88R14150 JXC-D
By: Campbell S.B. No. 2369
A BILL TO BE ENTITLED
AN ACT
relating to the reliability and resiliency of the power grid in this
state; authorizing the issuance of revenue bonds.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The Public Utility Commission of Texas may not
adopt a program that requires load serving entities to purchase
credits earned by generators based on generator availability during
times of high demand and low supply at a centrally determined
clearing price.
SECTION 2. Section 35.004, Utilities Code, is amended by
adding Subsection (i) to read as follows:
(i) The commission shall require the independent
organization certified under Section 39.151 for the ERCOT power
region to implement real-time co-optimization of energy and
ancillary services in the ERCOT wholesale market.
SECTION 3. Title 4, Utilities Code, is amended by adding
Subtitle C to read as follows:
SUBTITLE C. RELIABILITY AND RESILIENCY OF POWER GRID
CHAPTER 201. GENERAL PROVISIONS
Sec. 201.001. DEFINITIONS. In this subtitle:
(1) "Advisory committee" means the utilities
reliability fund advisory committee.
(2) "Commission" means the Public Utility Commission
of Texas.
(3) "Electric utility" has the meaning assigned by
Section 31.002, except that the term includes an electric
cooperative organized under Chapter 161 and a municipally owned
utility.
(4) "Fund" means the utilities reliability fund.
(5) "Historically underutilized business" has the
meaning assigned by Section 2161.001, Government Code.
(6) "Power generation company" has the meaning
assigned by Section 31.002.
(7) "Revenue fund" means the utilities reliability
revenue fund.
(8) "Trust company" means the Texas Treasury
Safekeeping Trust Company.
CHAPTER 202. UTILITIES RELIABILITY FUND
Sec. 202.001. FUND. (a) The utilities reliability fund is
a special fund in the state treasury outside the general revenue
fund to be used by the commission as authorized by this chapter
without further legislative appropriation. The commission may
establish separate accounts in the fund and may transfer funds
between accounts. The commission may invest, reinvest, and direct
the investment of money in the fund. The fund and the fund's
accounts may be kept and held by the trust company for and in the
name of the commission. The commission has legal title to money and
investments in the fund until money is disbursed from the fund as
provided by this chapter and commission rules.
(b) Money deposited to the credit of the fund may be used
only as provided by Section 202.003.
(c) The fund consists of:
(1) money appropriated to the fund;
(2) money transferred or deposited to the credit of
the fund by law, including money from any source transferred or
deposited to the credit of the fund at the commission's discretion
as authorized by law;
(3) the proceeds of any fee or tax imposed by this
state that by statute is dedicated for deposit to the credit of the
fund;
(4) any other revenue that the legislature by statute
dedicates for deposit to the credit of the fund;
(5) investment earnings and interest earned on amounts
credited to the fund;
(6) repayments of loans made from the fund; and
(7) money transferred to the fund from another fund or
account to which money from the fund was transferred.
Sec. 202.002. MANAGEMENT AND INVESTMENT OF FUND. (a) The
commission or the trust company may hold and invest the fund, and
any accounts established in the fund, for and in the name of the
commission, taking into account the purposes for which money in the
fund may be used. The fund may be invested with the state treasury
pool.
(b) The overall objectives for the investment of the fund
are, in order of precedence:
(1) preservation and safety of the fund principal;
(2) liquidity; and
(3) investment yield.
(c) The commission or the trust company, as directed by the
commission, has any power necessary to accomplish the purposes of
managing and investing the assets of the fund. In managing the
assets of the fund, through procedures and subject to restrictions
the commission or the trust company considers appropriate, the
commission or the trust company may acquire, exchange, sell,
supervise, manage, or retain any kind of investment that a prudent
investor, exercising reasonable care, skill, and caution, would
acquire or retain in light of the purposes, terms, distribution
requirements, and other circumstances of the fund then prevailing,
taking into consideration the investment of all the assets of the
fund rather than a single investment.
