88R3548 CXP-F
By: Hall, et al. S.B. No. 330
A BILL TO BE ENTITLED
AN ACT
relating to the resilience of the electric grid and certain
municipalities; authorizing an administrative penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The legislature finds that:
(1) electric grid blackouts threaten the lives of the
citizens of this state and pose a disproportionately large risk to:
(A) the elderly, vulnerable, and underprivileged
within this state; and
(B) communities facing disproportionate
environmental health burdens and population vulnerabilities
relating to facilities such as chemical plants and refineries that
can become environmental disaster areas when taken off-line due to
loss of electricity;
(2) the 16 critical infrastructures identified in
President Barack Obama's Presidential Policy Directive "Critical
Infrastructure Security and Resilience" (PPD-21) including water
and wastewater systems, food and agriculture, communications
systems, the energy sector including refineries and fuel
distribution systems, chemical plants, the financial sector,
hospitals and health care facilities, law enforcement and
government facilities, nuclear reactors, and other critical
functions depend on the electric grid in this state and make the
grid's protection vital to the economy of this nation and homeland
security;
(3) the blackout that occurred in this state in
February 2021 caused:
(A) death and suffering in this state;
(B) economic loss to this state's economy;
(C) impacts to all critical infrastructures in
this state;
(D) the dispatch of generation units that likely
exceeded limits established by the Environmental Protection Agency
for sulfur dioxide, nitrogen oxide, mercury, and carbon monoxide
emissions and wastewater release limits;
(E) radically increased pricing of electricity
that resulted in making electric power bills unaffordable to many
customers across this state; and
(F) the exacerbation of the COVID-19 pandemic
risk by forcing many of the state's citizens to consolidate at
warming centers and in other small spaces where warmth for survival
superseded social distancing protocols;
(4) a previous large-scale blackout occurred in this
state in February 2011 during which 4.4 million customers were
affected;
(5) this state is uniquely positioned to prevent
blackouts because this state is a net exporter of energy and is the
only state with an electric grid almost exclusively within its
territorial boundaries;
(6) the 2011 and 2021 blackouts call into question:
(A) whether too much risk has been accepted
regarding weatherization of electric generation infrastructure;
(B) whether this state lacks the internal
distribution structure and control systems to manage rolling
blackouts; and
(C) whether sufficient resources have been
allocated toward overall grid resilience;
(7) public confidence in the resilience of the
electric grid in this state is essential to ensuring economic
prosperity, domestic tranquility, continuity of government, and
life-sustaining systems;
(8) a resilient electric grid that offers businesses
in this state continuity of operations in the event of a natural or
man-made disaster will be an unrivaled attraction for businesses to
expand or move their operations to this state and for protecting
what is important to this state, including its military
installations and its environment;
(9) current market incentives and regulations are not
sufficient for electric utilities to:
(A) prioritize grid security and resilience; and
(B) protect the grid against hazards;
(10) protection of the electric grid in this state
against hazards would assure businesses and the citizens of this
state that the "lights will be back on first in Texas" in the event
of a nationwide catastrophe affecting electric infrastructure,
sparing catastrophic societal and environmental consequences for
this state; and
(11) when this state begins implementation of the plan
for all hazards resilience described by Section 44.007, Utilities
Code, as added by this Act, to protect the electric grid in this
state, short-term and long-term economic benefit will far exceed
even the most optimistic estimates of the conventional economic
incentives provided by tax abatements to attract businesses to this
state.
SECTION 2. Subtitle B, Title 2, Utilities Code, is amended
by adding Chapter 44 to read as follows:
CHAPTER 44. GRID RESILIENCE
Sec. 44.001. DEFINITIONS. In this chapter:
(1) "All hazards" means:
(A) terrestrial weather including wind,
hurricanes, tornadoes, flooding, ice storms, extended cold weather
events, heat waves, and wildfires;
(B) seismic events including earthquakes and
tsunamis;
(C) physical threats including terrorist attacks
with direct fire, drones, explosives, and other methods of physical
sabotage;
(D) cyber attacks including malware attacks and
hacking of unprotected or compromised information technology
networks;
(E) manipulation of operational technology
devices including sensors, actuators, and drives;
(F) electromagnetic threats through man-made
radio frequency weapons, high altitude nuclear electromagnetic
pulse, and naturally occurring geomagnetic disturbances;
(G) electric generation supply chain
vulnerabilities including insecure or inadequate fuel
transportation or storage; and
(H) insider threats caused by compromised or
hostile personnel working within government or the utility
industry.
(2) "Micro-grid" means a group of interconnected loads
and distributed energy resources inside clearly defined electrical
boundaries that act as a single controllable entity with respect to
the grid.
