| 1 | 1 | | By: King, et al. S.B. No. 1287 |
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| 2 | 2 | | (Slawson) |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to the cost of interconnecting certain electric generation |
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| 8 | 8 | | facilities with the ERCOT transmission system. |
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| 9 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 10 | 10 | | SECTION 1. Section 35.004, Utilities Code, is amended by |
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| 11 | 11 | | amending Subsection (d) and adding Subsections (d-1), (d-2), and |
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| 12 | 12 | | (d-3) to read as follows: |
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| 13 | 13 | | (d) The commission shall price wholesale transmission |
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| 14 | 14 | | services within ERCOT based on the postage stamp method of pricing |
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| 15 | 15 | | under which a transmission-owning utility's rate is based on the |
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| 16 | 16 | | ERCOT utilities' combined annual costs of transmission, other than |
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| 17 | 17 | | costs described by Subsections (d-2) and (d-3), divided by the |
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| 18 | 18 | | total demand placed on the combined transmission systems of all |
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| 19 | 19 | | such transmission-owning utilities within a power region. An |
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| 20 | 20 | | electric utility subject to the freeze period imposed by Section |
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| 21 | 21 | | 39.052 may treat transmission costs in excess of transmission |
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| 22 | 22 | | revenues during the freeze period as an expense for purposes of |
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| 23 | 23 | | determining annual costs in the annual report filed under Section |
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| 24 | 24 | | 39.257. Notwithstanding Section 36.201, the commission may approve |
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| 25 | 25 | | wholesale rates that may be periodically adjusted to ensure timely |
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| 26 | 26 | | recovery of transmission investment. Notwithstanding Section |
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| 27 | 27 | | 36.054(a), if the commission determines that conditions warrant the |
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| 28 | 28 | | action, the commission may authorize the inclusion of construction |
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| 29 | 29 | | work in progress in the rate base for transmission investment |
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| 30 | 30 | | required by the commission under Section 39.203(e). |
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| 31 | 31 | | (d-1) The commission by rule shall establish a reasonable |
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| 32 | 32 | | allowance to be applied on a per megawatt basis for costs incurred |
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| 33 | 33 | | to interconnect generation resources directly with the ERCOT |
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| 34 | 34 | | transmission system at transmission voltage, including costs of |
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| 35 | 35 | | utility interconnection facilities. The allowance must: |
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| 36 | 36 | | (1) take into account: |
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| 37 | 37 | | (A) average historical dispatchable generation |
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| 38 | 38 | | interconnection costs; and |
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| 39 | 39 | | (B) the reliability impact to the grid of the |
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| 40 | 40 | | interconnecting resource and whether the interconnecting resource |
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| 41 | 41 | | increases reliability or volatility in managing the grid; and |
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| 42 | 42 | | (2) be designed to lower costs to consumers and |
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| 43 | 43 | | encourage owners of generation resources to locate the resources |
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| 44 | 44 | | closer to load. |
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| 45 | 45 | | (d-2) Costs in excess of the allowance provided by |
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| 46 | 46 | | Subsection (d-1) incurred to interconnect generation resources |
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| 47 | 47 | | with the ERCOT transmission system, including costs of utility |
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| 48 | 48 | | interconnection facilities, must be directly assigned to and |
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| 49 | 49 | | collected from the generation resource interconnecting through the |
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| 50 | 50 | | facilities. |
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| 51 | 51 | | (d-3) Not later than September 1 of every fifth year after |
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| 52 | 52 | | 2023, the commission shall review and may adjust the allowance |
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| 53 | 53 | | provided by Subsection (d-1) to account for inflation or supply |
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| 54 | 54 | | chain issues. |
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| 55 | 55 | | SECTION 2. This Act takes effect September 1, 2023. |
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