(d) If the fund is managed by the trust company, the trust
company may charge fees to cover its costs incurred in managing and
investing the fund. The fees must be consistent with the fees the
trust company charges other state and local governmental entities
for which the trust company provides investment management
services. The trust company may recover fees the trust company
charges under this subsection only from the earnings of the fund.
(e) If the fund is managed by the trust company, the trust
company annually shall provide a report to the commission and to the
advisory committee with respect to the investment of the fund. The
trust company shall contract with a certified public accountant to
conduct an independent audit of the fund annually and shall present
the results of each annual audit to the commission and to the
advisory committee. This subsection does not affect the state
auditor's authority to conduct an audit of the fund under Chapter
321, Government Code.
(f) The commission or trust company shall adopt a written
investment policy that is appropriate for the fund. If the fund is
managed by the trust company:
(1) the trust company shall present the investment
policy to the commission and the investment advisory board
established under Section 404.028, Government Code; and
(2) the commission and investment advisory board shall
submit to the trust company recommendations regarding the policy.
(g) If the fund is managed by the trust company, the
commission annually shall provide to the trust company a forecast
of the cash flows into and out of the fund. The commission shall
provide updates to the forecasts as appropriate to assist the trust
company in achieving the objectives specified by Subsection (b).
(h) If the fund is managed by the trust company, the company
shall disburse money from the fund as directed by the commission.
The commission shall direct disbursements from the fund on a
schedule specified by the commission. If any applicable revenue
bonds are outstanding, the commission shall direct disbursements
from the fund not more frequently than twice in any state fiscal
year.
(i) An investment-related contract entered into under this
section is not subject to Chapter 2260, Government Code.
Sec. 202.003. USE OF FUND; PAYMENTS TO AND FROM OTHER FUNDS
OR ACCOUNTS. (a) The commission or the trust company at the
direction of the commission shall make disbursements from the fund
to the revenue fund in the amounts the commission determines are
needed for disbursement through the financing structures developed
to meet the goals of the fund, including transfer of those amounts
to other commission programs or funds as necessary, or for debt
service payments on or security provisions of the commission's
revenue bonds, after considering all other sources available for
those purposes.
(b) The fund may be used only to:
(1) enhance the reliability and resiliency of the
power grid in this state by installing dispatchable generation
capacity;
(2) pay the necessary and reasonable expenses of the
commission in administering the fund; and
(3) transfer funds to other programs or funds.
(c) The commission may provide financial assistance from
the fund for:
(1) an electric utility project; or
(2) a power generation company project.
(d) Financial assistance under Subsection (c) may be
provided in any form as determined by the commission, including a
market rate, low-interest, or no-interest loan, a loan guarantee,
an equity ownership in a public or private entity, a joint venture
with a public or private entity, a grant, an interest rebate, or an
interest subsidy. The commission may not provide more than two
loans from the fund to the same entity.
(e) In providing financial assistance under Subsection (c),
the commission may make, enter into, and enforce contracts,
agreements, including management agreements, for the management of
any of the commission's property, leases, indentures, mortgages,
deeds of trust, security agreements, pledge agreements, credit
agreements, overrides or other revenue sharing mechanisms,
repurchase agreements, and other instruments with any person,
including any lender and any federal, state, or local governmental
agency, and to take other actions as may accomplish any of its
purposes.
(f) The commission may contract with and provide for the
compensation of consultants and agents, including engineers,
attorneys, management consultants, financial advisors, indexing
agents, and other experts, as the business of the commission under
this chapter may require.
(g) Money in the fund may not be used for the purposes of
certification under Section 403.121, Government Code.
Sec. 202.004. PRIORITIZATION OF PROJECTS BY COMMISSION.
(a) The commission, for the purpose of providing financial
assistance under this chapter, shall prioritize projects that
enhance the reliability and resiliency of the power grid in this
state.
(b) The commission shall establish a point system for
prioritizing projects for which financial assistance is sought from
the commission. The system must include a standard for the
commission to apply in determining whether a project qualifies for
financial assistance at the time the application for financial
assistance is filed with the commission.