(3) "Security commission" means the Texas Grid
Security Commission.
Sec. 44.002. TEXAS GRID SECURITY COMMISSION. (a) The Texas
Grid Security Commission is composed of the following members:
(1) a representative of the Texas Division of
Emergency Management appointed by the chief of that division;
(2) a representative of the State Office of Risk
Management appointed by the risk management board;
(3) a representative from the commission appointed by
that commission;
(4) a representative from the Railroad Commission of
Texas appointed by that commission;
(5) a representative of the independent organization
certified under Section 39.151 for the ERCOT power region appointed
by the chief executive officer of that organization;
(6) a representative of the Texas Military Department
appointed by the adjutant general of that department;
(7) a representative of the Texas Military
Preparedness Commission appointed by that commission;
(8) a representative of the Office of State-Federal
Relations appointed by the director of that office;
(9) a representative of the Department of Information
Resources appointed by the executive director of that department;
(10) a representative of power generation companies
appointed by the chief of the Texas Division of Emergency
Management;
(11) two representatives of transmission and
distribution utilities appointed by the chief of the Texas Division
of Emergency Management;
(12) three individuals with expertise in critical
infrastructure protection appointed by the chief of the Texas
Division of Emergency Management, to represent the public interest;
(13) one representative appointed by the chief of the
Texas Division of Emergency Management from each of the following
essential services sectors:
(A) law enforcement;
(B) emergency services;
(C) communications;
(D) water and sewer services;
(E) health care;
(F) financial services;
(G) food and agriculture;
(H) transportation; and
(I) energy;
(14) an expert in the field of higher education
appointed by the chief of the Texas Division of Emergency
Management; and
(15) an expert in the field of electricity markets and
regulations appointed by the chief of the Texas Division of
Emergency Management.
(b) The chief of the Texas Division of Emergency Management
may invite members or former members of the United States Air
Force's Electromagnetic Defense Task Force to the membership of the
security commission.
(c) The Texas Division of Emergency Management shall
designate a member of the security commission to serve as presiding
officer.
(d) The presiding officer may invite to the membership of
the security commission any person whose expertise the security
commission considers necessary to carry out the purposes of this
chapter.
(e) The security commission shall convene at the call of the
presiding officer.
(f) The security commission shall report to the chief of the
Texas Division of Emergency Management.
(g) A vacancy on the security commission is filled by
appointment for the unexpired term in the same manner as the
original appointment.
(h) To the extent possible, individuals appointed to the
security commission must be residents of this state.
(i) The presiding officer of the security commission or the
chief of the Texas Division of Emergency Management may invite
subject matter experts to advise the security commission, including
individuals recognized as experts in the fields of electricity
markets, cybersecurity of grid control systems, electromagnetic
pulse mitigation, terrestrial and solar weather, and micro-grids.
The presiding officer may invite an individual for this purpose
regardless of whether the individual is a resident of this state.
Sec. 44.003. EXECUTIVE COMMITTEE. (a) The security
commission executive committee is composed of the following
security commission members selected by the presiding officer:
(1) a representative of the Texas Division of
Emergency Management;
(2) a representative of the Railroad Commission of
Texas;
(3) a representative of the commission;
(4) a representative of the independent organization
certified under Section 39.151 for the ERCOT power region;
(5) two representatives of transmission and
distribution utilities; and
(6) a representative of power generation companies or
another member of the security commission with expertise in power
generation.
(b) If two or more members or former members of the United
States Air Force's Electromagnetic Defense Task Force join the
security commission after being invited under Section 44.002(b),
the presiding officer shall select two of those members to serve on
the executive committee.
(c) The security commission may not adopt a resilience
standard under Section 44.006 unless the executive committee
approves the standard.
Sec. 44.004. GRID RESILIENCE INFORMATION. (a) Each of the
following members of the security commission shall apply for a
secret security clearance or an interim secret security clearance
to be granted by the federal government:
(1) the representative of the independent
organization certified under Section 39.151 for the ERCOT region;
(2) the representative of the Texas Division of
Emergency Management; and
(3) the representative of the State Office of Risk
Management.
(b) A member of the security commission listed under
Subsection (a) who is granted an applicable security clearance
under that subsection is a member of the information security
working group.
(c) The information security working group shall determine:
(1) which information received by the security
commission that is used in determining the vulnerabilities of the
electric grid or that is related to measures to be taken to protect
the grid is confidential and not subject to Chapter 552, Government
Code;
(2) which members of the security commission may
access which types of information received by the security
commission; and
(3) which members, other than members of the working
group, should apply for a secret security clearance or interim
clearance granted by the federal government.
