Texas 2023 - 88th Regular

Texas House Bill HB1500 Compare Versions

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1	1	H.B. No. 1500
2	2
3	3
4	4	AN ACT
5	5	relating to the continuation and functions of the Public Utility
6	6	Commission of Texas and the Office of Public Utility Counsel, and
7	7	the functions of the independent organization certified for the
8	8	ERCOT power region; increasing an administrative penalty.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 12.005, Utilities Code, is amended to
11	11	read as follows:
12	12	Sec. 12.005. APPLICATION OF SUNSET ACT. The Public Utility
13	13	Commission of Texas is subject to Chapter 325, Government Code
14	14	(Texas Sunset Act). Unless continued in existence as provided by
15	15	that chapter or by Chapter 39, the commission is abolished [and this
16	16	title expires] September 1, 2029 [2023].
17	17	SECTION 2. Section 12.059, Utilities Code, is amended to
18	18	read as follows:
19	19	Sec. 12.059. TRAINING PROGRAM FOR COMMISSIONERS. (a) A
20	20	person who is appointed to and qualifies for office as a member of
21	21	the commission may not vote, deliberate, or be counted as a member
22	22	in attendance at a meeting of the commission until the person
23	23	completes a [Before a commissioner may assume the commissioner's
24	24	duties and before the commissioner may be confirmed by the senate,
25	25	the commissioner must complete at least one course of the] training
26	26	program that complies with [established under] this section.
27	27	(b) The [A] training program must [established under this
28	28	section shall] provide the person with information [to the
29	29	commissioner] regarding:
30	30	(1) the law governing [enabling legislation that
31	31	created the] commission operations [and its policymaking body to
32	32	which the commissioner is appointed to serve];
33	33	(2) the programs, functions, rules, and budget of
34	34	[operated by] the commission;
35	35	(3) the scope [role and functions] of and limitations
36	36	on the rulemaking authority of the commission;
37	37	(4) the results [rules] of the most recent formal
38	38	audit of the commission [with an emphasis on the rules that relate
39	39	to disciplinary and investigatory authority];
40	40	(5) the requirements of:
41	41	(A) laws relating to open meetings, public
42	42	information, administrative procedure, and disclosing conflicts of
43	43	interest; and
44	44	(B) other laws applicable to members of a state
45	45	policy-making body in performing their duties [current budget for
46	46	the commission]; and
47	47	(6) [the results of the most recent formal audit of the
48	48	commission;
49	49	[(7) the requirements of Chapters 551, 552, and 2001,
50	50	Government Code;
51	51	[(8) the requirements of the conflict of interest laws
52	52	and other laws relating to public officials; and
53	53	[(9)] any applicable ethics policies adopted by the
54	54	commission or the Texas Ethics Commission.
55	55	(c) A person [who is] appointed to the commission is
56	56	entitled to reimbursement, as provided by the General
57	57	Appropriations Act, for the travel expenses incurred in attending
58	58	the training program regardless of whether the attendance at the
59	59	program occurs before or after the person qualifies for office.
60	60	(d) The executive director of the commission shall create a
61	61	training manual that includes the information required by
62	62	Subsection (b). The executive director shall distribute a copy of
63	63	the training manual annually to each member of the commission. Each
64	64	member of the commission shall sign and submit to the executive
65	65	director a statement acknowledging that the member received and has
66	66	reviewed the training manual.
67	67	SECTION 3. Section 12.202, Utilities Code, is amended by
68	68	adding Subsections (a-1) and (a-2) to read as follows:
69	69	(a-1) The policies adopted under this section must require
70	70	the agenda for each regular commission meeting to include public
71	71	testimony as a meeting agenda item and allow members of the public
72	72	to comment on:
73	73	(1) each meeting agenda item unrelated to a contested
74	74	case; and
75	75	(2) other matters under the commission's jurisdiction.
76	76	(a-2) The commission may prohibit public comment at a
77	77	regular commission meeting on a meeting agenda item related to a
78	78	contested case.
79	79	SECTION 4. Section 12.203, Utilities Code, is amended to
80	80	read as follows:
81	81	Sec. 12.203. BIENNIAL REPORT. (a) Not later than January
82	82	15 of each odd-numbered year, the commission shall prepare a
83	83	written report that includes:
84	84	(1) suggestions regarding modification and
85	85	improvement of the commission's statutory authority and for the
86	86	improvement of utility regulation in general, including the
87	87	regulation of water and sewer service under Chapter 13, Water Code,
88	88	that the commission considers appropriate for protecting and
89	89	furthering the interest of the public;
90	90	(2) a report on the scope of competition in the
91	91	electric and telecommunications markets that includes:
92	92	(A) an assessment of:
93	93	(i) the effect of competition and industry
94	94	restructuring on customers in both competitive and noncompetitive
95	95	electric markets; and
96	96	(ii) the effect of competition on the rates
97	97	and availability of electric services for residential and small
98	98	commercial customers;
99	99	(B) an assessment of the effect of competition
100	100	on:
101	101	(i) customers in both competitive and
102	102	noncompetitive telecommunications markets, with a specific focus
103	103	on rural markets; and
104	104	(ii) the rates and availability of
105	105	telecommunications services for residential and business
106	106	customers, including any effects on universal service; and
107	107	(C) a summary of commission action over the
108	108	preceding two years that reflects changes in the scope of
109	109	competition in regulated electric and telecommunications markets;
110	110	and
111	111	(3) recommendations for legislation that the
112	112	commission determines appropriate to promote the public interest in
113	113	the context of partially competitive electric and
114	114	telecommunications markets.
115	115	(b) A telecommunications utility, as defined by Section
116	116	51.002, shall cooperate with the commission as necessary for the
117	117	commission to satisfy the requirements of this section.
118	118	SECTION 5. Subchapter E, Chapter 12, Utilities Code, is
119	119	amended by adding Section 12.205 to read as follows:
120	120	Sec. 12.205. STRATEGIC COMMUNICATIONS PLAN. The commission
121	121	shall:
122	122	(1) develop an agency-wide plan for:
123	123	(A) improving the effectiveness of commission
124	124	communications with the public, market participants, and other
125	125	relevant audiences; and
126	126	(B) responding to changing communications needs;
127	127	(2) include in the plan required by Subdivision (1)
128	128	goals, objectives, and metrics to assess commission efforts; and
129	129	(3) update the plan required by Subdivision (1) at
130	130	least once every two years.
131	131	SECTION 6. Section 13.002, Utilities Code, is amended to
132	132	read as follows:
133	133	Sec. 13.002. APPLICATION OF SUNSET ACT. The Office of
134	134	Public Utility Counsel is subject to Chapter 325, Government Code
135	135	(Texas Sunset Act). Unless continued in existence as provided by
136	136	that chapter, the office is abolished [and this chapter expires]
137	137	September 1, 2029 [2023].
138	138	SECTION 7. Sections 15.023(b-1) and (f), Utilities Code,
139	139	are amended to read as follows:
140	140	(b-1) Notwithstanding Subsection (b), the penalty for a
141	141	violation of a voluntary mitigation plan entered into under
142	142	Subsection (f) or of a provision of Section 35.0021 or 38.075 may be
143	143	in an amount not to exceed $1,000,000 for a violation. Each day a
144	144	violation continues or occurs is a separate violation for purposes
145	145	of imposing a penalty.
146	146	(f) The commission and a person may develop and enter into a
147	147	voluntary mitigation plan relating to a violation of Section 39.157
148	148	or rules adopted by the commission under that section. The
149	149	commission may approve the plan only if the commission determines
150	150	that the plan is in the public interest. The voluntary mitigation
151	151	plan must be reviewed at least once every two years and not later
152	152	than the 90th day after the implementation date of a wholesale
153	153	market design change. As part of the review, the commission must
154	154	determine whether the voluntary mitigation plan remains in the
155	155	public interest. If the commission determines that the voluntary
156	156	mitigation plan is no longer in the public interest, the commission
157	157	and the person must agree to a modification of the plan or the
158	158	commission must terminate the plan. Adherence [If the commission
159	159	and a person enter into a voluntary mitigation plan, adherence] to
160	160	the plan must be considered in determining whether a violation
161	161	occurred and, if so, the penalty to be assessed [constitutes an
162	162	absolute defense against an alleged violation with respect to
163	163	activities covered by the plan].
164	164	SECTION 8. Subchapter A, Chapter 35, Utilities Code, is
165	165	amended by adding Section 35.0022 to read as follows:
166	166	Sec. 35.0022. SERVICE INTERRUPTION NOTIFICATIONS. (a)
167	167	This section applies only to a provider of electric generation
168	168	service described by Section 35.0021(a).
169	169	(b) The commission by rule shall require a provider of
170	170	electric generation service to provide to the independent
171	171	organization certified under Section 39.151 for the ERCOT power
172	172	region the reason for each unplanned service interruption. Not
173	173	later than the third business day after the service is restored, the
174	174	independent organization shall include the reason for each
175	175	unplanned service interruption in a publicly available report
176	176	published on the independent organization's Internet website.
