S.B. No. 398
AN ACT
relating to certain resources and facilities for distributed
generation.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle C, Title 5, Business & Commerce Code, is
amended by adding Chapter 113 to read as follows:
CHAPTER 113. SALES AND LEASING OF DISTRIBUTED RENEWABLE GENERATION
RESOURCES
Sec. 113.001. DEFINITIONS. In this chapter:
(1) "Distributed renewable generation" has the
meaning assigned by Section 39.916, Utilities Code.
(2) "Small commercial customer" has the meaning
assigned by Section 39.202(o), Utilities Code.
Sec. 113.002. APPLICABILITY. (a) This chapter applies to a
seller or lessor of distributed renewable generation resources.
(b) This chapter does not apply to:
(1) a transaction involving the sale or transfer of
the real property on which a distributed renewable generation
resource is located;
(2) a person, including a person acting through the
person's officers, employees, brokers, or agents, who markets,
sells, solicits, negotiates, or enters into an agreement for the
sale or financing of a distributed renewable generation resource as
part of a transaction involving the sale or transfer of the real
property on which the distributed renewable generation resource is
or will be affixed; or
(3) a third party that enters into an agreement for the
financing of a distributed renewable generation resource.
Sec. 113.003. LEASE, SALES, AND INSTALLATION DISCLOSURES.
A seller or lessor who enters into a purchase, lease, or power
purchase agreement with a residential or small commercial customer
for the operation of a distributed renewable generation resource
shall provide to the customer in writing:
(1) contact information of the salesperson and
installer of the generation resource;
(2) a description of all equipment to be installed;
(3) the cost of all equipment to be installed;
(4) a detailed accounting of fees associated with the
installation or operation of the generation resource;
(5) representations, if any, made as part of the
agreement regarding the expected operational performance and
financial performance of the generation resource; and
(6) all applicable warranties.
Sec. 113.004. ADDITIONAL DISCLOSURES FOR LEASE AGREEMENTS.
In addition to the disclosures required under Section 113.003, a
lessor shall provide to a leasing residential or small commercial
customer in writing:
(1) the term and rate of the lease, including any
payment escalators or other terms that affect the customer's
payments; and
(2) a statement of whether the lease and any
applicable warranty or maintenance agreement is transferable to a
subsequent purchaser of the property where the distributed
renewable generation resource is installed.
Sec. 113.005. DISCLOSURES FOR POWER PURCHASE AGREEMENTS. A
residential or small commercial customer who enters into a power
purchase agreement is entitled to receive in writing:
(1) the disclosures required under Sections
113.003(1), (2), (5), and (6);
(2) the term and rate of the power purchase agreement,
including any payment escalators or other terms that affect the
customer's payments; and
(3) whether the power purchase agreement and any
applicable warranty or maintenance agreement is transferable to a
subsequent purchaser of the property where the distributed
renewable generation resource is installed.
SECTION 2. Chapter 229, Local Government Code, is amended
by adding Subchapter C to read as follows:
SUBCHAPTER C. REGULATION OF SOLAR ENERGY DEVICES
Sec. 229.101. REGULATION OF SOLAR ENERGY DEVICES. (a) In
this section:
(1) "Municipally owned utility" has the meaning
assigned by Section 11.003, Utilities Code.
(2) "Small commercial customer" has the meaning
assigned by Section 39.202(o), Utilities Code.
(3) "Solar energy device" has the meaning assigned by
Section 171.107, Tax Code.
(b) A municipality may not prohibit or restrict the
installation of a solar energy device by a residential or small
commercial customer except to the extent:
(1) a property owner's association may prohibit the
installation under Sections 202.010(d)(1) through (7), Property
Code; or
(2) the interconnection guidelines and
interconnection agreement of a municipally owned utility serving
the customer's service area, the rules of the Public Utility
Commission of Texas, or the protocols of an independent
organization certified under Section 39.151, Utilities Code, limit
the installation of solar energy devices due to reliability, power
quality, or safety of the distribution system.
