82R7843 JJT-F
By: Strama H.B. No. 3532
Substitute the following for H.B. No. 3532:
By: Sheffield C.S.H.B. No. 3532
A BILL TO BE ENTITLED
AN ACT
relating to the creation of an incentive program for solar and
wind-powered distributed electric generation for public school
property.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 39.002, Utilities Code, is amended to
read as follows:
Sec. 39.002. APPLICABILITY. This chapter, other than
Sections 39.155, 39.157(e), 39.203, 39.903, 39.904, 39.9051,
39.9052, [and] 39.914(e), and 39.9156, 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. 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 2. Subchapter Z, Chapter 39, Utilities Code, is
amended by adding Section 39.9155 to read as follows:
Sec. 39.9155. SOLAR SCHOOLS INCENTIVE PROGRAM. (a) In this
section:
(1) "Distributed renewable generation" has the
meaning assigned by Section 39.916.
(2) "Distributed solar generation" means distributed
renewable generation using an energy source derived directly from
the sun.
(3) "Low-income electric customer" has the meaning
assigned by Section 39.903(l).
(4) "Rated watts" means the output of a solar energy
device as specified by the manufacturer of the device expressed in
watts of direct current.
(5) "School district" has the meaning assigned by
Section 21.201, Education Code.
(b) The program developed under this section applies to an
electric utility operating inside or outside of ERCOT.
(c) The commission shall develop and implement a program as
provided by this section to increase the amount of distributed
solar generation installed on property owned by school districts in
the state. The program must apply statewide and must be designed to
be transparent, cost-effective, and limited in scope. The
commission shall act as program administrator to oversee and
administer the implementation of the program.
(d) The solar schools incentive fund is established as a
special trust fund held by the comptroller outside of the state
treasury and administered by the program administrator for the
payment of the incentives authorized by this section, without the
necessity of an appropriation. Money in the fund may be used only
for the purposes of the program as provided by this section,
including the administrative costs incurred by the commission. The
fund consists of:
(1) fees imposed under this section and remitted to
the comptroller for deposit to the credit of the fund;
(2) gifts or grants awarded for the purposes of the
program and deposited to the credit of the fund; and
(3) interest and other income from investment of the
money deposited to the credit of the fund.
(e) The commission by rule shall provide for the assessment
and collection of nonbypassable fees by electric utilities and
transmission and distribution utilities. An electric utility or
transmission and distribution utility shall remit all fees
collected to the comptroller for deposit to the credit of the solar
schools incentive fund. The fees must appear as a separate charge
on customers' bills. In an area where customer choice has been
introduced, a fee assessed under this subsection must be included
in delivery charges assessed by a transmission and distribution
utility and collected by the customer's retail electric provider.
The fee for each industrial electric service identifier is $50 each
month. The fees for residential and commercial electric service
identifiers must be assessed in an amount established as applicable
for each billing period that falls during the next six-month
period. For a six-month period that follows a six-month period in
which the average natural gas futures closing price is less than $6
per million British thermal units, the fee for a residential or
commercial electric service identifier is $0.00028 per kilowatt
hour. For a six-month period that follows a six-month period in
which the average natural gas futures closing price is $6 or more
per million British thermal units, the fee for a residential or
commercial electric service identifier is $0.00014 per kilowatt
hour. Commission rules must provide that the average natural gas
futures closing price be evaluated for the purposes of this
subsection on a semiannual basis and that the resulting assessment
of the fee for a residential or commercial electric service
identifier applies only to billing periods that begin at least 30
days after the resulting assessment is made.
(f) The commission by rule shall provide for incentives to
defray the cost of installing distributed solar generation on
property owned by school districts and for the incentives to be
distributed as provided by this section. The commission shall
ensure that:
(1) the schedule for payment of the incentives does
not obligate payment of incentives in amounts that would cause the
incentive payments to exceed the amount budgeted for incentive
payments over the duration of the program; and
(2) incentives are paid directly to school districts,
qualified installers, or third-party owners of installed
distributed solar generation in a simple, uniform, and reliable
administrative manner that:
(A) ensures the timely payment of incentives; and
(B) allows for the assignment of the incentive to
another person at the direction of the qualified recipient.
(g) Electric utilities may not assess the fees authorized by
this section after the fifth anniversary of the date the program
required by this section is established by commission rule. Each
biennium, the commission shall report to the legislature on the
progress of the program. The report may include recommendations on
how the program can be modified to increase the deployment of
distributed solar generation on school district property. For the
biennium in which the program is scheduled to end, the report must
include a recommendation to the legislature on whether to extend
the program.
(h) The commission must distribute the incentives provided
by rules adopted under Subsection (f) by administering reverse
auctions quarterly. The total of incentives available in each
quarter's auction must be determined by the commission based on the
projected amount of available funding and on the number of quarters
remaining in the program, allowing for a reasonable margin of error
for the conversion to production-based incentives in accordance
with Subsection (n). The commission may establish the total of
incentives available for a quarter in terms of cost or in terms of
capacity.