177	177	SECTION 9. Section 35.004, Utilities Code, is amended by
178	178	amending Subsection (d) and adding Subsections (d-1), (d-2), and
179	179	(d-3) to read as follows:
180	180	(d) The commission shall price wholesale transmission
181	181	services within ERCOT based on the postage stamp method of pricing
182	182	under which a transmission-owning utility's rate is based on the
183	183	ERCOT utilities' combined annual costs of transmission, other than
184	184	costs described by Subsections (d-2) and (d-3), divided by the
185	185	total demand placed on the combined transmission systems of all
186	186	such transmission-owning utilities within a power region. An
187	187	electric utility subject to the freeze period imposed by Section
188	188	39.052 may treat transmission costs in excess of transmission
189	189	revenues during the freeze period as an expense for purposes of
190	190	determining annual costs in the annual report filed under Section
191	191	39.257. Notwithstanding Section 36.201, the commission may approve
192	192	wholesale rates that may be periodically adjusted to ensure timely
193	193	recovery of transmission investment. Notwithstanding Section
194	194	36.054(a), if the commission determines that conditions warrant the
195	195	action, the commission may authorize the inclusion of construction
196	196	work in progress in the rate base for transmission investment
197	197	required by the commission under Section 39.203(e).
198	198	(d-1) The commission by rule shall establish a reasonable
199	199	allowance for transmission-owning utility costs incurred to
200	200	interconnect generation resources directly with the ERCOT
201	201	transmission system at transmission voltage. The allowance must
202	202	take into account:
203	203	(1) the potential to reduce the costs to consumers of
204	204	generation interconnection;
205	205	(2) historical generation interconnection costs; and
206	206	(3) any other factor that the commission considers
207	207	reasonable to accomplish the goal of this subsection.
208	208	(d-2) Costs in excess of the transmission-owning utility
209	209	allowance provided by Subsection (d-1) incurred to interconnect
210	210	generation resources with the ERCOT transmission system must be
211	211	directly assigned to and collected from the generation resource
212	212	interconnecting through the facilities.
213	213	(d-3) Not later than September 1 of every fifth year, the
214	214	commission shall review and may adjust the allowance provided by
215	215	Subsection (d-1) to account for inflation or supply chain issues.
216	216	SECTION 10. Section 36.053(d), Utilities Code, is amended
217	217	to read as follows:
218	218	(d) If the commission issues a certificate of convenience
219	219	and necessity or if the commission, acting under the authority
220	220	formerly provided by Section 39.203(e), ordered [orders] an
221	221	electric utility or a transmission and distribution utility to
222	222	construct or enlarge transmission or transmission-related
223	223	facilities to facilitate meeting the goal for generating capacity
224	224	from renewable energy technologies under former Section 39.904(a),
225	225	the commission shall find that the facilities are used and useful to
226	226	the utility in providing service for purposes of this section and
227	227	are prudent and includable in the rate base, regardless of the
228	228	extent of the utility's actual use of the facilities.
229	229	SECTION 11. Section 37.0541, Utilities Code, is amended to
230	230	read as follows:
231	231	Sec. 37.0541. CONSOLIDATION OF CERTAIN PROCEEDINGS. The
232	232	commission shall consolidate the proceeding on an application to
233	233	obtain or amend a certificate of convenience and necessity for the
234	234	construction of a transmission line with the proceeding on another
235	235	application to obtain or amend a certificate of convenience and
236	236	necessity for the construction of a transmission line if it is
237	237	apparent from the applications or a motion to intervene in either
238	238	proceeding that the transmission lines that are the subject of the
239	239	separate proceedings share a common point of interconnection.
240	240	[This section does not apply to a proceeding on an application for a
241	241	certificate of convenience and necessity for a transmission line to
242	242	serve a competitive renewable energy zone as part of a plan
243	243	developed by the commission under Section 39.904(g)(2).]
244	244	SECTION 12. Sections 37.056(c) and (d), Utilities Code, are
245	245	amended to read as follows:
246	246	(c) The commission shall grant each certificate on a
247	247	nondiscriminatory basis after considering:
248	248	(1) the adequacy of existing service;
249	249	(2) the need for additional service;
250	250	(3) the effect of granting the certificate on the
251	251	recipient of the certificate and any electric utility serving the
252	252	proximate area; and
253	253	(4) other factors, such as:
254	254	(A) community values;
255	255	(B) recreational and park areas;
256	256	(C) historical and aesthetic values;
257	257	(D) environmental integrity; and
258	258	(E) the probable improvement of service or
259	259	lowering of cost to consumers in the area if the certificate is
260	260	granted, including any potential economic or reliability benefits
261	261	associated with dual fuel and fuel storage capabilities in areas
262	262	outside the ERCOT power region[; and
263	263	[(F) to the extent applicable, the effect of
264	264	granting the certificate on the ability of this state to meet the
265	265	goal established by Section 39.904(a) of this title].
266	266	(d) The commission by rule shall establish criteria, in
267	267	addition to the criteria described by Subsection (c), for granting
268	268	a certificate for a transmission project that serves the ERCOT
269	269	power region and[,] that is not necessary to meet state or federal
270	270	reliability standards[, and that is not included in a plan
271	271	developed under Section 39.904(g)]. The criteria must include a
272	272	comparison of the estimated cost of the transmission project for
273	273	consumers and the estimated congestion cost savings for consumers
274	274	that may result from the transmission project, considering both
275	275	current and future expected congestion levels and the transmission
276	276	project's ability to reduce those congestion levels. The
277	277	commission shall include with its decision on an application for a
278	278	certificate to which this subsection applies findings on the
279	279	criteria.
280	280	SECTION 13. Subchapter D, Chapter 38, Utilities Code, is
281	281	amended by adding Section 38.078 to read as follows:
282	282	Sec. 38.078. CIRCUIT SEGMENTATION STUDY AND COST RECOVERY.
283	283	(a) Not later than September 15, 2023, the commission shall direct
284	284	each transmission and distribution utility to perform a circuit
285	285	segmentation study.
286	286	(b) A circuit segmentation study must:
287	287	(1) use an engineering analysis to examine whether and
288	288	how the transmission and distribution utility's transmission and
289	289	distribution systems can be segmented and sectionalized to manage
290	290	and rotate outages more evenly across all customers and circuits,
291	291	while maintaining the protections offered to critical facilities;
292	292	(2) include an engineering analysis of the feasibility
293	293	of using sectionalization, automated reclosers, and other
294	294	technology to break up the circuits that host significant numbers
295	295	of critical facilities into smaller segments for outage management
296	296	purposes to enable more granular and flexible outage management;
297	297	(3) identify feeders with critical facilities that, if
298	298	equipped with facility-specific backup power systems and
299	299	segmentation, can enhance the utility's outage management
300	300	flexibility; and
301	301	(4) include an estimate of the time, capital cost, and
302	302	expected improvements to load-shed management associated with the
303	303	circuit segmentation study.
304	304	(c) Each transmission and distribution utility shall submit
305	305	a report of the conclusions of the utility's study to the commission
306	306	not later than September 1, 2024.
307	307	(d) The commission shall review each circuit segmentation
308	308	study not later than March 15, 2025.
309	309	SECTION 14. Section 39.002, Utilities Code, as amended by
310	310	Chapters 908 (H.B. 4492) and 950 (S.B. 1580), Acts of the 87th
311	311	Legislature, Regular Session, 2021, is reenacted and amended to
312	312	read as follows:
313	313	Sec. 39.002. APPLICABILITY. This chapter, other than
314	314	Sections 39.151, 39.1516, 39.155, 39.157(e), 39.159, 39.160,
315	315	39.203, [39.904,] 39.9051, 39.9052, and 39.914(e), and Subchapters
316	316	M and N, does not apply to a municipally owned utility or an
317	317	electric cooperative. Sections 39.157(e) and[,] 39.203[, and
318	318	39.904, however,] apply only to a municipally owned utility or an
319	319	electric cooperative that is offering customer choice. If there is
320	320	a conflict between the specific provisions of this chapter and any
321	321	other provisions of this title, except for Chapters 40 and 41, the
322	322	provisions of this chapter control.
323	323	SECTION 15. Section 39.151, Utilities Code, is amended by
324	324	amending Subsections (d), (g-1), and (g-6) and adding Subsection
325	325	(g-7) to read as follows:
326	326	(d) The commission shall adopt and enforce rules relating to
327	327	the reliability of the regional electrical network and accounting
328	328	for the production and delivery of electricity among generators and
329	329	all other market participants, or may delegate those
330	330	responsibilities to an independent organization [responsibilities
331	331	for adopting or enforcing such rules. Rules adopted by an
332	332	independent organization and enforcement actions taken by the
333	333	organization under delegated authority from the commission are
334	334	subject to commission oversight and review and may not take effect
335	335	before receiving commission approval]. An independent organization
336	336	certified by the commission is directly responsible and accountable
337	337	to the commission. The commission has complete authority to
338	338	oversee and investigate the independent organization's finances,
339	339	budget, and operations as necessary to ensure the organization's
340	340	accountability and to ensure that the organization adequately
341	341	performs the organization's functions and duties. The independent
342	342	organization shall fully cooperate with the commission in the
343	343	commission's oversight and investigatory functions. The
344	344	commission may take appropriate action against an independent
345	345	organization that does not adequately perform the organization's
346	346	functions or duties or does not comply with this section, including
347	347	decertifying the organization or assessing an administrative
348	348	penalty against the organization. The commission by rule shall
349	349	adopt procedures governing decertification of an independent
350	350	organization, selecting and certifying a successor organization,
351	351	and transferring assets to the successor organization to ensure
352	352	continuity of operations in the region. The commission may not
353	353	implement, by order or by rule, a requirement that is contrary to an
354	354	applicable federal law or rule.