SECTION 3. Subchapter B, Chapter 35, Utilities Code, is
amended by adding Section 35.037 to read as follows:
Sec. 35.037. INTERCONNECTION AND OPERATION OF CERTAIN
DISTRIBUTED GENERATION FACILITIES FOR FOOD SUPPLY CHAIN. (a) In
this section:
(1) "Customer" means a retail electric customer:
(A) with a distributed generation facility
installed on the retail electric customer's side of the meter; and
(B) that has a primary purpose of or derives a
material source of revenue from:
(i) retail grocery sales; or
(ii) food manufacturing or distribution for
retail grocery sales.
(2) "Distributed generation facility" means a
facility installed on the customer's side of the meter but
separately metered from the customer:
(A) with a nameplate capacity of at least 250
kilowatts and not more than 10 megawatts;
(B) that is capable of generating and providing
backup or supplementary power to the customer's premises; and
(C) that is owned or operated by a person
registered as a power generation company in accordance with Section
39.351.
(b) This section only applies in the ERCOT power region in
areas where retail customer choice has not been implemented.
(c) A person who owns or operates a distributed generation
facility served by a municipally owned utility or electric
cooperative in the ERCOT power region may sell electric power
generated by the distributed generation facility at wholesale,
including the provision of ancillary services, subject to the
limitations of this section.
(d) A person who owns or operates a distributed generation
facility may sell electric power generated by the distributed
generation facility at wholesale to a municipally owned utility or
electric cooperative certificated for retail service to the area
where the distributed generation facility is located or to a
related generation and transmission electric cooperative. The
municipally owned utility or electric cooperative shall purchase at
wholesale the quantity of electric power generated by the
distributed generation facility needed to satisfy the full electric
requirements of the customer on whose side of the meter the
distributed generation facility is installed and operated at a
wholesale price agreed to by the customer and shall resell that
quantity of power at retail to the customer at the rate applicable
to the customer for retail service, which must at minimum include
all amounts paid for the wholesale electric power, during:
(1) an emergency declared by the independent
organization certified under Section 39.151 for the ERCOT power
region that creates the potential for interruption of service to
the customer;
(2) any service interruption at the customer's
premises;
(3) construction on the customer's premises that
creates the potential for interruption of service to the customer;
(4) maintenance and testing of the distributed
generation facility; and
(5) additional times mutually agreed on by the owner
or operator of the distributed generation facility and the
municipally owned utility or electric cooperative.
(e) The customer shall provide written notice as soon as
reasonably practicable to the municipally owned utility or electric
cooperative of a circumstance described by Subsection (d)(3) or
(4).
(f) In addition to a sale authorized under Subsection (d),
on request by an owner or operator of a distributed generation
facility, the municipally owned utility or electric cooperative
shall provide wholesale transmission service to the distributed
generation facility owner in the same manner as to other power
generation companies for the sale of power from the distributed
generation facility at wholesale, including for the provision of
ancillary services, in the ERCOT market. The distributed generation
facility owner shall comply with all applicable commission rules
and protocols and with governing documents of the independent
organization certified under Section 39.151 for the ERCOT power
region. This section does not require a municipally owned utility
or electric cooperative to transmit electricity to a retail point
of delivery in the certificated service area of the municipally
owned utility or electric cooperative.
(g) In addition to a sale authorized under Subsection (d) or
(f), a municipally owned utility or electric cooperative or related
generation and transmission electric cooperative may purchase
electric power provided by the owner or operator of the distributed
generation facility at wholesale at a mutually agreed on price. The
price may be based wholly or partly on the ERCOT market clearing
price of energy at the time of day and at the location at which the
electric power is made available.
(h) A municipally owned utility or electric cooperative
shall make available a standard interconnection application and
agreement for distributed generation facilities that is
substantially similar to the commission's interconnection
agreement form and consistent with this section to facilitate the
connection of distributed generation facilities. A municipally
owned utility or electric cooperative shall allow interconnection
of a distributed generation facility and provide to a distributed
generation facility on a nondiscriminatory basis wholesale
transmission service, including at distribution voltage, in the
same manner as for other power generation companies to transmit to
the ERCOT power grid the electric power generated by the
distributed generation facility. A municipally owned utility or
electric cooperative may recover from the owner or operator of the
distributed generation facility all reasonable costs necessary for
and directly attributable to the interconnection of the facility,
including the reasonable costs of necessary system upgrades and
improvements directly attributable to the distributed generation
facility.
