88R11656 JXC-F
By: Morales of Maverick H.B. No. 3964
A BILL TO BE ENTITLED
AN ACT
relating to energy efficiency goals and programs, public
information regarding energy efficiency programs, and the
participation of loads in certain energy markets.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 39.905, Utilities Code, is amended by
amending Subsections (a), (b), (e), (g), (h), (i), and (j) and
adding Subsection (i-1) to read as follows:
(a) It is the goal of the legislature that:
(1) electric utilities will administer energy
efficiency incentive programs in a market-neutral,
nondiscriminatory manner but will not offer underlying competitive
services;
(2) all customers, in all customer classes, will have
a choice of and access to energy efficiency alternatives and other
choices from the market that allow each customer to reduce energy
consumption, summer and winter peak demand, or energy costs;
(3) each electric utility will administer energy
efficiency programs that:
(A) cause the utility's portfolio of programs to
be cost-effective;
(B) include load management programs and demand
response programs;
(C) acquire the following minimum quantifiable
reductions in demand annually:
(i) 5,000 kilowatts for utilities with an
average of less than 300,000 total eligible residential and
commercial customers in the previous five years;
(ii) 15,000 kilowatts for utilities with an
average of greater than 300,000 but less than 750,000 total
eligible residential and commercial customers in the previous five
years;
(iii) 25,000 kilowatts for utilities with
an average of greater than 750,000 but less than 1.5 million total
eligible residential and commercial customers in the previous five
years;
(iv) 75,000 kilowatts for utilities with an
average of greater than 1.5 million but less than 3 million total
eligible residential and commercial customers in the previous five
years;
(v) 100,000 kilowatts for utilities with an
average of greater than 3 million but less than 4 million total
eligible residential and commercial customers in the previous five
years; or
(vi) 125,000 kilowatts for utilities with
an average of greater than 4 million total eligible residential and
commercial customers in the previous five years; and
(D) acquire energy savings in the following
amounts corresponding to that utility's total demand reductions
identified by Paragraph (C):
(i) 8,760,000 kilowatt hours for a demand
reduction goal of 5,000 kilowatts;
(ii) 26,280,000 kilowatt hours for a demand
reduction goal of 15,000 kilowatts;
(iii) 43,800,000 kilowatt hours for a
demand reduction goal of 25,000 kilowatts;
(iv) 131,400,000 kilowatt hours for a
demand reduction goal of 75,000 kilowatts;
(v) 175,200,000 kilowatt hours for a demand
reduction goal of 100,000 kilowatts; or
(vi) 219,000,000 kilowatt hours for a
demand reduction goal of 125,000 kilowatts [annually will provide,
through market-based standard offer programs or through targeted
market-transformation programs, incentives sufficient for retail
electric providers and competitive energy service providers to
acquire additional cost-effective energy efficiency, subject to
cost ceilings established by the commission, for the utility's
residential and commercial customers equivalent to:
[(A) not less than:
[(i) 30 percent of the electric utility's
annual growth in demand of residential and commercial customers by
December 31 of each year beginning with the 2013 calendar year; and
[(ii) the amount of energy efficiency to be
acquired for the utility's residential and commercial customers for
the most recent preceding year; and
[(B) for an electric utility whose amount of
energy efficiency to be acquired under this subsection is
equivalent to at least four-tenths of one percent of the electric
utility's summer weather-adjusted peak demand for residential and
commercial customers in the previous calendar year, not less than:
[(i) four-tenths of one percent of the
utility's summer weather-adjusted peak demand for residential and
commercial customers by December 31 of each subsequent year; and
[(ii) the amount of energy efficiency to be
acquired for the utility's residential and commercial customers for
the most recent preceding year;]
(4) each electric utility in the ERCOT region will
[shall] use its best efforts to encourage and facilitate the
involvement of the region's retail electric providers in the
delivery of efficiency programs and demand response programs under
this section, including programs for demand-side renewable energy
systems that:
(A) use distributed renewable generation, as
defined by Section 39.916; or
(B) reduce the need for energy consumption by
using a renewable energy technology, a geothermal technology [heat
pump], a solar water heater, or another natural mechanism of the
environment;
(5) retail electric providers in the ERCOT region, and
electric utilities outside of the ERCOT region, shall provide
customers with energy efficiency educational materials; and
(6) notwithstanding Subsection (a)(3), electric
utilities shall continue to make available, at 2023 [2007] funding
and participation levels, any load management [standard offer]
programs or demand response programs developed for [industrial]
customers and implemented before January 1, 2023 [prior to May 1,
2007].