(c) The commission may consider the following criteria in
prioritizing projects:
(1) other funding sources secured by the applicant for
the project, including any capital to be provided by the applicant;
(2) the financial capacity of the applicant to repay
the financial assistance provided; and
(3) the ability of the applicant to timely leverage
state financing with local, federal, or private funding.
(d) The commission shall consider federal tax subsidies in
prioritizing projects.
Sec. 202.005. ADVISORY COMMITTEE. (a) The utilities
reliability fund advisory committee is composed of the following
members:
(1) the comptroller, or a person designated by the
comptroller;
(2) three members of the senate appointed by the
lieutenant governor, including:
(A) a member of the committee of the senate
having primary jurisdiction over matters relating to finance; and
(B) a member of the committee of the senate
having primary jurisdiction over natural resources;
(3) three members of the house of representatives
appointed by the speaker of the house of representatives,
including:
(A) a member of the committee of the house of
representatives having primary jurisdiction over appropriations;
and
(B) a member of the committee of the house of
representatives having primary jurisdiction over natural
resources;
(4) the chief executive of the Office of Public
Utility Counsel, or a person designated by the chief executive of
the Office of Public Utility Counsel;
(5) the presiding officer of the commission, or a
person designated by the presiding officer of the commission;
(6) the chair of the Texas Reliability Entity board of
directors, or a person designated by a public vote of the Texas
Reliability Entity; and
(7) an unaffiliated board member of the Electric
Reliability Council of Texas, appointed in a public meeting of the
Electric Reliability Council of Texas.
(b) The commission shall provide staff as necessary to
assist the advisory committee.
(c) An appointed member of the advisory committee serves at
the will of the officer who appointed the member.
(d) The lieutenant governor shall appoint a co-presiding
officer of the advisory committee from among the members appointed
by the lieutenant governor, and the speaker of the house of
representatives shall appoint a co-presiding officer of the
committee from among the members appointed by the speaker.
(e) The advisory committee shall hold public hearings,
formal meetings, or work sessions in a location with audio and video
capacity. The commission shall broadcast over the Internet live
video and audio of each public hearing, formal meeting, or work
session of the advisory committee and provide access to each
broadcast on the commission's Internet website. Either
co-presiding officer of the advisory committee may call a public
hearing, formal meeting, or work session of the advisory committee
after issuing a public notice not later than the seventh day before
the date of the public hearing, formal meeting, or work session.
The public notice must include an agenda with formal actions
included. The advisory committee may not take formal action at a
public hearing, formal meeting, or work session unless a quorum of
the committee is present. The commission shall provide access on
the commission's Internet website to the public notices, recordings
of the live broadcasts, and minutes of public hearings, formal
meetings, and work sessions.
(f) Except as otherwise provided by this subsection, a
member of the advisory committee is not entitled to receive
compensation for service on the committee or reimbursement for
expenses incurred in the performance of official duties as a member
of the committee. Service on the advisory committee by a member of
the senate or house of representatives is considered legislative
service for which the member is entitled to reimbursement and other
benefits in the same manner and to the same extent as for other
legislative service.
(g) The advisory committee shall submit comments and
recommendations to the commission regarding the use of money in the
fund and in the revenue fund for use by the commission in adopting
rules under Section 202.006 and in adopting policies and procedures
under Section 202.008. The submission must include:
(1) comments and recommendations on rulemaking
related to the prioritization of projects in accordance with
Section 202.004;
(2) comments and recommendations on rulemaking
related to establishing standards for determining whether projects
meet the criteria provided by Section 202.003;
(3) an evaluation of the available programs for
providing financing for projects authorized by this chapter and
guidelines for implementing those programs;
(4) an evaluation of the lending practices of the
commission and guidelines for lending standards;
(5) an evaluation of the use of funds by the commission
to provide support for financial assistance for projects that
enhance the reliability and resiliency of the power grid in this
state;
(6) an evaluation of methods for encouraging
participation in the programs established under this chapter by
companies domiciled in this state or that employ a significant
number of residents of this state; and
(7) an evaluation of the overall operation, function,
and structure of the fund.
