By: King, Hughes, Kolkhorst S.B. No. 1287
A BILL TO BE ENTITLED
AN ACT
relating to the cost of interconnecting certain electric generation
facilities with the ERCOT transmission system.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 35.004, Utilities Code, is amended by
amending Subsection (d) and adding Subsections (d-1), (d-2), and
(d-3) to read as follows:
(d) The commission shall price wholesale transmission
services within ERCOT based on the postage stamp method of pricing
under which a transmission-owning utility's rate is based on the
ERCOT utilities' combined annual costs of transmission, other than
costs described by Subsections (d-2) and (d-3), divided by the
total demand placed on the combined transmission systems of all
such transmission-owning utilities within a power region. An
electric utility subject to the freeze period imposed by Section
39.052 may treat transmission costs in excess of transmission
revenues during the freeze period as an expense for purposes of
determining annual costs in the annual report filed under Section
39.257. Notwithstanding Section 36.201, the commission may approve
wholesale rates that may be periodically adjusted to ensure timely
recovery of transmission investment. Notwithstanding Section
36.054(a), if the commission determines that conditions warrant the
action, the commission may authorize the inclusion of construction
work in progress in the rate base for transmission investment
required by the commission under Section 39.203(e).
(d-1) The commission by rule shall establish a reasonable
allowance to be applied on a per megawatt basis for costs incurred
to interconnect generation resources directly with the ERCOT
transmission system at transmission voltage, including costs of
utility interconnection facilities. The allowance must:
(1) take into account:
(A) average historical dispatchable generation
interconnection costs; and
(B) the reliability impact to the grid of the
interconnecting resource and whether the interconnecting resource
increases reliability or volatility in managing the grid; and
(2) be designed to lower costs to consumers and
encourage owners of generation resources to locate the resources
closer to load.
(d-2) Costs in excess of the allowance provided by
Subsection (d-1) incurred to interconnect generation resources
with the ERCOT transmission system, including costs of utility
interconnection facilities, must be directly assigned to and
collected from the generation resource interconnecting through the
facilities.
(d-3) Not later than September 1 of every fifth year after
2023, the commission shall review and may adjust the allowance
provided by Subsection (d-1) to account for inflation or supply
chain issues.
SECTION 2. This Act takes effect September 1, 2023.