial benefits to our health and to 
our economy and to our global competitiveness, and, of course, to our 
environment.
  The bill we are introducing today is simple. It sets a national goal 
for clean energy. It establishes a transparent framework that lets 
resources compete to achieve that goal based on how clean they are, and 
then it gets out of the way and lets the market and American ingenuity 
determine the best path forward.
  I think this is a very well thought out proposal and one that 
deserves the

[[Page S1197]]

attention of all colleagues. I hope they will look at it seriously, and 
I hope we can attract additional supporters and cosponsors as the weeks 
proceed in the Senate.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 2146

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Clean Energy Standard Act of 
     2012''.

     SEC. 2. FEDERAL CLEAN ENERGY STANDARD.

       Title VI of the Public Utility Regulatory Policies Act of 
     1978 (16 U.S.C. 2601 et seq.) is amended by adding at the end 
     the following:

     ``SEC. 610. FEDERAL CLEAN ENERGY STANDARD.

       ``(a) Purpose.--The purpose of this section is to create a 
     market-oriented standard for electric energy generation that 
     stimulates clean energy innovation and promotes a diverse set 
     of low- and zero-carbon generation solutions in the United 
     States at the lowest incremental cost to electric consumers.
       ``(b) Definitions.--In this section:
       ``(1) Clean energy.--The term `clean energy' means electric 
     energy that is generated--
       ``(A) at a facility placed in service after December 31, 
     1991, using--
       ``(i) renewable energy;
       ``(ii) qualified renewable biomass;
       ``(iii) natural gas;
       ``(iv) hydropower;
       ``(v) nuclear power; or
       ``(vi) qualified waste-to-energy;
       ``(B) at a facility placed in service after the date of 
     enactment of this section, using--
       ``(i) qualified combined heat and power; or
       ``(ii) a source of energy, other than biomass, with lower 
     annual carbon intensity than 0.82 metric tons of carbon 
     dioxide equivalent per megawatt-hour;
       ``(C) as a result of qualified efficiency improvements or 
     capacity additions; or
       ``(D) at a facility that captures carbon dioxide and 
     prevents the release of the carbon dioxide into the 
     atmosphere.
       ``(2) Natural gas.--
       ``(A) Inclusion.--The term `natural gas' includes coal mine 
     methane.
       ``(B) Exclusions.--The term `natural gas' excludes landfill 
     methane and biogas.
       ``(3) Qualified combined heat and power.--
       ``(A) In general.--The term `qualified combined heat and 
     power' means a system that--
       ``(i) uses the same energy source for the simultaneous or 
     sequential generation of electrical energy and thermal 
     energy;
       ``(ii) produces at least--

       ``(I) 20 percent of the useful energy of the system in the 
     form of electricity; and
       ``(II) 20 percent of the useful energy in the form of 
     useful thermal energy;

