By: Fraser S.B. No. 15
A BILL TO BE ENTITLED
AN ACT
relating to state energy policy and the planning of energy
development and utilization and to certain related electric power
generation issues.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1
SECTION 1.01. This article may be cited as the Energy Policy
Act.
SECTION 1.02. The Utilities Code is amended by adding Title
6 to read as follows:
TITLE 6. ENERGY POLICY ACT
CHAPTER 300. STRATEGIC ENERGY PLANNING
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 300.001. PURPOSE AND FINDINGS. (a) This title is
enacted to promote, in accordance with the public interest, the
strategic planning of energy development, production, delivery,
commercialization, and utilization in this state.
(b) The purpose of this title is to establish a statewide
energy policy planning entity and process that recognizes:
(1) public health and general welfare as a critical
concern in the development of energy policies;
(2) energy as a valuable and vital commodity in the
state's economy;
(3) protection of the environment as a major
consideration in the production of energy and utilization of
natural resources;
(4) cost-effective, market-based solutions as a
preferred policy for energy planning;
(5) utilization of Texas-based resources to help
provide energy security, stability, and reliability; and
(6) the importance of portfolio diversity in promoting
energy system flexibility, affordability, and efficiency.
Sec. 300.002. DEFINITIONS. In this title:
(1) "Commission" means the Public Utility Commission
of Texas.
(2) "Council" means the Texas Energy Policy Council.
(3) "Plan" means the statewide energy policy plan.
Sec. 300.003. TEXAS ENERGY POLICY COUNCIL. (a) The Texas
Energy Policy Council is created to develop and present a statewide
energy policy plan to the legislature. The plan must include a
20-year planning horizon and be updated to reflect changing
conditions and should be considered a living document.
(b) The council is composed of 13 members as follows:
(1) the chairman of the Public Utility Commission of
Texas;
(2) the chairman of the Railroad Commission of Texas;
(3) the chairman of the Texas Commission on
Environmental Quality;
(4) the president and chief executive officer of the
Electric Reliability Council of Texas;
(5) the commissioner of the General Land Office;
(6) two members of the senate appointed by the
lieutenant governor;
(7) two members of the house of representatives
appointed by the speaker of the house of representatives;
(8) one member of the academic community with
expertise in energy appointed by the governor;
(9) one member of the academic community with
expertise in environmental issues related to energy appointed by
the governor;
(10) the director of the State Energy Conservation
Office; and
(11) one member of the public with expertise in
low-income energy issues, including the needs of low-income and
vulnerable ratepayers, appointed by the governor.
(c) The governor shall designate the presiding officer from
among the members of the council.
(d) An appointed member of the council serves for a full
planning cycle and may be reappointed at the pleasure of the
appointing official.
(e) The council shall meet at least quarterly in
even-numbered years while developing a plan for submission to the
legislature. The council may meet annually in odd-numbered years
after submitting plans to the legislature.
(f) The council shall develop and implement policies and
procedures that provide the public with reasonable opportunity to
appear before the council and to speak on issues under the
jurisdiction of the council.
(g) The commission is designated as the state agency
responsible for administering the council. Staff from the
commission shall be tasked, as necessary, with assisting the
council in carrying out its duties.
Sec. 300.004. POWERS, DUTIES, AND RESPONSIBILITIES OF
COUNCIL. (a) In developing the plan, the council shall:
(1) encourage cooperation and coordination between
public and private entities regarding energy usage, planning,
research and development, and commercialization;
(2) seek policies that promote a diverse portfolio of
clean, reliable, and competitively priced energy sources;
(3) promote research, pilot projects, and
market-based incentives to explore and expand long-term energy
options;
(4) develop policies to prevent supply interruptions
and infrastructure failure;
(5) examine the impact on the environment of energy
exploration, production, and use;
(6) take into account the statewide and regional water
planning process;
(7) make recommendations for increasing public
knowledge of energy use issues and public awareness of the
importance of more efficient consumption of energy; and
(8) take into account the needs of low-income and
vulnerable Texans.
(b) The council shall submit to the legislature the initial
plan by December 1, 2012. Thereafter, the council shall report to
the legislature by December 1 of each even-numbered year the status
of the plan's implementation and make any recommendations for
legislative action as necessary to implement or revise the plan.