355	355	(g-1) The [independent organization's] bylaws of an
356	356	independent organization certified for the ERCOT power region [or
357	357	protocols] must be approved by [the commission] and [must] reflect
358	358	the input of the commission. The bylaws must require that every
359	359	member of the governing body be a resident of this state and must
360	360	prohibit a legislator from serving as a member. The governing body
361	361	must be composed of:
362	362	(1) two members [the chairman] of the commission as
363	363	[an] ex officio nonvoting members:
364	364	(A) one of whom must be the presiding officer of
365	365	the commission; and
366	366	(B) one of whom must be designated by the
367	367	presiding officer of the commission to serve a one-year term on the
368	368	governing body [member];
369	369	(2) the counsellor as an ex officio voting member
370	370	representing residential and small commercial consumer interests;
371	371	(3) the chief executive officer of the independent
372	372	organization as an ex officio nonvoting member; and
373	373	(4) eight members selected by the selection committee
374	374	under Section 39.1513 with executive-level experience in any of the
375	375	following professions:
376	376	(A) finance;
377	377	(B) business;
378	378	(C) engineering, including electrical
379	379	engineering;
380	380	(D) trading;
381	381	(E) risk management;
382	382	(F) law; or
383	383	(G) electric market design.
384	384	(g-6) In this subsection, a reference to a protocol includes
385	385	a rule. Protocols adopted by an independent organization and
386	386	enforcement actions taken by the organization under delegated
387	387	authority from the commission are subject to commission oversight
388	388	and review and may not take effect before receiving commission
389	389	approval. To maintain certification as an independent organization
390	390	under this section, the organization's governing body must
391	391	establish and implement a formal process for adopting new protocols
392	392	or revisions to existing protocols. The process must require that
393	393	new or revised protocols may not take effect until the commission
394	394	approves a market impact statement describing the new or revised
395	395	protocols. The commission may approve, reject, or remand with
396	396	suggested modifications to the independent organization's
397	397	governing body protocols adopted by the organization.
398	398	(g-7) The presiding officer of the commission shall
399	399	designate commissioners to serve terms on the independent
400	400	organization's governing body under Subsection (g-1)(1)(B) in the
401	401	order in which the commissioners were first appointed to the
402	402	commission. A commissioner may not serve an additional term until
403	403	each commissioner has served a term.
404	404	SECTION 16. Section 39.1511, Utilities Code, is amended by
405	405	amending Subsection (a) and adding Subsection (a-1) to read as
406	406	follows:
407	407	(a) Meetings of the governing body of an independent
408	408	organization certified under Section 39.151 and meetings of a
409	409	subcommittee that includes a member of the governing body must be
410	410	open to the public. The bylaws of the independent organization and
411	411	the rules of the commission may provide for the governing body or
412	412	subcommittee to enter into executive session closed to the public
413	413	only to address risk management or a matter that the independent
414	414	organization would be authorized to consider in a closed meeting if
415	415	the independent organization were governed under Chapter 551,
416	416	Government Code [sensitive matters such as confidential personnel
417	417	information, contracts, lawsuits, competitively sensitive
418	418	information, or other information related to the security of the
419	419	regional electrical network].
420	420	(a-1) An independent organization's governing body or a
421	421	subcommittee may adopt a policy allowing the governing body or
422	422	subcommittee to enter into an executive session closed to the
423	423	public and commissioners, including the commissioners serving as ex
424	424	officio nonvoting members, only to address a contested case, as
425	425	defined by Section 2001.003, Government Code, or a personnel matter
426	426	that is unrelated to members of the governing body.
427	427	SECTION 17. Subchapter D, Chapter 39, Utilities Code, is
428	428	amended by adding Section 39.1514 to read as follows:
429	429	Sec. 39.1514. COMMISSION DIRECTIVES TO INDEPENDENT
430	430	ORGANIZATION. (a) The commission may not use a verbal directive
431	431	to direct an independent organization certified under Section
432	432	39.151 to take an official action. The commission may direct the
433	433	organization to take an official action only through:
434	434	(1) a contested case;
435	435	(2) rulemaking; or
436	436	(3) a memorandum or written order adopted by a
437	437	majority vote.
438	438	(a-1) The commission must use a contested case or rulemaking
439	439	process to direct an independent organization certified under
440	440	Section 39.151 to take an official action that will create a new
441	441	cost or fee, increase an existing cost or fee, or impose significant
442	442	operational obligations on an entity.
443	443	(b) The commission by rule shall:
444	444	(1) specify the types of directives the commission may
445	445	issue through a contested case, rulemaking, memorandum, or written
446	446	order, in accordance with Subsection (a-1);
447	447	(2) require that proposed commission directives be
448	448	included as an item on a commission meeting agenda and require the
449	449	commission to allow members of the public an opportunity to comment
450	450	on the agenda item; and
451	451	(3) establish a reasonable timeline for the release
452	452	before a commission meeting of discussion materials relevant to
453	453	any proposed commission directives included as agenda items for
454	454	that meeting.
455	455	(c) Notwithstanding another provision of this section, the
456	456	commission may use a verbal directive to direct an independent
457	457	organization to take an official action in an urgent or emergency
458	458	situation that poses an imminent threat to public health, public
459	459	safety, or the reliability of the power grid. If the commission
460	460	uses a verbal directive, the commission shall provide written
461	461	documentation of the directive to the independent organization not
462	462	later than 72 hours after the urgent or emergency situation ends.
463	463	The commission by rule shall establish criteria for determining
464	464	whether a situation is urgent or an emergency under this subsection
465	465	and establish a process by which the commission will issue
466	466	directives to the independent organization under this subsection.
467	467	SECTION 18. Section 39.1515, Utilities Code, is amended by
468	468	amending Subsections (a) and (f) and adding Subsection (i) to read
469	469	as follows:
470	470	(a) An independent organization certified under Section
471	471	39.151 shall contract with an entity selected by the commission to
472	472	act as the commission's wholesale electric market monitor to detect
473	473	and prevent market manipulation strategies, [and] recommend
474	474	measures to enhance the efficiency of the wholesale market, and
475	475	provide independent analysis of any material changes proposed to
476	476	the wholesale market. The commission may not restrict the market
477	477	monitor from appearing or speaking before or providing analysis to
478	478	the legislature. The independent organization may not
479	479	substantially modify the market monitor's contract unless the
480	480	modification is approved by a majority of the commissioners.
481	481	(f) The market monitor immediately shall report in writing
482	482	directly to the commission and commission staff all [any] potential
483	483	market manipulations and all [any] discovered or potential
484	484	violations of commission rules or rules of the independent
485	485	organization.
486	486	(i) Not later than December 1 of each year, the commission
487	487	shall submit a report to the legislature that describes for the
488	488	12-month period preceding the report's submission:
489	489	(1) the number of instances in which the market
490	490	monitor reported potential market manipulation to the commission or
491	491	commission staff;
492	492	(2) the statutes, commission rules, and rules of the
493	493	independent organization alleged to have been violated by the
494	494	reported entities; and
495	495	(3) the number of instances reported under Subdivision
496	496	(1) for which the commission instituted a formal investigation on
497	497	its own motion or commission staff initiated an enforcement action.
498	498	SECTION 19. Section 39.155(d), Utilities Code, is amended
499	499	to read as follows:
500	500	(d) In a qualifying power region, the report [reports]
501	501	required by Subsection (c) [Subsections (b) and (c)] shall be
502	502	submitted by the independent organization or organizations having
503	503	authority over the power region or discrete areas thereof.
504	504	SECTION 20. Section 39.157(f), Utilities Code, is amended
505	505	to read as follows:
506	506	(f) Following review of the annual report [reports]
507	507	submitted to it under Section 39.155(c) [Sections 39.155(b) and
508	508	(c)], the commission shall determine whether specific transmission
509	509	or distribution constraints or bottlenecks within this state give
510	510	rise to market power in specific geographic markets in the state.
511	511	The commission, on a finding that specific transmission or
512	512	distribution constraints or bottlenecks within this state give rise
513	513	to market power, may order reasonable mitigation of that potential
514	514	market power by ordering, under Section 39.203(e), one or more
515	515	electric utilities or transmission and distribution utilities to
516	516	construct additional transmission or distribution capacity, or
517	517	both, subject to the certification provisions of this title.
518	518	SECTION 21. The heading to Section 39.159, Utilities Code,
519	519	as added by Chapter 426 (S.B. 3), Acts of the 87th Legislature,
520	520	Regular Session, 2021, is amended to read as follows:
521	521	Sec. 39.159. POWER REGION RELIABILITY AND DISPATCHABLE
522	522	GENERATION.
