| 1 | 1 | | S.B. No. 1866 |
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| 2 | 2 | | |
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| 3 | 3 | | |
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| 4 | 4 | | AN ACT |
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| 5 | 5 | | relating to the use of customer-sited distributed generation |
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| 6 | 6 | | facilities owned by certain non-ERCOT electric utilities. |
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| 7 | 7 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 8 | 8 | | SECTION 1. Subchapter E, Chapter 36, Utilities Code, is |
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| 9 | 9 | | amended by adding Section 36.215 to read as follows: |
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| 10 | 10 | | Sec. 36.215. RECOVERY OF INVESTMENT IN DISTRIBUTED |
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| 11 | 11 | | GENERATION AND RATES FOR BACKUP ELECTRIC SERVICE FOR CERTAIN |
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| 12 | 12 | | NON-ERCOT UTILITIES. (a) In this section: |
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| 13 | 13 | | (1) "Customer-sited distributed generation facility" |
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| 14 | 14 | | means a dispatchable generation facility that is installed on the |
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| 15 | 15 | | electric utility's side of the retail meter and owned and operated |
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| 16 | 16 | | by the electric utility: |
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| 17 | 17 | | (A) with a nameplate capacity of not more than 10 |
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| 18 | 18 | | megawatts; |
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| 19 | 19 | | (B) that is capable of generating and providing |
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| 20 | 20 | | backup electric service to a customer during a power grid outage; |
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| 21 | 21 | | and |
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| 22 | 22 | | (C) sited at or adjacent to the customer's |
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| 23 | 23 | | premises. |
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| 24 | 24 | | (2) "Host customer" means a customer receiving backup |
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| 25 | 25 | | electric service under this section. |
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| 26 | 26 | | (b) This section applies only to an electric utility that |
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| 27 | 27 | | operates solely outside of ERCOT in areas of this state included in |
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| 28 | 28 | | the Southeastern Electric Reliability Council. |
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| 29 | 29 | | (c) An electric utility may provide backup electric service |
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| 30 | 30 | | to a nonresidential retail customer through a customer-sited |
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| 31 | 31 | | distributed generation facility. |
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| 32 | 32 | | (d) The commission, on the petition of an electric utility, |
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| 33 | 33 | | shall establish just and reasonable rates for backup electric |
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| 34 | 34 | | service supplied using a customer-sited distributed generation |
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| 35 | 35 | | facility, consistent with this chapter, provided that costs are |
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| 36 | 36 | | allocated as follows: |
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| 37 | 37 | | (1) if the facility is capable of directly supplying |
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| 38 | 38 | | energy to the distribution system or of disconnecting the host |
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| 39 | 39 | | customer from the distribution system when not being used to supply |
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| 40 | 40 | | backup electric service to the host customer and thereby reducing |
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| 41 | 41 | | system load, the commission shall allocate the cost of owning and |
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| 42 | 42 | | operating the facility between the host customer and the electric |
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| 43 | 43 | | utility's broader customer base, including an allocation of any |
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| 44 | 44 | | margins from energy sales attributable to the facility to the host |
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| 45 | 45 | | customer in reasonable proportion to the allocation of nonfuel |
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| 46 | 46 | | costs as provided by Subdivision (2); and |
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| 47 | 47 | | (2) the allocation of nonfuel costs to the host |
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| 48 | 48 | | customer must be based on the cost to purchase, install, |
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| 49 | 49 | | interconnect, own, operate, and maintain the facility that is above |
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| 50 | 50 | | the electric utility's levelized avoided cost to install, own, |
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| 51 | 51 | | operate, and maintain a single-cycle combustion turbine, on a per |
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| 52 | 52 | | kilowatt basis, grossed up for avoided line losses based on the |
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| 53 | 53 | | utility's transmission and distribution line loss factors last |
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| 54 | 54 | | approved by the commission. |
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| 55 | 55 | | (e) In a rate proceeding in which an electric utility seeks |
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| 56 | 56 | | to recover the utility's investment in a customer-sited distributed |
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| 57 | 57 | | generation facility that is interconnected to the utility's |
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| 58 | 58 | | distribution system: |
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| 59 | 59 | | (1) the full cost of the utility's investment is |
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| 60 | 60 | | eligible for recovery; and |
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| 61 | 61 | | (2) the cost of the facility and backup electric |
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| 62 | 62 | | service revenues must be allocated among customer classes on the |
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| 63 | 63 | | same basis used to allocate the utility's distribution-level |
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| 64 | 64 | | investments. |
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| 65 | 65 | | SECTION 2. This Act takes effect immediately if it receives |
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| 66 | 66 | | a vote of two-thirds of all the members elected to each house, as |
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| 67 | 67 | | provided by Section 39, Article III, Texas Constitution. If this |
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| 68 | 68 | | Act does not receive the vote necessary for immediate effect, this |
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| 69 | 69 | | Act takes effect September 1, 2023. |
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| 70 | 70 | | ______________________________ ______________________________ |
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| 71 | 71 | | President of the Senate Speaker of the House |
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| 72 | 72 | | I hereby certify that S.B. No. 1866 passed the Senate on |
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| 73 | 73 | | April 25, 2023, by the following vote: Yeas 30, Nays 0. |
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| 74 | 74 | | ______________________________ |
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| 75 | 75 | | Secretary of the Senate |
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| 76 | 76 | | I hereby certify that S.B. No. 1866 passed the House on |
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| 77 | 77 | | May 6, 2023, by the following vote: Yeas 137, Nays 0, one present |
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| 78 | 78 | | not voting. |
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| 79 | 79 | | ______________________________ |
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| 80 | 80 | | Chief Clerk of the House |
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| 81 | 81 | | Approved: |
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| 82 | 82 | | ______________________________ |
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| 83 | 83 | | Date |
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| 84 | 84 | | ______________________________ |
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| 85 | 85 | | Governor |
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