The council may update the plan as necessary to reflect evolving
conditions.
Sec. 300.005. FUELS AND TECHNOLOGIES. (a) The council
shall consider the following fuel sources, types of generation, and
innovative technologies associated with these fuels and types of
generation when creating the plan. These fuels, types of
generation, and technologies include:
(1) oil and natural gas;
(2) coal and lignite;
(3) nuclear;
(4) renewable energy technologies;
(5) geothermal;
(6) methane;
(7) distributed generation;
(8) fuel cells and storage;
(9) water conservation technologies that could be
utilized in the exploration, production, and generation of energy
resources; and
(10) any other fuels and technologies as defined in
Section 39.904(d), including solar and wind technologies.
(b) The council shall develop policies that ensure fuel
resources available to the state are utilized in a balanced and
efficient manner. The council shall consider the economic
viability, price stability and volatility, and environmental
impact of types of fuel and technology when making its
recommendations. The council shall also consider all types of
generation technology to identify in its recommendations current or
potential operational or administrative advantages or
disadvantages of each type of technology to which a protocol of the
Electric Reliability Council of Texas applies.
Sec. 300.006. ENERGY EFFICIENT TECHNOLOGY. (a) In order
to reduce the energy demand of customers in this state, the council
shall consider energy-efficient technologies when formulating the
plan and include them in its recommendations. Energy-efficient
technologies shall be considered for the following:
(1) residential, commercial, industrial, and state
and local energy users; and
(2) any other user group or application the council
deems appropriate.
(b) The council shall consider the economic viability and
competitiveness of new technologies when making its
recommendations.
(c) The council shall consider the ability of
energy-efficient technologies to reduce the demand for energy and
the need for additional transmission capacity in the state and
shall consider opportunities for reducing transmission constraints
by using these technologies.
Sec. 300.007. TRANSMISSION. (a) The council shall
consider and recommend strategies to ensure that customers in this
state have access to reliable energy.
(b) The council shall consider transmission constraints,
and make recommendations in the plan to alleviate or prevent those
constraints, for the following sources of energy:
(1) oil and natural gas;
(2) coal and lignite;
(3) wind and solar; and
(4) electricity.
Sec. 300.008. ALTERNATIVE FUEL VEHICLES. (a) The council
shall consider and make recommendations on strategies and
incentives that promote the use of alternative fuel vehicles such
as natural gas vehicles and plug-in electric vehicles.
(b) The council shall consider the economic feasibility of
alternative fuel vehicles and infrastructure constraints and may
make recommendations on incentives to incorporate and promote these
vehicles as a component of the plan.
Sec. 300.009. ENVIRONMENT. (a) The council, when creating
the plan or in formulating recommendations, shall consider the
effects of energy exploration, production, and consumption on the
environment.
(b) The council shall recommend strategies that protect and
preserve the environment of the state and allow for access to and
the production of safe, economically viable, and reliable sources
of energy. The council shall consider:
(1) air quality;
(2) water quality;
(3) water supply; and
(4) waste disposal.
ARTICLE 2
SECTION 2.01. Chapter 39, Utilities Code, is amended by
adding Subchapter L to read as follows:
SUBCHAPTER L. REPORT ON RESERVES AND VOLUNTARY EMISSIONS
REDUCTIONS PLAN
Sec. 39.551. STATEMENT OF INTENT. It is not the intent of
this subchapter to:
(1) transfer environmental regulation from the
Railroad Commission of Texas or the Texas Commission on
Environmental Quality to the commission; or
(2) reduce the competitiveness of the existing energy
market in Texas by re-regulating the market or requiring the
decommissioning of any lawfully operating generating plant.
Sec. 39.552. REPORT ON RESERVES. (a) Not later than
December 1, 2011, the Railroad Commission of Texas shall prepare
and submit to the commission a report on coal and gas reserves in
this state that includes information relating to:
(1) natural gas reserves in this state proven and
probable on November 1, 2011;
(2) estimates of the proven and probable natural gas
reserves in this state for each of the next 15 years;
(3) estimates of natural gas prices and potential
price volatility for each of the next 15 years;
(4) coal reserves in this state proven and probable on
November 1, 2011;
(5) estimates of the proven and probable coal reserves
in this state for each of the next 15 years; and
(6) estimates of coal prices and potential price
volatility for each of the next 15 years.