523	523	SECTION 22. Section 39.159, Utilities Code, as added by
524	524	Chapter 426 (S.B. 3), Acts of the 87th Legislature, Regular
525	525	Session, 2021, is amended by adding Subsections (d) and (e) to read
526	526	as follows:
527	527	(d) The commission shall require the independent
528	528	organization certified under Section 39.151 for the ERCOT power
529	529	region to develop and implement an ancillary services program to
530	530	procure dispatchable reliability reserve services on a day-ahead
531	531	and real-time basis to account for market uncertainty. Under the
532	532	required program, the independent organization shall:
533	533	(1) determine the quantity of services necessary based
534	534	on historical variations in generation availability for each season
535	535	based on a targeted reliability standard or goal, including
536	536	intermittency of non-dispatchable generation facilities and forced
537	537	outage rates, for dispatchable generation facilities;
538	538	(2) develop criteria for resource participation that
539	539	require a resource to:
540	540	(A) be capable of running for at least four hours
541	541	at the resource's high sustained limit;
542	542	(B) be online and dispatchable not more than two
543	543	hours after being called on for deployment; and
544	544	(C) have the dispatchable flexibility to address
545	545	inter-hour operational challenges; and
546	546	(3) reduce the amount of reliability unit commitment
547	547	by the amount of dispatchable reliability reserve services procured
548	548	under this section.
549	549	(e) Notwithstanding Subsection (d)(2)(A), the independent
550	550	organization certified under Section 39.151 for the ERCOT power
551	551	region may require a resource to be capable of running for more than
552	552	four hours as the organization determines is needed.
553	553	SECTION 23. Subchapter D, Chapter 39, Utilities Code, is
554	554	amended by adding Sections 39.1591, 39.1592, 39.1593, 39.1594, and
555	555	39.1595 to read as follows:
556	556	Sec. 39.1591. REPORT ON DISPATCHABLE AND NON-DISPATCHABLE
557	557	GENERATION FACILITIES. Not later than December 1 of each year, the
558	558	commission shall file a report with the legislature that:
559	559	(1) includes:
560	560	(A) the estimated annual costs incurred by
561	561	load-serving entities under this subchapter associated with
562	562	backing up dispatchable and non-dispatchable electric generation
563	563	facilities to guarantee that a firm amount of electric energy will
564	564	be available to the ERCOT power grid; and
565	565	(B) as calculated by the independent system
566	566	operator, the cumulative annual costs that have been incurred in
567	567	the ERCOT market to facilitate the transmission of dispatchable and
568	568	non-dispatchable electricity to load and to interconnect
569	569	transmission level loads, including a statement of the total
570	570	cumulative annual costs and of the cumulative annual costs incurred
571	571	for each type of activity described by this paragraph; and
572	572	(2) documents the status of the implementation of this
573	573	subchapter, including whether the rules and protocols adopted to
574	574	implement this subchapter have materially improved the
575	575	reliability, resilience, and transparency of the electricity
576	576	market.
577	577	Sec. 39.1592. GENERATION RELIABILITY REQUIREMENTS. (a)
578	578	This section applies only to an electric generation facility in the
579	579	ERCOT power region for which a standard generator interconnection
580	580	agreement is signed on or after January 1, 2027, that has been in
581	581	operation for at least one year, and that is not a self-generator.
582	582	(b) Not later than December 1 of each year, an owner or
583	583	operator of an electric generation facility, other than a battery
584	584	energy storage resource, shall demonstrate to the commission the
585	585	ability of the owner or operator's portfolio to operate or be
586	586	available to operate when called on for dispatch at or above the
587	587	seasonal average generation capability during the times of highest
588	588	reliability risk, as determined by the commission, due to low
589	589	operation reserves, as determined by the commission. The owner or
590	590	operator must be allowed to meet the performance requirements
591	591	described by this subsection by supplementing or contracting with
592	592	on-site or off-site resources, including battery energy storage
593	593	resources. The commission shall determine the average generation
594	594	capability based on expected resource availability and
595	595	seasonal-rated capacity on a standalone basis.
596	596	(c) The commission shall require the independent
597	597	organization certified under Section 39.151 for the ERCOT power
598	598	region to:
599	599	(1) enforce the requirements of Subsection (b) by
600	600	imposing financial penalties, as determined by the commission, for
601	601	failing to comply with the performance requirements described by
602	602	that subsection; and
603	603	(2) provide financial incentives, as determined by the
604	604	commission, for exceeding the performance requirements described
605	605	by that subsection.
606	606	(d) The independent organization certified under Section
607	607	39.151 for the ERCOT power region may not impose penalties under
608	608	Subsection (c):
609	609	(1) for resource unavailability due to planned
610	610	maintenance outages or transmission outages;
611	611	(2) on resources that are already subject to
612	612	performance obligations during the highest reliability risk hours
613	613	under the day-ahead market rules or other ancillary or reliability
614	614	services established by the commission or the independent
615	615	organization; or
616	616	(3) during hours outside a baseline established by the
617	617	commission that includes morning and evening ramping periods.
618	618	Sec. 39.1593. COST ALLOCATION OF RELIABILITY SERVICES. (a)
619	619	The commission shall direct the independent organization certified
620	620	under Section 39.151 for the ERCOT power region to evaluate with
621	621	input from a technical advisory committee established under the
622	622	bylaws of the independent organization that includes market
623	623	participants whether allocating the costs of ancillary and
624	624	reliability services, including those procured under Section
625	625	39.159, as added by Chapter 426 (S.B. 3), Acts of the 87th
626	626	Legislature, Regular Session, 2021, using a methodology described
627	627	by Subsection (b) would result in a net savings to consumers in the
628	628	ERCOT power region compared to allocating all costs of ancillary
629	629	and reliability services to load to ensure reliability.
630	630	(b) The commission shall evaluate whether to allocate the
631	631	cost of ancillary and reliability services:
632	632	(1) on a semiannual basis among electric generation
633	633	facilities and load-serving entities in proportion to their
634	634	contribution to unreliability during the times of highest
635	635	reliability risk due to low operating reserves by season, as
636	636	determined by the commission based on a number of hours adopted by
637	637	the commission for that season; or
638	638	(2) using another method identified by the commission.
639	639	(c) The evaluation must:
640	640	(1) use historical ancillary and reliability services
641	641	data;
642	642	(2) consider the causes for ancillary services
643	643	deployments; and
644	644	(3) consider the design, procurement, and cost
645	645	allocation of ancillary services required by Section 35.004(h).
646	646	(d) Not later than December 1, 2026, the commission shall
647	647	submit a report on the evaluation to the legislature.
648	648	Sec. 39.1594. RELIABILITY PROGRAM. (a) Under Section
649	649	39.159(b), as added by Chapter 426 (S.B. 3), Acts of the 87th
650	650	Legislature, Regular Session, 2021, or other law, the commission
651	651	may not require retail customers or load-serving entities in the
652	652	ERCOT power region to purchase credits designed to support a
653	653	required reserve margin or other capacity or reliability
654	654	requirement unless the commission ensures that:
655	655	(1) the net cost to the ERCOT market of the credits
656	656	does not exceed $1 billion annually, less the cost of any interim or
657	657	bridge solutions that are lawfully implemented, except that the
658	658	commission may adjust the limit:
659	659	(A) proportionally according to the highest net
660	660	peak demand year-over-year with a base year of 2026; and
661	661	(B) for inflation with a base year of 2026;
662	662	(2) credits are available only for dispatchable
663	663	generation;
664	664	(3) the independent organization certified under
665	665	Section 39.151 for the ERCOT power region is required to procure the
666	666	credits centrally in a manner designed to prevent market
667	667	manipulation by affiliated generation and retail companies;
668	668	(4) a generator cannot receive credits that exceed the
669	669	amount of generation bid into the forward market by that generator;
670	670	(5) an electric generating unit can receive a credit
671	671	only for being available to perform in real time during the tightest
672	672	intervals of low supply and high demand on the grid, as defined by
673	673	the commission on a seasonal basis;
674	674	(6) a penalty structure is established, resulting in a
675	675	net benefit to load, for generators that bid into the forward market
676	676	but do not meet the full obligation;
677	677	(7) any program reliability standard reasonably
678	678	balances the incremental reliability benefits to customers against
679	679	the incremental costs of the program based on an evaluation by the
680	680	wholesale electric market monitor;
681	681	(8) a single ERCOT-wide clearing price is established
682	682	for the program and does not differentiate payments or credit
683	683	values based on locational constraints;
684	684	(9) any market changes implemented as a bridge
685	685	solution for the program are removed not later than the first
686	686	anniversary of the date the program was implemented;
687	687	(10) the independent organization certified under
688	688	Section 39.151 for the ERCOT power region begins implementing real
689	689	time co-optimization of energy and ancillary services in the ERCOT
690	690	wholesale market before the program is implemented;
691	691	(11) all elements of the program are initially
692	692	implemented on a single starting date;
693	693	(12) the terms of the program and any associated
694	694	market rules do not assign costs, credit, or collateral for the
695	695	program in a manner that provides a cost advantage to load-serving
696	696	entities who own, or whose affiliates own, generation facilities;
697	697	(13) secured financial credit and collateral
698	698	requirements are adopted for the program to ensure that other
699	699	market participants do not bear the risk of nonperformance or
700	700	nonpayment; and
701	701	(14) the wholesale electric market monitor has the
702	702	authority and necessary resources to investigate potential
703	703	instances of market manipulation by program participants,
704	704	including financial and physical actions, and recommend penalties
705	705	to the commission.
