‘(a) Statement of Federal Policy- The Federal energy efficiency resource standard established by this section sets nationwide minimum levels of electricity and natural gas savings to be achieved through utility efficiency programs, building energy codes, appliance standards, and related efficiency measures. In light of the cost-effective energy efficiency opportunities that exist across the country in every sector of the economy, retail electricity distributors, retail natural gas distributors, and States should additionally consider energy efficiency as a resource in utility planning and procurement activities and should seek to achieve all energy efficiency that is available at lower cost than energy supply options.
‘(1) AFFILIATE- The term ‘affiliate’ when used in relation to a person, means another person which owns or controls, is owned or controlled by, or is under common ownership control with, such person, as determined under regulations promulgated by the Secretary.
‘(2) ASHRAE, ANSI, AND IESNA- The terms ‘ASHRAE’, ‘ANSI’, and ‘IESNA’ mean the American Society of Heating, Refrigerating and Air Conditioning Engineers, the American National Standards Institute, and the Illuminating Engineering Society of North America, respectively.
‘(3) BASE QUANTITY- The term ‘base quantity’, with respect to a retail electricity distributor or retail natural gas distributor, means, for each year for which a performance standard is established under subsection (d), the average annual quantity of electricity or natural gas delivered by the retail electricity distributor or retail natural gas distributor to retail customers during the 2 calendar years immediately preceding such year. In determining the base quantity of a retail natural gas distributor, natural gas delivered for purposes of electricity generation shall be excluded.
‘(4) CHP SAVINGS- The term ‘CHP savings’ means--
‘(A) CHP system savings from a combined heat and power system that commences operation after the date of enactment of this section; and
‘(B) the increase in CHP system savings from upgrading or replacing, after the date of enactment of this section, a combined heat and power system that commenced operation on or before the date of enactment of this section.
‘(5) CHP SYSTEM SAVINGS- The term ‘CHP system savings’ means the electric output, and the electricity saved due to the mechanical output, of a combined heat and power system, adjusted to reflect any increase in fuel consumption by that system as compared to the fuel that would have been required to produce an equivalent useful thermal energy output in a separate thermal-only system, as determined in accordance with regulations promulgated by the Secretary.
‘(6) CODES AND STANDARDS SAVINGS-
‘(A) IN GENERAL- The term ‘codes and standards savings’ means a reduction in end-use electricity or natural gas consumption in a retail electricity distributor or a retail natural gas distributor’s service territory as a result of the adoption and implementation, after the date of enactment of this section, of new or revised appliance and equipment efficiency standards or building energy codes.
‘(B) BASELINES- In calculating codes and standards savings--
‘(i) the baseline for calculating savings from building codes shall be the 2006 International Energy Conservation Code for residential buildings and the ASHRAE/ANSI/IESNA Standard 90.1-2004 for commercial buildings, or the relevant State building code in effect on date of enactment of this section, whichever is more stringent; and
‘(ii) the baseline for calculating savings from appliance standards shall be the average efficiency of new appliances in the relevant category or categories prior to adoption and implementation of the new standard.
‘(7) 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 Secretary may promulgate by regulation; and
‘(B) the net wholesale sales of electricity by the facility will not exceed 50 percent of total annual electric generation by the facility.
‘(8) COST-EFFECTIVE- The term ‘cost-effective’, with respect to an energy efficiency measure, means that the measure achieves a net present value of economic benefits over the life of the measure, both directly to the energy consumer and to the economy, that is greater than the net present value of the cost of the measure over the life of the measure, both directly to the energy consumer and to the economy.
‘(9) CUSTOMER FACILITY SAVINGS- The term ‘customer facility savings’ means a reduction in end-use electricity or natural gas consumption (including recycled energy savings) at a facility of an end-use consumer of electricity or natural gas served by a retail electricity distributor or natural gas distributor, as compared to--
‘(A) in the case of 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 (which shall not be less than 1 year); or
‘(C) in the case of new equipment, regardless of whether the new equipment replaces existing equipment at the end of the useful life of the existing equipment, consumption by new equipment of average efficiency of the same equipment type, provided that customer savings under this subparagraph shall not be counted towards customer savings under subparagraph (A) or (B).
