Texas 2023 - 88th Regular

Texas House Bill HB3964 Compare Versions

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1	1	88R11656 JXC-F
2	2	By: Morales of Maverick H.B. No. 3964
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to energy efficiency goals and programs, public
8	8	information regarding energy efficiency programs, and the
9	9	participation of loads in certain energy markets.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Section 39.905, Utilities Code, is amended by
12	12	amending Subsections (a), (b), (e), (g), (h), (i), and (j) and
13	13	adding Subsection (i-1) to read as follows:
14	14	(a) It is the goal of the legislature that:
15	15	(1) electric utilities will administer energy
16	16	efficiency incentive programs in a market-neutral,
17	17	nondiscriminatory manner but will not offer underlying competitive
18	18	services;
19	19	(2) all customers, in all customer classes, will have
20	20	a choice of and access to energy efficiency alternatives and other
21	21	choices from the market that allow each customer to reduce energy
22	22	consumption, summer and winter peak demand, or energy costs;
23	23	(3) each electric utility will administer energy
24	24	efficiency programs that:
25	25	(A) cause the utility's portfolio of programs to
26	26	be cost-effective;
27	27	(B) include load management programs and demand
28	28	response programs;
29	29	(C) acquire the following minimum quantifiable
30	30	reductions in demand annually:
31	31	(i) 5,000 kilowatts for utilities with an
32	32	average of less than 300,000 total eligible residential and
33	33	commercial customers in the previous five years;
34	34	(ii) 15,000 kilowatts for utilities with an
35	35	average of greater than 300,000 but less than 750,000 total
36	36	eligible residential and commercial customers in the previous five
37	37	years;
38	38	(iii) 25,000 kilowatts for utilities with
39	39	an average of greater than 750,000 but less than 1.5 million total
40	40	eligible residential and commercial customers in the previous five
41	41	years;
42	42	(iv) 75,000 kilowatts for utilities with an
43	43	average of greater than 1.5 million but less than 3 million total
44	44	eligible residential and commercial customers in the previous five
45	45	years;
46	46	(v) 100,000 kilowatts for utilities with an
47	47	average of greater than 3 million but less than 4 million total
48	48	eligible residential and commercial customers in the previous five
49	49	years; or
50	50	(vi) 125,000 kilowatts for utilities with
51	51	an average of greater than 4 million total eligible residential and
52	52	commercial customers in the previous five years; and
53	53	(D) acquire energy savings in the following
54	54	amounts corresponding to that utility's total demand reductions
55	55	identified by Paragraph (C):
56	56	(i) 8,760,000 kilowatt hours for a demand
57	57	reduction goal of 5,000 kilowatts;
58	58	(ii) 26,280,000 kilowatt hours for a demand
59	59	reduction goal of 15,000 kilowatts;
60	60	(iii) 43,800,000 kilowatt hours for a
61	61	demand reduction goal of 25,000 kilowatts;
62	62	(iv) 131,400,000 kilowatt hours for a
63	63	demand reduction goal of 75,000 kilowatts;
64	64	(v) 175,200,000 kilowatt hours for a demand
65	65	reduction goal of 100,000 kilowatts; or
66	66	(vi) 219,000,000 kilowatt hours for a
67	67	demand reduction goal of 125,000 kilowatts [annually will provide,
68	68	through market-based standard offer programs or through targeted
69	69	market-transformation programs, incentives sufficient for retail
70	70	electric providers and competitive energy service providers to
71	71	acquire additional cost-effective energy efficiency, subject to
72	72	cost ceilings established by the commission, for the utility's
73	73	residential and commercial customers equivalent to:
74	74	[(A) not less than:
75	75	[(i) 30 percent of the electric utility's
76	76	annual growth in demand of residential and commercial customers by
77	77	December 31 of each year beginning with the 2013 calendar year; and
78	78	[(ii) the amount of energy efficiency to be
79	79	acquired for the utility's residential and commercial customers for
80	80	the most recent preceding year; and
81	81	[(B) for an electric utility whose amount of
82	82	energy efficiency to be acquired under this subsection is
83	83	equivalent to at least four-tenths of one percent of the electric
84	84	utility's summer weather-adjusted peak demand for residential and
85	85	commercial customers in the previous calendar year, not less than:
86	86	[(i) four-tenths of one percent of the
87	87	utility's summer weather-adjusted peak demand for residential and
88	88	commercial customers by December 31 of each subsequent year; and
89	89	[(ii) the amount of energy efficiency to be
90	90	acquired for the utility's residential and commercial customers for
91	91	the most recent preceding year;]
92	92	(4) each electric utility in the ERCOT region will
93	93	[shall] use its best efforts to encourage and facilitate the
