87R16686 BRG-F
By: Darby, Lucio III, King of Parker, H.B. No. 1607
Hernandez, Hunter, et al.
A BILL TO BE ENTITLED
AN ACT
relating to certificates of public convenience and necessity for
certain transmission projects.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The legislature finds that:
(1) this state has long been a leader in energy policy
that has delivered economic, electricity, and environmental
benefits to millions of electricity consumers, businesses,
state-owned lands, and landowners;
(2) this state continues to experience population,
business, industrial, and manufacturing growth that increases the
need for reliable, low-cost electricity;
(3) the ERCOT electric power grid is experiencing
congestion, constraint, and curtailment that are economically
undesirable;
(4) the ERCOT electric power grid is experiencing load
growth management challenges;
(5) while this state does not import large amounts of
electricity, working to ensure that this state's electricity needs
are met as fully as possible from in-state resources is of strategic
interest to the legislature;
(6) all of the electric power industry's available
power generation resources, including its wind and solar
generation, natural gas-fired generation, energy storage, and
transmission components, can play a substantial role in this
state's economic recovery;
(7) this state's oil and natural gas industries
continue to grow and prosper, and those industries require low-cost
electricity and a reliable electric power grid to thrive; and
(8) to attract new capital projects to this state,
create jobs, promote substantial new economic development, ensure a
reliable and stable electric power grid that is powered by in-state
resources, and keep this state as a leader on energy policy in the
United States, a timely and targeted expansion of this state's
electric transmission system is necessary to enhance the
reliability of the system.
SECTION 2. Section 37.0541, Utilities Code, is amended to
read as follows:
Sec. 37.0541. CONSOLIDATION OF CERTAIN PROCEEDINGS. The
commission shall consolidate the proceeding on an application to
obtain or amend a certificate of convenience and necessity for the
construction of a transmission line with the proceeding on another
application to obtain or amend a certificate of convenience and
necessity for the construction of a transmission line if it is
apparent from the applications or a motion to intervene in either
proceeding that the transmission lines that are the subject of the
separate proceedings share a common point of interconnection. [This
section does not apply to a proceeding on an application for a
certificate of convenience and necessity for a transmission line to
serve a competitive renewable energy zone as part of a plan
developed by the commission under Section 39.904(g)(2).]
SECTION 3. Section 37.056, Utilities Code, is amended by
adding Subsections (a-1), (d-1), (d-2), and (d-3) and amending
Subsection (d) to read as follows:
(a-1) In this section:
(1) "Interzonal" means involving more than one ERCOT
load zone.
(2) "Intrazonal" means involving a single ERCOT load
zone.
(d) The commission by rule shall establish criteria, in
addition to the criteria described by Subsection (c), for granting
a certificate for a transmission project that serves the ERCOT
power region and[,] that is not necessary to meet state or federal
reliability standards[, and that does not serve a competitive
renewable energy zone].
(d-1) Except as provided by Subsection (d-2), an
application for a certificate described by Subsection (d) [The
criteria] must include a comparison of the levelized estimated cost
of the transmission project and the levelized estimated cost
savings and economic benefits that may result from the
[transmission] project. The commission shall include with the
commission's decision to grant or deny the certificate the
commission's findings on the comparison. The comparison must
account for:
(1) the probable improvement of service and reduction
of costs for consumers that may be realized from the project;
(2) an estimated value of the reduction in interzonal
and intrazonal constraint and congestion costs and interzonal and
intrazonal curtailment costs that may be realized from the project;
(3) an estimation of reduced transmission losses that
may be realized from the project;
(4) an assessment of whether the project will provide
improved access to ERCOT for new generation facilities and the
benefits that improved access could provide to generation
facilities, industrial load, and the ERCOT market;
(5) an estimation of reduced future transmission
investment costs that may be realized from the project;
(6) an estimation of costs of projects described by
Subsection (d-2) that may be avoided as a result of the project; and
(7) an estimation of direct economic benefits that may
be realized from the construction of the project [The commission
shall include with its decision on an application for a certificate
to which this subsection applies findings on the criteria].
(d-2) If an application does not include a comparison
described by Subsection (d-1), the commission may not grant a
certificate for a project described by Subsection (d) unless the
commission finds that the project is needed to support a reliable
and adequate transmission network, to facilitate wholesale
competition, or to minimize curtailments due to interzonal
constraints and intrazonal congestion.
(d-3) Not less than once per year, the independent
organization certified under Section 39.151 for the ERCOT power
region shall identify transmission projects that will meet
commission findings under Subsection (d-2).
