By: Van de Putte S.B. No. 601
A BILL TO BE ENTITLED
AN ACT
relating to the state goal for energy efficiency.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. SECTION 39.905, Utilities Code, is amended 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 help build an
infrastructure of trained and qualified energy services providers
such 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) each electric utility will annually 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 transmission-level industrial
facilities, equivalent to at least:
(A) [10] 0.5 percent of the electric utility's
[annual growth in] peak demand, other than demand by
transmission-level industrial facilities, [of residential and
commercial customers] by January 1, 2012 [December 31, 2007]; and
(B) [15] 1 percent of the electric utility's
[annual growth in] peak demand, other than demand by
transmission-level industrial facilities, [of residential and
commercial customers] by January 1, 2015; [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;]
(4) each utility will provide, as part of its overall
portfolio of efficiency programs, sufficient incentives for its
load-proportionate share of 200 megawatts of demand-side renewable
energy systems by January 1, 2015; in this section, a "demand-side
renewable energy system" includes "distributed renewable
generation" as defined by Section 39.916 as well as any system that
reduces the need for energy consumption using renewable energy
technology or natural mechanisms of the environment, such as
geothermal heat-pumps and solar water heaters.
[(4)] (5) each electric utility in the ERCOT region
shall [use its best efforts to encourage and] create specific
programs at a scale sufficient to facilitate the involvement of the
region's retail electric providers in the mass marketing and
widespread delivery of efficiency programs and demand-side
renewable [demand response] programs under this section; and
[(5)] (6) 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)] (7) 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.
(b) 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, sufficient to
mitigate the impact of any lost revenues associated with the
success of efficiency-related programs required 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 the program rules encourage the value of
the incentives to be passed on to the end-use customer;
(6) ensuring programs operate at sufficient scale to:
(A) reduce the rate of free ridership;
(B) achieve the goal that all eligible customers
have access to program opportunities; and
(C) allow retail electric providers and
competitive energy service providers to successfully undertake the
mass marking and widespread delivery of the programs required by
this section to customers;
(7) establishing a statewide market transformation
program to achieve, at a minimum, the following goals for
demand-side renewable systems:
(A) 50 MW of demand-side renewable systems by
January 1, 2012; and
(B) 200 MW of demand-side renewable systems by
January 1, 2015;
(8) ensuring that demand-side renewable energy
programs under this section encourage the utilities, through retail
electric providers, to pass on the value of the incentives to
end-use consumers; and
(9) ensuring that efficiency and demand-side
renewable energy programs under this section lead to a significant
and continuing reduction in demand or energy consumption, or costs,
by using a ten-year measure life as the basis for calculating the
contribution of either particular measures or programs toward the
satisfaction of the goal of this section.
(b-1) The energy efficiency cost recovery factor under
Subsection (b)(1) may not result in an over-recovery of costs but
may be adjusted each year to change rates to enable utilities to
match revenues against energy efficiency costs and any incentives
to which they are granted. The factor shall be adjusted to reflect
any over-collection or under-collection of energy efficiency cost
recovery revenues in previous years.
(b-2) The commission shall conduct a study, to be funded by
electric utilities, regarding cost-effective energy-efficiency in
this state. Not later than January 15, 2009, the commission shall
submit to the legislature a report regarding the commission's
findings that:
(1) considers the technical, economic, and achievable
potential, and natural occurrence of energy efficiency in this
state in terms of kilowatts and kilowatt hours for each element;
(2) determines the amount of savings that is
achievable through utility programs in compliance with commission
rules;
(3) recommends whether:
(A) utility funding of energy efficiency in areas
of the state with competitive retail electric service should
continue;
(B) energy efficiency in areas with competitive
retail electric service is best provided by the competitive market;
and
(C) utilities should fund education programs to
be conducted by the commission regarding the provision of energy
efficiency service from the competitive market;
(4) provides estimates of achievable savings specific
to each utility service area and each customer class;
(5) quantifies the costs and rate impacts associated
with meeting energy efficiency goals;
(6) determines whether an increase in the goal to 30
percent of the growth in demand for each utility is achievable by
December 31, 2010, and whether an increase in the goal to 50 percent
of the growth in demand for electricity is achievable by December
31, 2015, by each utility in the service area served through the
energy efficiency programs described by this section;
(7) recommends policies designed to promote energy
efficiency in the areas of the state that are not served by the
utilities which administer programs under this section; and
(8) identifies potential barriers to the increased
participation by retail electric providers in the delivery of
energy efficiency services to ERCOT customers, and to the increased
potential for energy efficiency in ERCOT or in this state
generally, including any recommended regulatory or statutory
changes to eliminate such barriers or facilitate greater
efficiency.