706	706	(b) This section does not require the commission to adopt a
707	707	reliability program that requires an entity to purchase capacity
708	708	credits.
709	709	(c) The commission and the independent organization
710	710	certified under Section 39.151 for the ERCOT power region shall
711	711	consider comments and recommendations from a technical advisory
712	712	committee established under the bylaws of the independent
713	713	organization that includes market participants when adopting and
714	714	implementing a program described by Subsection (a), if any.
715	715	(d) Before the commission adopts a program described by
716	716	Subsection (a), the commission shall require the independent
717	717	organization certified under Section 39.151 for the ERCOT power
718	718	region and the wholesale electric market monitor to complete an
719	719	updated assessment on the cost to and effects on the ERCOT market of
720	720	the proposed reliability program and submit to the commission and
721	721	the legislature a report on the costs and benefits of continuing the
722	722	program. The assessment must include:
723	723	(1) an evaluation of the cost of new entry and the
724	724	effects of the proposed reliability program on consumer costs and
725	725	the competitive retail market;
726	726	(2) a compilation of detailed information regarding
727	727	cost offsets realized through a reduction in costs in the energy and
728	728	ancillary services markets and use of reliability unit commitments;
729	729	(3) a set of metrics to measure the effects of the
730	730	proposed reliability program on system reliability;
731	731	(4) an evaluation of the cost to retain existing
732	732	dispatchable resources in the ERCOT power region;
733	733	(5) an evaluation of the planned timeline for
734	734	implementation of real time co-optimization for energy and
735	735	ancillary services in the ERCOT power region; and
736	736	(6) anticipated market and reliability effects of new
737	737	and updated ancillary service products.
738	738	(e) If the commission adopts a program described by
739	739	Subsection (a), the commission by rule shall prohibit a generator
740	740	that receives credits through the program for a dispatchable
741	741	electric generating unit operated by the generator from
742	742	decommissioning or removing from service that unit while the
743	743	generator participates in the program unless the decommissioning or
744	744	removal from service begins after September 1, 2028, or the
745	745	commission finds that the decommissioning or removal from service:
746	746	(1) is required by or is a result of federal law; or
747	747	(2) would alleviate significant financial hardship
748	748	for the generator.
749	749	(f) If the commission adopts a program described by
750	750	Subsection (a), the wholesale electric market monitor described by
751	751	Section 39.1515 biennially shall:
752	752	(1) evaluate the incremental reliability benefits of
753	753	the program for consumers compared to the costs to consumers of the
754	754	program and the costs in the energy and ancillary services markets;
755	755	and
756	756	(2) report the results of each evaluation to the
757	757	legislature.
758	758	Sec. 39.1595. GRID RELIABILITY LEGISLATIVE OVERSIGHT
759	759	COMMITTEE. (a) In this section, "committee" means the Grid
760	760	Reliability Legislative Oversight Committee established under this
761	761	section.
762	762	(b) The Grid Reliability Legislative Oversight Committee is
763	763	created to oversee the commission's implementation of legislation
764	764	related to the regulation of the electricity market in this state
765	765	enacted by the 87th and 88th Legislatures.
766	766	(c) The committee is composed of eight members as follows:
767	767	(1) three members of the senate, appointed by the
768	768	lieutenant governor;
769	769	(2) three members of the house of representatives,
770	770	appointed by the speaker of the house of representatives;
771	771	(3) the chair of the committee of the senate having
772	772	primary jurisdiction over matters relating to the generation of
773	773	electricity; and
774	774	(4) the chair of the committee of the house having
775	775	primary jurisdiction over matters relating to the generation of
776	776	electricity.
777	777	(d) An appointed member of the committee serves at the
778	778	pleasure of the appointing official.
779	779	(e) The committee members described by Subsections (c)(3)
780	780	and (4) serve as presiding co-chairs.
781	781	(f) A member of the committee may not receive compensation
782	782	for serving on the committee but is entitled to reimbursement for
783	783	travel expenses incurred by the member while conducting the
784	784	business of the committee as provided by the General Appropriations
785	785	Act.
786	786	(g) The committee shall meet at least twice each year at the
787	787	call of either co-chair and shall meet at other times at the call of
788	788	either co-chair, as that officer determines appropriate.
789	789	(h) Chapter 551, Government Code, applies to the committee.
790	790	SECTION 24. (a) This section takes effect only if the Act
791	791	of the 88th Legislature, Regular Session, 2023, relating to
792	792	nonsubstantive additions to and corrections in enacted codes
793	793	becomes law.
794	794	(b) Subchapter D, Chapter 39, Utilities Code, is amended by
795	795	adding Sections 39.166, 39.167, and 39.168 to read as follows:
796	796	Sec. 39.166. ELECTRIC INDUSTRY REPORT. (a) Not later than
797	797	January 15 of each odd-numbered year, the commission, in
798	798	consultation with the independent organization certified under
799	799	Section 39.151 for the ERCOT power region, shall prepare and submit
800	800	to the legislature an electric industry report.
801	801	(b) Each electric industry report submitted under this
802	802	section must:
803	803	(1) identify existing and potential transmission and
804	804	distribution constraints and system needs within the ERCOT power
805	805	region, alternatives for meeting system needs, and recommendations
806	806	for meeting system needs;
807	807	(2) summarize key findings from:
808	808	(A) the grid reliability assessment conducted
809	809	under Section 39.165; and
810	810	(B) the report required by Section 39.9112;
811	811	(3) outline basic information regarding the electric
812	812	grid and market in this state, including generation capacity,
813	813	customer demand, and transmission capacity currently installed on
814	814	the grid and projected in the future; and
815	815	(4) be presented in plain language that is readily
816	816	understandable by a person with limited knowledge of the electric
817	817	industry.
818	818	Sec. 39.167. CONFLICTS OF INTEREST REPORT. The commission
819	819	and the independent organization certified under Section 39.151 for
820	820	the ERCOT power region annually shall review statutes, rules,
821	821	protocols, and bylaws that apply to conflicts of interest for
822	822	commissioners and for members of the governing body of the
823	823	independent organization and submit to the legislature a report on
824	824	the effects the statutes, rules, protocols, and bylaws have on the
825	825	ability of the commission and the independent organization to
826	826	fulfill their duties.
827	827	Sec. 39.168. RETAIL SALES REPORT. (a) Each retail electric
828	828	provider that offers electricity for sale shall report to the
829	829	commission:
830	830	(1) its annual retail sales in this state;
831	831	(2) the annual retail sales of its affiliates by
832	832	number of customers, kilowatts per hour sold, and revenue from
833	833	kilowatts per hour sold by customer class; and
834	834	(3) any other information the commission requires
835	835	relating to affiliations between retail electric providers.
836	836	(b) The commission by rule shall prescribe the nature and
837	837	detail of the reporting requirements. The commission may accept
838	838	information reported under other law to satisfy the requirements of
839	839	this section. Information reported under this section is
840	840	confidential and not subject to disclosure if the information is
841	841	competitively sensitive information. The commission shall
842	842	administer the reporting requirements in a manner that ensures the
843	843	confidentiality of competitively sensitive information.
844	844	SECTION 25. (a) This section takes effect only if the Act of
845	845	the 88th Legislature, Regular Session, 2023, relating to
846	846	nonsubstantive additions to and corrections in enacted codes does
847	847	not become law.
848	848	(b) Subchapter D, Chapter 39, Utilities Code, is amended by
849	849	adding Sections 39.166, 39.167, and 39.168 to read as follows:
850	850	Sec. 39.166. ELECTRIC INDUSTRY REPORT. (a) Not later than
851	851	January 15 of each odd-numbered year, the commission, in
852	852	consultation with the independent organization certified under
853	853	Section 39.151 for the ERCOT power region, shall prepare and submit
854	854	to the legislature an electric industry report.
855	855	(b) Each electric industry report submitted under this
856	856	section must:
857	857	(1) identify existing and potential transmission and
858	858	distribution constraints and system needs within the ERCOT power
859	859	region, alternatives for meeting system needs, and recommendations
860	860	for meeting system needs;
861	861	(2) summarize key findings from:
862	862	(A) the grid reliability assessment conducted
863	863	under Section 39.159, as added by Chapter 876 (S.B. 1281), Acts of
864	864	the 87th Legislature, Regular Session, 2021; and
865	865	(B) the report required by Section 39.9112;
866	866	(3) outline basic information regarding the electric
867	867	grid and market in this state, including generation capacity,
868	868	customer demand, and transmission capacity currently installed on
869	869	the grid and projected in the future; and
870	870	(4) be presented in plain language that is readily
871	871	understandable by a person with limited knowledge of the electric
872	872	industry.
