81R28414 E
By: Anchia, Farrar H.B. No. 280
Substitute the following for H.B. No. 280:
By: Strama C.S.H.B. No. 280
A BILL TO BE ENTITLED
AN ACT
relating to energy efficiency goals and programs and demand
reduction targets; creating an office of energy efficiency
deployment in the state energy conservation office.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 39.905, Utilities Code, is amended by
amending Subsections (a), (b), and (d) and adding Subsections
(a-1), (a-2), (b-5), (d-1), (d-2), (d-3), (e-1), and (h) to read as
follows:
(a) It is the goal of the legislature that:
(1) electric utilities will administer energy
efficiency incentive programs in a market-neutral,
nondiscriminatory manner but will not offer underlying competitive
services;
(2) electric utilities will assist in building an
infrastructure of trained and qualified energy service providers
that will allow and encourage the participation of retail electric
providers in the delivery of services and that will ensure that all
customers, in all customer classes, will have a choice of and access
to energy efficiency alternatives and other choices from the
market, including demand-side renewable energy systems, that allow
each customer to reduce energy consumption, peak demand, or energy
costs;
(3) except as provided by Subsection (b)(8), each
electric utility annually will provide, through a cost-effective
portfolio of market-based standard offer programs or limited,
targeted, market-transformation programs, incentives sufficient
for retail electric providers and competitive energy service
providers to acquire additional [cost-effective] energy efficiency
for [residential and commercial] customers other than customers who
operate a transmission-level industrial facility, equivalent to at
least:
(A) 30 [10] percent of the electric utility's
annual growth in demand, not including demand from
transmission-level industrial facilities, [of residential and
commercial customers] by January 1, 2012 [December 31, 2007];
(B) one-half of one [15] percent of the electric
utility's peak [annual growth in] demand, not including demand from
transmission-level industrial facilities, [of residential and
commercial customers] by January 1, 2013; and [December 31, 2008,
provided that the electric utility's program expenditures for 2008
funding may not be greater than 75 percent above the utility's
program budget for 2007 for residential and commercial customers,
as included in the April 1, 2006, filing; and
[(C) 20 percent of the electric utility's annual
growth in demand of residential and commercial customers by
December 31, 2009, provided that the electric utility's program
expenditures for 2009 funding may not be greater than 150 percent
above the utility's program budget for 2007 for residential and
commercial customers, as included in the April 1, 2006, filing;]
(C) one percent of the electric utility's peak
demand, not including demand from transmission-level industrial
facilities, by January 1, 2016;
(4) each electric utility in the ERCOT region shall
create specific programs sufficient to [use its best efforts to
encourage and] facilitate the involvement of the region's retail
electric providers in the widespread delivery of efficiency
programs and programs for demand-side renewable energy systems
[demand response programs] under this section;
(5) retail electric providers in the ERCOT region, and
electric utilities outside of the ERCOT region, shall provide
customers with energy efficiency educational materials; [and]
(6) notwithstanding Subsection (a)(3), electric
utilities shall continue to make available, at 2007 funding and
participation levels, any load management standard offer programs
developed for industrial customers and implemented prior to May 1,
2007;
(7) electric utilities will make their best efforts to
ensure continuity in funding for market-based standard offer
programs with proven demand at levels consistent with that demand;
(8) a customer who participates in a standard offer
load management or demand response program is not precluded from
participating in other load management or demand response programs
during different intervals; and
(9) for an electric utility operating solely outside
of ERCOT in areas of this state that were included in the Western
Electricity Coordinating Council on January 1, 2009, the utility
may:
(A) continue to provide standard offer programs,
limited and targeted market transformation programs, or programs
that address the major barriers to energy efficiency as required by
Subdivision (3); or
(B) provide energy efficiency programs and
measures directly to a class of customers.
(a-1) The commission annually shall compute the sum of all
measurable and verifiable demand response and load management
capacity independently implemented by electric utilities, retail
electric providers, and the independent organization certified
under Section 39.151, including programs used to shift load
off-peak or reduce local or systemwide peak demand. The commission
is not required to act under Subsection (a-2) if the quantity of
load management and demand response capacity, measured as a
percentage of statewide peak demand, and excluding any reduction
resulting from a program in existence on January 1, 2009, exceeds:
(1) one percent by December 31, 2012;
(2) two percent by December 31, 2014; and
(3) three percent by December 31, 2016.