(b) The Railroad Commission of Texas may request financial
information and forecasts from the comptroller to assist the
Railroad Commission of Texas in carrying out its duties under this
section. The comptroller shall provide that information and those
forecasts to the Railroad Commission of Texas as quickly as
possible after receiving such request.
Sec. 39.553. REPORT AND PLAN. (a) The commission shall
prepare a report on electric energy generation in this state. The
report must include an analysis of and policy recommendations for
how to most cost-effectively comply with environmental regulation.
(b) In preparing the report, the commission shall:
(1) analyze information from the reports submitted
under this subchapter by electric generating facilities and the
Railroad Commission of Texas; and
(2) use information already in the possession of
existing regulators by consulting with the Railroad Commission of
Texas, the Texas Commission on Environmental Quality, the Electric
Reliability Council of Texas, the Southwest Power Pool, the
Southeastern Electric Reliability Council, and the Western
Electricity Coordinating Council.
(c) The report must evaluate and consider measures that
will:
(1) maintain electric grid reliability;
(2) ensure the availability of electric energy at
reasonable rates;
(3) reduce air pollution, as defined by Section
382.003, Health and Safety Code;
(4) increase the state's ability to comply with state
and federal clean air standards in nonattainment and
near-nonattainment areas; and
(5) reduce the use of water for electricity generation
in this state.
(d) The report must identify the 10 percent of electric
generation capacity that will be most impacted by compliance with
environmental regulation.
(e) The report must identify combinations of market
factors, plant operating characteristics, federal and state
environmental regulations promulgated after January 1, 2011, and
other conditions that might make it more economically attractive
for the electric generation capacity identified in the report to be
retired rather than comply with the regulations. The market
factors considered in the analysis must include:
(1) long-term prices and price volatility for fuel
sources used to generate electricity in this state;
(2) price projections for the cost of electricity
going forward and factors that are relevant to determining the
market price of electricity; and
(3) the potential impact of the voluntary
decommissioning of existing units of electric generation capacity
from facilities in this state.
(f) The report must consider plant operating
characteristics including variable and fixed operating costs of
electric generation facilities identified in the report. The
analysis must also incorporate a range of costs projected by
credible sources for complying with the specified federal and state
air pollution regulations. In conducting this analysis, the
commission shall consider electric generation facilities in this
state of various vintages, sizes, fuel types, conversion
efficiencies, and emission characteristics. The analysis must:
(1) estimate the amount of electric generation
capacity that is likely to voluntarily be retired rather than incur
the additional expense of complying with the federal and state air
pollution regulations;
(2) provide an analysis of the cost and the impact on
electric rates, and provide price projections, associated with
voluntarily retiring electric generation facilities included in
the report;
(3) identify any additional barriers to the retirement
of the types of electric generation capacity identified and provide
recommendations on how to most cost-effectively and voluntarily
reduce air pollution, including recommendations to accelerate the
permitting process for certain types of low-polluting generation;
and
(4) identify the types, costs, and effects of
incentives to promote the goals of this section.
(g) Not later than October 1, 2012, the commission shall
make a draft of the report available for public review and comment
for a period of not less than 30 days.
(h) Not later than December 1, 2012, the commission shall
finalize and publish the report.
(i) Implementation of the requirements of this section
shall be contingent upon receiving gifts, grants, or donations
sufficient to cover the expenses incurred by the commission.
SECTION 2.02. Section 31.002, Utilities Code, is amended by
adding Subdivision (4-a) and amending Subdivision (10) to read as
follows:
(4-a) "Distributed natural gas generation facility"
means a facility installed on the customer's side of the meter that
uses natural gas to generate not more than 2,000 kilowatts of
electricity.
(10) "Power generation company" means a person,
including a person who owns or operates a distributed natural gas
generation facility, that:
(A) generates electricity that is intended to be
sold at wholesale;
(B) does not own a transmission or distribution
facility in this state other than an essential interconnecting
facility, a facility not dedicated to public use, or a facility
otherwise excluded from the definition of "electric utility" under
this section; and
(C) does not have a certificated service area,
although its affiliated electric utility or transmission and
distribution utility may have a certificated service area.