873	873	Sec. 39.167. CONFLICTS OF INTEREST REPORT. The commission
874	874	and the independent organization certified under Section 39.151 for
875	875	the ERCOT power region annually shall review statutes, rules,
876	876	protocols, and bylaws that apply to conflicts of interest for
877	877	commissioners and for members of the governing body of the
878	878	independent organization and submit to the legislature a report on
879	879	the effects the statutes, rules, protocols, and bylaws have on the
880	880	ability of the commission and the independent organization to
881	881	fulfill their duties.
882	882	Sec. 39.168. RETAIL SALES REPORT. (a) Each retail electric
883	883	provider that offers electricity for sale shall report to the
884	884	commission:
885	885	(1) its annual retail sales in this state;
886	886	(2) the annual retail sales of its affiliates by
887	887	number of customers, kilowatts per hour sold, and revenue from
888	888	kilowatts per hour sold by customer class; and
889	889	(3) any other information the commission requires
890	890	relating to affiliations between retail electric providers.
891	891	(b) The commission by rule shall prescribe the nature and
892	892	detail of the reporting requirements. The commission may accept
893	893	information reported under other law to satisfy the requirements of
894	894	this section. Information reported under this section is
895	895	confidential and not subject to disclosure if the information is
896	896	competitively sensitive information. The commission shall
897	897	administer the reporting requirements in a manner that ensures the
898	898	confidentiality of competitively sensitive information.
899	899	SECTION 26. Sections 39.203(e) and (i), Utilities Code, are
900	900	amended to read as follows:
901	901	(e) The commission may require an electric utility or a
902	902	transmission and distribution utility to construct or enlarge
903	903	facilities to ensure safe and reliable service for the state's
904	904	electric markets and to reduce transmission constraints within
905	905	ERCOT in a cost-effective manner where the constraints are such
906	906	that they are not being resolved through Chapter 37 or the ERCOT
907	907	transmission planning process. [The commission shall require an
908	908	electric utility or a transmission and distribution utility to
909	909	construct or enlarge transmission or transmission-related
910	910	facilities for the purpose of meeting the goal for generating
911	911	capacity from renewable energy technologies under Section
912	912	39.904(a).] In any proceeding brought under Chapter 37, an
913	913	electric utility or transmission and distribution utility ordered
914	914	to construct or enlarge facilities under this subchapter need not
915	915	prove that the construction ordered is necessary for the service,
916	916	accommodation, convenience, or safety of the public and need not
917	917	address the factors listed in Sections 37.056(c)(1)-(3) and (4)(E).
918	918	Notwithstanding any other law, including Section 37.057, in any
919	919	proceeding brought under Chapter 37 by an electric utility or a
920	920	transmission and distribution utility related to an application for
921	921	a certificate of public convenience and necessity to construct or
922	922	enlarge transmission or transmission-related facilities under this
923	923	subsection, the commission shall issue a final order before the
924	924	181st day after the date the application is filed with the
925	925	commission. If the commission does not issue a final order before
926	926	that date, the application is approved.
927	927	(i) The commission, in cooperation with transmission and
928	928	distribution utilities and the ERCOT independent system operator,
929	929	shall study whether existing transmission and distribution
930	930	planning processes are sufficient to provide adequate
931	931	infrastructure for seawater desalination projects. If the
932	932	commission determines that statutory changes are needed to ensure
933	933	that adequate infrastructure is developed for projects of that
934	934	kind, the commission shall include recommendations in the report
935	935	required by Section 12.203 [31.003].
936	936	SECTION 27. Section 39.206(q), Utilities Code, is amended
937	937	to read as follows:
938	938	(q) The commission shall, in conjunction with the Nuclear
939	939	Regulatory Commission, investigate the development of a mechanism
940	940	whereby the State of Texas could ensure that funds for
941	941	decommissioning will be obtained when necessary in the same manner
942	942	as if the State of Texas were the licensee under federal law. [The
943	943	commission shall file legislative recommendations regarding any
944	944	changes in law that may be necessary to carry out the purposes of
945	945	this subsection prior to January 15, 2009, which may be combined
946	946	with the report required by Section 31.003.]
947	947	SECTION 28. Section 39.402(a), Utilities Code, is amended
948	948	to read as follows:
949	949	(a) Until the date on which an electric utility subject to
950	950	this subchapter is authorized by the commission to implement
951	951	customer choice, the rates of the utility shall be regulated under
952	952	traditional cost of service regulation and the utility is subject
953	953	to all applicable regulatory authority prescribed by this subtitle
954	954	and Subtitle A, including Chapters 14, 32, 33, 36, and 37. Until the
955	955	date on which an electric utility subject to this subchapter
956	956	implements customer choice, the provisions of this chapter, other
957	957	than this subchapter, Sections 39.1516[, 39.904,] and 39.905, and
958	958	the provisions relating to the duty to obtain a permit from the
959	959	Texas Commission on Environmental Quality for an electric
960	960	generating facility and to reduce emissions from an electric
961	961	generating facility, shall not apply to that utility. That portion
962	962	of any commission order entered before September 1, 2001, to comply
963	963	with this subchapter shall be null and void.
964	964	SECTION 29. Section 39.408(g), Utilities Code, is amended
965	965	to read as follows:
966	966	(g) This section expires September 1, 2029 [2023].
967	967	SECTION 30. Section 39.452(d), Utilities Code, is amended
968	968	to read as follows:
969	969	(d) Until the date on which an electric utility subject to
970	970	this subchapter implements customer choice:
971	971	(1) the provisions of this chapter do not apply to that
972	972	electric utility, other than this subchapter, Sections 39.1516[,
973	973	39.904,] and 39.905, the provisions relating to the duty to obtain a
974	974	permit from the Texas Commission on Environmental Quality for an
975	975	electric generating facility and to reduce emissions from an
976	976	electric generating facility, and the provisions of Subchapter G
977	977	that pertain to the recovery and securitization of hurricane
978	978	reconstruction costs authorized by Sections 39.458-39.463; and
979	979	(2) the electric utility is not subject to a rate
980	980	freeze and, subject to the limitation provided by Subsection (b),
981	981	may file for rate changes under Chapter 36 and for approval of one
982	982	or more of the rate rider mechanisms authorized by Sections 39.454
983	983	and 39.455.
984	984	SECTION 31. Section 39.4525(g), Utilities Code, is amended
985	985	to read as follows:
986	986	(g) This section expires September 1, 2029 [2023].
987	987	SECTION 32. Section 39.502(b), Utilities Code, is amended
988	988	to read as follows:
989	989	(b) Until the date on which an electric utility subject to
990	990	this subchapter implements customer choice, the provisions of this
991	991	chapter, other than this subchapter and Sections 39.1516[, 39.904,]
992	992	and 39.905, do not apply to that utility.
993	993	SECTION 33. Section 39.504(g), Utilities Code, is amended
994	994	to read as follows:
995	995	(g) This section expires September 1, 2029 [2023].
996	996	SECTION 34. Section 39.552(b), Utilities Code, is amended
997	997	to read as follows:
998	998	(b) Until the date on which an electric utility subject to
999	999	this subchapter implements customer choice, the provisions of this
1000	1000	chapter, other than this subchapter and Sections 39.1516[, 39.904,]
1001	1001	and 39.905, do not apply to that utility.
1002	1002	SECTION 35. Section 39.9055, Utilities Code, is amended to
1003	1003	read as follows:
1004	1004	Sec. 39.9055. EXAMINATION OF DEMAND RESPONSE POTENTIAL OF
1005	1005	SEAWATER DESALINATION PROJECTS. The commission and the ERCOT
1006	1006	independent system operator shall study the potential for seawater
1007	1007	desalination projects to participate in existing demand response
1008	1008	opportunities in the ERCOT market. To the extent feasible, the
1009	1009	study shall determine whether the operational characteristics of
1010	1010	seawater desalination projects enable projects of that kind to
1011	1011	participate in ERCOT-operated ancillary services markets or other
1012	1012	competitively supplied demand response opportunities. The study
1013	1013	shall also determine the potential economic benefit to a seawater
1014	1014	desalination project if the project is able to reduce its demand
1015	1015	during peak pricing periods. The commission shall include the
1016	1016	results of the study in the report required by Section 12.203
1017	1017	[31.003].
1018	1018	SECTION 36. Section 39.908, Utilities Code, is amended to
1019	1019	read as follows:
1020	1020	Sec. 39.908. EFFECT OF SUNSET PROVISION. [(a)] If the
1021	1021	commission is abolished under Section 12.005 or other law, the [and
1022	1022	the other provisions of this title expire as provided by Chapter
1023	1023	325, Government Code (Texas Sunset Act), this subchapter, including
1024	1024	the provisions of this title referred to in this subchapter,
1025	1025	continues in full force and effect and does not expire.
1026	1026	[(b) The] authorities, duties, and functions of the
1027	1027	commission under this chapter shall be performed and carried out by
1028	1028	a successor agency to be designated by the legislature before
1029	1029	abolishment of the commission or, if the legislature does not
1030	1030	designate the successor, by the secretary of state.
1031	1031	SECTION 37. Subchapter Z, Chapter 39, Utilities Code, is
1032	1032	amended by adding Sections 39.9111, 39.9112, and 39.9113 to read as
1033	1033	follows:
1034	1034	Sec. 39.9111. RULES RELATED TO RENEWABLE POWER FACILITIES.
