Texas 2023 - 88th Regular

Texas Senate Bill SB6 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New	Differences
1	1	By: Schwertner, King S.B. No. 6
2	2	Kolkhorst
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the establishment of the Texas Energy Insurance Program
8	8	and other funding mechanisms to support the construction and
9	9	operation of electric generating facilities.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	ARTICLE 1. TEXAS ENERGY INSURANCE PROGRAM
12	12	SECTION 1.01. Section 11.003(16), Utilities Code, is
13	13	amended to read as follows:
14	14	(16) "Rate" includes:
15	15	(A) any compensation, tariff, charge, fare,
16	16	toll, rental, or classification that is directly or indirectly
17	17	demanded, observed, charged, or collected by a public utility or an
18	18	entity operating under Section 39.360 for a service, product, or
19	19	commodity described in the definition of utility in Section 31.002
20	20	or 51.002; and
21	21	(B) a rule, practice, or contract affecting the
22	22	compensation, tariff, charge, fare, toll, rental, or
23	23	classification.
24	24	SECTION 1.02. Section 31.002(6), Utilities Code, as amended
25	25	by Chapters 255 (H.B. 1572) and 389 (S.B. 1202), Acts of the 87th
26	26	Legislature, Regular Session, 2021, is reenacted and amended to
27	27	read as follows:
28	28	(6) "Electric utility" means a person or river
29	29	authority that owns or operates for compensation in this state
30	30	equipment or facilities to produce, generate, transmit,
31	31	distribute, sell, or furnish electricity in this state. The term
32	32	includes a lessee, trustee, or receiver of an electric utility and a
33	33	recreational vehicle park owner who does not comply with Subchapter
34	34	C, Chapter 184, with regard to the metered sale of electricity at
35	35	the recreational vehicle park. The term does not include:
36	36	(A) a municipal corporation;
37	37	(B) a qualifying facility;
38	38	(C) a power generation company;
39	39	(D) an exempt wholesale generator;
40	40	(E) a power marketer;
41	41	(F) a corporation described by Section 32.053 to
42	42	the extent the corporation sells electricity exclusively at
43	43	wholesale and not to the ultimate consumer;
44	44	(G) an electric cooperative;
45	45	(H) a retail electric provider;
46	46	(I) this state or an agency of this state; [or]
47	47	(J) an entity operating under Section 39.360; or
48	48	(K) a person not otherwise an electric utility
49	49	who:
50	50	(i) furnishes an electric service or
51	51	commodity only to itself, its employees, or its tenants as an
52	52	incident of employment or tenancy, if that service or commodity is
53	53	not resold to or used by others;
54	54	(ii) owns or operates in this state
55	55	equipment or facilities to produce, generate, transmit,
56	56	distribute, sell, or furnish electric energy to an electric
57	57	utility, if the equipment or facilities are used primarily to
58	58	produce and generate electric energy for consumption by that
59	59	person;
60	60	(iii) owns or operates in this state a
61	61	recreational vehicle park that provides metered electric service in
62	62	accordance with Subchapter C, Chapter 184; [or]
63	63	(iv) owns or operates equipment used solely
64	64	to provide electricity charging service for consumption by an
65	65	alternatively fueled vehicle, as defined by Section 502.004,
66	66	Transportation Code; or
67	67	(v) [(iv)] is an electric generation
68	68	equipment lessor or operator.
69	69	SECTION 1.03. Section 31.002, Utilities Code, is amended by
70	70	amending Subdivisions (10), (15), (19), and (20) and adding
71	71	Subdivisions (15-a) and (18-a) to read as follows:
72	72	(10) "Power generation company":
73	73	(A) means a person, including a person who owns
74	74	or operates a distributed natural gas generation facility, that:
75	75	(i) [(A)] generates electricity that is
76	76	intended to be sold at wholesale, including the owner or operator of
77	77	electric energy storage equipment or facilities to which Subchapter
78	78	E, Chapter 35, applies;
79	79	(ii) [(B)] does not own a transmission or
80	80	distribution facility in this state other than an essential
81	81	interconnecting facility, a facility not dedicated to public use,
82	82	or a facility otherwise excluded from the definition of "electric
83	83	utility" under this section; and
84	84	(iii) [(C)] does not have a certificated
85	85	service area, although its affiliated electric utility or
86	86	transmission and distribution utility may have a certificated
87	87	service area; and
88	88	(B) does not include an entity operating under
89	89	Section 39.360.