(i) A participant in a reverse auction for an incentive to
install distributed solar generation on school district property
must submit a bid and a deposit as provided by this subsection.
Each bid must include a price component, expressed in dollars per
installed watt of capacity, and a volume component, expressed in
terms of the proposed total capacity, measured in rated watts, to be
installed by the proposed project. The deposit must be in an amount
equal to five percent of the total value of the bid. The commission
shall retain the deposit for an accepted bid and shall refund the
deposit for a bid that is not accepted.
(j) At a reverse auction, a bid is not qualified unless the
bidder:
(1) demonstrates, in accordance with any procedure and
guideline the commission may adopt for that purpose, the bidder's
ability to finance the costs of the project if the incentive were
awarded; and
(2) meets all other requirements adopted by the
commission to ensure successful implementation of the program.
(k) The commission may not accept a bid for a quarter's
reverse auction if the bid exceeds the quarter's bid price limit.
The bid price limit for a quarter is the lesser of:
(1) $1.50 per rated watt of capacity;
(2) the bid limit from the previous quarter's reverse
auction; or
(3) the quarterly incentive clearing price
established for the previous quarter in the manner provided by
Subsection (l), unless that price was established by a bid for a
wind-powered electric generation project.
(l) On receiving bids in a reverse auction under this
section, the commission shall order the qualified bids from the
lowest bid to the highest bid according to the price component of
the qualified bids. The commission shall accept qualified bids
from the bid stack in that order, from lowest to highest, until the
limit on the total of incentives available, as determined under
Subsection (h), is reached. The price component of the highest bid
accepted is the quarterly incentive clearing price for that
quarter, and the commission shall award the incentives to each
bidder for each accepted bid according to the quarter's incentive
clearing price.
(m) If, following the awarding of incentives through a
quarterly reverse auction, funding remains available, the
commission shall make available to applicants on a first-come,
first-served basis, in the form of nonparticipating incentives,
incentives set at a dollar-per-watt value of 90 percent of that
quarter's incentive clearing price. The commission shall carry
forward any quarterly funding remaining after the incentives are
awarded under this subsection, with the remaining funding divided
equally among the quarters remaining in the program. If funding is
carried forward under this subsection in two consecutive quarters,
the commission may implement any of the following measures that the
commission determines may increase the installation of distributed
solar generation on school district property:
(1) making distributed solar generation projects for
community college property in this state eligible for program
incentives;
(2) using available program funding for outreach
programs that may increase program participation;
(3) conducting or commissioning a study on the
available capacity and optimal locations for installation of
distributed solar generation on the property of school districts or
community colleges; or
(4) only if 25 percent or more of quarterly funding is
carried forward in two consecutive quarters, increasing the bid
price limit.
(n) Incentives awarded under this section must be in the
form of a production-based incentive and must be disbursed by 12
quarterly payments over a term of three years with the amount paid
determined by the units of electricity produced by the installed
distributed solar generation during the previous quarter. The
commission shall establish the amount of the payment per unit of
electricity produced by the installed distributed solar generation
by converting the quarterly incentive clearing price or the
nonparticipating incentive price from a capacity incentive price to
a production-based incentive price. In making this conversion, the
commission must consider a reasonable production factor, including
an appropriate discount rate, that would result in the quarterly
incentive clearing price or the nonparticipating incentive price
being fully paid with the final quarterly payment of the three-year
payment period, were the distributed solar generation system to
produce at the production factor's assumed rate.
(o) Quarterly payments of an incentive awarded under this
section must begin not later than the fourth quarter following the
acceptance of bids for a quarter. Payment of an incentive may begin
earlier than the fourth quarter on the filing of a claim with the
commission by the person awarded the incentive.
(p) A person awarded an incentive under this section must
have the distributed solar generation interconnected not later than
the end of the fourth quarter following the quarter in which the bid
was accepted. If the person has not interconnected the distributed
solar generation by the end of the period prescribed by this
subsection, the person's claim to the incentive is rescinded and
the capacity and funding returns to the program and available
program funding, except that the commission may grant one extension
of the period for interconnection, not to exceed two additional
quarters, if the commission finds based on evidence provided in the
person's application for extension that substantial construction
work has been completed by the date of the application for
extension. Quarterly payments may resume if the distributed solar
generation is interconnected during the fifth or sixth quarter, but
the person awarded the incentive may not recover a quarterly
payment lost because of a failure to interconnect.
(q) The commission by rule shall provide a method by which a
retail electric provider and a transmission and distribution
utility shall use money collected through nonbypassable fees
imposed in accordance with rules adopted under Subsection (e) to
credit the electric service bill of a low-income electric customer
for an amount equal to the customer's share of the fee, based on the
customer's electric energy consumption during the billing period.
(r) The commission by rule shall provide for making
incentives under the program available to projects to install on
property owned by school districts distributed renewable
generation that uses wind-driven turbines, subject to all
requirements for a distributed solar generation incentive. The
eligibility under the rules may extend only to projects for wind
turbine distributed renewable technology projects with a combined
capacity of not more than 150 kilowatts at any one school district
property location.
