By: Schwertner S.B. No. 2627
(In the Senate - Filed May 1, 2023; May 1, 2023, read first
time and referred to Committee on Business & Commerce; May 2, 2023,
reported favorably by the following vote: Yeas 8, Nays 0, three
present not voting; May 2, 2023, sent to printer.)
Click here to see the committee vote
A BILL TO BE ENTITLED
AN ACT
relating to funding mechanisms to support the construction,
maintenance, and modernization of dispatchable electric generating
facilities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. This Act may be cited as the Powering Texas
Forward Act.
SECTION 2. Subtitle B, Title 2, Utilities Code, is amended
by adding Chapter 34 to read as follows:
CHAPTER 34. GENERATING FACILITY FUNDING
Sec. 34.0101. DEFINITIONS. In this chapter:
(1) "Advisory committee" means the Texas Energy Fund
Advisory Committee.
(2) "Fund" means the Texas energy fund established by
Section 49-q, Article III, Texas Constitution.
(3) "Trust company" means the Texas Treasury
Safekeeping Trust Company.
Sec. 34.0102. FUND. (a) The fund is a special fund in the
state treasury outside the general revenue fund to be administered
and used by the commission for the purposes authorized by this
chapter. The commission may establish separate accounts in the
fund.
(b) The fund and the fund's accounts are kept and held by the
trust company for and in the name of the commission.
(c) Money deposited to the credit of the fund may be used
only as provided by this chapter.
(d) The fund consists of:
(1) money appropriated, credited, transferred, or
deposited to the credit of the fund by or as authorized by law,
including money from any source transferred or deposited to the
credit of the fund at the commission's discretion;
(2) revenue that the legislature by statute dedicates
for deposit to the credit of the fund;
(3) investment earnings and interest earned on money
in the fund; and
(4) gifts, grants, and donations contributed to the
fund.
Sec. 34.0103. LOANS FOR MAINTENANCE AND MODERNIZATION. (a)
The commission may use money in the fund without further
appropriation to provide loans to finance maintenance or
modernization of dispatchable electric generating facilities
operating in the ERCOT power region. For the purposes of this
section, a generating facility is considered to be dispatchable if
the facility's output can be controlled primarily by forces under
human control.
(b) The commission shall give priority to loan applications
under this section that the commission determines will provide the
highest ratio of dispatchable megawatts maintained to project
costs.
(c) The commission shall evaluate an application for a loan
under this section based on the applicant's:
(1) efforts and achievements in conserving resources;
(2) quality of services;
(3) efficiency of operations;
(4) quality of management;
(5) proposed improvement in availability of the
generation facility for which the loan is requested; and
(6) previous Texas energy fund loan history, with a
preference toward entities that have not applied for or been
granted a loan previously.
(d) The commission may provide a loan under this section
only for maintenance or modernization of a facility that has a
generation capacity of at least 10 megawatts and is capable of
operating for at least five years after the date the loan is
received.
(e) Proceeds of a loan received under this section may not
be used for:
(1) compliance with weatherization standards adopted
before December 1, 2023;
(2) debt payments; or
(3) expenses not related to maintaining or modernizing
the electric generating facility.
(f) An electric utility may not receive a loan under this
section.
(g) The commission may require immediate repayment of a loan
issued under this section if the recipient of the loan stops
operating the facility for which the loan was received before the
fifth anniversary of the date on which the loan was disbursed.
(h) A loan provided under this section:
(1) must have a term of five years; and
(2) must bear an interest rate of zero percent.
(i) Information submitted to the commission in an
application for a loan under this section is confidential and not
subject to disclosure under Chapter 552, Government Code.
Sec. 34.0104. LOANS FOR CONSTRUCTION. (a) The commission
may use money in the fund without further appropriation to provide
loans to finance the construction of dispatchable electric
generating facilities providing power for the ERCOT power region.
For the purposes of this section, a generating facility is
considered to be dispatchable if the facility's output can be
controlled primarily by forces under human control. An electric
energy storage facility is not eligible for a loan under this
section.
(b) The commission may provide a loan under this section
only:
(1) for construction of a facility that will have a
generation capacity of at least 10 megawatts the construction of
which does not begin before September 1, 2023; and
(2) in an amount that does not exceed 75 percent of the
estimated cost of the facility to be constructed.