90	90	(15) "Rate" includes:
91	91	(A) a compensation, tariff, charge, fare, toll,
92	92	rental, or classification that is directly or indirectly demanded,
93	93	observed, charged, or collected by an electric utility for a
94	94	service, product, or commodity described in the definition of
95	95	electric utility in this section and a rule, practice, or contract
96	96	affecting the compensation, tariff, charge, fare, toll, rental, or
97	97	classification that must be approved by a regulatory authority; or
98	98	(B) Texas Energy Insurance Program charges.
99	99	(15-a) "Reliability asset" means a gas-fueled
100	100	generation asset with on-site fuel storage that is located in the
101	101	ERCOT power region and is owned and operated by an entity certified
102	102	under Section 39.360 for the purpose of providing power when
103	103	dispatched under Section 38.079.
104	104	(18-a) "Texas Energy Insurance Program" means the
105	105	program established under Section 39.360.
106	106	(19) "Transmission and distribution utility" means a
107	107	person or river authority that owns or operates for compensation in
108	108	this state equipment or facilities to transmit or distribute
109	109	electricity, except for facilities necessary to interconnect a
110	110	generation facility with the transmission or distribution network,
111	111	a facility not dedicated to public use, or a facility otherwise
112	112	excluded from the definition of "electric utility" under this
113	113	section, in a qualifying power region certified under Section
114	114	39.152, but does not include a municipally owned utility, [or] an
115	115	electric cooperative, or an entity operating under Section 39.360.
116	116	(20) "Transmission service" includes construction or
117	117	enlargement of facilities, transmission over distribution
118	118	facilities, control area services, scheduling resources,
119	119	regulation services, reactive power support, voltage control,
120	120	provision of operating reserves, and any other associated
121	121	electrical service the commission determines appropriate, except
122	122	that, on and after the implementation of customer choice, control
123	123	area services, scheduling resources, regulation services,
124	124	provision of operating reserves, and reactive power support,
125	125	voltage control, [and] other services provided by generation
126	126	resources, and services provided by an entity operating under
127	127	Section 39.360 are not "transmission service."
128	128	SECTION 1.04. Section 33.001, Utilities Code, is amended by
129	129	adding Subsection (b) to read as follows:
130	130	(b) The governing body of a municipality does not have
131	131	jurisdiction over the Texas Energy Insurance Program.
132	132	SECTION 1.05. Section 33.008(a), Utilities Code, is amended
133	133	to read as follows:
134	134	(a) Following the end of the freeze period for a
135	135	municipality that has been served by an electric utility, and
136	136	following the date a municipally owned utility or an electric
137	137	cooperative has implemented customer choice for a municipality that
138	138	has been served by that municipally owned utility or electric
139	139	cooperative, a municipality may impose on an electric utility,
140	140	transmission and distribution utility, municipally owned utility,
141	141	or electric cooperative, as appropriate, that provides
142	142	distribution service within the municipality a reasonable charge as
143	143	specified in Subsection (b) for the use of a municipal street,
144	144	alley, or public way to deliver electricity to a retail customer. A
145	145	municipality may not impose a charge on:
146	146	(1) an electric utility, or transmission and
147	147	distribution utility, municipally owned utility, or electric
148	148	cooperative for electric service provided outside the
149	149	municipality;
150	150	(2) a qualifying facility;
151	151	(3) an exempt wholesale generator;
152	152	(4) a power marketer;
153	153	(5) a retail electric provider;
154	154	(6) a power generation company;
155	155	(7) a person that generates electricity on and after
156	156	January 1, 2002; [or]
157	157	(8) an aggregator, as that term is defined by Section
158	158	39.353; or
159	159	(9) an entity operating under Section 39.360.
160	160	SECTION 1.06. Section 35.004, Utilities Code, is amended by
161	161	amending Subsections (b) and (c) and adding Subsection (i) to read
162	162	as follows:
163	163	(b) The commission shall ensure that an electric utility or
164	164	transmission and distribution utility provides nondiscriminatory
165	165	access to wholesale transmission service for qualifying
166	166	facilities, exempt wholesale generators, power marketers, power
167	167	generation companies, retail electric providers, entities
168	168	operating under Section 39.360, and other electric utilities or
169	169	transmission and distribution utilities.