(a-2) Except as provided by Subsection (a-1), the
commission, in cooperation with the independent organization
certified under Section 39.151, shall design new demand response
and load management programs, or expand existing programs,
including peak load management programs and programs that are
designed to enhance the reliability of the grid. Programs adopted
under this subsection must be designed to:
(1) achieve cost savings for consumers;
(2) ensure that residential elderly customers,
critical care residential customers, and low-income residential
customers do not experience harmful health effects from the
programs; and
(3) ensure that benefits provided by the utility are
passed through to the participating customer.
(b) Subject to the limitations of Subsection (b-5), the
[The] commission shall provide oversight and adopt rules and
procedures to ensure that the utilities can achieve the goal of this
section, including:
(1) establishing an energy efficiency cost recovery
factor for ensuring timely and reasonable cost recovery for utility
expenditures made to satisfy the goal of this section;
(2) establishing an incentive under Section 36.204 to
reward utilities administering programs under this section that
exceed the minimum goals established by this section;
(3) providing a utility that is unable to establish an
energy efficiency cost recovery factor in a timely manner due to a
rate freeze with a mechanism to enable the utility to:
(A) defer the costs of complying with this
section; and
(B) recover the deferred costs through an energy
efficiency cost recovery factor on the expiration of the rate
freeze period;
(4) ensuring that the costs associated with programs
provided under this section are borne by the customer classes that
receive the services under the programs; [and]
(5) ensuring that programs are implemented in a manner
in which program incentives are passed on to end-use customers
through rebates, discounts on products and services, and other
direct benefits that reduce the costs of the products and services
to the end-use customer; [the program rules encourage the value of
the incentives to be passed on to the end-use customer]
(6) ensuring that standard offer programs operate at a
scale sufficient to ensure that all eligible customers have access
to the programs and program benefits under this section;
(7) establishing a minimum standard offer payment
available to all eligible customers that may be reduced by the
amount of other available state incentives equal to at least 70
percent of avoided cost as determined by the commission for the
installation of demand-side renewable energy systems;
(8) on application by a utility, and when considered
necessary by the commission, increasing or decreasing the demand
reduction goals under Subsection (a) based on each utility's
capacity to implement efficiency measures and demand response
programs, and providing incentives under Section 36.204 to reward
utilities administering programs under this section that exceed the
minimum goals established under this section;
(9) without compromising the ability to achieve
statewide energy efficiency goals, developing different standards
for program offerings in remote regions of this state and for
program offerings in regions of this state where the demand for
energy efficiency services exceeds the local utilities' capacity to
provide them, to allow a utility to partner with local governments
and community organizations to provide energy efficiency services;
and
(10) establishing standards for consumer disclosures
by energy services companies that include the expected reduction of
energy consumption, the anticipated payback period, and disclosure
of any incentive received from the energy service provider from the
state or federal government.
(b-5) Notwithstanding any other provision of this title,
the average of the aggregate cost for programs under this section
for individual utilities located in areas in which customer choice
has been introduced may not exceed $0.0010 per kilowatt hour for
nontransmission level customers in any calendar year, regardless of
whether the costs:
(1) are part of the utility's energy efficiency cost
recovery factor under this section; or
(2) are included in the utility's most recent base rate
case.