(h) The advisory committee shall review the overall
operation, function, and structure of the fund at least
semiannually and may provide comments and recommendations to the
commission on any matter.
(i) The advisory committee may adopt rules, procedures, and
policies as needed to administer this section and implement its
responsibilities.
(j) Chapter 2110, Government Code, does not apply to the
size, composition, or duration of the advisory committee.
(k) The advisory committee is subject to Chapter 325,
Government Code (Texas Sunset Act). Unless continued in existence
as provided by that chapter, the advisory committee is abolished
and this section expires September 1, 2035.
(l) The advisory committee shall make recommendations to
the commission regarding information to be posted on the
commission's Internet website under Section 202.007(b).
(m) The commission shall provide an annual report to the
advisory committee on:
(1) the commission's compliance with statewide annual
goals relating to historically underutilized businesses; and
(2) the participation level of historically
underutilized businesses in projects that receive funding under
this chapter.
(n) If the aggregate level of participation by historically
underutilized businesses in projects that receive funding under
this chapter does not meet statewide annual goals adopted under
Chapter 2161, Government Code, the advisory committee shall make
recommendations to the commission to improve the participation
level.
Sec. 202.006. RULES. (a) The commission shall adopt rules
providing for the use of money in the fund that are consistent with
this subchapter, including rules:
(1) establishing standards for determining whether
projects meet the criteria provided by Section 202.003;
(2) providing for public access to information on
financing assistance applications and providing for consideration
of public comment before financing decisions are made; and
(3) specifying the manner for prioritizing projects
for purposes of Section 202.004.
(b) The commission shall give full consideration to the
recommendations of the advisory committee before adopting rules
under this chapter.
Sec. 202.007. REPORTING AND TRANSPARENCY REQUIREMENTS. (a)
Not later than December 1 of each even-numbered year, the
commission shall provide a report to the governor, lieutenant
governor, speaker of the house of representatives, and members of
the legislature regarding the use of the fund.
(b) The commission shall post on the commission's Internet
website a description of each project funded through the fund,
including the expected date of completion of the project.
Sec. 202.008. POLICIES AND PROCEDURES TO MITIGATE OR
MINIMIZE ADVERSE EFFECTS OF CERTAIN FEDERAL LAWS. The commission
shall adopt, and may amend from time to time at the commission's
discretion, policies and procedures for the purpose of mitigating
or minimizing the adverse effects, if any, of federal laws and
regulations relating to income taxes, arbitrage, rebates, and
related matters that may restrict the commission's ability to
freely invest all or part of the fund or to receive and retain all
the earnings from the fund.
Sec. 202.009. PUBLIC PRIVATE PARTNERSHIPS. Money from the
fund may be used to make payments under a public and private entity
agreement to design, develop, finance, or construct a project
described by this chapter.
CHAPTER 203. UTILITIES RELIABILITY REVENUE FUND
Sec. 203.001. REVENUE FUND. (a) The utilities reliability
revenue fund is a special fund in the state treasury outside the
general revenue fund to be used by the commission as authorized by
this chapter without further legislative appropriation. The
commission may establish separate accounts in the revenue fund and
may transfer money between accounts. The commission has legal
title to money and investments in the revenue fund until the money
is disbursed as provided by this chapter and commission rules.
(b) Money deposited to the credit of the revenue fund may be
used only as provided by Section 203.003.