(b-3) (b-2) Beginning not later than January 1, 2008, the
commission, in consultation with the State Energy Conservation
Office, annually for a period of five years shall compute and report
to ERCOT the projected energy savings and demand impacts for each
entity in the ERCOT region that administers standard offer
programs, market transformation programs, combined heating and
power technology, demand response programs, solar incentive
programs, appliance efficiency standards, energy efficiency
programs in public buildings, and any other relevant programs that
are reasonably anticipated to reduce electricity energy or peak
demand or that serve as substitutes for electric supply.
(b-4) (b-3) The commission and ERCOT shall develop a method
to account for the projected efficiency impacts under Subsection
(b-3)(b-2) in ERCOT's annual forecasts of future capacity,
demand, and reserves.
(c) A standard offer program provided under Subsection
(a)(3) must be neutral with respect to technologies, equipment, and
fuels, including thermal, chemical, mechanical, and electrical
energy storage technologies.
(d) The commission shall establish a procedure for
reviewing and evaluating market-transformation program options
described by this subsection and other options. A market
transformation program which is launched as a pilot program shall
not be continued for more than three years without commission
determination that it is an appropriate vehicle to address special
market barriers that prevent or inhibit the measure or behavior
addressed from being delivered or adopted through normal market
channels, under the 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) programs for solar thermal, [or] solar electric
programs,
(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.
(e) An electric utility may use money approved by the
commission for energy efficiency programs to perform necessary
energy efficiency research and development to foster continuous
improvement and innovation in the application of energy efficiency
technology and energy efficiency program design and
implementation. Money the utility uses under this subsection may
not exceed 10 percent of the greater of:
(1) the amount the commission approved for energy
efficiency programs in the utility's most recent full rate
proceeding; or
(2) the commission-approved expenditures by the
utility for energy efficiency in the previous year.
(f) Unless funding is provided under Section 39.903, each
unbundled transmission and distribution utility shall include in
its energy efficiency plan a targeted low-income energy efficiency
program as described by Section 39.903(f)(2), and the savings
achieved by the program shall count toward the transmission and
distribution utility's energy efficiency goal. The commission
shall determine the appropriate level of funding to be allocated to
both targeted and standard offer low-income energy efficiency
programs in each unbundled transmission and distribution utility
service area. The total expenditures for both targeted and
standard offer low-income energy efficiency programs will be based
on the amount spent by the transmission and distribution utility on
the commission's hard-to-reach program in calendar year 2003. This
level of funding for low-income energy efficiency programs shall be
provided from money approved by the commission for the transmission
and distribution utility's energy efficiency programs. The state
agency that administers the federal weatherization assistance
program shall provide reports as required by the commission to
provide the most current information available on energy and peak
demand savings achieved in each transmission and distribution
utility service area.
(g) The commission may provide for a good cause exemption to
a utility's liability for an administrative penalty or other
sanction if the utility fails to meet a goal for energy efficiency
under this section and the utility's failure to meet the goal is
caused by one or more factors outside of the utility's control,
including:
(1) insufficient demand by retail electric providers
and competitive energy service providers for program incentive
funds made available by the utility through its programs;
(2) changes in building energy codes; and
(3) changes in government-imposed appliance or
equipment efficiency standards.
SECTION 2. This Act takes effect September 1, 2009.