170	170	(c) When an electric utility, electric cooperative, or
171	171	transmission and distribution utility provides wholesale
172	172	transmission service within ERCOT at the request of a third party,
173	173	the commission shall ensure that the utility recovers the utility's
174	174	reasonable costs in providing wholesale transmission services
175	175	necessary for the transaction from the entity for which the
176	176	transmission is provided so that the utility's other customers do
177	177	not bear the costs of the service. An entity operating under
178	178	Section 39.360 is not a third party for the purposes of this
179	179	subsection.
180	180	(i) Services provided by reliability assets when dispatched
181	181	under Section 38.079 are not considered to be ancillary services.
182	182	SECTION 1.07. Section 35.005, Utilities Code, is amended by
183	183	amending Subsection (a) and adding Subsections (d), (e), (f), (g),
184	184	and (h) to read as follows:
185	185	(a) The commission may require an electric utility to
186	186	provide transmission service at wholesale to another electric
187	187	utility, a qualifying facility, an exempt wholesale generator, an
188	188	entity operating under Section 39.360, or a power marketer and may
189	189	determine whether terms for the transmission service are
190	190	reasonable.
191	191	(d) To ensure customers in the ERCOT power region can
192	192	receive promptly the benefits associated with the Texas Energy
193	193	Insurance Program, the independent organization certified under
194	194	Section 39.151 for the ERCOT power region shall work with electric
195	195	utilities to ensure that each reliability asset is fully
196	196	interconnected in the ERCOT power region not later than the date the
197	197	reliability asset is ready for commercial operation. The
198	198	independent organization certified under Section 39.151 for the
199	199	ERCOT power region shall give priority to interconnecting each
200	200	reliability asset. An electric utility that enters into an
201	201	interconnection agreement for a reliability asset shall give
202	202	priority to interconnecting the reliability asset and complete
203	203	construction of any facilities necessary to interconnect the
204	204	reliability asset not later than the date the reliability asset is
205	205	ready for commercial operation.
206	206	(e) If the commission receives an application under Chapter
207	207	37 for a certificate of convenience and necessity related to
208	208	facilities necessary to interconnect a reliability asset, as
209	209	described by Subsection (d), and does not approve the application
210	210	before the 90th day after the date the commission received the
211	211	application, the deadline established by Subsection (d) is extended
212	212	one day for each day after the 90th day in which the commission does
213	213	not approve the application.
214	214	(f) The commission may extend the deadline established by
215	215	Subsection (d) after notice, hearing, and a determination on a
216	216	showing of good cause that fully interconnecting the reliability
217	217	asset before the deadline is not feasible.
218	218	(g) A transmission facility constructed to interconnect a
219	219	reliability asset, as described by Subsection (d), is considered to
220	220	be necessary for the service, accommodation, convenience, or safety
221	221	of the public for the purposes of Chapter 37.
222	222	(h) The commission shall permit an electric utility that
223	223	constructs and operates interconnecting facilities for a
224	224	reliability asset to recover the reasonable and necessary costs
225	225	incurred to interconnect the reliability asset.
226	226	SECTION 1.08. Section 36.001, Utilities Code, is amended by
227	227	adding Subsection (c) to read as follows:
228	228	(c) The commission may regulate the rates of certified
229	229	entities in the Texas Energy Insurance Program related to each
230	230	reliability asset only to the extent provided by Subchapter K. No
231	231	other provision of this chapter applies to rates related to a
232	232	reliability asset.
233	233	SECTION 1.09. Chapter 36, Utilities Code, is amended by
234	234	adding Subchapter K to read as follows:
235	235	SUBCHAPTER K. TEXAS ENERGY INSURANCE PROGRAM
236	236	Sec. 36.501. PROGRAM RATES. (a) If sufficient funding for
237	237	the Texas Energy Insurance Program is not available from state
238	238	money, the commission shall set a nonbypassable rate that must be
239	239	charged by transmission and distribution utilities, municipally
240	240	owned utilities, and electric cooperatives in the ERCOT power
241	241	region to provide funding for the Texas Energy Insurance Program.
242	242	The transmission and distribution utilities, municipally owned
243	243	utilities, and electric cooperatives shall:
244	244	(1) charge the nonbypassable rate to their respective
245	245	customers or, as appropriate, bill the customer's retail electric
246	246	provider; and
247	247	(2) remit to the independent organization certified
248	248	under Section 39.151 for the ERCOT power region each month the rate
249	249	revenue received under Subdivision (1).
250	250	(b) The independent organization certified under Section
251	251	39.151 for the ERCOT power region shall remit the rate revenue
252	252	received under Subsection (a)(2) to the comptroller.