(c) The revenue fund consists of:
(1) money appropriated to the revenue fund;
(2) money transferred or deposited to the credit of
the revenue fund by law, including money from any source
transferred or deposited to the credit of the revenue fund at the
commission's discretion as authorized by law;
(3) the proceeds of any fee or tax imposed by this
state that by statute is dedicated for deposit to the credit of the
revenue fund;
(4) any other revenue that the legislature by statute
dedicates for deposit to the credit of the revenue fund;
(5) investment earnings and interest earned on amounts
credited to the revenue fund;
(6) the proceeds from the sale of revenue bonds issued
by the commission under this chapter that are designated by the
commission for the purpose of providing money for the revenue fund;
(7) repayments of loans made from the revenue fund;
and
(8) money disbursed to the revenue fund from the
utilities reliability fund as authorized by Section 202.003.
Sec. 203.002. MANAGEMENT AND INVESTMENT OF REVENUE FUND.
(a) Money deposited to the credit of the revenue fund shall be
invested as determined by the commission. The revenue fund may be
invested with the state treasury pool.
(b) The revenue fund and any accounts established in the
revenue fund shall be kept and maintained by or at the direction of
the commission.
(c) At the direction of the commission, the revenue fund and
any accounts established in the revenue fund may be managed by the
commission, the comptroller, or a corporate trustee that is a trust
company or a bank that has the powers of a trust company for and on
behalf of the commission and, pending use of the revenue fund and
accounts for the purposes provided by this chapter, may be invested
as provided by an order, resolution, or rule of the commission.
(d) The commission, comptroller, or corporate trustee shall
manage the revenue fund in strict accordance with this chapter and
the orders, resolutions, and rules of the commission.
Sec. 203.003. USE OF REVENUE FUND. (a) Money in the
revenue fund may be used by the commission only to provide financial
assistance under terms specified by the commission for projects
that enhance the reliability and resiliency of the power grid in
this state by installing dispatchable generation capacity.
(b) Financial assistance for projects under Subsection (a)
may be provided in any form determined by the commission that meets
the needs and goals of this state and the applicants, including a
market rate, low-interest, or no-interest loan, loan guarantee,
equity ownership in a public or private entity, a joint venture with
a public or private entity, a grant, an interest rebate, or an
interest subsidy.
(c) In providing financial assistance under Subsection (a),
the commission may:
(1) make, enter into, and enforce contracts and
agreements, including management agreements, for the management of
any of the commission's property, leases, indentures, mortgages,
deeds of trust, security agreements, pledge agreements, credit
agreements, overrides or other revenue sharing mechanisms,
repurchase agreements, and other instruments with any person,
including any lender and any federal, state, or local governmental
agency;
(2) contract with and provide for the compensation of
consultants and agents, including engineers, attorneys, management
consultants, financial advisors, indexing agents, and other
experts, as the business of the commission may require; and
(3) take other actions to accomplish any of the
commission's purposes.
(d) The commission may use money in the revenue fund:
(1) as a source of revenue or security for the payment
of the principal of and interest on revenue bonds issued by the
commission under this chapter;
(2) to pay the necessary and reasonable expenses of
paying agents, bond counsel, and financial advisory services and
similar costs incurred by the commission in administering the
revenue fund; or
(3) to transfer money to the fund as necessary.
(e) The commission, comptroller, or corporate trustee
managing the revenue fund at the direction of the commission shall
withdraw from the revenue fund and pay to a person any amounts, as
determined by the commission, for the timely payment of:
(1) the principal of and interest on bonds described
by Subsection (d)(1) that mature or become due; and
(2) any cost related to bonds described by Subsection
(d)(1) that become due, including payments under related credit
agreements.
(f) Money in the revenue fund may not be used for the purpose
of certification under Section 403.121, Government Code.
Sec. 203.004. ISSUANCE OF REVENUE BONDS. (a) The
commission may issue revenue bonds for the purpose of providing
money for the revenue fund.
(b) The commission may issue revenue bonds to refund revenue
bonds or bonds and obligations issued or incurred in accordance
with other provisions of law.
(c) Revenue bonds issued under this chapter are special
obligations of the commission payable only from and secured by
designated income and receipts of the revenue fund, or of one or
more accounts in the revenue fund, including principal of and
interest paid and to be paid on revenue fund assets or income from
accounts created within the revenue fund by the commission, as
determined by the commission.