       ``(iii) to the extent the system uses biomass, uses only 
     qualified renewable biomass; and
       ``(iv) operates with an energy efficiency percentage that 
     is greater than 50 percent.
       ``(B) Determination of energy efficiency.--For purposes of 
     subparagraph (A), the energy efficiency percentage of a 
     combined heat and power system shall be determined in 
     accordance with section 48(c)(3)(C)(i) of the Internal 
     Revenue Code of 1986.
       ``(4) Qualified efficiency improvements or capacity 
     additions.--
       ``(A) In general.--Subject to subparagraphs (B) and (C), 
     the term `qualified efficiency improvements or capacity 
     additions' means efficiency improvements or capacity 
     additions made after December 31, 1991, to--
       ``(i) a nuclear facility placed in service on or before 
     December 31, 1991; or
       ``(ii) a hydropower facility placed in service on or before 
     December 31, 1991.
       ``(B) Exclusion.--The term `qualified efficiency 
     improvements or capacity additions' does not include 
     additional electric energy generated as a result of 
     operational changes not directly associated with efficiency 
     improvements or capacity additions.
       ``(C) Measurement and certification.--In the case of 
     hydropower, efficiency improvements and capacity additions 
     under this paragraph shall be--
       ``(i) measured on the basis of the same water flow 
     information that is used to determine the historic average 
     annual generation for the applicable hydroelectric facility; 
     and
       ``(ii) certified by the Secretary or the Commission.
       ``(5) Qualified renewable biomass.--The term `qualified 
     renewable biomass' means renewable biomass produced and 
     harvested through land management practices that maintain or 
     restore the composition, structure, and processes of 
     ecosystems, including the diversity of plant and animal 
     communities, water quality, and the productive capacity of 
     soil and the ecological systems.
       ``(6) Qualified waste-to-energy.--The term `qualified 
     waste-to-energy' means energy produced--
       ``(A) from the combustion of--
       ``(i) post-recycled municipal solid waste;
       ``(ii) gas produced from the gasification or pyrolization 
     of post-recycled municipal solid waste;
       ``(iii) biogas;
       ``(iv) landfill methane;
       ``(v) animal waste or animal byproducts; or
       ``(vi) wood, paper products that are not commonly 
     recyclable, and vegetation (including trees and trimmings, 
     yard waste, pallets, railroad ties, crates, and solid-wood 
     manufacturing and construction debris), if diverted from or 
     separated from other waste out of a municipal waste stream; 
     and
       ``(B) at a facility that the Commission has certified, on 
     an annual basis, is in compliance with all applicable Federal 
     and State environmental permits, including--
       ``(i) in the case of a facility that commences operation 
     before the date of enactment of this section, compliance with 
     emission standards under sections 112 and 129 of the Clean 
     Air Act (42 U.S.C. 7412, 7429) that apply as of the date of 
     enactment of this section to new facilities within the 
     applicable source category; and
       ``(ii) in the case of a facility that produces electric 
     energy from the combustion, pyrolization, or gasification of 
     municipal solid waste, certification that each local 
     government unit from which the waste originates operates, 
     participates in the operation of, contracts for, or otherwise 
     provides for recycling services for residents of the local 
     government unit.
       ``(7) Renewable energy.--The term `renewable energy' means 
     solar, wind, ocean, current, wave, tidal, or geothermal 
     energy.
       ``(c) Clean Energy Requirement.--
       ``(1) In general.--Effective beginning in calendar year 
     2015, each electric utility that sells electric energy to 
     electric consumers in a State shall obtain a percentage of 
     the electric energy the electric utility sells to electric 
     consumers during a calendar year from clean energy.
       ``(2) Percentage required.--The percentage of electric 
     energy sold during a calendar year that is required to be 
     clean energy under paragraph (1) shall be determined in 
     accordance with the following table:


------------------------------------------------------------------------
                                                               Minimum
                      ``Calendar year                           annual
                                                              percentage
------------------------------------------------------------------------
2015.......................................................           24
2016.......................................................           27
2017.......................................................           30
2018.......................................................           33
2019.......................................................           36
2020.......................................................           39
2021.......................................................           42
2022.......................................................           45
2023.......................................................           48
2024.......................................................           51
2025.......................................................           54
2026.......................................................           57
2027.......................................................           60
2028.......................................................           63
2029.......................................................           66
2030.......................................................           69
2031.......................................................           72
2032.......................................................           75
2033.......................................................           78
2034.......................................................           81
2035.......................................................           84
------------------------------------------------------------------------

       ``(3) Deduction for electric energy generated from 
     hydropower or nuclear power.--An electric utility that sells 
     electric energy to electric consumers from a facility placed 
     in service in the United States on or before December 31, 
     1991, using hydropower or nuclear power may deduct the 
     quantity of the electric energy from the quantity to which 
     the percentage in paragraph (2) applies.
       ``(d) Means of Compliance.--An electric utility shall meet 
     the requirements of subsection (c) by--
       ``(1) submitting to the Secretary clean energy credits 
     issued under subsection (e);
       ``(2) making alternative compliance payments of 3 cents per 
     kilowatt hour in accordance with subsection (i); or
       ``(3) taking a combination of actions described in 
     paragraphs (1) and (2).
       ``(e) Federal Clean Energy Trading Program.--
       ``(1) Establishment.--Not later than 180 days after the 
     date of enactment of this section, the Secretary shall 
     establish a Federal clean energy credit trading program under 
     which electric utilities may submit to the Secretary clean 
     energy credits to certify compliance by the electric 
     utilities with subsection (c).
       ``(2) Clean energy credits.--Except as provided in 
     paragraph (3)(B), the Secretary shall issue to each generator 
     of electric energy a quantity of clean energy credits 
     determined in accordance with subsections (f) and (g).
       ``(3) Administration.--In carrying out the program under 
     this subsection, the Secretary shall ensure that--
       ``(A) a clean energy credit shall be used only once for 
     purposes of compliance with this section; and
       ``(B) a clean energy credit issued for clean energy 
     generated and sold for resale under a contract in effect on 
     the date of enactment of this section shall be issued to the 
     purchasing electric utility, unless otherwise provided by the 
     contract.
       ``(4) Delegation of market function.--
       ``(A) In general.--In carrying out the program under this 
     subsection, the Secretary may delegate--
       ``(i) to 1 or more appropriate market-making entities, the 
     administration of a national clean energy credit market for 
     purposes of establishing a transparent national market for 
     the sale or trade of clean energy credits; and