SECTION 2.03. The heading to Subchapter B, Chapter 35,
Utilities Code, is amended to read as follows:
SUBCHAPTER B. EXEMPT WHOLESALE GENERATORS, DISTRIBUTED NATURAL
GAS GENERATION FACILITIES, AND POWER MARKETERS
SECTION 2.04. Subchapter B, Chapter 35, Utilities Code, is
amended by adding Section 35.036 to read as follows:
Sec. 35.036. DISTRIBUTED NATURAL GAS GENERATION
FACILITIES. (a) A person who owns or operates a distributed
natural gas generation facility may sell electric power generated
by the facility. The electric utility, electric cooperative, or
retail electric provider that provides retail electricity service
to the facility may purchase electric power tendered to it by the
owner or operator of the facility at a value agreed to by the
electric utility, electric cooperative, or retail electric
provider and the owner or operator of the facility. The value of
the electric power may be based wholly or partly on the clearing
price of energy at the time of day and at the location at which the
electric power is made available to the electric grid.
(b) At the request of the owner or operator of the
distributed natural gas generation facility, the electric utility
or electric cooperative shall allow the owner or operator of the
facility to use transmission and distribution facilities to
transmit the electric power to another entity that is acceptable to
the owner or operator in accordance with commission rules or a
tariff approved by the Federal Energy Regulatory Commission.
(c) Subject to Subsections (e) and (f), if the owner or
operator of a distributed natural gas generation facility requests
to be interconnected to an electric utility or electric cooperative
that does not have a transmission tariff approved by the Federal
Energy Regulatory Commission, the electric utility or electric
cooperative may recover from the owner or operator of the facility
the reasonable costs of interconnecting the facility with the
electric utility or electric cooperative that are necessary for and
directly attributable to the interconnection of the facility.
(d) Subject to Subsections (e) and (f), an electric utility
or electric cooperative may recover from the owner or operator of a
distributed natural gas generation facility the reasonable costs of
electric facility upgrades and improvements if:
(1) the rated capacity of the distributed natural gas
generation facility is greater than the rated capacity of the
electric utility or electric cooperative; and
(2) the costs are necessary for and directly
attributable to accommodating the distributed natural gas
generation facility's capacity.
(e) An electric utility or electric cooperative may recover
costs under Subsection (c) or (d) only if:
(1) the electric utility or electric cooperative
provides a written good-faith cost estimate to the owner or
operator of the distributed natural gas generation facility; and
(2) the owner or operator of the distributed natural
gas generation facility agrees in writing to pay the reasonable and
necessary costs of interconnection or capacity accommodation
requested by the owner or operator and described in the estimate
before the electric utility or electric cooperative incurs the
costs.
(f) If an electric utility or electric cooperative seeks to
recover from the owner or operator of a distributed natural gas
generation facility an amount that exceeds the amount in the
estimate provided under Subsection (e) by more than five percent,
the commission shall resolve the dispute at the request of the owner
or operator of the facility.
(g) A distributed natural gas generation facility must
comply with emissions limitations established by the Texas
Commission on Environmental Quality for a standard emissions permit
for an electric generation facility unit installed after January 1,
1995.
(h) This section does not require an electric cooperative to
transmit electricity to a retail point of delivery in the
certificated service area of the electric cooperative if the
electric cooperative has not adopted customer choice.
SECTION 2.05. Subsection (c), Section 39.351, Utilities
Code, is amended to read as follows:
(c) The commission may establish simplified filing
requirements for distributed natural gas generation facilities [A
power generation company may register any time after September 1,
2000].
SECTION 2.06. Section 39.904, Utilities Code, is amended by
adding Subsection (p) to read as follows:
(p) This section is intended to increase the amount of
renewable generating capacity as provided by Subsection (a) and is
not intended, unless specifically stated otherwise in this section,
to provide operational or competitive advantages through Electric
Reliability Council of Texas protocols to renewable energy
generators to the detriment of other generation resources.
ARTICLE 3
SECTION 3.01. As soon as practicable after the effective
date of this Act, the designated appointing officials shall appoint
the members to the Texas Energy Policy Council established under
Chapter 300, Utilities Code, as added by this Act.
SECTION 3.02. This Act takes effect September 1, 2011.