94	94	involvement of the region's retail electric providers in the
95	95	delivery of efficiency programs and demand response programs under
96	96	this section, including programs for demand-side renewable energy
97	97	systems that:
98	98	(A) use distributed renewable generation, as
99	99	defined by Section 39.916; or
100	100	(B) reduce the need for energy consumption by
101	101	using a renewable energy technology, a geothermal technology [heat
102	102	pump], a solar water heater, or another natural mechanism of the
103	103	environment;
104	104	(5) retail electric providers in the ERCOT region, and
105	105	electric utilities outside of the ERCOT region, shall provide
106	106	customers with energy efficiency educational materials; and
107	107	(6) notwithstanding Subsection (a)(3), electric
108	108	utilities shall continue to make available, at 2023 [2007] funding
109	109	and participation levels, any load management [standard offer]
110	110	programs or demand response programs developed for [industrial]
111	111	customers and implemented before January 1, 2023 [prior to May 1,
112	112	2007].
113	113	(b) The commission shall provide oversight and adopt rules
114	114	and procedures to ensure that the utilities can achieve the goals
115	115	[goal] of this section, including:
116	116	(1) establishing an energy efficiency cost recovery
117	117	factor for ensuring timely and reasonable cost recovery for utility
118	118	expenditures made to satisfy the goals [goal] of this section;
119	119	(2) establishing an incentive under Section 36.204 to
120	120	reward utilities administering programs under this section that
121	121	exceed the minimum goals established by this section;
122	122	(2-a) prohibiting an incentive achieved under this
123	123	section from being included in an electric utility's revenues or
124	124	net income for the purposes of establishing a utility's rates or the
125	125	utility's earnings monitoring report under Section 36.157, 36.210,
126	126	or 36.212;
127	127	(2-b) providing that an incentive achieved by an
128	128	electric utility under this section entitles the utility to receive
129	129	an amount equal to the net benefits realized in meeting the
130	130	applicable demand reduction and energy savings established under
131	131	this section, provided that:
132	132	(A) the net benefits must be calculated by
133	133	subtracting the total program costs from the total of the avoided
134	134	costs associated with the portfolio of programs administered by the
135	135	utility; and
136	136	(B) an electric utility that exceeds its demand
137	137	reduction and energy savings goals is entitled to receive an
138	138	incentive equal to one percent of the net benefits for every two
139	139	percent that the demand reduction goal has been exceeded, with a
140	140	maximum of 10 percent of the utility's total net benefits;
141	141	(3) providing a utility that is unable to establish an
142	142	energy efficiency cost recovery factor in a timely manner due to a
143	143	rate freeze with a mechanism to enable the utility to:
144	144	(A) defer the costs of complying with this
145	145	section; and
146	146	(B) recover the deferred costs through an energy
147	147	efficiency cost recovery factor on the expiration of the rate
148	148	freeze period;
149	149	(4) ensuring that the costs associated with programs
150	150	provided under this section and any shareholder incentive [bonus]
151	151	awarded are borne by the customer classes that receive the services
152	152	under the programs;
153	153	(5) establishing cost caps that:
154	154	(A) allow electric utilities to meet the goals of
155	155	this section; and
156	156	(B) exclude:
157	157	(i) any shareholder incentive; and
158	158	(ii) any third-party evaluation
159	159	measurement and verification costs;
160	160	(6) requiring that, for an industrial customer to opt
161	161	out of an electric utility's energy efficiency cost recovery
162	162	factor, the industrial customer must submit a notice to the
163	163	electric utility and the commission;
164	164	(7) ensuring the program rules encourage the value of
165	165	the incentives to be passed on to the end-use customer;
166	166	(8) [(6)] ensuring that programs are evaluated,
167	167	measured, and verified using a framework established by the
168	168	commission that promotes effective program design and consistent
169	169	and streamlined reporting; and
170	170	(9) [(7)] ensuring that an independent organization
171	171	certified under Section 39.151 allows load participation in all
172	172	energy markets for residential, commercial, and industrial
173	173	customer classes, either directly or through aggregators of retail
174	174	customers, to the extent that load participation by each of those
175	175	customer classes complies with reasonable requirements adopted by
176	176	the organization relating to the reliability and adequacy of the
177	177	regional electric network and in a manner that will increase market
178	178	efficiency, competition, and customer benefits.