(i) Not later than the 30th day after the date a complete
application for interconnection of a distributed generation
facility is received, the municipally owned utility or electric
cooperative shall provide the applicant with a written good faith
cost estimate for interconnection-related costs. The municipally
owned utility or electric cooperative may not incur any
interconnection-related costs without entering into a written
agreement for the payment of those costs by the applicant.
(j) The process to interconnect a distributed generation
facility must be completed not later than the 240th day after the
date the municipally owned utility or electric cooperative receives
payment of all estimated costs to complete the interconnection,
except that:
(1) the period may be extended by written agreement
between the parties; or
(2) the period may be extended after a good faith
showing by the municipally owned utility or electric cooperative
that the interconnection requires improvements, upgrades, or
construction of new facilities that cannot reasonably be completed
within that period, in which case the period may be extended for a
time not to exceed the time necessary for the improvements,
upgrades, or construction of new facilities to be completed.
(k) A municipally owned utility or electric cooperative
shall charge the owner or operator of a distributed generation
facility rates on a reasonable and nondiscriminatory basis for
providing wholesale transmission service to the distributed
generation facility owner in the same manner as for other power
generation companies to transmit to the ERCOT power grid the
electric power generated by the distributed generation facility in
accordance with a tariff filed by the municipally owned utility or
electric cooperative with the commission.
(l) The owner or operator of the distributed generation
facility shall contract with the municipally owned utility or
electric cooperative or the municipally owned utility's or electric
cooperative's designee for any scheduling, settlement,
communication, telemetry, or other services required to
participate in the ERCOT wholesale market, but only to the extent
that the utility, cooperative, or designee offers the services on a
nondiscriminatory basis and at a commercially reasonable cost. If
the municipally owned utility or electric cooperative or the
municipally owned utility's or electric cooperative's designee does
not offer or declines to offer the services, or fails to do so on a
nondiscriminatory basis and at a commercially reasonable cost as
determined by quotes from at least three third parties providing
the same services, the owner or operator of the distributed
generation facility may contract with a third party provider to
obtain the services.
(m) A distributed 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.
(n) A municipally owned utility or electric cooperative is
not required to interconnect a distributed generation facility
under this section if, on the date the utility or cooperative
receives an application for interconnection of the facility, the
municipally owned utility or electric cooperative has
interconnected distributed generation facilities with an aggregate
capacity that equals the lesser amount of:
(1) 5 percent of the municipally owned utility's or
electric cooperative's average of the 15-minute summer peak load
coincident with the independent system operator's 15-minute summer
peak load in each of the months of June, July, August, and
September; or
(2) 300 megawatts, adjusted annually by the percentage
of total system load growth in the ERCOT power region beginning in
2022.
(o) A municipally owned utility or electric cooperative
that, on the date the utility or cooperative receives an
application for interconnection of a distributed generation
facility, has interconnected distributed generation facilities
with an aggregate capacity less than the threshold described by
Subsection (n) is required to increase that capacity only up to that
threshold.
(p) This section is not intended to change registration
standards or other qualifications required by the independent
organization certified under Section 39.151 for the ERCOT power
region related to the participation of distributed generation
facilities in the wholesale market. This section is not intended to
allow distributed generation facilities to participate in a manner
that is not technically feasible or that is otherwise in conflict
with wholesale rules and requirements adopted by the independent
organization certified under Section 39.151 for the ERCOT power
region.
SECTION 4. It is the intent of the legislature in enacting
Section 35.037, Utilities Code, to allow grocers the ability to
deploy back-up generation in the ERCOT power region in areas that
have not implemented retail customer choice.
SECTION 5. The changes in law made by this Act apply only to
an agreement governing the sale or lease of distributed renewable
generation, as defined by Section 39.916, Utilities Code, or a
power purchase agreement entered into on or after the effective
date of this Act. An agreement entered into before the effective
date of this Act is governed by the law as it existed immediately
before the effective date of this Act, and that law is continued in
effect for that purpose.
SECTION 6. This Act takes effect September 1, 2021.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 398 passed the Senate on
April 9, 2021, by the following vote: Yeas 31, Nays 0; and that
the Senate concurred in House amendment on May 28, 2021, by the
following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 398 passed the House, with
amendment, on May 25, 2021, by the following vote: Yeas 126,
Nays 16, two present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor