87R3413 CXP-F
By: Eckhardt S.B. No. 304
A BILL TO BE ENTITLED
AN ACT
relating to a state goal for competitive zero-carbon electric
generation.
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 39.1516, 39.155, 39.157(e), 39.203, 39.904, 39.9051,
39.9052, [and] 39.914(e), and 39.918, 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. Section 39.402(a), Utilities Code, is amended to
read as follows:
(a) Until the date on which an electric utility subject to
this subchapter is authorized by the commission to implement
customer choice, the rates of the utility shall be regulated under
traditional cost of service regulation and the utility is subject
to all applicable regulatory authority prescribed by this subtitle
and Subtitle A, including Chapters 14, 32, 33, 36, and 37. Until
the date on which an electric utility subject to this subchapter
implements customer choice, the provisions of this chapter, other
than this subchapter, Sections 39.1516, 39.904, [and] 39.905, and
39.918, and the provisions relating to the duty to obtain a permit
from the Texas Commission on Environmental Quality for an electric
generating facility and to reduce emissions from an electric
generating facility, shall not apply to that utility. That portion
of any commission order entered before September 1, 2001, to comply
with this subchapter shall be null and void.
SECTION 3. Section 39.452(d), Utilities Code, is amended to
read as follows:
(d) Until the date on which an electric utility subject to
this subchapter implements customer choice:
(1) the provisions of this chapter do not apply to that
electric utility, other than this subchapter, Sections 39.1516,
39.904, [and] 39.905, and 39.918, the provisions relating to the
duty to obtain a permit from the Texas Commission on Environmental
Quality for an electric generating facility and to reduce emissions
from an electric generating facility, and the provisions of
Subchapter G that pertain to the recovery and securitization of
hurricane reconstruction costs authorized by Sections
39.458-39.463; and
(2) the electric utility is not subject to a rate
freeze and, subject to the limitation provided by Subsection (b),
may file for rate changes under Chapter 36 and for approval of one
or more of the rate rider mechanisms authorized by Sections 39.454
and 39.455.
SECTION 4. Section 39.502(b), Utilities Code, is amended to
read as follows:
(b) Until the date on which an electric utility subject to
this subchapter implements customer choice, the provisions of this
chapter, other than this subchapter and Sections 39.1516, 39.904,
[and] 39.905, and 39.918, do not apply to that utility.
SECTION 5. Section 39.552(b), Utilities Code, is amended to
read as follows:
(b) Until the date on which an electric utility subject to
this subchapter implements customer choice, the provisions of this
chapter, other than this subchapter and Sections 39.1516, 39.904,
[and] 39.905, and 39.918, do not apply to that utility.
SECTION 6. Subchapter Z, Chapter 39, Utilities Code, is
amended by adding Section 39.918 to read as follows:
Sec. 39.918. GOAL FOR COMPETITIVE ZERO-CARBON ENERGY. (a)
In this section:
(1) "Biomass fuel" means fuel developed from organic
material, including material derived from plants, crops, wood or
forest residues, waste residues, waste from food crops,
horticulture, food processing, animal farming, animal waste,
landfills, and sewage treatment facilities.
(2) "Zero-carbon energy technology" means a
technology that relies exclusively on an energy source that does
not emit a greenhouse gas in the production of electricity. The
term includes a technology that effectively captures and sequesters
greenhouse gases before their release into the atmosphere.
(b) It is the intent of the legislature that the amount of
electric power generated in this state from zero-carbon energy
technology for delivery by a retail electric provider, municipally
owned utility, or electric cooperative each year will increase to
meet the following percentages on or before the specified dates:
(1) by January 1, 2025, not less than 65 percent of the
annual total;
(2) by January 1, 2030, not less than 85 percent of the
annual total; and
(3) by January 1, 2035, 100 percent of the annual
total.
(c) The commission by rule shall:
(1) establish the minimum annual zero-carbon energy
technology generation requirement for each retail electric
provider, municipally owned utility, and electric cooperative
operating in this state in a manner designed to produce, on a
statewide basis, compliance with the requirement prescribed by
Subsection (b); and
(2) specify reasonable standards that zero-carbon
energy generation must meet to count toward compliance with the
requirement prescribed by Subsection (b) and that:
(A) are designed and operated so as to maximize
the use of all resources available to meet electric demand and
reliability needs from the capacity additions in accordance with
then-current industry standards; and
(B) encourage the development, construction, and
operation of new zero-carbon energy technology projects at sites in
this state that have the greatest economic potential for capture
and development of resources for zero-carbon energy technology.
