By: Harrison H.B. No. 4669
A BILL TO BE ENTITLED
AN ACT
relating to allocating the cost of ancillary and reliability
services procured in the ERCOT power region.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The legislature finds that:
(1) the welfare of the residents and the economic
security of the state depend on the reliability and resilience of
the electric power supply;
(2) the increased deployment of non-dispatchable wind
and solar electricity generation has exposed the bulk power system
to significant weather dependence and will continue to erode the
reliability and resilience of the grid unless reforms are
instituted to more adequately value reliability and resilience;
(3) the current system of grid operation and
regulatory oversight has failed to ensure the reliability and
resilience of the grid for a number of reasons, including:
(A) market rules developed by the Electric
Reliability Council of Texas and overseen by the Public Utility
Commission of Texas have so far failed to adequately value
reliability and resilience of the grid; and
(B) direct and indirect subsidies for wind and
solar electricity generation have led to overinvestment in those
forms of electricity generation and undervaluation of
dispatchable, reliable, and resilient power plants, which has
resulted in the retirement of several such plants, inhibited the
addition of such plants, and inhibited weatherization expenditures
to increase the reliability and resilience of the grid;
(5) several recent federal policy announcements
mandating and incentivizing further deployment of significant
non-dispatchable electricity sources such as wind and solar without
providing sufficient resilient backup power will impose
reliability and resilience penalties on the bulk power system
relied on by the residents and industries of the state; and
(6) it is essential that the legislature immediately
provide further direction to the Public Utility Commission of Texas
regrading reliability standards for the ERCOT market and new
mechanisms to address the reliability and resilience shortcomings
of the grid.
SECTION 2. Chapter 39, Utilities Code, is amended by adding
Subchapter M to read as follows:
SUBCHAPTER M. RELIABILITY STANDARD FOR NON-DISPATCHABLE
GENERATORS
Sec. 39.601. DEFINITIONS. In this subchapter:
(1) "Dispatchable generator" means a source of
electricity that:
(A) is available for use on demand;
(B) may be dispatched on the request of a power
grid operator;
(C) may have its power output adjusted, according
to market need; and
(D) does not derive its power output primarily
from sources that inherently change from minute to minute, such as
those dependent on local weather conditions to be present.
(2) "Expected availability factor" means the average
generation of a non-dispatchable generator, divided by its
installed capacity, during the highest 100 net load hours each year
in an average of two or more immediately preceding calendar years,
as determined by the commission.
(3) "Firming requirement" is a requirement for a
non-dispatchable generator to ensure that its hourly availability
factor during at least 95 hours of the highest 100 net load hours
equals or exceeds its expected availability factor by continuing to
operate, constructing, or acquiring through a power purchase
agreement or other means sufficient resources that are eligible to
act as ancillary service reserves according to ERCOT protocols.
(4) "Hourly availability factor" means the hourly
average generation of a non-dispatchable generator, divided by its
installed capacity.
(5) "Non-dispatchable generator" means a source of
electricity that does not meet the definition of a dispatchable
generator in Paragraph (1).
Sec. 39.602. FIRMING REQUIREMENT FOR NON-DISPATCHABLE
GENERATORS.
(a) Each non-dispatchable generator in the market shall, on
an annual basis, acquire the necessary resources to meet its
firming requirement.
(b) Beginning on December 1, 2024 and not later than
December 1 of every year thereafter, each non-dispatchable
generator in the market shall demonstrate to the commission, in a
manner provided by the commission, that the non-dispatchable
generator has secured sufficient firming capacity for the upcoming
calendar year.
(c) The commission shall adopt any rules necessary to
implement this section, including rules that establish an ancillary
service market or a separate reliability service to implement this
section.
SECTION 3. Chapter 39, Utilities Code, is amended by adding
Subchapter M to read as follows:
Sec. 39.603. TRANSPARENCY REQUIRED FOR THE COST OF FIRMING
AND TRANSMISSION ASSOCIATED WITH NON-DISPATCHABLE GENERATORS.
(a) The commission shall prepare a report by December 1,
2023 and thereafter on an annual basis, that includes the estimated
annual firming costs required to be incurred under this subchapter
by non-dispatchable generators, as well as the cumulative annual
transmission costs that have been incurred in order to facilitate
the transmission of non-dispatchable electricity to load.
(b) No later than December 1, 2024, and annually
thereafter, the Public Utility Commission shall prepare a report
to the Legislature that documents the status of implementation of
this subchapter, whether the rules and protocols put in place to
implement this Act have materially improved the reliability,
resilience, and transparency of the electricity market, and whether
any additional measures need to be taken by the legislature to
empower the Commission to implement additional market reforms to
ensure that market signals are adequate to preserve existing
dispatchable generation and incent the construction of new
dispatchable generation sufficient to maintain the reliability
standard for at least 5 years from the date of the report.
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.