| 1 | 1 | | 87R11019 MCF-F |
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| 2 | 2 | | By: Thierry H.B. No. 2818 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to use of electric energy storage facilities in the ERCOT |
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| 8 | 8 | | power region. |
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| 9 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 10 | 10 | | SECTION 1. Section 35.151, Utilities Code, is amended to |
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| 11 | 11 | | read as follows: |
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| 12 | 12 | | Sec. 35.151. ELECTRIC ENERGY STORAGE. This subchapter |
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| 13 | 13 | | applies only to the ownership or operation of electric energy |
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| 14 | 14 | | storage equipment or facilities in the ERCOT power region that are |
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| 15 | 15 | | intended to: |
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| 16 | 16 | | (1) provide energy or ancillary services at wholesale, |
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| 17 | 17 | | including electric energy storage equipment or facilities listed on |
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| 18 | 18 | | a power generation company's registration with the commission or, |
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| 19 | 19 | | for an exempt wholesale generator, on the generator's registration |
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| 20 | 20 | | with the Federal Energy Regulatory Commission; or |
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| 21 | 21 | | (2) provide reliable delivery of electric energy to |
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| 22 | 22 | | distribution customers. |
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| 23 | 23 | | SECTION 2. Subchapter E, Chapter 35, Utilities Code, is |
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| 24 | 24 | | amended by adding Section 35.153 to read as follows: |
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| 25 | 25 | | Sec. 35.153. CONTRACTS FOR ELECTRIC ENERGY STORAGE FOR |
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| 26 | 26 | | RELIABILITY SERVICES. (a) A transmission and distribution |
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| 27 | 27 | | utility, with prior approval of the commission, may contract with a |
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| 28 | 28 | | power generation company to provide electric energy from an |
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| 29 | 29 | | electric energy storage facility to ensure reliable service to |
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| 30 | 30 | | distribution customers. |
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| 31 | 31 | | (b) The commission may not authorize ownership of an |
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| 32 | 32 | | electric energy storage facility by a transmission and distribution |
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| 33 | 33 | | utility. |
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| 34 | 34 | | (c) Before entering into a contract under Subsection (a), |
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| 35 | 35 | | the transmission and distribution utility must issue a request for |
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| 36 | 36 | | proposals for use of an electric energy storage facility to meet the |
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| 37 | 37 | | utility's reliability needs. |
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| 38 | 38 | | (d) A transmission and distribution utility may enter into a |
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| 39 | 39 | | contract under Subsection (a) only if use of an electric energy |
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| 40 | 40 | | storage facility is more cost-effective than construction or |
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| 41 | 41 | | modification of traditional distribution facilities. |
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| 42 | 42 | | (e) A transmission and distribution utility may not enter |
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| 43 | 43 | | into a contract under Subsection (a) that reserves an amount of |
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| 44 | 44 | | capacity exceeding the amount of capacity required to ensure |
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| 45 | 45 | | reliable service to the utility's distribution customers. |
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| 46 | 46 | | (f) A power generation company that owns or operates an |
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| 47 | 47 | | electric energy storage facility subject to a contract under |
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| 48 | 48 | | Subsection (a) may sell electric energy or ancillary services |
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| 49 | 49 | | through use of the facility only to the extent that the company |
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| 50 | 50 | | reserves capacity as required by the contract. |
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| 51 | 51 | | (g) A power generation company that owns or operates an |
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| 52 | 52 | | electric energy storage facility subject to a contract under |
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| 53 | 53 | | Subsection (a) may not discharge the facility to satisfy the |
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| 54 | 54 | | contract's requirements unless directed by the transmission and |
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| 55 | 55 | | distribution utility. |
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| 56 | 56 | | (h) A contract under Subsection (a) must require a power |
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| 57 | 57 | | generation company that owns or operates an electric energy storage |
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| 58 | 58 | | facility to reimburse a transmission and distribution utility for |
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| 59 | 59 | | the cost of an administrative penalty assessed against the utility |
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| 60 | 60 | | for a violation caused by the facility's failure to meet the |
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| 61 | 61 | | requirements of the agreement. |
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| 62 | 62 | | (i) In establishing the rates of a transmission and |
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| 63 | 63 | | distribution utility, a regulatory authority shall review a |
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| 64 | 64 | | contract between the utility and a power generation company under |
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| 65 | 65 | | Subsection (a). The utility has the burden of proof to establish |
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| 66 | 66 | | that the costs of the contract are reasonable and necessary. The |
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| 67 | 67 | | regulatory authority may authorize a transmission and distribution |
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| 68 | 68 | | utility to include a reasonable return on the payments required |
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| 69 | 69 | | under the contract only if the contract terms satisfy the relevant |
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| 70 | 70 | | accounting standards for a capital lease or finance lease. |
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| 71 | 71 | | (j) The total amount of electric energy storage capacity |
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| 72 | 72 | | reserved by contracts under Subsection (a) may not exceed 40 |
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| 73 | 73 | | megawatts. The commission shall by rule establish the maximum |
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| 74 | 74 | | amount of electric energy storage capacity allotted to each |
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| 75 | 75 | | transmission and distribution utility. |
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| 76 | 76 | | (k) The commission shall adopt rules as necessary to |
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| 77 | 77 | | implement this section and establish criteria for approving |
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| 78 | 78 | | contracts under Subsection (a). |
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| 79 | 79 | | SECTION 3. The Public Utility Commission of Texas shall |
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| 80 | 80 | | adopt rules required by Section 35.153, Utilities Code, as added by |
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| 81 | 81 | | this Act, as soon as practicable after the effective date of this |
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| 82 | 82 | | Act. |
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| 83 | 83 | | SECTION 4. This Act takes effect September 1, 2021. |
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