(d) The commission shall establish a procedure for
reviewing and evaluating market-transformation program options
described by this section [subsection] and other options. A
market-transformation program that is launched as a pilot program
may be continued for more than three years only if the commission
determines that the pilot program is an appropriate means of
addressing special market barriers that prevent or inhibit the
measure or behavior addressed by the pilot program from being
delivered or adopted through normal market channels, under the
electric utility's standard offer programs [In evaluating program
options, the commission may consider the ability of a program
option to reduce costs to customers through reduced demand, energy
savings, and relief of congestion. Utilities may choose to
implement any program option approved by the commission after its
evaluation in order to satisfy the goal in Subsection (a),
including:
[(1) energy-smart schools;
[(2) appliance retirement and recycling;
[(3) air conditioning system tune-ups;
[(4) the use of trees or other landscaping for energy
efficiency;
[(5) customer energy management and demand response
programs;
[(6) high performance residential and commercial
buildings that will achieve the levels of energy efficiency
sufficient to qualify those buildings for federal tax incentives;
[(7) programs for customers who rent or lease their
residence or commercial space;
[(8) programs providing energy monitoring equipment
to customers that enable a customer to better understand the
amount, price, and time of the customer's energy use;
[(9) energy audit programs for owners and other
residents of single-family or multifamily residences and for small
commercial customers;
[(10) net-zero energy new home programs;
[(11) solar thermal or solar electric programs; and
[(12) programs for using windows and other glazing
systems, glass doors, and skylights in residential and commercial
buildings that reduce solar gain by at least 30 percent from the
level established for the federal Energy Star windows program].
(d-1) In addition to the market-transformation programs
described by Subsection (d), the commission may establish, and if
established, each electric utility may implement,
market-transformation incentive programs that:
(1) encourage the use of new building technologies and
construction practices that are anticipated to be included in a new
edition of the International Residential Code or International
Energy Conservation Code;
(2) offer incentives for a building that meets federal
Energy Star standards or exceeds by at least 15 percent the energy
conservation standards of the most current edition of the
International Residential Code or International Energy
Conservation Code;
(3) offer increased incentives for a building that
exceeds by at least 30 percent the energy conservation standards of
the most current edition of the International Residential Code or
International Energy Conservation Code; and
(4) encourage the testing of new building technologies
and construction practices that integrate renewable energy into
building designs.
(d-2) Each electric utility shall administer an energy
efficiency program designed to also meet an energy savings goal
calculated from its demand savings goal, using a 25 percent
capacity factor. For purposes of this subsection, "capacity
factor" is defined as the ratio of the utility's annual energy
savings goal, in kilowatt hours, to the peak demand goal for the
year, in kilowatts, multiplied by the number of hours in the year.
(d-3) A utility may work with municipalities or other
governmental entities to establish building energy codes that
promote greater energy efficiency than the minimum standards
required by state or local law. If a utility and governmental
entity develop a building energy code under this subsection, the
utility may count not more than 50 percent of the savings in peak
demand and energy savings that result in the first 12 months after
the code is implemented toward the utility's goal for energy
efficiency.
(e-1) The commission shall exempt costs related to
marketing, information dissemination, and training from the
requirements of Subsection (e).
(h) In this section, "demand-side renewable energy system"
means an energy generation system that:
(1) uses distributed renewable generation, as defined
by Section 39.916; or
(2) reduces the need for energy consumption by using a
renewable energy technology or natural mechanism of the
environment, including a geothermal heat pump or solar water
heater.
SECTION 2. Chapter 447, Government Code, is amended by
adding Section 447.0025 to read as follows:
Sec. 447.0025. OFFICE OF ENERGY EFFICIENCY DEPLOYMENT. (a)
The office of energy efficiency deployment is created in the state
energy conservation office.
(b) The office of energy efficiency deployment shall design
and implement a statewide campaign to educate consumers, utilities,
and public entities about, and to promote the use of, energy
efficiency and demand response programs available in the state.
The office of energy efficiency deployment and the state energy
conservation office may enter into contracts for professional
services to carry out this statewide campaign.
(c) In designing and implementing a campaign under
Subsection (b), the office of energy efficiency deployment shall
collaborate with retail electric providers, transmission and
distribution utilities, and energy service providers.
SECTION 3. (a) The Public Utility Commission of Texas shall
conduct a study paid for by electric utilities regarding the
feasibility of mechanisms to decouple electric utility revenues and
earnings from the amount of electricity consumed by utility
customers so that investor-owned electric utilities, electric
transmission and distribution utilities, municipally owned
electric utilities, and electric cooperatives may prevent
fluctuations in retail electric energy consumption from affecting
the ability of those types of utilities to recover fixed costs of
service that do not ordinarily vary directly with changes in
electric energy consumption or sales volume.