[[Page S1198]]

       ``(ii) to appropriate entities, the tracking of dispatch of 
     clean generation.
       ``(B) Administration.--In making a delegation under 
     subparagraph (A)(ii), the Secretary shall ensure that the 
     tracking and reporting of information concerning the dispatch 
     of clean generation is transparent, verifiable, and 
     independent of any generation or load interests subject to an 
     obligation under this section.
       ``(5) Banking of clean energy credits.--Clean energy 
     credits to be used for compliance purposes under subsection 
     (c) shall be valid for the year in which the clean energy 
     credits are issued or in any subsequent calendar year.
       ``(f) Determination of Quantity of Credit.--
       ``(1) In general.--Except as otherwise provided in this 
     subsection, the quantity of clean energy credits issued to 
     each electric utility generating electric energy in the 
     United States from clean energy shall be equal to the product 
     of--
       ``(A) for each generator owned by a utility, the number of 
     megawatt-hours of electric energy sold from that generator by 
     the utility; and
       ``(B) the difference between--
       ``(i) 1.0; and
       ``(ii) the quotient obtained by dividing--

       ``(I) the annual carbon intensity of the generator, as 
     determined in accordance with subsection (g), expressed in 
     metric tons per megawatt-hour; by
       ``(II) 0.82.

       ``(2) Negative credits.--Notwithstanding any other 
     provision of this subsection, the Secretary shall not issue a 
     negative quantity of clean energy credits to any generator.
       ``(3) Qualified combined heat and power.--
       ``(A) In general.--The quantity of clean energy credits 
     issued to an owner of a qualified combined heat and power 
     system in the United States shall be equal to the difference 
     between--
       ``(i) the product obtained by multiplying--

       ``(I) the number of megawatt-hours of electric energy 
     generated by the system; and
       ``(II) the difference between--

       ``(aa) 1.0; and
       ``(bb) the quotient obtained by dividing--
       ``(AA) the annual carbon intensity of the generator, as 
     determined in accordance with subsection (g), expressed in 
     metric tons per megawatt-hour; by
       ``(BB) 0.82; and
       ``(ii) the product obtained by multiplying--

       ``(I) the number of megawatt-hours of electric energy 
     generated by the system that are consumed onsite by the 
     facility; and
       ``(II) the annual target for electric energy sold during a 
     calendar year that is required to be clean energy under 
     subsection (c)(2).

       ``(B) Additional credits.--In addition to credits issued 
     under subparagraph (A), the Secretary shall award clean 
     energy credits to an owner of a qualified heat and power 
     system in the United States for greenhouse gas emissions 
     avoided as a result of the use of a qualified combined heat 
     and power system, rather than a separate thermal source, to 
     meet onsite thermal needs.
       ``(4) Qualified waste-to-energy.--The quantity of clean 
     energy credits issued to an electric utility generating 
     electric energy in the United States from a qualified waste-
     to-energy facility shall be equal to the product obtained by 
     multiplying--
       ``(A) the number of megawatt-hours of electric energy 
     generated by the facility and sold by the utility; and
       ``(B) 1.0.
       ``(g) Determination of Annual Carbon Intensity of 
     Generating Facilities.--
       ``(1) In general.--For purposes of determining the quantity 
     of credits under subsection (f), except as provided in 
     paragraph (2), the Secretary shall determine the annual 
     carbon intensity of each generator by dividing--
       ``(A) the net annual carbon dioxide equivalent emissions of 
     the generator; by
       ``(B) the annual quantity of electricity generated by the 
     generator.
       ``(2) Biomass.--The Secretary shall--
       ``(A) not later than 180 days after the date of enactment 
     of this section, issue interim regulations for determining 
     the carbon intensity based on an initial consideration of the 
     issues to be reported on under subparagraph (B);
       ``(B) not later than 180 days after the date of enactment 
     of this section, enter into an agreement with the National 
     Academy of Sciences under which the Academy shall--
       ``(i) evaluate models and methodologies for quantifying net 
     changes in greenhouse gas emissions associated with 
     generating electric energy from each significant source of 
     qualified renewable biomass, including evaluation of 
     additional sequestration or emissions associated with changes 
     in land use by the production of the biomass; and
       ``(ii) not later than 1 year after the date of enactment of 
     this section, publish a report that includes--

