By: Watson, et al. S.B. No. 541
A BILL TO BE ENTITLED
AN ACT
relating to renewable energy and to incentives for Texas renewable
energy jobs and manufacturing.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The purpose of this Act is to continue Texas'
leadership in installing clean, renewable energy in Texas in a
market-based manner that drives manufacturing jobs and provides
price protection for businesses and consumers.
SECTION 2. Section 39.002, Utilities Code, is amended to
read as follows:
Sec. 39.002. APPLICABILITY. Except as provided by this
section, this [This] chapter, other than Sections 39.155,
39.157(e), 39.203, 39.903, 39.904, 39.9051, 39.9052, and
39.914(e), does not apply to a municipally owned utility or an
electric cooperative. Sections 39.157(e), 39.203, and 39.904[,
however,] apply only to a municipally owned utility or an electric
cooperative that is offering customer choice. Section 39.9041
applies to a municipally owned utility. If there is a conflict
between the specific provisions of this chapter and any other
provisions of this title, except for Chapters 40 and 41, the
provisions of this chapter control.
SECTION 3. Section 39.904, Utilities Code, is amended by
amending Subsections (a), (b), (c), (d), (n), and (o), and adding
Subsections (a-1), (c-1), (c-2), (c-3), (n-1), and (p) to read as
follows:
(a) It is the intent of the legislature that by January 1,
2015, an additional 5,000 megawatts of generating capacity from
tier 1 renewable energy technologies will have been installed in
this state. The cumulative installed renewable capacity in this
state shall total 5,880 megawatts by January 1, 2015, and the
commission shall establish a target of 10,000 megawatts of
installed renewable capacity by January 1, 2025. The cumulative
installed tier 1 renewable capacity in this state shall total 2,280
megawatts by January 1, 2007, 3,272 megawatts by January 1, 2009,
4,264 megawatts by January 1, 2011, 5,256 megawatts by January 1,
2013, and 5,880 megawatts by January 1, 2015. [Of the renewable
energy technology generating capacity installed to meet the goal of
this subsection after September 1, 2005, the commission shall
establish a target of having at least 500 megawatts of capacity from
a renewable energy technology other than a source using wind
energy.]
(a-1) It is the goal of the legislature that by January 1,
2020, an additional 1,500 megawatts of tier 2 renewable energy will
have been installed in this state. Of the renewable energy
generating capacity installed to meet the goal of this subsection,
up to 500 megawatts of renewable energy storage may qualify to meet
the tier 2 goal. The cumulative installed tier 2 renewable energy
resource capacity in this state shall total 50 megawatts by January
1, 2011; 100 megawatts by January 1, 2012; 200 megawatts by January
1, 2013; 350 megawatts by January 1, 2014; 500 megawatts by January
1, 2015; 750 megawatts by January 1, 2016; 900 megawatts by January
1, 2017; 1,000 megawatts by January 1, 2018; 1,250 megawatts by
January 1, 2019; and 1,500 megawatts by January 1, 2020. On January
1, 2016, if the commission determines the state has not made
significant progress toward the goals of this subsection, then the
commission may take action to suspend future obligations under this
subsection.
(b) The commission shall establish a tier 1 renewable energy
credits trading program and a tier 2 renewable energy credits
trading program. Any retail electric provider, municipally owned
utility, or electric cooperative that does not satisfy the
requirements of Subsection (a) by directly owning or purchasing
capacity using renewable energy technologies shall purchase
sufficient renewable energy credits to satisfy the requirements by
holding renewable energy credits in lieu of capacity from renewable
energy technologies. In calculating capacity factors for tier 2
renewable energy credits, the commission shall encourage a diverse
portfolio of tier 2 renewable energy technologies.
(c) Not later than January 1, 2000, the commission shall
adopt rules necessary to administer and enforce this section. At a
minimum, the rules shall:
(1) establish the minimum annual renewable energy
requirement for each retail electric provider, municipally owned
utility, and electric cooperative operating in this state in a
manner reasonably calculated by the commission to produce, on a
statewide basis, compliance with the requirement prescribed by
Subsections (a) and (a-1) [Subsection (a)]; and
(2) specify reasonable performance standards that all
renewable capacity additions must meet to count against the
requirement prescribed by Subsections (a) and (a-1) [Subsection
(a)] and that:
(A) are designed and operated so as to maximize
the energy output from the capacity additions in accordance with
then-current industry standards; and
(B) encourage the development, construction, and
operation of new renewable energy projects at those sites in this
state that have the greatest economic potential for capture and
development of this state's environmentally beneficial renewable
resources.
(c-1) Not later than January 1, 2011, the commission shall
adopt rules necessary to provide a "Made in Texas" incentive for
tier 1 and tier 2 renewable energy credits generated by generation
equipment that is wholly produced or substantially transformed by a
Texas workforce, as determined by the commission. The incentive
under this subsection shall be available for the first three years
after the renewable energy equipment first produces electricity on
a commercial basis.
(c-2) Not later than January 1, 2010, the commission shall
adopt rules necessary to track and account for renewable energy
credits earned from electric generating capacity derived from
renewable energy storage. The rules shall:
(1) allow for the renewable energy storage to be
located on the same or on a different site as the renewable
generation being stored;
(2) ensure that only one renewable energy credit is
retired for every megawatt hour of renewable energy generated prior
to being stored for later release onto the electricity grid; and
(3) account for any loss in energy resulting from
storage for later use.