1035	1035	The commission may adopt rules requiring renewable power facilities
1036	1036	to have reactive power control capabilities or any other feasible
1037	1037	technology designed to reduce the facilities' effects on system
1038	1038	reliability.
1039	1039	Sec. 39.9112. REPORT ON TRANSMISSION AND GENERATION
1040	1040	CAPACITY. The commission and the independent organization
1041	1041	certified under Section 39.151 for the ERCOT power region shall
1042	1042	study the need for increased transmission and generation capacity
1043	1043	throughout this state and report to the legislature the results of
1044	1044	the study and any recommendations for legislation. The report must
1045	1045	be filed with the legislature not later than December 31 of each
1046	1046	even-numbered year.
1047	1047	Sec. 39.9113. RENEWABLE ENERGY CREDITS. To facilitate
1048	1048	voluntary contractual obligations and verify claims regarding
1049	1049	environmental attributes of renewable energy production in this
1050	1050	state, the independent organization certified under Section 39.151
1051	1051	for the ERCOT power region shall maintain an accreditation and
1052	1052	banking system to award and track voluntary renewable energy
1053	1053	credits generated by eligible facilities.
1054	1054	SECTION 38. Section 39.916(a), Utilities Code, is amended
1055	1055	by amending Subdivision (1) and adding Subdivision (4) to read as
1056	1056	follows:
1057	1057	(1) "Distributed renewable generation" means electric
1058	1058	generation with a capacity of not more than 2,000 kilowatts
1059	1059	provided by a renewable energy technology[, as defined by Section
1060	1060	39.904,] that is installed on a retail electric customer's side of
1061	1061	the meter.
1062	1062	(4) "Renewable energy technology" means any
1063	1063	technology that relies exclusively on an energy source that is
1064	1064	naturally regenerated over a short time and is derived from the sun
1065	1065	directly or indirectly or from moving water or other natural
1066	1066	movements or mechanisms of the environment. The term includes a
1067	1067	technology that relies on energy derived from the sun directly, on
1068	1068	wind, geothermal, hydroelectric, wave, or tidal energy, or on
1069	1069	biomass or biomass-based waste products, including landfill gas.
1070	1070	The term does not include a technology that relies on an energy
1071	1071	resource derived from a fossil fuel, a waste product from a fossil
1072	1072	fuel, or a waste product from an inorganic source.
1073	1073	SECTION 39. The heading to Section 39.918, Utilities Code,
1074	1074	is amended to read as follows:
1075	1075	Sec. 39.918. UTILITY FACILITIES FOR POWER RESTORATION AFTER
1076	1076	SIGNIFICANT [WIDESPREAD] POWER OUTAGE.
1077	1077	SECTION 40. Section 39.918, Utilities Code, is amended by
1078	1078	amending Subsections (a) and (b) and adding Subsection (a-1) to
1079	1079	read as follows:
1080	1080	(a) In this section, "significant ["widespread] power
1081	1081	outage" means an event that [results in]:
1082	1082	(1) results in a loss of electric power that:
1083	1083	(A) affects a significant number of distribution
1084	1084	customers of a transmission and distribution utility[;] and
1085	1085	[(B)] has lasted or is expected to last for at
1086	1086	least six [eight] hours;
1087	1087	(B) affects distribution customers of a
1088	1088	transmission and distribution utility in an area for which the
1089	1089	governor has issued a disaster or emergency declaration;
1090	1090	(C) affects distribution customers served by a
1091	1091	radial transmission or distribution facility, creates a risk to
1092	1092	public health or safety, and has lasted or is expected to last for
1093	1093	at least 12 hours; or
1094	1094	(D) creates [and
1095	1095	[(2)] a risk to public health or safety because it
1096	1096	affects a critical infrastructure facility that serves the public
1097	1097	such as a hospital, health care facility, law enforcement facility,
1098	1098	fire station, or water or wastewater facility; or
1099	1099	(2) causes the independent system operator to order a
1100	1100	transmission and distribution utility to shed load.
1101	1101	(a-1) The Texas Division of Emergency Management, the
1102	1102	independent organization certified under Section 39.151 for the
1103	1103	ERCOT power region, or the executive director of the commission may
1104	1104	determine that a power outage other than an outage described by
1105	1105	Subsection (a) is a significant power outage for the purposes of
1106	1106	this section.
1107	1107	(b) Notwithstanding any other provision of this subtitle, a
1108	1108	transmission and distribution utility may:
1109	1109	(1) lease and operate facilities that provide
1110	1110	temporary emergency electric energy to aid in restoring power to
1111	1111	the utility's distribution customers during a significant
1112	1112	[widespread] power outage in which:
1113	1113	(A) the independent system operator has ordered
1114	1114	the utility to shed load; or
1115	1115	(B) the utility's distribution facilities are
1116	1116	not being fully served by the bulk power system under normal
1117	1117	operations; and
1118	1118	(2) procure, own, and operate, or enter into a
1119	1119	cooperative agreement with other transmission and distribution
1120	1120	utilities to procure, own, and operate jointly, transmission and
1121	1121	distribution facilities that have a lead time of at least six months
1122	1122	and would aid in restoring power to the utility's distribution
1123	1123	customers following a significant [widespread] power outage. In
1124	1124	this section, long lead time facilities may not be electric energy
1125	1125	storage equipment or facilities under Chapter 35, Utilities Code.
1126	1126	SECTION 41. Section 40.001(a), Utilities Code, is amended
1127	1127	to read as follows:
1128	1128	(a) Notwithstanding any other provision of law, except
1129	1129	Sections 39.155, 39.157(e), and 39.203, [and 39.904,] this chapter
1130	1130	governs the transition to and the establishment of a fully
1131	1131	competitive electric power industry for municipally owned
1132	1132	utilities. With respect to the regulation of municipally owned
1133	1133	utilities, this chapter controls over any other provision of this
1134	1134	title, except for sections in which the term "municipally owned
1135	1135	utility" is specifically used.
1136	1136	SECTION 42. Section 40.004, Utilities Code, is amended to
1137	1137	read as follows:
1138	1138	Sec. 40.004. JURISDICTION OF COMMISSION. Except as
1139	1139	specifically otherwise provided in this chapter, the commission has
1140	1140	jurisdiction over municipally owned utilities only for the
1141	1141	following purposes:
1142	1142	(1) to regulate wholesale transmission rates and
1143	1143	service, including terms of access, to the extent provided by
1144	1144	Subchapter A, Chapter 35;
1145	1145	(2) to regulate certification of retail service areas
1146	1146	to the extent provided by Chapter 37;
1147	1147	(3) to regulate rates on appeal under Subchapters D
1148	1148	and E, Chapter 33, subject to Section 40.051(c);
1149	1149	(4) to establish a code of conduct as provided by
1150	1150	Section 39.157(e) applicable to anticompetitive activities and to
1151	1151	affiliate activities limited to structurally unbundled affiliates
1152	1152	of municipally owned utilities, subject to Section 40.054;
1153	1153	(5) to establish terms and conditions for open access
1154	1154	to transmission and distribution facilities for municipally owned
1155	1155	utilities providing customer choice, as provided by Section 39.203;
1156	1156	(6) to administer [the renewable energy credits
1157	1157	program under Section 39.904(b) and] the natural gas energy credits
1158	1158	program under Section 39.9044(b);
1159	1159	(7) to require reports of municipally owned utility
1160	1160	operations only to the extent necessary to:
1161	1161	(A) enable the commission to determine the
1162	1162	aggregate load and energy requirements of the state and the
1163	1163	resources available to serve that load; or
1164	1164	(B) enable the commission to determine
1165	1165	information relating to market power as provided by Section 39.155;
1166	1166	and
1167	1167	(8) to evaluate and monitor the cybersecurity
1168	1168	preparedness of a municipally owned utility described by Section
1169	1169	39.1516(a)(3) or (4).
1170	1170	SECTION 43. Section 41.001, Utilities Code, is amended to
1171	1171	read as follows:
1172	1172	Sec. 41.001. APPLICABLE LAW. Notwithstanding any other
1173	1173	provision of law, except Sections 39.155, 39.157(e), and 39.203,
1174	1174	[and 39.904,] this chapter governs the transition to and the
1175	1175	establishment of a fully competitive electric power industry for
1176	1176	electric cooperatives. Regarding the regulation of electric
1177	1177	cooperatives, this chapter shall control over any other provision
1178	1178	of this title, except for sections in which the term "electric
1179	1179	cooperative" is specifically used.
1180	1180	SECTION 44. Section 52.060, Utilities Code, is amended to
1181	1181	read as follows:
1182	1182	Sec. 52.060. ADMINISTRATIVE FEE OR ASSESSMENT. The
1183	1183	commission may prescribe and collect a fee or assessment from local
1184	1184	exchange companies necessary to recover the cost to the commission
1185	1185	and to the office of activities carried out and services provided
1186	1186	under this subchapter and Section 12.203 [52.006].