       ``(I) a description of the evaluation required by clause 
     (i); and
       ``(II) recommendations for determining the carbon intensity 
     of electric energy generated from qualified renewable biomass 
     under this section; and

       ``(C) not later than 180 days after the publication of the 
     report under subparagraph (B)(ii), issue regulations for 
     determining the carbon intensity of electric energy generated 
     from qualified renewable biomass that take into account the 
     report.
       ``(3) Consultation.--The Secretary shall consult with--
       ``(A) the Administrator of the Environmental Protection 
     Agency in determining the annual carbon intensity of 
     generating facilities under paragraph (1); and
       ``(B) the Administrator of the Environmental Protection 
     Agency, the Secretary of the Interior, and the Secretary of 
     Agriculture in issuing regulations for determining the carbon 
     intensity of electric energy generated by biomass under 
     paragraph (2)(C).
       ``(h) Civil Penalties.--
       ``(1) In general.--Subject to paragraph (2), an electric 
     utility that fails to meet the requirements of this section 
     shall be subject to a civil penalty in an amount equal to the 
     product obtained by multiplying--
       ``(A) the number of kilowatt-hours of electric energy sold 
     by the utility to electric consumers in violation of 
     subsection (c); and
       ``(B) 200 percent of the value of the alternative 
     compliance payment, as adjusted under subsection (m).
       ``(2) Waivers and mitigation.--
       ``(A) Force majeure.--The Secretary may mitigate or waive a 
     civil penalty under this subsection if the electric utility 
     was unable to comply with an applicable requirement of this 
     section for reasons outside of the reasonable control of the 
     utility.
       ``(B) Reduction for state penalties.--The Secretary shall 
     reduce the amount of a penalty determined under paragraph (1) 
     by the amount paid by the electric utility to a State for 
     failure to comply with the requirement of a State renewable 
     energy program, if the State requirement is more stringent 
     than the applicable requirement of this section.
       ``(3) Procedure for assessing penalty.--The Secretary shall 
     assess a civil penalty under this subsection in accordance 
     with section 333(d) of the Energy Policy and Conservation Act 
     (42 U.S.C. 6303(d)).
       ``(i) Alternative Compliance Payments.--An electric utility 
     may satisfy the requirements of subsection (c), in whole or 
     in part, by submitting in lieu of a clean energy credit 
     issued under this section a payment equal to the amount 
     required under subsection (d)(2), in accordance with such 
     regulations as the Secretary may promulgate.
       ``(j) State Energy Efficiency Funding Program.--
       ``(1) Establishment.--Not later than December 31, 2015, the 
     Secretary shall establish a State energy efficiency funding 
     program.
       ``(2) Funding.--All funds collected by the Secretary as 
     alternative compliance payments under subsection (i), or as 
     civil penalties under subsection (h), shall be used solely to 
     carry out the program under this subsection.
       ``(3) Distribution to states.--
       ``(A) In general.--An amount equal to 75 percent of the 
     funds described in paragraph (2) shall be used by the 
     Secretary, without further appropriation or fiscal year 
     limitation, to provide funds to States for the implementation 
     of State energy efficiency plans under section 362 of the 
     Energy Policy and Conservation Act (42 U.S.C. 6322), in 
     accordance with the proportion of those amounts collected by 
     the Secretary from each State.
       ``(B) Action by states.--A State that receives funds under 
     this paragraph shall maintain such records and evidence of 
     compliance as the Secretary may require.
       ``(4) Guidelines and criteria.--The Secretary may issue 
     such additional guidelines and criteria for the program under 
     this subsection as the Secretary determines to be 
     appropriate.
       ``(k) Exemptions.--
       ``(1) In general.--This section shall not apply during any 
     calendar year to an electric utility that sold less than the 
     applicable quantity described in paragraph (2) of megawatt-
     hours of electric energy to electric consumers during the 
     preceding calendar year.
       ``(2) Applicable quantity.--For purposes of paragraph (1), 
     the applicable quantity is--
       ``(A) in the case of calendar year 2015, 2,000,000;
       ``(B) in the case of calendar year 2016, 1,900,000;
       ``(C) in the case of calendar year 2017, 1,800,000;
       ``(D) in the case of calendar year 2018, 1,700,000;
       ``(E) in the case of calendar year 2019, 1,600,000;
       ``(F) in the case of calendar year 2020, 1,500,000;
       ``(G) in the case of calendar year 2021, 1,400,000;
       ``(H) in the case of calendar year 2022, 1,300,000;
       ``(I) in the case of calendar year 2023, 1,200,000;
       ``(J) in the case of calendar year 2024, 1,100,000; and
       ``(K) in the case of calendar year 2025 and each calendar 
     year thereafter, 1,000,000.
       ``(3) Calculation of electric energy sold.--
       ``(A) Definitions.--In this subsection, the terms 
     `affiliate' and `associate company' have the meanings given 
     the terms in section 1262 of the Energy Policy Act of 2005 
     (42 U.S.C. 16451).
       ``(B) Inclusion.--For purposes of calculating the quantity 
     of electric energy sold by an electric utility under this 
     subsection, the quantity of electric energy sold by an 
     affiliate of the electric utility or an associate company 
     shall be treated as sold by the electric utility.
       ``(l) State Programs.--
       ``(1) Savings provision.--

[[Page S1199]]

       ``(A) In general.--Subject to paragraph (2), nothing in 
     this section affects the authority of a State or a political 
     subdivision of a State to adopt or enforce any law or 
     regulation relating to--
       ``(i) clean or renewable energy; or
       ``(ii) the regulation of an electric utility.
       ``(B) Federal law.--No law or regulation of a State or a 
     political subdivision of a State may relieve an electric 
     utility from compliance with an applicable requirement of 
     this section.
       ``(2) Coordination.--The Secretary, in consultation with 
     States that have clean and renewable energy programs in 
     effect, shall facilitate, to the maximum extent practicable, 
     coordination between the Federal clean energy program under 
     this section and the relevant State clean and renewable 
     energy programs.
       ``(m) Adjustment of Alternative Compliance Payment.--Not 
     later than December 31, 2016, and annually thereafter, the 
     Secretary shall--
       ``(1) increase by 5 percent the rate of the alternative 
     compliance payment under subsection (d)(2); and
       ``(2) additionally adjust that rate for inflation, as the 
     Secretary determines to be necessary.
       ``(n) Report on Clean Energy Resources That Do Not Generate 
     Electric Energy.--
       ``(1) In general.--Not later than 3 years after the date of 
     enactment of this section, the Secretary shall submit to 
     Congress a report examining mechanisms to supplement the 
     standard under this section by addressing clean energy 
     resources that do not generate electric energy but that may 
     substantially reduce electric energy loads, including energy 
     efficiency, biomass converted to thermal energy, geothermal 
     energy collected using heat pumps, thermal energy delivered 
     through district heating systems, and waste heat used as 
     industrial process heat.
       ``(2) Potential integration.--The report under paragraph 
     (1) shall examine the benefits and challenges of integrating 
     the additional clean energy resources into the standard 
     established by this section, including--
       ``(A) the extent to which such an integration would achieve 
     the purposes of this section;
       ``(B) the manner in which a baseline describing the use of 
     the resources could be developed that would ensure that only 
     incremental action that increased the use of the resources 
     received credit; and
       ``(C) the challenges of pricing the resources in a 
     comparable manner between organized markets and vertically 
     integrated markets, including options for the pricing.
       ``(3) Complementary policies.--The report under paragraph 
     (1) shall examine the benefits and challenges of using 
     complementary policies or standards, other than the standard 
     established under this section, to provide effective 
     incentives for using the additional clean energy resources.
       ``(4) Legislative recommendations.--As part of the report 
     under paragraph (1), the Secretary may provide legislative 
     recommendations for changes to the standard established under 
     this section or new complementary policies that would provide 
     effective incentives for using the additional clean energy 
     resources.
       ``(o) Exclusions.--This section does not apply to an 
     electric utility located in the State of Alaska or Hawaii.
       ``(p) Regulations.--Not later than 1 year after the date of 
     enactment of this section, the Secretary shall promulgate 
     regulations to implement this section.

     ``SEC. 611. REPORT ON NATURAL GAS CONSERVATION.

       ``Not later than 2 years after the date of enactment of 
     this section, the Secretary shall submit to Congress a report 
     that--
       ``(1) quantifies the losses of natural gas during the 
     production and transportation of the natural gas; and
       ``(2) makes recommendations, as appropriate, for programs 
     and policies to promote conservation of natural gas for 
     beneficial use.''.
                                 ______