To amend the Public Utility Regulatory Policies Act of 1978 to provide for a Federal renewable portfolio standard.

February 17, 2005

Mr. JEFFORDS (for himself, Ms. SNOWE, Ms. CANTWELL, Mrs. FEINSTEIN, Mr. DURBIN, Mr. KENNEDY, Mr. REED, Mr. KERRY, Mr. DODD, Mrs. BOXER, and Mr. LAUTENBERG) introduced the following bill; which was read twice and referred to the Committee on Energy and Natural Resources

To amend the Public Utility Regulatory Policies Act of 1978 to provide for a Federal renewable portfolio standard.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the `Renewable Energy Investment Act of 2005'.

SEC. 2. RENEWABLE PORTFOLIO 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. 606. FEDERAL RENEWABLE PORTFOLIO STANDARD.

`(a) DEFINITIONS- In this section:

`(1) BIOMASS-

`(A) IN GENERAL- The term `biomass' means--

`(i) organic material from a plant that is planted for the purpose of being used to produce energy;

`(ii) nonhazardous, cellulosic or agricultural waste material that is segregated from other waste materials and is derived from--

`(I) a forest-related resource, including--

`(aa) mill and harvesting residue;

`(bb) precommercial thinnings;

`(cc) slash; and

`(dd) brush;

`(II) agricultural resources, including--

`(aa) orchard tree crops;

`(bb) vineyards;

`(cc) grains;

`(dd) legumes;

`(ee) sugar; and

`(ff) other crop by-products or residues; or

`(III) miscellaneous waste such as--

`(aa) waste pallet;

`(bb) crate; and

`(cc) landscape or right-of-way tree trimmings; and

`(iii) animal waste that is converted to a fuel rather than directly combusted, the residue of which is converted to a biological fertilizer, oil, or activated carbon.

`(B) EXCLUSIONS- The term `biomass' shall not include--

`(i) municipal solid waste that is incinerated;

`(ii) recyclable post-consumer waste paper;

`(iii) painted, treated, or pressurized wood;

`(iv) wood contaminated with plastics or metals; or

`(v) tires.

`(2) DISTRIBUTED GENERATION- The term `distributed generation' means reduced electricity consumption from the electric grid due to use by a customer of renewable energy generated at a customer site.

`(3) INCREMENTAL HYDROPOWER- The term `incremental hydropower' means additional generation achieved from increased efficiency after January 1, 2005, at a hydroelectric dam that was placed in service before January 1, 2005.

`(4) LANDFILL GAS- The term `landfill gas' means gas generated from the decomposition of household solid waste, commercial solid waste, and industrial solid waste disposed of in a municipal solid waste landfill unit (as those terms are defined in regulations promulgated under subtitle D of the Solid Waste Disposal Act (42 U.S.C. 6941 et seq.)).

`(5) RENEWABLE ENERGY- The term `renewable energy' means electricity generated from

`(A) a renewable energy source; or

`(B) hydrogen that is produced from a renewable energy source.

`(6) RENEWABLE ENERGY SOURCE- The term `renewable energy source' means--

`(A) wind;

`(B) ocean waves;

`(C) biomass;

`(D) solar;

`(E) landfill gas;

`(F) incremental hydropower; or

`(G) geothermal.

`(7) RETAIL ELECTRIC SUPPLIER- The term `retail electric supplier' means a person or entity that sells retail electricity to consumers, and which sold not less than 500,000 megawatt-hours of electric energy to consumers for purposes other than resale during the preceding calendar year.

`(8) SECRETARY- The term `Secretary' means the Secretary of Energy.

`(b) RENEWABLE ENERGY REQUIREMENTS-

`(1) IN GENERAL- For each calendar year beginning in Calendar year 2006, each retail electric supplier shall submit to the Secretary, not later than April 30 of each year, renewable energy credits in an amount equal to the required annual percentage of the retail electric supplier's total amount of kilowatt-hours of non-hydropower (excluding incremental hydropower) electricity sold to retail consumers during the previous calendar year.

`(2) CARRYOVER- A renewable energy credit for any year that is not used to satisfy the minimum requirement for that year may be carried over for use within the next two years.

`(c) REQUIRED ANNUAL PERCENTAGE- Of the total amount of non-hydropower (excluding incremental hydropower) electricity sold by each retail electric supplier during a calendar year, the amount generated by renewable energy sources shall be not less than the percentage specified below:

--5

--10

--15

--20.

`(d) SUBMISSION OF RENEWABLE ENERGY CREDITS-

`(1) IN GENERAL- To meet the requirements under subsection (b), a retail electric supplier shall submit to the Secretary either--

`(A) renewable energy credits issued to the retail electric supplier under subsection (f);

`(B) renewable energy credits obtained by purchase or exchange under subsection (g);

`(C) renewable energy credits purchased from the United States under subsection (h); or

`(D) any combination of credits under subsections (f), (g) or (h).

`(2) PROHIBITION ON DOUBLE COUNTING- A credit may be counted toward compliance with subsection (b) only once.

`(e) RENEWABLE ENERGY CREDIT PROGRAM- The Secretary shall establish, not later than 1 year after the date of enactment of this Act, a program to issue, monitor the sale or exchange of, and track, renewable energy credits.