(c) The commission shall evaluate an application for a loan
under this section based on regional and reliability needs in the
ERCOT power region and:
(1) the applicant's:
(A) efforts and achievements in conserving
resources;
(B) quality of services and management;
(C) efficiency of operations;
(D) history of electricity generation operations
in this country; and
(E) previous Texas energy fund loan history, with
a preference toward entities that have not applied for or been
granted a loan previously; and
(2) the generation capacity and estimated
construction costs of the facility for which the loan is requested.
(d) Outstanding loans provided under this section may not
support the construction of more than 10,000 megawatts of
generation capacity.
(e) An electric utility may not receive a loan under this
section.
(f) A loan provided under this section:
(1) must have a term of 20 years; and
(2) must bear an interest rate of zero percent.
(g) The commission shall require each recipient of a loan
under this section to deposit in an escrow account held by the
comptroller an amount of money equal to five percent of the
estimated cost of constructing the facility for which the loan is
provided. The deposit must be made before the loan funds are
disbursed. The loan recipient may not withdraw the deposit unless
authorized by the commission. The commission:
(1) shall authorize the loan recipient to withdraw the
deposit from the escrow account if the facility for which the loan
was provided is interconnected in the ERCOT power region before the
third anniversary of the date the loan funds were disbursed; or
(2) after the third anniversary of the date the loan
funds were disbursed, may authorize the loan recipient to withdraw
the deposit from the escrow account if the facility for which the
loan was provided is interconnected in the ERCOT power region not
later than the fourth anniversary of the date the loan funds were
disbursed and the commission determines that extenuating
circumstances justify the delay in completion.
(h) The comptroller shall deposit to the credit of the fund
any escrow funds described by Subsection (g) that the commission
may not authorize to be withdrawn by a loan recipient.
(i) Information submitted to the commission in an
application for a loan under this section is confidential and not
subject to disclosure under Chapter 552, Government Code.
(j) This section expires September 1, 2050.
Sec. 34.0105. COMPLETION BONUS. (a) The commission shall
provide, using money available in the fund for the purpose without
further appropriation, a completion bonus grant for the
construction of dispatchable electric generating facilities in the
ERCOT power region. For the purposes of this section, a generating
facility is considered to be dispatchable if the facility's output
can be controlled primarily by forces under human control. An
electric energy storage facility is not eligible for a grant under
this section.
(b) The amount of a grant under this section must be based on
the megawatts of capacity provided to the ERCOT power region by the
facility.
(c) The commission shall provide a grant under this section
only for a facility the construction of which begins before
December 1, 2024, and is interconnected in the ERCOT power region
not later than:
(1) the third anniversary of the date on which the
construction began; or
(2) the fourth anniversary of the date on which the
construction began if the commission determines that extenuating
circumstances justify the delay in completion.
(d) Information submitted to the commission in an
application for a grant under this section is confidential and not
subject to disclosure under Chapter 552, Government Code.
Sec. 34.0106. MANAGEMENT AND INVESTMENT OF FUND. (a) The
trust company shall hold 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 and comingled with other
investments.
(b) The overall objective for the investment of the fund is
to maintain sufficient liquidity to meet the needs of the fund while
striving to preserve the purchasing power of the fund.
(c) In managing the assets of the fund, 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) The reasonable expenses of managing the fund's assets
shall be paid from the fund.
(e) The trust company annually shall provide a written
report to the commission and to the advisory committee with respect
to the investment of the fund.
(f) The trust company shall adopt a written investment
policy that is appropriate for the fund. The trust company shall
present the investment policy to the investment advisory board
established under Section 404.028, Government Code. The investment
advisory board shall submit to the trust company recommendations
regarding the policy.
(g) 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
ensure that the trust company is able to achieve the objective
specified by Subsection (b).
(h) The trust company shall disburse money from the fund as
directed by the commission.
Sec. 34.0107. RECEIVERSHIP OF DEFAULT GENERATING FACILITY.
(a) In this section, "default" means:
(1) default in payment of the principal of or interest
on a loan; or
(2) a failure to perform any of the terms of a loan.
(b) The state, including the commission, the advisory
committee, and the trust company, may not retain an ownership
interest in a project or facility for which a loan is provided under
this chapter.
(c) In the event of a default on a loan made under this
chapter, at the request of the commission, the attorney general
shall bring suit in a district court in Travis County for the
appointment of a receiver to collect the assets and carry on the
business of a loan recipient if the action is necessary to cure a
default by the recipient.