(d) Revenue bonds issued under this chapter do not
constitute indebtedness of the state as prohibited by the
constitution.
(e) The commission may require revenue fund participants to
make charges, levy taxes, or otherwise provide for sufficient money
to pay acquired obligations.
(f) Revenue bonds issued under this chapter must be
authorized by resolution of the commission and must have the form
and characteristics and bear the designations as the resolution
provides.
(g) Revenue bonds issued under this chapter may:
(1) bear interest at the rate or rates payable
annually or otherwise;
(2) be dated;
(3) mature at the time or times, serially, as term
revenue bonds, or otherwise in not more than 50 years from their
dates;
(4) be callable before stated maturity on the terms
and at the prices, be in the denominations, be in the form, either
coupon or registered, carry registration privileges as to principal
only or as to both principal and interest and as to successive
exchange of coupon for registered bonds or one denomination for
bonds of other denominations, and successive exchange of registered
revenue bonds for coupon revenue bonds, be executed in the manner,
and be payable at the place or places inside or outside the state,
as provided by the resolution;
(5) be issued in temporary or permanent form;
(6) be issued in one or more installments and from time
to time as required and sold at a price or prices and under terms
determined by the commission to be the most advantageous reasonably
obtainable; and
(7) be issued on a parity with and be secured in the
manner as other revenue bonds authorized to be issued by this
chapter or may be issued without parity and secured differently
than other revenue bonds.
(h) All proceedings relating to the issuance of revenue
bonds issued under this chapter shall be submitted to the attorney
general for examination. If the attorney general finds that the
revenue bonds have been authorized in accordance with law, the
attorney general shall approve the revenue bonds, and the revenue
bonds shall be registered by the comptroller. After the approval
and registration, the revenue bonds are incontestable in any court
or other forum for any reason and are valid and binding obligations
in accordance with their terms for all purposes.
(i) The proceeds received from the sale of revenue bonds
issued under this chapter may be deposited or invested in any manner
and in such investments as may be specified in the resolution or
other proceedings authorizing those obligations. Money in the
revenue fund or accounts created by this chapter or created in the
resolution or other proceedings authorizing the revenue bonds may
be invested in any manner and in any obligations as may be specified
in the resolution or other proceedings.
Sec. 203.005. CHAPTER CUMULATIVE OF OTHER LAWS. (a) This
chapter is cumulative of other laws on the subject, and the
commission may use provisions of other applicable laws in the
issuance of bonds and other obligations, but this chapter is wholly
sufficient authority for the issuance of bonds and other
obligations and the performance of all other acts and procedures
authorized by this chapter.
(b) In addition to other authority granted by this chapter,
the commission may exercise the authority granted to the governing
body of an issuer with regard to the issuance of obligations under
Chapter 1371, Government Code.
SECTION 4. As soon as practicable after the effective date
of this Act, the lieutenant governor and the speaker of the house of
representatives shall appoint the initial appointive members of the
utilities reliability fund advisory committee as provided by
Section 202.005, Utilities Code, as added by this Act.
SECTION 5. (a) Not later than June 1, 2025, the utilities
reliability fund advisory committee shall submit recommendations
to the Public Utility Commission of Texas on the rules to be adopted
by the commission under Section 202.006(a), Utilities Code, as
added by this Act.
(b) Not later than December 1, 2025, the commission shall
adopt rules under Section 202.006, Utilities Code, as added by this
Act.
SECTION 6. The Public Utility Commission of Texas shall
post the information described by Section 202.007(b), Utilities
Code, as added by this Act, on the commission's Internet website not
later than March 1, 2024.
SECTION 7. This Act takes effect on the date on which the
constitutional amendment proposed by the 88th Legislature, Regular
Session, 2023, creating the utilities reliability fund and the
utilities reliability revenue fund to provide financial support for
projects that enhance the reliability and resiliency of the power
grid in this state takes effect. If that amendment is not approved
by the voters, this Act has no effect.