253	253	(c) The nonbypassable rate required by Subsection (a) must
254	254	be based on all reliability asset rates approved under this
255	255	section.
256	256	(d) The commission shall set just and reasonable rates for
257	257	each entity operating under Section 39.360 for constructing,
258	258	owning, operating, and maintaining reliability assets. The rates
259	259	must:
260	260	(1) except as provided by Subdivision (2), be based on
261	261	the entity's just and reasonable costs of providing service,
262	262	including variable costs, allowance for funds used during
263	263	construction, and all costs of constructing, owning, operating, and
264	264	maintaining reliability assets, subject to:
265	265	(A) the rate of return on equity accepted by the
266	266	entity under Section 39.360(h)(1); and
267	267	(B) the total cost of reliability assets accepted
268	268	by the entity under Section 39.360(h)(2); and
269	269	(2) ensure that a certified entity does not receive
270	270	more than $100 million per year in revenue per gigawatt of installed
271	271	generation capacity operated by the entity in the program.
272	272	(e) In addition to the considerations required by
273	273	Subsection (d), the commission shall consider the following
274	274	parameters when setting reliability asset rates for a certified
275	275	entity:
276	276	(1) the entity's capital financing structure,
277	277	including:
278	278	(A) the capital financing structure of any
279	279	corporation owned by or affiliated with the entity; and
280	280	(B) the entity's debt-to-equity ratio, including
281	281	any debt of the corporate parent that is used to fund any part of the
282	282	entity's equity;
283	283	(2) a 40-year depreciable life;
284	284	(3) allowance for funds used during construction;
285	285	(4) costs associated with ownership, operations,
286	286	maintenance, fuel, and other variable costs;
287	287	(5) reasonably incurred attorney's fees; and
288	288	(6) the estimated costs of constructing the
289	289	reliability asset before construction has begun and, after the
290	290	reliability asset is complete, the actual cost of the asset.
291	291	(f) Not later than the 185th day after the date a certified
292	292	entity submits to the commission a rate request for a reliability
293	293	asset, the commission shall set the reliability asset rate. The
294	294	commission shall incorporate the approved rate into the
295	295	commission's calculations of the nonbypassable rate under
296	296	Subsection (a) and require the newly calculated nonbypassable rate
297	297	to be collected beginning on the date the reliability asset is
298	298	commissioned.
299	299	(g) The comptroller shall disburse in monthly amounts
300	300	determined by the commission to each certified entity for which the
301	301	commission has set a reliability asset rate under this section the
302	302	rate revenue to which the certified entity is entitled.
303	303	(h) Not later than the 185th day after the commercial
304	304	operation date of a reliability asset, the commission shall:
305	305	(1) adjust the previously established rates for the
306	306	asset to reflect the actual construction costs if the commission
307	307	determines those costs were prudently incurred; and
308	308	(2) in collaboration with the independent
309	309	organization certified under Section 39.151 for the ERCOT power
310	310	region, reconcile any over-collections or under-collections.
311	311	(i) The commission shall adjust the rates for each
312	312	reliability asset annually to reflect changes to the costs of
313	313	ownership, operations and maintenance, and variable costs,
314	314	including fuel costs and interest rates. The adjustment must be
315	315	based on an annual filing by the certified entity that shows the
316	316	actual costs the entity incurred over the preceding year. The
317	317	commission shall apply any market revenues earned by the certified
318	318	entity for the operation of the reliability asset under Section
319	319	38.079 in the prior year as an offset to the rates. The review for a
320	320	rate adjustment under this subsection is limited to verifying the
321	321	accuracy of the incurred costs, the reconciliation of any
322	322	over-collections or under-collections, and the calculation of the
323	323	rates. A certified entity is not entitled to recover more than $10
324	324	million per year for a single capital cost unless the commission
325	325	approves the cost before the entity incurs the cost.
326	326	Sec. 36.502. STRANDED COST RECOVERY. The commission by
327	327	rule shall establish a process to allow certified entities in the
328	328	Texas Energy Insurance Program to recover stranded costs if the
329	329	Texas Energy Insurance Program is repealed or lacks sufficient
330	330	funding.