(d) The commission by rule shall establish a zero-carbon
energy generation credits trading program. A retail electric
provider, municipally owned utility, or electric cooperative that
does not satisfy the requirements of Subsection (b) by directly
owning or purchasing energy generated using zero-carbon energy
technologies shall purchase sufficient zero-carbon energy
generation credits to satisfy the requirements by holding
zero-carbon energy generation credits in lieu of energy generated
from zero-carbon energy technologies.
(e) The commission by rule shall establish a means for a
retail electric provider, municipally owned utility, or electric
cooperative to satisfy the requirements of Subsection (b) by
generating electricity using biomass fuel instead of directly
owning or purchasing energy generated using zero-carbon energy
technologies.
(f) The commission may cap the price of zero-carbon energy
credits and may suspend the goal established by Subsection (b) as
necessary to protect the reliability and operation of the grid. A
price cap established under this subsection must equal or exceed
the social cost of carbon as determined by the United States
Environmental Protection Agency.
(g) The commission by rule shall establish a carbon offset
alternative payment program. An entity required by this section to
purchase a zero-carbon energy generation credit may choose to
purchase and apply a carbon capture and sequestration credit
instead of a zero-carbon energy generation credit toward the
satisfaction of the entity's obligation under this section. A
carbon capture and sequestration credit must be purchased through a
marketplace certified by the commission to offset the same amount
of carbon as is produced by the entity's carbon energy generation.
The offset payment must equal or exceed the social cost of carbon as
determined by the United States Environmental Protection Agency.
In implementing this subsection, the commission shall consider:
(1) the effects of zero-carbon energy credit prices on
electric rates; and
(2) the effects of the carbon offset alternative
payments on the zero-carbon energy credit market.
SECTION 7. Section 40.001(a), Utilities Code, is amended to
read as follows:
(a) Notwithstanding any other provision of law, except
Sections 39.155, 39.157(e), 39.203, [and] 39.904, and 39.918, this
chapter governs the transition to and the establishment of a fully
competitive electric power industry for municipally owned
utilities. With respect to the regulation of municipally owned
utilities, this chapter controls over any other provision of this
title, except for sections in which the term "municipally owned
utility" is specifically used.
SECTION 8. Section 40.004, Utilities Code, is amended to
read as follows:
Sec. 40.004. JURISDICTION OF COMMISSION. Except as
specifically otherwise provided in this chapter, the commission has
jurisdiction over municipally owned utilities only for the
following purposes:
(1) to regulate wholesale transmission rates and
service, including terms of access, to the extent provided by
Subchapter A, Chapter 35;
(2) to regulate certification of retail service areas
to the extent provided by Chapter 37;
(3) to regulate rates on appeal under Subchapters D
and E, Chapter 33, subject to Section 40.051(c);
(4) to establish a code of conduct as provided by
Section 39.157(e) applicable to anticompetitive activities and to
affiliate activities limited to structurally unbundled affiliates
of municipally owned utilities, subject to Section 40.054;
(5) to establish terms and conditions for open access
to transmission and distribution facilities for municipally owned
utilities providing customer choice, as provided by Section 39.203;
(6) to administer the renewable energy credits program
under Section 39.904(b), [and] the natural gas energy credits
program under Section 39.9044(b), and the zero-carbon energy
generation credits trading program under Section 39.918(d);
(7) to require reports of municipally owned utility
operations only to the extent necessary to:
(A) enable the commission to determine the
aggregate load and energy requirements of the state and the
resources available to serve that load; or
(B) enable the commission to determine
information relating to market power as provided by Section 39.155;
and
(8) to evaluate and monitor the cybersecurity
preparedness of a municipally owned utility described by Section
39.1516(a)(3) or (4).
SECTION 9. Section 41.001, Utilities Code, is amended to
read as follows:
Sec. 41.001. APPLICABLE LAW. Notwithstanding any other
provision of law, except Sections 39.155, 39.157(e), 39.203, [and]
39.904, and 39.918, this chapter governs the transition to and the
establishment of a fully competitive electric power industry for
electric cooperatives. Regarding the regulation of electric
cooperatives, this chapter shall control over any other provision
of this title, except for sections in which the term "electric
cooperative" is specifically used.
SECTION 10. The Public Utility Commission of Texas shall
adopt rules required by Section 39.918, Utilities Code, as added by
this Act, not later than January 1, 2022.
SECTION 11. This Act takes effect September 1, 2021.