(c-3) Not later than January 1, 2010, the commission shall
adopt rules necessary to allow generators of tier 2 renewable
energy installed before September 1, 1999, to qualify annually for
not more than 40 megawatts of tier 2 renewable energy credits.
(d) For purposes of [In] this section:
(1) "Tier 1 renewable energy technology" [, "renewable
energy technology"] means any technology that exclusively relies on
an energy source that is naturally regenerated over a short time and
derived directly from the sun, indirectly from the sun, or from
moving water or other natural movements and mechanisms of the
environment. Renewable energy technologies include those that rely
on energy derived directly from the sun, on wind, geothermal,
hydroelectric, wave, or tidal energy, or on biomass or
biomass-based waste products, including landfill gas. A renewable
energy technology does not rely on energy resources derived from
fossil fuels, waste products from fossil fuels, or waste products
from inorganic sources.
(2) "Tier 2 renewable energy" means tier 1 renewable
energy technology excluding energy derived from wind with a
capacity of more than 150 kilowatts.
(3) "Renewable energy storage" means energy storage
technology that stores for later release energy derived from tier 1
or tier 2 renewable energy.
(n) Notwithstanding any other provision of law, the
commission shall have the authority to cap the price of renewable
energy credits and may suspend the goal contained in Subsections
(a) and (a-1) [Subsection (a)] if such suspension is necessary to
protect the reliability and operation of the grid.
(n-1) If the commission determines that complying with the
goals of Subsection (a-1) and a federal renewable portfolio
standard that is more stringent than those goals would cause an
undue burden to ratepayers in this state, the commission may
suspend any requirement relating to meeting those goals.
(o) The commission may establish tier 1 and tier 2 [an]
alternative compliance payments [payment]. An entity that has a
renewable energy purchase requirement under this section may elect
to pay the alternative compliance payment instead of applying
renewable energy credits toward the satisfaction of the entity's
obligation under this section. [The commission may establish a
separate alternative compliance payment for the goal of 500
megawatts of capacity from renewable energy technologies other than
wind energy.] The tier 1 alternative compliance payment for a
renewable energy purchase requirement that could be satisfied with
a renewable energy credit from wind energy may not be less than
$2.50 per credit or greater than $20 per credit. Prior to September
1, 2009, an alternative compliance payment under this subsection
may not be set above $5 per credit. The tier 2 alternative
compliance payment that could be satisfied with a tier 2 renewable
energy credit shall not exceed $90 per renewable energy credit
before December 31, 2014; $80 per renewable energy credit before
December 31, 2015; $65 per renewable energy credit before December
31, 2016; $45 per renewable energy credit before December 31, 2017;
$40 per renewable energy credit before December 31, 2018; $35 per
renewable energy credit before December 31, 2019; $30 per renewable
energy credit before December 31, 2020. In implementing this
subsection, the commission shall consider:
(1) the effect of renewable energy credit prices on
retail competition;
(2) the effect of renewable energy credit prices on
electric rates;
(3) the effect of the alternative compliance payment
level on the renewable energy credit market; and
(4) any other factors necessary to ensure the
continued development of the renewable energy industry in this
state while protecting ratepayers from unnecessary rate increases.
(p) If the commission suspends the tier 2 renewable energy
goal under Subsection (a-1), all alternative compliance payment
funds collected shall be refunded by the retail electric providers
under the guidance of the commission to the residential and
commercial electric customers covered by this subchapter. If the
commission does not suspend the tier 2 renewable energy goal under
Subsection (a-1), the alternative compliance payment funds
collected by the commission shall be used for the purpose of a solar
rebate program established by the commission.
SECTION 4. Subchapter Z, Chapter 39, Utilities Code, is
amended by adding Section 39.9041 to read as follows:
Sec. 39.9041. RENEWABLE ENERGY FOR MUNICIPALLY OWNED
UTILITIES. (a) It is the goal of the legislature that municipally
owned utilities:
(1) increase the installed capacity in this state from
tier 2 renewable energy or from renewable energy storage in a
cost-effective, market neutral, and nondiscriminatory manner; and
(2) install capacity from tier 2 renewable energy or
from renewable energy storage in proportion to and at a level
consistent with the requirements for electric utilities under
Section 39.904(a-1).
(b) This section applies only to a municipally owned utility
with retail sales of more than 500,000 megawatt hours for the year
beginning January 1, 2007.
(c) Beginning not later than September 1, 2012, a
municipally owned utility annually shall report to the State Energy
Conservation Office, in a form determined by the office,
information regarding the efforts of the utility under this
section.
(d) This section does not prevent the governing body of a
municipally owned utility from adopting rules, programs, and
incentives that encourage or provide for the installation of
capacity from tier 2 renewable energy or renewable energy storage
in addition to the goals in Section 39.904(a-1).
(e) The commission shall count capacity from tier 2
renewable energy or renewable energy storage installed on or after
May 1, 2007, toward a municipally owned utility's compliance with
this section.
(f) A municipally owned utility may satisfy the
requirements of this section:
(1) by owning or purchasing capacity from tier 2
renewable energy or renewable energy storage; or
(2) by purchasing renewable energy credits in lieu of
capacity from tier 2 renewable energy technologies.
SECTION 5. This Act takes effect September 1, 2009.