ENCOURAGEMENT OF INVESTMENTS IN CONSERVATION AND ENERGY EFFICIENCY BY GAS UTILITIES.

SEC. 115. ENCOURAGEMENT OF INVESTMENTS IN CONSERVATION AND ENERGY EFFICIENCY BY GAS UTILITIES. (a) Definitions.— Section 302 of the Public Utility Regulatory Policies Act of 1978 (15 U.S.C. 3202) is amended by adding the following at the end thereof: “(9) The term ‘integrated resource planning’ means, in the case of a gas utility, planning by the use of any standard, regulation, practice, or policy to undertake a systematic comparison between demand-side management measures and the supply of gas by a gas utility to minimize life-cycle costs of adequate and reliable utility services to gas consumers. Integrated resource planning shall take into account necessary features for system operation such as diversity, reliability, dispatchability, and other factors of risk and shall treat demand and supply to gas consumers on a consistent and integrated basis. “(10) The term ‘demand-side management’ includes energy conservation, energy efficiency, and load management techniques.”. (b) In General.— Section 303(b) of the Public Utility Regulatory Policies Act of 1978 (15 U.S.C. 3202) is amended by inserting at the end the following new paragraphs: 106 STAT. 2804 “(3) Integrated resource planning.— Each gas utility shall employ, in order to provide adequate and reliable service to its gas customers at the lowest system cost. All plans or filings of a State regulated gas utility before a State regulatory authority to meet the requirements of this paragraph shall (A) be updated on a regular basis, (B) provide the opportunity for public participation and comment, (C) provide for methods of validating predicted performance, and (D) contain a requirement that the plan be implemented after approval of the State regulatory authority. Subsection (c) shall not apply to this paragraph to the extent that it could be construed to require the State regulatory authority to extend the record of a State proceeding in submitting reports to the Federal Government. “(4) Investments in conservation and demand management.— The rates charged by any State regulated gas utility shall be such that the utility’s prudent investments in, and expenditures for, energy conservation and load shifting programs and for other demand-side management measures which are consistent with the findings and purposes of the Energy Policy Act of 1992 are at least as profitable (taking into account the income lost due to reduced sales resulting from such programs) as prudent investments in, and expenditures for, the acquisition or construction of supplies and facilities. This objective requires that (A) regulators link the utility’s net revenues, at least in part, to the utility’s performance in implementing cost-effective programs promoted by this section; and (B) regulators ensure that, for purposes of recovering fixed costs, including its authorized return, the utility’s performance is not affected by reductions in its retail sales volumes.”. (c) Impact on Small Business.— Section 303 of such Act is amended by inserting the following new subsection at the end thereof: “(d) Small Business Impacts.— If a State regulatory authority implements a standard established by subsection (b) (3) or (4), such authority shall— “(1) consider the impact that implementation of such standard would have on small businesses engaged in the design, sale, supply, installation, or servicing of energy conservation, energy efficiency, or other demand-side management measures, and “2) implement such standard so as to assure that utility actions would not provide such utilities with unfair competitive advantages over such small businesses.”. (d) Effective Date.— Section 303(a) of such Act is amended by inserting “(or after the enactment of the Energy Policy Act of 1992 in the case of standards under paragraphs (3), and (4) of subsection (b))” after “Act” and by striking out “standard established by subsection (b)(2)” in paragraph (2) and inserting “standards established by paragraphs (2), (3) and (4) of subsection (b)”. (e) Report.— The report under section 111(e) of this Act transmitted by the Secretary of Energy to the President and to the Congress shall contain a survey of all State laws, regulations, practices, and policies under which State regulatory authorities implement the provisions of paragraphs (3) and (4) of section 303(b) of the Public Utility Regulatory Policies Act of 1978. The report shall include an analysis, prepared in conjunction with the Federal Trade Commission, of the competitive impact of implementation 106 STAT. 2805of energy conservation, energy efficiency, and other demand side management programs by gas utilities on small businesses engaged in the design, sale, supply, installation, or servicing of similar energy conservation, energy efficiency, or other demand-side management measures and whether any unfair, deceptive, or predatory acts or practices exist, or are likely to exist, from implementation of such programs.