1187	1187	SECTION 45. Section 13.4132, Water Code, is amended by
1188	1188	adding Subsection (b-1) to read as follows:
1189	1189	(b-1) Notwithstanding Section 5.505, the term of an
1190	1190	emergency order issued under this section by the utility commission
1191	1191	or the commission may not exceed 360 days. The emergency order may
1192	1192	be renewed:
1193	1193	(1) once for a period not to exceed 360 days; or
1194	1194	(2) if the utility is undergoing a sale, transfer,
1195	1195	merger, consolidation, or acquisition required to be reported to
1196	1196	the utility commission under Section 13.301, for a reasonable time
1197	1197	until the sale, transfer, merger, consolidation, or acquisition is
1198	1198	complete.
1199	1199	SECTION 46. (a) The following provisions are repealed:
1200	1200	(1) Section 304.201, Business & Commerce Code;
1201	1201	(2) Section 31.003, Utilities Code;
1202	1202	(3) Section 39.155(b), Utilities Code;
1203	1203	(4) Section 39.904, Utilities Code;
1204	1204	(5) Section 39.916(g), Utilities Code;
1205	1205	(6) Section 39.918(k), Utilities Code; and
1206	1206	(7) Section 52.006, Utilities Code.
1207	1207	(b) Section 34, Chapter 426 (S.B. 3), Acts of the 87th
1208	1208	Legislature, Regular Session, 2021, is repealed.
1209	1209	SECTION 47. The Public Utility Commission of Texas is not
1210	1210	required to conduct the first review of an allowance under Section
1211	1211	35.004(d-3), Utilities Code, as added by this Act, until the fifth
1212	1212	year after the adoption of the rules required by Section
1213	1213	35.004(d-1), Utilities Code, as added by this Act.
1214	1214	SECTION 48. The Public Utility Commission of Texas shall
1215	1215	adopt rules as necessary to implement the changes in law made by
1216	1216	this Act to Section 35.004, Utilities Code, not later than the 180th
1217	1217	day after the effective date of this Act.
1218	1218	SECTION 49. The changes in law made by this Act to Section
1219	1219	35.004, Utilities Code, apply only to an electric generation
1220	1220	facility that executes a standard generator interconnection
1221	1221	agreement with a transmission-owning utility after December 31,
1222	1222	2025.
1223	1223	SECTION 50. (a) The presiding officer of the Public Utility
1224	1224	Commission of Texas shall designate a commissioner to serve a term
1225	1225	on the governing body of the independent organization certified
1226	1226	under Section 39.151, Utilities Code, for the ERCOT power region
1227	1227	that begins January 1, 2024, to comply with Section 39.151(g-1),
1228	1228	Utilities Code, as amended by this Act.
1229	1229	(b) Except as provided by Subsection (c) of this section,
1230	1230	Section 12.059, Utilities Code, as amended by this Act, applies to a
1231	1231	member of the Public Utility Commission of Texas appointed before,
1232	1232	on, or after the effective date of this Act.
1233	1233	(c) A member of the Public Utility Commission of Texas who,
1234	1234	before the effective date of this Act, completed the training
1235	1235	program required by Section 12.059, Utilities Code, as that law
1236	1236	existed before the effective date of this Act, is only required to
1237	1237	complete additional training on the subjects added by this Act to
1238	1238	the training program required by Section 12.059, Utilities Code. A
1239	1239	commission member described by this subsection may not vote,
1240	1240	deliberate, or be counted as a member in attendance at a meeting of
1241	1241	the commission held on or after December 1, 2023, until the member
1242	1242	completes the additional training.
1243	1243	SECTION 51. The Public Utility Commission of Texas shall
1244	1244	require the independent organization certified under Section
1245	1245	39.151, Utilities Code, for the ERCOT power region to implement the
1246	1246	program required by Section 39.159(d), Utilities Code, as added by
1247	1247	this Act, not later than December 1, 2024.
1248	1248	SECTION 52. (a) The Public Utility Commission of Texas
1249	1249	shall prepare the portions of the report required by Section
1250	1250	39.1591(2), Utilities Code, as added by this Act, only for reports
1251	1251	due on or after December 1, 2024.
1252	1252	(b) The Public Utility Commission of Texas shall implement
1253	1253	Section 39.1592, Utilities Code, as added by this Act, not later
1254	1254	than December 1, 2027.
1255	1255	(c) Notwithstanding Subsection (b) of this section and the
1256	1256	deadline provided by Section 39.1592(b), Utilities Code, as added
1257	1257	by this Act, an owner or operator of an electric generation facility
1258	1258	to which Section 39.1592(b), Utilities Code, as added by this Act,
1259	1259	applies shall make the first demonstration required by that
1260	1260	subsection not later than January 1, 2028.
1261	1261	(d) The Public Utility Commission of Texas and the
1262	1262	independent organization certified under Section 39.151, Utilities
1263	1263	Code, for the ERCOT power region shall:
1264	1264	(1) conduct a study on whether implementing an
1265	1265	alternative to the single market clearing price for energy,
1266	1266	ancillary services, and other products would reduce costs to
1267	1267	residential and small commercial customers or their load-serving
1268	1268	entities, such as paying generators the price bid and not the
1269	1269	additional amounts up to the highest cost generator needed to clear
1270	1270	the market;
1271	1271	(2) analyze:
1272	1272	(A) whether cost savings can be achieved for
1273	1273	consumers, or load-serving entities serving residential and small
1274	1274	commercial consumers, by:
1275	1275	(i) limiting generators that have received
1276	1276	state or federal subsidies to receiving the price bid by that type
1277	1277	of generator; or
1278	1278	(ii) limiting a generator to receiving the
1279	1279	price bid by that generator; and
1280	1280	(B) if a pay as bid mechanism is used or a single
1281	1281	market clearing price mechanism is retained, whether
1282	1282	non-dispatchable and dispatchable generation facilities should bid
1283	1283	into separate markets for ERCOT power region products such that the
1284	1284	generation facilities are directly competing against technologies
1285	1285	with similar attributes; and
1286	1286	(3) report the results of the study and analysis
1287	1287	conducted under this subsection to the legislature not later than
1288	1288	December 1, 2025.
1289	1289	SECTION 53. (a) Except as provided by Subsection (b) of
1290	1290	this section, notwithstanding the repeal by this Act of Section
1291	1291	39.904, Utilities Code, the Public Utility Commission of Texas by
1292	1292	rule shall adopt a program to apply that section as it existed
1293	1293	immediately before the effective date of this Act, and to apply
1294	1294	other statutes that referred to that section immediately before the
1295	1295	effective date of this Act, as if that section had not been repealed
1296	1296	by this Act and the other statutes that referred to that section had
1297	1297	not been repealed or amended by this Act.
1298	1298	(b) Under Subsection (a) of this section, the statutes
1299	1299	described in that subsection must be applied as if Section 39.904
1300	1300	were applicable only to renewable energy technologies that
1301	1301	exclusively rely on an energy source that is naturally regenerated
1302	1302	over a short time and derived directly from the sun.
1303	1303	(c) This section expires September 1, 2025, and the Public
1304	1304	Utility Commission of Texas shall phase out the program required by
1305	1305	Subsection (a) of this section so that it terminates on that date.
1306	1306	SECTION 54. The changes in law made by this Act to Section
1307	1307	15.023, Utilities Code, apply only to a violation committed on or
1308	1308	after the effective date of this Act. A violation committed before
1309	1309	the effective date of this Act is governed by the law in effect when
1310	1310	the violation was committed, and the former law is continued in
1311	1311	effect for that purpose.
1312	1312	SECTION 55. It is the intent of the 88th Legislature,
1313	1313	Regular Session, 2023, that the amendments made by this Act be
1314	1314	harmonized with another Act of the 88th Legislature, Regular
1315	1315	Session, 2023, relating to nonsubstantive additions to and
1316	1316	corrections in enacted codes.
1317	1317	SECTION 56. This Act takes effect September 1, 2023.
1318	1318	______________________________ ______________________________
1319	1319	President of the Senate Speaker of the House
1320	1320	I certify that H.B. No. 1500 was passed by the House on April
1321	1321	19, 2023, by the following vote: Yeas 140, Nays 1, 1 present, not
1322	1322	voting; that the House refused to concur in Senate amendments to
1323	1323	H.B. No. 1500 on May 25, 2023, and requested the appointment of a
1324	1324	conference committee to consider the differences between the two
1325	1325	houses; and that the House adopted the conference committee report
1326	1326	on H.B. No. 1500 on May 28, 2023, by the following vote: Yeas 140,
1327	1327	Nays 1, 2 present, not voting.
1328	1328	______________________________
1329	1329	Chief Clerk of the House
1330	1330	I certify that H.B. No. 1500 was passed by the Senate, with
1331	1331	amendments, on May 24, 2023, by the following vote: Yeas 30, Nays
1332	1332	0; at the request of the House, the Senate appointed a conference
1333	1333	committee to consider the differences between the two houses; and
1334	1334	that the Senate adopted the conference committee report on H.B. No.
1335	1335	1500 on May 28, 2023, by the following vote: Yeas 31, Nays 0.
1336	1336	______________________________
1337	1337	Secretary of the Senate
1338	1338	APPROVED: __________________
1339	1339	Date
1340	1340	__________________
1341	1341	Governor