SECTION 4. Section 39.904(k), Utilities Code, is amended to
read as follows:
(k) The commission and the independent organization
certified for ERCOT shall study the need for increased transmission
and generation capacity throughout this state and report to the
legislature the results of the study and any recommendations for
legislation. The report must be filed with the legislature not
later than December 31 of each even-numbered year [and may be filed
as a part of the report required by Subsection (j)].
SECTION 5. Subchapter Z, Chapter 39, Utilities Code, is
amended by adding Section 39.918 to read as follows:
Sec. 39.918. CRITICAL DESIGNATION TRANSMISSION
INFRASTRUCTURE PROJECTS. (a) In this section:
(1) "Interzonal" means involving more than one ERCOT
load zone.
(2) "Intrazonal" means involving a single ERCOT load
zone.
(b) Not later than December 30, 2021, the independent
organization certified under Section 39.151 for the ERCOT power
region shall:
(1) identify, in consultation with the commission,
critical designation transmission infrastructure projects and the
electric utilities or transmission and distribution utilities that
will construct and operate the projects in a manner consistent with
Section 37.056; and
(2) submit a written description of each project to
the commission.
(c) Projects identified under Subsection (b) must
facilitate a timely and targeted expansion of the electric power
grid in ERCOT for the purposes of:
(1) resolving existing interzonal and intrazonal
transmission constraints, congestion, or curtailments, including
generic transmission constraints; and
(2) ensuring the future reliability of the ERCOT
electric power grid.
(d) To the extent practicable, projects identified under
Subsection (b) should:
(1) be cost-effective and designed to transmit high
volumes of electricity in and across ERCOT load zones efficiently;
(2) minimize the need for the acquisition of new
rights-of-way by replacing aging infrastructure or following
routes that align with existing rights-of-way or existing
transmission infrastructure;
(3) minimize interzonal constraints and intrazonal
congestion during construction activities;
(4) be designed to accommodate new solutions,
including higher voltages, if the independent organization
determines that new solutions are required; and
(5) be designed to significantly reduce present or
expected future interzonal constraints and intrazonal congestion.
(e) The independent organization certified under Section
39.151 for the ERCOT power region shall identify as a critical
designation transmission infrastructure project under Subsection
(b) a project addressing an interzonal constraint or intrazonal
congestion in an area if:
(1) the constraint or congestion has been present for
three years or longer; and
(2) the area has experienced constraint or congestion
costs greater than or equal to $100 million per year in each of the
previous three years.
(f) The independent organization certified under Section
39.151 for the ERCOT power region may consult with the independent
organization's market participant segments and other stakeholders
to identify projects under Subsection (b) that could facilitate:
(1) the growth of the economy of this state; or
(2) oil and gas, commercial, and industrial
development that could provide substantial new tax revenue,
landowner income, or new jobs in this state.
(g) Not later than the 450th day after the date that the
independent organization certified under Section 39.151 for the
ERCOT power region submits a written description of a project to the
commission under Subsection (b), the utility that will construct
and operate the project shall submit to the commission an
application for a certificate of public convenience and necessity
for the project.
(h) In considering an application for a certificate of
public convenience and necessity for a project identified under
Subsection (b), the commission is not required to consider the
factors provided by Sections 37.056(c)(1) and (2). The commission
shall consider all factors provided by Section 37.056, including
Sections 37.056(c)(1) and (2), for a project not identified under
Subsection (b).
(i) If the commission issues a certificate of public
convenience and necessity for a project identified under Subsection
(b), the commission shall find that the project is used and useful
to the utility in providing service for purposes of this section,
prudent, and includable in the rate base, regardless of the extent
of the utility's actual use of the project.
(j) Transmission service that is facilitated through a
project identified under Subsection (b) must be provided in a
manner consistent with Subchapter A, Chapter 35.
(k) This section expires September 1, 2030.
SECTION 6. Sections 39.904(g), (h), (i), and (j), Utilities
Code, are repealed.
SECTION 7. The changes in law made by this Act apply only to
a proceeding affecting a certificate of public convenience and
necessity that commences on or after the effective date of this Act.
A proceeding affecting a certificate of public convenience and
necessity that commenced before the effective date of this Act is
governed by the law in effect on the date the proceeding is
commenced, and that law is continued in effect for that purpose.
SECTION 8. The recovery of a transmission facility
investment made by an electric utility to serve a competitive
renewable energy zone is governed by the law in effect on the date
the facility is placed in service, regardless of whether the
facility is completed before, on, or after the effective date of
this Act, and that law is continued in effect for that purpose.
SECTION 9. This Act takes effect September 1, 2021.