(d) Information that the information security working group
determines is confidential under Subsection (c) shall be stored and
maintained by the independent organization certified under Section
39.151 for the ERCOT power region.
(e) The security commission must maintain a reasonable
balance between public transparency and security for information
determined to be confidential under Subsection (c).
(f) Nothing in this section abrogates any rights or remedies
under Chapter 552, Government Code.
Sec. 44.005. GRID RESILIENCE EVALUATION. (a) The security
commission shall evaluate, using available information on past
blackouts in ERCOT, all hazards to the ERCOT electric grid,
including threats that can cause future blackouts. The security
commission shall evaluate the resilience of municipalities in this
state in the following essential areas:
(1) emergency services;
(2) communications systems;
(3) clean water and sewer services;
(4) health care systems;
(5) financial services;
(6) energy systems, including an evaluation of whether
energy, electric power, and fuel supplies are protected and
available for recovery in the event of a catastrophic power outage;
and
(7) transportation systems.
(b) The security commission may create groups or teams to
address each hazard as necessary. The security commission must
assess each hazard both on the likelihood of occurrence of the
hazard and the potential consequences of the hazard.
(c) The security commission shall identify methods by which
this state can support an overall national deterrence policy as
proposed by the Cyberspace Solarium Commission, including by:
(1) identifying means to ensure that all hazards
resilience for electric utilities supports critical national
security functions in this state; and
(2) engaging the Texas National Guard to be trained as
first responders to cybersecurity threats to the ERCOT electric
grid and other critical infrastructure.
(d) The security commission shall evaluate nuclear
generation sites in this state, the resilience of each nuclear
reactor to all hazards, and the resilience to all hazards of
off-site power for critical safety systems that support the reactor
and spent fuel. The security commission may communicate with the
Nuclear Regulatory Commission to accomplish the evaluation.
(e) The security commission shall evaluate current Critical
Infrastructure Protection standards established by the North
American Electric Reliability Corporation and standards set by the
National Institute of Standards and Technology to determine the
most appropriate standards for protecting grid infrastructure in
this state.
(f) The security commission shall investigate the steps
that local communities and other states have taken to address grid
resilience. The security commission may request funding to conduct
site visits to these locations as required.
(g) The security commission shall identify universities
based in this state that have expertise in cybersecurity and other
matters that can contribute to the security commission's goal of
mitigating all hazards to the grid in this state.
(h) In carrying out the security commission's duties under
this section, the security commission may solicit information from:
(1) defense contractors with experience protecting
defense systems from electromagnetic pulse;
(2) electric utilities that have developed
electromagnetic pulse protections for the utilities' grid assets;
(3) the United States Department of Homeland Security;
and
(4) the Commission to Assess the Threat to the United
States from Electromagnetic Pulse (EMP) Attack.
Sec. 44.006. RESILIENCE STANDARDS. (a) Based on the
findings of the evaluations and investigations conducted under
Section 44.005, the security commission shall develop and adopt
resilience standards for municipalities and critical components of
the ERCOT electric grid.
(b) Standards developed and adopted for energy systems of
municipalities must include provisions to ensure that energy,
electric power, and fuel supplies are protected and available for
recovery in the event of a catastrophic power outage.
Sec. 44.007. CONTRACTOR SUPPORT FOR CRITICAL SYSTEM AND
COMPONENT RESILIENCE. (a) The State Office of Risk Management,
with assistance from the security commission, shall select
contractors with proven expertise to identify critical systems and
components of the ERCOT electric grid vulnerable to hazards
described by Section 44.005(a) with a specific emphasis on the most
dangerous cyber and electromagnetic threats.
(b) A contractor selected under Subsection (a) must
identify the critical components, including industrial control
systems, not later than six months after the date the contractor is
engaged.
(c) Not later than January 1, 2025, an entity that owns or
operates a component identified by a contractor under Subsection
(a) as critical shall upgrade the component as necessary for the
component to meet the applicable standards set by the security
commission under Section 44.006.
(d) The State Office of Risk Management shall select
contractors with demonstrated expertise to verify whether an entity
with a component identified as critical under Subsection (a) has
upgraded components as required by Subsection (c).
Sec. 44.008. PLAN FOR ALL HAZARDS RESILIENCE. (a) Not
later than January 1, 2024, the security commission shall prepare
and deliver to the legislature a plan for protecting the ERCOT
electric grid from all hazards, including a catastrophic loss of
power in the state.