‘(10) ELECTRICITY SAVINGS- The term ‘electricity savings’ means reductions in electricity consumption achieved through measures implemented after the date of enactment of this section, as determined in accordance with regulations promulgated by the Secretary, 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 (as defined in regulations to be promulgated by the Secretary);
‘(C) CHP savings; and
‘(D) codes and standards savings of electricity.
‘(11) NATURAL GAS SAVINGS- The term ‘natural gas savings’ means reductions in natural gas consumption from measures implemented after the date of enactment of this section, as determined in accordance with regulations promulgated by the Secretary, limited to--
‘(A) customer facility savings of natural gas, adjusted to reflect any associated increase in electricity consumption or consumption of other fuels at the facility;
‘(B) reductions in leakage, operational losses, and consumption of natural gas fuel to operate a gas distribution system, achieved by a retail natural gas distributor, as compared to similar leakage, losses, and consumption during a base period (which shall not be less than 1 year); and
‘(C) codes and standards savings of natural gas.
‘(12) POWER POOL- The term ‘power pool’ means an association of 2 or more interconnected electric systems that is recognized by the Commission as having an agreement to coordinate operations and planning for improved reliability and efficiencies, including a Regional Transmission Organization or an Independent System Operator.
‘(13) RECYCLED ENERGY SAVINGS- The term ‘recycled energy savings’ means a reduction in electricity or natural gas consumption that results from a modification of an industrial or commercial system that commenced operation before the date of enactment of this section, in order to recapture electrical, mechanical, or thermal energy that would otherwise be wasted, as determined in accordance with regulations promulgated by the Secretary.
‘(14) REPORTING PERIOD- The term ‘reporting period’ means--
‘(A) calendar year 2012; and
‘(B) each successive 2-calendar-year period thereafter.
‘(15) RETAIL ELECTRICITY DISTRIBUTOR-
‘(A) IN GENERAL- The term ‘retail electricity distributor’ means, for any given calendar year, an electric utility that owns or operates an electric distribution facility and, using the facility, delivered not less than 1,500,000 megawatt-hours of electric energy to electric consumers for purposes other than resale during the most recent 2-calendar-year period for which data are available.
‘(B) INCLUSIONS AND LIMITATIONS- For purposes of determining whether an electric utility qualifies as a retail electricity distributor under subparagraph (A)--
‘(i) deliveries by any affiliate of an electric utility to electric consumers for purposes other than resale shall be considered to be deliveries by such electric utility; and
‘(ii) deliveries by any electric utility to a lessee, tenant, or affiliate of such electric utility shall not be treated as deliveries to electric consumers.
‘(16) RETAIL NATURAL GAS DISTRIBUTOR-
‘(A) IN GENERAL- The term ‘retail natural gas distributor’ means, for any given calendar year, a local distribution company, as that term is defined in section 2(17) of the Natural Gas Policy Act of 1978 (15 U.S.C. 3301(17)), that delivered to natural gas consumers more than 5,000,000,000 cubic feet of natural gas during the most recent 2-calendar-year period for which data are available.
‘(B) INCLUSIONS AND LIMITATIONS- For purposes of determining whether a person qualifies as a retail natural gas distributor under subparagraph (A)--
‘(i) deliveries of natural gas by any affiliate of a local distribution company to consumers for purposes other than resale shall be considered to be deliveries by such local distribution company; and
‘(ii) deliveries of natural gas to a lessee, tenant, or affiliate of a local distribution company shall not be treated as deliveries to natural gas consumers.
‘(17) 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 non-profit entity that is capable of providing electricity savings or natural gas savings in accordance with the requirements of subsections (e) and (f).