(d) The court shall vest a receiver appointed by the court
with any power or duty the court finds necessary to cure the
default, including the power or duty to:
(1) perform audits;
(2) direct ongoing operation of the assets;
(3) fund reserve accounts;
(4) make payments of the principal of or interest on
bonds, securities, or other obligations; and
(5) take any other action necessary to prevent or to
remedy the default, including the sale of assets.
(e) The receiver shall execute a bond in an amount to be set
by the court to ensure the proper performance of the receiver's
duties.
(f) After appointment and execution of bond, the receiver
shall take possession of the books, records, accounts, and assets
of the defaulting loan recipient specified by the court. Until
discharged by the court, the receiver shall perform the duties that
the court directs and shall strictly observe the final order
involved.
(g) On a showing of good cause by the defaulting loan
recipient, the court may dissolve the receivership.
Sec. 34.0108. TEXAS ENERGY FUND ADVISORY COMMITTEE. (a)
The advisory committee is composed of the following six members:
(1) 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 the generation
of electricity; and
(B) a member of the committee of the senate
having primary jurisdiction over finance; and
(2) 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 the generation of
electricity; and
(B) a member of the committee of the house of
representatives having primary jurisdiction over finance.
(b) A member of the advisory committee serves at the will of
the person who appointed the member.
(c) The lieutenant governor shall appoint a co-presiding
officer of the advisory committee from among the members appointed
by the lieutenant governor. The speaker of the house of
representatives shall appoint a co-presiding officer of the
advisory committee from among the members appointed by the speaker.
(d) The advisory committee may hold public hearings, formal
meetings, and work sessions. Either co-presiding officer of the
advisory committee may call a public hearing, formal meeting, or
work session of the advisory committee at any time. 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.
(e) 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.
(f) The advisory committee:
(1) may provide comments and recommendations to the
commission for the commission to use in adopting rules regarding
the use of the fund or on any other matter; and
(2) shall review the overall operation, function, and
structure of the fund at least semiannually.
(g) The advisory committee may adopt rules, procedures, and
policies as needed to administer this section and implement its
responsibilities.
(h) Chapter 2110, Government Code, does not apply to the
size, composition, or duration of the advisory committee.
(i) 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
September 1, 2035.
Sec. 34.0109. RULES. (a) The commission by rule may
establish procedures for:
(1) the application for and award of a loan under this
chapter; and
(2) the administration of the fund.
(b) The commission shall give full consideration to
comments and recommendations of the advisory committee before the
commission adopts rules under this chapter.
SECTION 3. Section 35.005, Utilities Code, is amended by
adding Subsections (d), (e), and (f) to read as follows:
(d) The independent organization certified under Section
39.151 for the ERCOT power region shall work with electric
utilities to ensure that each facility for which a loan or grant is
provided under Chapter 34 is fully interconnected in the ERCOT
power region not later than the date the facility is ready for
commercial operation. The independent organization certified under
Section 39.151 for the ERCOT power region shall give priority to
interconnecting each facility for which a loan or grant is provided
under Chapter 34. An electric utility that enters into an
interconnection agreement for a facility for which a loan or grant
is provided under Chapter 34 shall give priority to interconnecting
the facility and complete construction of any other facilities
necessary to interconnect the facility not later than the date the
facility is ready for commercial operation.
(e) If the commission receives an application under Chapter
37 for a certificate of convenience and necessity related to
facilities necessary to interconnect a facility for which a loan or
grant is provided under Chapter 34 and does not approve the
application before the 90th day after the date the commission
received the application, the deadline established by Subsection
(d) is extended one day for each day after the 90th day in which the
commission does not approve the application.
(f) The commission may extend the deadline established by
Subsection (d) after notice, hearing, and a determination on a
showing of good cause that fully interconnecting the facility
before the deadline is not feasible.
SECTION 4. Not later than December 31, 2023, the Public
Utility Commission of Texas shall accept loan applications for
loans authorized by Chapter 34, Utilities Code, as added by this
Act, approve or deny each loan application, and disburse loan funds
for each approved applicant.
SECTION 5. This Act takes effect on the date on which the
constitutional amendment proposed by the 88th Legislature, Regular
Session, 2023, providing for the creation of the Texas energy fund
and the authorization of other funding mechanisms to support the
construction, maintenance, and modernization of electric
generating facilities takes effect. If that amendment is not
approved by the voters, this Act has no effect.
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