(s) Notwithstanding any provision of this title:
(1) any person, including a retail electric provider,
may own distributed renewable generation installed under the
program and enter into a contract with a school district on the
property of which the distributed renewable generation is installed
to lease the generation or to sell the surplus electricity
generated by the distributed renewable generation to a retail
customer or the district's retail electric provider;
(2) the owner of distributed renewable generation
installed under the program is not, as a result of that ownership,
an electric utility and is not required, as a result of that
ownership, to register with the commission as a power generation
company or self-generator unless the commission determines that
requiring registration is necessary to maintain the reliability of
the electric distribution grid;
(3) the commission may establish appropriate
reporting requirements to provide for trading renewable energy
credits gained by the installation of distributed renewable
generation under the program; and
(4) an area of this state in which distributed
renewable generation is installed under the program is not, for
reason of that installation, considered an area in which customer
choice has been introduced.
SECTION 3. Subchapter Z, Chapter 39, Utilities Code, is
amended by adding Section 39.9156 to read as follows:
Sec. 39.9156. SOLAR SCHOOLS PROGRAMS; MUNICIPALLY OWNED
UTILITIES AND COOPERATIVES. (a) It is the goal of the legislature
that:
(1) electric cooperatives and municipally owned
utilities administer incentive programs that increase the amount of
distributed solar generation installed on property owned by school
districts in this state in a cost-effective, market-neutral, and
nondiscriminatory manner;
(2) customers of electric cooperatives and
municipally owned utilities have access to incentives for the
installation of distributed solar generation on property owned by
school districts; and
(3) electric cooperatives and municipally owned
utilities spend money to increase the amount of distributed solar
generation at a total funding level consistent with the
requirements for electric utilities in this state under Section
39.9155(e).
(b) This section applies only to an electric cooperative or
municipally owned utility with retail sales of more than 500,000
megawatt hours in 2007.
(c) Beginning not later than September 1, 2014, a
municipally owned utility or electric cooperative must report
annually to the State Energy Conservation Office, in a form and
manner determined by the office, information regarding the efforts
of the municipally owned utility or electric cooperative related to
this section.
(d) This section does not prevent the governing body of an
electric cooperative or municipally owned utility from adopting
rules, programs, or incentives to encourage or provide for the
installation of more solar generation capacity than the goal
established by Subsection (a)(3).
(e) An electric cooperative or municipally owned utility
may recover the costs required by this section through a
nonbypassable fee consistent with that authorized by the commission
for electric utilities under Section 39.9155(e) or another cost
recovery mechanism as determined by the governing body of the
electric cooperative or municipally owned utility.
(f) The commission shall credit toward compliance with this
section funding for distributed solar generation provided after May
1, 2009.
SECTION 4. The heading to Section 39.914, Utilities Code,
is amended to read as follows:
Sec. 39.914. CREDIT FOR SURPLUS DISTRIBUTED RENEWABLE
[SOLAR] GENERATION BY PUBLIC SCHOOLS.
SECTION 5. Section 39.914, Utilities Code, is amended by
amending Subsections (a), (b), and (c) and adding Subsection (a-1)
to read as follows:
(a) In this section, "distributed renewable generation" has
the meaning assigned by Section 39.916.
(a-1) An electric utility or retail electric provider shall
offer service to [provide for net metering] and contract with an
independent school district so that:
(1) surplus electricity produced by distributed
renewable generation on school district property [a school
building's solar electric generation panels] is made available for
sale to the electric transmission grid and distribution system; and
(2) the [net] value of that surplus electricity is
credited to the school district at a price that is at least the fair
market price.
(b) For areas of this state in which customer choice has not
been introduced, the commission by rule shall require that credits
for electricity produced by distributed renewable generation on
school district property [a school building's solar electric
generation panels] reflect the value of the surplus electricity
[that is made available for sale to the electric utility in
accordance with federal regulations].
(c) For independent school districts in areas in which
customer choice has been introduced, the [district must sell the
school buildings' surplus electricity produced to the] retail
electric provider that serves the school district's load shall
provide a credit to the school district for the surplus electricity
produced by distributed renewable generation on school district
property at a fair market value [agreed to between the district and
the provider that serves the district's load. The agreed value may
be] based on the clearing price of energy at the time of day that the
electricity is made available to the grid and shall allow any unused
credits to be carried forward to a subsequent billing cycle until
used. The independent organization identified in Section 39.151
shall develop procedures so that the amount of electricity
purchased from a school district under this section is accounted
for in settling the total load served by the provider that serves
the school district's load. A school district requesting [net]
metering services for purposes of this section must have metering
devices capable of providing measurements consistent with the
independent organization's settlement requirements.
SECTION 6. The Public Utility Commission of Texas shall
adopt rules establishing the program required under Section
39.9155, Utilities Code, as added by this Act, as soon as
practicable.
SECTION 7. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2011.