`(f) ISSUANCE OF RENEWABLE ENERGY CREDITS-

`(1) IN GENERAL- Under the program established in subsection (e), an entity that generates electric energy through the use of a renewable energy resource may apply to the Secretary for the issuance of renewable energy credits.

`(2) APPLICATION- An application for the issuance of renewable energy credits shall indicate--

`(A) the type of renewable energy resource used to produce the electric energy;

`(B) the State in which the electric energy was produced; and

`(C) any other information the Secretary determines appropriate.

`(3) CREDIT VALUE- Except as provided in subparagraph (4), the Secretary shall issue to an entity applying under this subsection 1 renewable energy credit for each kilowatt-hour of renewable energy generated in any State from the date of enactment of this Act and in each subsequent calendar year.

`(4) CREDIT VALUE FOR DISTRIBUTED GENERATION- The Secretary shall issue 3 renewable energy credits for each kilowatt-hour of distributed generation.

`(5) VESTING- A renewable energy credit will vest with the owner of the system or facility that generates the renewable energy unless such owner explicitly transfers the credit.

`(6) CREDIT ELIGIBILITY- To be eligible for a renewable energy credit, the unit of electricity generated through the use of a renewable energy resource shall be sold for retail consumption or used by the generator. If both a renewable energy resource and a non-renewable energy resource are used to generate the electric energy, the Secretary shall issue renewable energy credits based on the proportion of the renewable energy resource used.

`(7) IDENTIFYING CREDITS- The Secretary shall identify renewable energy credits by the type and date of generation.

`(8) SALE UNDER PURPA CONTRACT- When a generator sells electric energy generated through the use of a renewable energy resource to a retail electric supplier under a contract subject to section 210 of the Public Utilities Regulatory Policies Act of 1978 (16 U.S.C. 824a-3), the retail electric supplier is treated as the generator of the electric energy for the purposes of this Act for the duration of the contract.

`(g) SALE OR EXCHANGE OF RENEWABLE ENERGY CREDITS- A renewable energy credit may be sold or exchanged by the entity issued the renewable energy credit or by any other entity that acquires the renewable energy credit. Credits may be sold or exchanged in any manner not in conflict with existing law, including on the spot market or by contractual arrangements of any duration.

`(h) PURCHASE FROM THE UNITED STATES- The Secretary shall offer renewable energy credits for sale at the lesser of three cents per kilowatt-hour or 110 percent of the average market value of credits for the applicable compliance period. On January 1 of each year following calendar year 2006, the Secretary shall adjust for inflation the price charged per credit for such calendar year.

`(i) STATE PROGRAMS- Nothing in this section shall preclude any State from requiring additional renewable energy generation in the State under any renewable energy program conducted by the State.

`(j) CONSUMER ALLOCATION- The rates charged to classes of consumers by a retail electric supplier shall reflect a proportional percentage of the cost of generating or acquiring the required annual percentage of renewable energy under subsection (b). A retail electric supplier shall not represent to any customer or prospective customer that any product contains more than the percentage of eligible resources if the additional amount of eligible resources is being used to satisfy the renewable generation requirement under subsection (b).

`(k) ENFORCEMENT- A retail electric supplier that does not submit renewable energy credits as required under subsection (b) shall be liable for the payment of a civil penalty. That penalty shall be calculated on the basis of the number of renewable energy credits not submitted, multiplied by the lesser of 4.5 cents or 300 percent of the average market value of credits for the compliance period.

`(l) INFORMATION COLLECTION- The Secretary may collect the information necessary to verify and audit--

`(1) the annual electric energy generation and renewable energy generation of any entity applying for renewable energy credits under this section;

`(2) the validity of renewable energy credits submitted by a retail electric supplier to the Secretary; and

`(3) the quantity of electricity sales of all retail electric suppliers.

`(m) VOLUNTARY PARTICIPATION- The Secretary may issue a renewable energy credit pursuant to subsection (f) to any entity not subject to the requirements of this Act only if the entity applying for such credit meets the terms and conditions of this Act to the same extent as entities subject to this Act.

`(n) STATE RENEWABLE ENERGY GRANT PROGRAM-

`(1) DISTRIBUTION TO STATES- The Secretary shall distribute amounts received from sales under subsection (h) and from amounts received under subsection (k) to States to be used for the purposes of this section.

`(2) REGIONAL EQUITY PROGRAM-

`(A) ESTABLISHMENT OF PROGRAM- Within 1 year from the date of enactment of this Act, the Secretary shall establish a program to promote renewable energy production and use consistent with the purposes of this section.

`(B) ELIGIBILITY- The Secretary shall make funds available under this section to State energy agencies for grant programs for--

`(i) renewable energy research and development;

`(ii) loan guarantees to encourage construction of renewable energy facilities;

`(iii) consumer rebate or other programs to offset costs of small residential or small commercial renewable energy systems including solar hot water; or

`(iv) promoting distributed generation.

`(3) ALLOCATION PREFERENCES- In allocating funds under the program, the Secretary shall give preference to--

`(A) States in regions which have a disproportionately small share of economically sustainable renewable energy generation capacity; and

`(B) State grant programs most likely to stimulate or enhance innovative renewable energy technologies.'.

END