(b) The commission shall provide oversight and adopt rules
and procedures to ensure that the utilities can achieve the goals
[goal] of this section, including:
(1) establishing an energy efficiency cost recovery
factor for ensuring timely and reasonable cost recovery for utility
expenditures made to satisfy the goals [goal] of this section;
(2) establishing an incentive under Section 36.204 to
reward utilities administering programs under this section that
exceed the minimum goals established by this section;
(2-a) prohibiting an incentive achieved under this
section from being included in an electric utility's revenues or
net income for the purposes of establishing a utility's rates or the
utility's earnings monitoring report under Section 36.157, 36.210,
or 36.212;
(2-b) providing that an incentive achieved by an
electric utility under this section entitles the utility to receive
an amount equal to the net benefits realized in meeting the
applicable demand reduction and energy savings established under
this section, provided that:
(A) the net benefits must be calculated by
subtracting the total program costs from the total of the avoided
costs associated with the portfolio of programs administered by the
utility; and
(B) an electric utility that exceeds its demand
reduction and energy savings goals is entitled to receive an
incentive equal to one percent of the net benefits for every two
percent that the demand reduction goal has been exceeded, with a
maximum of 10 percent of the utility's total net benefits;
(3) providing a utility that is unable to establish an
energy efficiency cost recovery factor in a timely manner due to a
rate freeze with a mechanism to enable the utility to:
(A) defer the costs of complying with this
section; and
(B) recover the deferred costs through an energy
efficiency cost recovery factor on the expiration of the rate
freeze period;
(4) ensuring that the costs associated with programs
provided under this section and any shareholder incentive [bonus]
awarded are borne by the customer classes that receive the services
under the programs;
(5) establishing cost caps that:
(A) allow electric utilities to meet the goals of
this section; and
(B) exclude:
(i) any shareholder incentive; and
(ii) any third-party evaluation
measurement and verification costs;
(6) requiring that, for an industrial customer to opt
out of an electric utility's energy efficiency cost recovery
factor, the industrial customer must submit a notice to the
electric utility and the commission;
(7) ensuring the program rules encourage the value of
the incentives to be passed on to the end-use customer;
(8) [(6)] ensuring that programs are evaluated,
measured, and verified using a framework established by the
commission that promotes effective program design and consistent
and streamlined reporting; and
(9) [(7)] ensuring that an independent organization
certified under Section 39.151 allows load participation in all
energy markets for residential, commercial, and industrial
customer classes, either directly or through aggregators of retail
customers, to the extent that load participation by each of those
customer classes complies with reasonable requirements adopted by
the organization relating to the reliability and adequacy of the
regional electric network and in a manner that will increase market
efficiency, competition, and customer benefits.
(e) An electric utility may use money approved by the
commission for energy efficiency programs to perform necessary
energy efficiency research and development to foster continuous
improvement and innovation in the application of energy efficiency
technology and energy efficiency program design and
implementation. Money the utility uses under this subsection may
not exceed 10 percent of the greater of:
(1) the amount the commission approved for energy
efficiency programs in the utility's most recent [full rate]
proceeding in which an energy efficiency cost recovery factor is
set; or
(2) the commission-approved expenditures by the
utility for energy efficiency in the previous year.
(g) The commission shall [may] provide for a good cause
exemption to a utility's liability for an administrative penalty or
other sanction if the utility fails to meet a goal [for energy
efficiency] under this section and the utility's failure to meet
the goal is caused by one or more factors outside of the utility's
control, including:
(1) limitations caused by the imposition of cost caps
on the energy efficiency cost recovery factor;
(2) insufficient demand by retail electric providers
and competitive energy service providers for program incentive
funds made available by the utility through its programs;
(3) [(2)] changes in building energy codes; and
(4) [(3)] changes in government-imposed appliance or
equipment efficiency standards.
(h) For an electric utility operating in an area not open to
competition, the utility may achieve the goal of this section by:
(1) providing rebate or incentive funds directly to
customers to promote or facilitate the success of programs
implemented under this section; or
(2) developing, subject to commission approval, new
programs other than standard offer programs and market
transformation programs, to the extent that the new programs make
the portfolio of programs no longer cost-effective [satisfy the
same cost-effectiveness requirements as standard offer programs
and market transformation programs].
(i) For an electric utility operating in an area open to
competition that provides [, on demonstration] to the commission a
notice [, after a contested case hearing,] that the requirements
under Subsection (a) cannot be met [in a rural area] through retail
electric providers or competitive energy service providers in
hard-to-reach areas or areas with low-income customers, the utility
may achieve the goal of this section by providing rebate or
incentive funds directly to customers in those areas [the rural
area] to promote or facilitate the success of programs implemented
under this section. The electric utility must provide the notice to
the commission at least once every two years. In this subsection:
(1) "Hard-to-reach area" means a rural area not
adequately served by retail electric providers or competitive
energy service providers.
(2) "Low-income customer" means a residential
customer with an annual household income at or below 200 percent of
the federal poverty guidelines or who meets income eligibility
requirements established by the commission.
(i-1) An electric utility described by Subdivision (i) may
receive information identifying low-income electric customers
under Section 17.007(a).
(j) An electric utility may use energy audit programs to
achieve the goal of this section if[:
[(1) the programs do not constitute more than three
percent of total program costs under this section; and
[(2)] the addition of the programs does not cause a
utility's portfolio of programs to no longer be cost-effective.
SECTION 2. Section 39.905(k), Utilities Code, is repealed.
SECTION 3. The Public Utility Commission of Texas shall
adopt rules to implement Section 39.905, Utilities Code, as amended
by this Act, not later than January 1, 2024.
SECTION 4. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2023.