(b) The study must address:
(1) disincentives to the promotion of efficient use of
electricity by better practices and better technology, including
concerns regarding:
(A) a utility's lost revenues from electricity
sales that may result from energy efficiency improvements or energy
saving practices that reduce electricity consumption; and
(B) a utility's recovery of the utility's costs
for programs promoting electric energy efficiency; and
(2) the effects of decoupling electric utility
revenues and earnings from the amount of electricity consumed by
customers, including the effect decoupling would have on low-income
customers.
(c) In conducting the study, the Public Utility Commission
of Texas may consider and evaluate mechanisms proposed or applied
in other states for:
(1) allowing rates of return on energy efficiency
investments in a manner like those for other capital investments;
(2) providing an increased rate of return on overall
investments or on energy efficiency investments;
(3) providing financial incentives for meeting energy
efficiency targets; and
(4) recovering energy efficiency program costs.
(d) The study may not be performed by a person:
(1) who performs services for an electric utility;
(2) who has performed services for an electric utility
in the two years before the study begins; or
(3) who is in the process of bidding to perform
services for an electric utility at the time the study begins.
(e) The Public Utility Commission of Texas shall report the
conclusions of the study to the lieutenant governor, the speaker of
the house of representatives, and each committee of the 82nd
Legislature that has jurisdiction over electric utilities.
(f) The report must:
(1) include recommendations tailored by category to
investor-owned electric utilities, electric transmission and
distribution utilities, municipally owned electric utilities, and
electric cooperatives;
(2) include recommendations on the use of a credit
trading system to achieve increased energy efficiency; and
(3) state:
(A) whether decoupling will result in an increase
in the installation of energy efficiency measures by consumers;
(B) whether decoupling will result in higher or
lower energy bills for consumers;
(C) whether decoupling will result in higher or
lower electricity rates;
(D) whether decoupling will result in lower risk
to electric utilities; and
(E) whether electric utility rates of return
should be reduced as a result of decoupling.
(g) The report and recommendations must be delivered not
later than January 31, 2011, and must contain specific
recommendations regarding transmission and distribution utility
revenues and earnings in relation to electric energy efficiency,
including legislative proposals.
SECTION 4. (a) The Public Utility Commission of Texas shall
conduct a study paid for by electric utilities regarding the
programs offered under Section 39.905, Utilities Code. The study
must address:
(1) the effectiveness of the programs required by
Section 39.905, Utilities Code, and whether the cost caps described
by Subsection (b-5) of that section should be revised;
(2) the feasibility of increasing existing energy
efficiency efforts to achieve a two percent reduction of electric
utility peak demand, not including demand from transmission level
industrial facilities, not later than January 1, 2021;
(3) an assessment of the cost impact, by customer
class, on a dollar per kilowatt hour basis, necessary to achieve:
(A) a one percent reduction in electric utility
peak demand, not including demand from transmission level
customers, not later than January 1, 2016; and
(B) a two percent reduction in electric utility
peak demand, not including demand from transmission level
customers, not later than January 1, 2021;
(4) whether demand response and load management
programs designed under Sections 39.905(a-1) and (a-2), Utilities
Code, will result in a reduction of statewide peak demand of four
percent not later than January 1, 2019, and five percent not later
than January 1, 2021;
(5) the cost impact, by customer class on a dollar per
kilowatt hour basis, of demand response and load management
programs designed under Sections 39.905(a-1) and (a-2), Utilities
Code; and
(6) the level of free ridership on programs described
by Section 39.905, Utilities Code.
(b) The study may not be performed by a person:
(1) who performs services for an electric utility;
(2) who has performed services for an electric utility
in the two years before the study begins; or
(3) who is in the process of bidding to perform
services for an electric utility at the time the study begins.
(c) Not later than December 15, 2012, the Public Utility
Commission of Texas shall report the conclusions of the study to the
lieutenant governor, the speaker of the house of representatives,
and each committee of the 82nd Legislature that has jurisdiction
over electric utilities.
SECTION 5. Section 39.905(b-2), Utilities Code, is
repealed.
SECTION 6. This Act takes effect September 1, 2009.