SURGE Act of 2026

Bill Number

H.R. 7729

Origin Chamber

House

Congress

119th Congress, Session 2

Policy Area

Energy

Status

Introduced

Latest Action

2026-02-26: Referred to the House Committee on Energy and Commerce.

Last Updated

2026-03-27T20:51:09Z

AI-Generated Summary

Purpose of the Legislation

The Shared Utility Rewards for Grid Efficiency Act of 2026 (SURGE Act) aims to promote efficiency in the U.S. electric grid by incentivizing utilities to reduce energy losses and costs. It does this by requiring federal regulators to create "shared savings" programs, where utilities can recover a portion of the money saved through efficiency improvements, ultimately lowering costs for consumers while ensuring reliable power delivery.

Key Provisions

• Amendments to the Federal Power Act (Section 219): Updates existing rules to require the Federal Energy Regulatory Commission (FERC) to issue guidelines that include incentives for grid efficiency, such as performance-based measures and shared savings mechanisms (where utilities share verified cost reductions with ratepayers).

• Rulemaking for FERC-Jurisdictional Transmitting Utilities (Section 3):
• FERC must issue a final rule within one year of enactment establishing a shared savings framework for "covered transmitting utilities" (utilities regulated by FERC for rates).
• Defines "qualifying actions" as efficiency improvements that reduce physical energy losses in transmission lines (e.g., replacing old wires with advanced conductors or deploying grid-enhancing technologies like software for better grid control).
• Requires standardized methods for:
• Setting a "baseline performance" (normal energy use without improvements, adjusted for factors like weather or demand changes).
• Calculating and verifying cost savings (using estimates of energy value and independent checks).
• Determining incentives: Utilities can recover 10-60% of savings over 2-5 years, based on risks, benefits (e.g., reduced congestion or emissions), and other factors.
• Utilities must file initial plans and annual reports with FERC, including data verification by independent evaluators.
• FERC adjusts rates to allow recovery of claimed incentives, with reconciliation if overpayments occur (refunds to customers).
• Encourages future expansions to other efficiency actions.

• Guidance for Non-FERC Utilities (Section 4): The Department of Energy (DOE), working with FERC and states, must publish guidance within two years for state-regulated electric utilities. This covers similar shared savings setups tailored to utility types (e.g., those handling generation, transmission, or distribution). Includes methods for baselines, savings calculations, verification, and recovery mechanisms, with updates based on ongoing studies.

• Grant Program for States (Section 5): DOE establishes a grant program within two years to help state regulators develop, implement, and oversee shared savings frameworks. Grants fund planning, tools, regulations, and stakeholder engagement (but not payments to utilities). Recipients report annually; DOE provides technical support and biennial reports to Congress. Funding allocation: Up to 70% for development, at least 30% for implementation, max 5% for federal admin costs.

• Studies on Rate Treatments (Section 6): DOE, with FERC input, conducts studies every five years (first within three years) on inefficiencies from current utility rate structures and alternatives like shared savings, revenue decoupling (separating utility profits from sales volume), or performance scorecards (evaluating utilities on metrics like reliability or emissions). Reports to Congress include findings and recommendations to cut costs, reduce congestion, and boost grid technologies.

• Definitions (Section 7): Clarifies terms like "advanced conductor" (high-performance wires that carry more power or lose less energy), "grid-enhancing technology" (tools to improve grid capacity without new builds), "covered actions" (efficiency steps excluding new construction), and others to ensure consistent application.

Significant Changes to Existing Law

• Expands Section 219 of the Federal Power Act (which previously focused on incentives for reliability and new investments) to explicitly include efficiency improvements and shared savings as recoverable costs.
• Introduces new requirements for FERC rules on performance-based incentives, baseline measurements, and annual reporting—previously, incentives were limited to returns on equity or capital investments.
• Adds a mechanism for rate recovery of shared savings (up to 60% of verified reductions), shifting from traditional cost-plus regulation (where utilities recover all costs plus profit) toward performance-based rewards.
• Creates new DOE roles in guidance and grants for state utilities, which were not previously mandated.

Potential Impacts

• Government Agencies: FERC gains expanded rulemaking duties, potentially increasing workload but enabling more data-driven oversight. DOE takes on guidance development, grant administration, and studies, requiring coordination with national labs and states. This could lead to more uniform national standards while respecting state authority.

• Citizens (Consumers and Ratepayers): Encourages lower electricity bills through verified savings shared via rate adjustments. Promotes grid reliability and resilience, reducing outages or congestion costs. May accelerate adoption of technologies that cut energy waste (e.g., 5-10% of U.S. electricity is lost in transmission), benefiting households and businesses.

• International Relations: No direct impacts; the bill focuses on domestic grid efficiency and does not address cross-border energy trade or foreign policy.

Main Stakeholders Affected

• Transmitting Utilities under FERC (e.g., large interstate grid operators): Must adopt new efficiency actions and reporting to access incentives, potentially boosting profits from savings while facing verification requirements.
• State-Regulated Electric Utilities (e.g., local or vertically integrated companies handling generation, transmission, or distribution): Benefit from DOE guidance and state grants to implement similar programs, encouraging investments in demand reduction or loss-cutting tech.
• State Regulatory Authorities (public utility commissions): Receive grants and tools to oversee frameworks, gaining resources for modernized regulation.
• Consumers and Ratepayers: Primary beneficiaries through cost reductions and improved service reliability.
• Federal Agencies (FERC and DOE): Lead implementation, with input from independent system operators (grid coordinators) and national labs.
• Environmental and Industry Groups: Indirectly affected, as efficiency gains could lower emissions and support clean energy integration without major new infrastructure.

Notable Legal, Constitutional, or Political Implications

• Legal: Strengthens FERC's authority under the Federal Power Act for performance-based regulation, potentially reducing litigation over traditional rate cases by emphasizing verifiable outcomes. Requires independent verification to ensure fairness and prevent over-recovery, aligning with antitrust principles against utility overcharges.

• Constitutional: Respects federalism by limiting FERC to interstate utilities and empowering states via DOE guidance/grants, avoiding preemption of state ratemaking powers under the Commerce Clause.

• Political: Promotes bipartisan goals of energy affordability and grid modernization amid rising demand (e.g., from electrification). Could face pushback from utilities preferring capital-heavy investments, but encourages innovation without mandating spending. Sense-of-Congress provisions signal intent for ongoing expansions, influencing future energy policy debates.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Casten, Sean [D-IL-6]

Recent Actions

• 2026-02-26: Referred to the House Committee on Energy and Commerce.
• 2026-02-26: Introduced in House
• 2026-02-26: Introduced in House

Bill Versions

• Shared Utility Rewards for Grid Efficiency Act of 2026 — issued 2026-02-26 — PDF (31 pages)