(b) The plan must include:
(1) weatherizing requirements to prevent blackouts
from extreme cold weather events, an analysis of whether these
requirements would induce cyber vulnerabilities, and an analysis of
the associated costs for these requirements;
(2) provisions for installing, replacing, or
upgrading industrial control systems and associated networks, or
the use of compensating controls or procedures, in critical
facilities to address cyber vulnerabilities;
(3) provisions for installing, replacing, or
upgrading extra high-voltage power transformers and supervisory
control and data acquisition systems to withstand 100
kilovolts/meter E1 electromagnetic pulses and 85 volts/kilometer
E3 electromagnetic pulses;
(4) a timeline for making improvements to remaining
infrastructure to meet resilience standards adopted by the security
commission under Section 44.006;
(5) long-term resilience provisions for supporting
industries including:
(A) nuclear reactors, materials, and waste;
(B) fuel supply;
(C) health care;
(D) communications;
(E) water and sewer services;
(F) food supply; and
(G) transportation; and
(6) any additional provisions considered necessary by
the security commission.
(c) The security commission may consult with the Private
Sector Advisory Council in developing the plan.
(d) The Texas Division of Emergency Management shall
incorporate the plan into the state emergency management plan and
update the state emergency management plan as necessary to
incorporate progressive resilience improvements.
Sec. 44.009. GRID RESILIENCE REPORT. (a) Not later than
January 1 of each year, the security commission shall prepare and
deliver a nonclassified report to the legislature, the governor,
and the commission assessing natural and man-made threats to the
electric grid and efforts to mitigate the threats.
(b) The security commission shall make the report available
to the public.
(c) In preparing the report, the security commission may
hold confidential or classified briefings with federal, state, and
local officials as necessary.
Sec. 44.010. RESILIENCE COST RECOVERY. A regulatory
authority shall include in establishing the rates of an electric
utility consideration of the costs incurred to install, replace, or
upgrade facilities or equipment to meet a resilience standard
established under this chapter. A regulatory authority shall
presume that costs incurred to meet a resilience standard under
this chapter are reasonable and necessary expenses.
Sec. 44.011. MICRO-GRIDS. (a) The security commission
shall establish resilience standards for micro-grids and certify a
micro-grid that meets the standards. The standards must be
developed for both alternating current and direct current
micro-grids.
(b) Except as provided by Subsection (c), a municipality or
other political subdivision may not enact or enforce an ordinance
or other measure that bans, limits, or otherwise regulates inside
the boundaries or extraterritorial jurisdiction of the
municipality or political subdivision a micro-grid that is
certified by the security commission under this section.
(c) The owner or operator of a micro-grid certified by the
security commission is a power generation company and is required
to register under Section 39.351(a). The owner or operator of the
micro-grid is entitled to:
(1) interconnect the micro-grid;
(2) obtain transmission service for the micro-grid;
and
(3) use the micro-grid to sell electricity and
ancillary services at wholesale in a manner consistent with the
provisions of this title and commission rules applicable to a power
generation company or an exempt wholesale generator.
Sec. 44.012. COMPLIANCE AND ENFORCEMENT. (a) The
commission by rule shall require entities that the commission
determines operate critical components of the ERCOT electric grid
to comply with resilience standards adopted by the security
commission under this chapter. This subsection applies only to an
entity that is subject to the jurisdiction of the commission under
another provision of this subtitle. The commission may impose an
administrative penalty, in the manner provided by Chapter 15, on an
entity that is subject to the jurisdiction of the commission under
another provision of this subtitle for a violation of a resilience
standard or of Subsection (b).
(b) The commission by rule shall require each entity
described by Subsection (a) to make publicly available on an
Internet website the entity's compliance status with the resilience
standards.
(c) The Railroad Commission of Texas by rule shall require
entities that the Railroad Commission of Texas determines operate
critical components of the ERCOT electric grid to comply with
resilience standards adopted by the security commission under this
chapter. This subsection applies only to an entity that is subject
to the jurisdiction of the Railroad Commission of Texas under
Section 81.051, Natural Resources Code. The Railroad Commission of
Texas may impose an administrative penalty, in the manner provided
by Chapter 81, Natural Resources Code, on an entity that is subject
to the jurisdiction of the Railroad Commission of Texas under
Section 81.051, Natural Resources Code, for a violation of a
resilience standard or of Subsection (d).
(d) The Railroad Commission of Texas by rule shall require
each entity described by Subsection (c) to make publicly available
on an Internet website the entity's compliance status with the
resilience standards.
SECTION 3. Not later than January 1, 2025, the Texas Grid
Security Commission shall prepare and deliver a report to the
legislature on the progress of implementing resilience standards
adopted and implemented under Sections 44.006 and 44.007, Utilities
Code, as added by this Act.
SECTION 4. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2023.