179	179	(e) An electric utility may use money approved by the
180	180	commission for energy efficiency programs to perform necessary
181	181	energy efficiency research and development to foster continuous
182	182	improvement and innovation in the application of energy efficiency
183	183	technology and energy efficiency program design and
184	184	implementation. Money the utility uses under this subsection may
185	185	not exceed 10 percent of the greater of:
186	186	(1) the amount the commission approved for energy
187	187	efficiency programs in the utility's most recent [full rate]
188	188	proceeding in which an energy efficiency cost recovery factor is
189	189	set; or
190	190	(2) the commission-approved expenditures by the
191	191	utility for energy efficiency in the previous year.
192	192	(g) The commission shall [may] provide for a good cause
193	193	exemption to a utility's liability for an administrative penalty or
194	194	other sanction if the utility fails to meet a goal [for energy
195	195	efficiency] under this section and the utility's failure to meet
196	196	the goal is caused by one or more factors outside of the utility's
197	197	control, including:
198	198	(1) limitations caused by the imposition of cost caps
199	199	on the energy efficiency cost recovery factor;
200	200	(2) insufficient demand by retail electric providers
201	201	and competitive energy service providers for program incentive
202	202	funds made available by the utility through its programs;
203	203	(3) [(2)] changes in building energy codes; and
204	204	(4) [(3)] changes in government-imposed appliance or
205	205	equipment efficiency standards.
206	206	(h) For an electric utility operating in an area not open to
207	207	competition, the utility may achieve the goal of this section by:
208	208	(1) providing rebate or incentive funds directly to
209	209	customers to promote or facilitate the success of programs
210	210	implemented under this section; or
211	211	(2) developing, subject to commission approval, new
212	212	programs other than standard offer programs and market
213	213	transformation programs, to the extent that the new programs make
214	214	the portfolio of programs no longer cost-effective [satisfy the
215	215	same cost-effectiveness requirements as standard offer programs
216	216	and market transformation programs].
217	217	(i) For an electric utility operating in an area open to
218	218	competition that provides [, on demonstration] to the commission a
219	219	notice [, after a contested case hearing,] that the requirements
220	220	under Subsection (a) cannot be met [in a rural area] through retail
221	221	electric providers or competitive energy service providers in
222	222	hard-to-reach areas or areas with low-income customers, the utility
223	223	may achieve the goal of this section by providing rebate or
224	224	incentive funds directly to customers in those areas [the rural
225	225	area] to promote or facilitate the success of programs implemented
226	226	under this section. The electric utility must provide the notice to
227	227	the commission at least once every two years. In this subsection:
228	228	(1) "Hard-to-reach area" means a rural area not
229	229	adequately served by retail electric providers or competitive
230	230	energy service providers.
231	231	(2) "Low-income customer" means a residential
232	232	customer with an annual household income at or below 200 percent of
233	233	the federal poverty guidelines or who meets income eligibility
234	234	requirements established by the commission.
235	235	(i-1) An electric utility described by Subdivision (i) may
236	236	receive information identifying low-income electric customers
237	237	under Section 17.007(a).
238	238	(j) An electric utility may use energy audit programs to
239	239	achieve the goal of this section if[:
240	240	[(1) the programs do not constitute more than three
241	241	percent of total program costs under this section; and
242	242	[(2)] the addition of the programs does not cause a
243	243	utility's portfolio of programs to no longer be cost-effective.
244	244	SECTION 2. Section 39.905(k), Utilities Code, is repealed.
245	245	SECTION 3. The Public Utility Commission of Texas shall
246	246	adopt rules to implement Section 39.905, Utilities Code, as amended
247	247	by this Act, not later than January 1, 2024.
248	248	SECTION 4. This Act takes effect immediately if it receives
249	249	a vote of two-thirds of all the members elected to each house, as
250	250	provided by Section 39, Article III, Texas Constitution. If this
251	251	Act does not receive the vote necessary for immediate effect, this
252	252	Act takes effect September 1, 2023.