331	331	SECTION 1.10. Subchapter D, Chapter 38, Utilities Code, is
332	332	amended by adding Section 38.079 to read as follows:
333	333	Sec. 38.079. TEXAS ENERGY INSURANCE PROGRAM. (a)
334	334	Reliability assets may be dispatched by the independent
335	335	organization certified under Section 39.151 for the ERCOT power
336	336	region in a manner that minimizes wholesale electric market
337	337	effects. Dispatch may occur:
338	338	(1) when the independent organization determines that
339	339	without generation by a regional reliability asset, an overload of
340	340	a transmission system element will result in load shed for that
341	341	region;
342	342	(2) when the independent organization determines that
343	343	the operation of a reliability asset is needed to resolve an actual
344	344	or anticipated violation of transmission security criteria;
345	345	(3) as a last resort to avoid ordering involuntary
346	346	load shedding; and
347	347	(4) for not more than 336 hours per year for testing
348	348	purposes and as directed by the independent organization.
349	349	(b) The commission shall require the independent
350	350	organization to:
351	351	(1) develop deployment criteria and protocols for
352	352	reliability assets, including a maximum notice time for deployment,
353	353	minimum run times, and other operational requirements needed to
354	354	support reliability; and
355	355	(2) allow the state to collect revenue under Section
356	356	36.501(b) but ensure that reliability assets do not participate in
357	357	the day-ahead or real-time ERCOT markets.
358	358	(c) The commission shall address long-term resource
359	359	adequacy and investment in the wholesale electric market in
360	360	conjunction with implementation of the Texas Energy Insurance
361	361	Program.
362	362	SECTION 1.11. Section 39.154, Utilities Code, is amended by
363	363	adding Subsection (f) to read as follows:
364	364	(f) For purposes of this section and Section 39.158, a
365	365	reliability asset is not considered to be installed generation
366	366	capacity.
367	367	SECTION 1.12. Section 39.155, Utilities Code, is amended by
368	368	amending Subsections (a) and (b) and adding Subsection (e) to read
369	369	as follows:
370	370	(a) Each person, municipally owned utility, electric
371	371	cooperative, and river authority that owns generation facilities
372	372	and offers electricity for sale in this state, other than an entity
373	373	operating under Section 39.360, shall report to the commission its
374	374	installed generation capacity, the total amount of capacity
375	375	available for sale to others, the total amount of capacity under
376	376	contract to others, the total amount of capacity dedicated to its
377	377	own use, its annual wholesale power sales in the state, its annual
378	378	retail power sales in the state, and any other information
379	379	necessary for the commission to assess market power or the
380	380	development of a competitive retail market in the state. The
381	381	commission shall by rule prescribe the nature and detail of the
382	382	reporting requirements and shall administer those reporting
383	383	requirements in a manner that ensures the confidentiality of
384	384	competitively sensitive information.
385	385	(b) The ERCOT independent system operator shall submit an
386	386	annual report to the commission identifying existing and potential
387	387	transmission and distribution constraints and system needs within
388	388	ERCOT, alternatives for meeting system needs, and recommendations
389	389	for meeting system needs. The first report shall be submitted on or
390	390	before October 1, 1999. Subsequent reports shall be submitted by
391	391	January 15 of each year or as determined necessary by the
392	392	commission. The reports required by this subsection must include a
393	393	section identifying existing and potential transmission
394	394	constraints that could affect the availability of any reliability
395	395	asset and include alternatives for meeting identified needs.
396	396	(e) Entities operating under Section 39.360 are not
397	397	considered to have market power when dispatched by an order of the
398	398	independent organization certified under Section 39.151 for the
399	399	ERCOT power region.
400	400	SECTION 1.13. Subchapter H, Chapter 39, Utilities Code, is
401	401	amended by adding Section 39.360 to read as follows:
402	402	Sec. 39.360. CERTIFICATION OF TEXAS ENERGY INSURANCE
403	403	PROGRAM. (a) The commission may certify one or more entities to
404	404	operate as participants in the Texas Energy Insurance Program by
405	405	owning and operating reliability assets. The commission may
406	406	certify any number of entities to operate any number of reliability
407	407	assets, but may not certify a total of more than 10 gigawatts of
408	408	generating capacity for the entire Texas Energy Insurance Program.
409	409	(b) An entity may not operate as part of the Texas Energy
410	410	Insurance Program unless the entity is certified by the commission
411	411	under this section.
412	412	(c) The commission shall:
413	413	(1) issue at least one request for proposals from
414	414	qualified applicants to serve as part of the Texas Energy Insurance
415	415	Program; and
416	416	(2) if the commission receives at least two
417	417	applications from qualified applicants in response to the request
418	418	described by Subdivision (1) before the expiration of the period
419	419	provided by Subsection (e), select and certify at least two
420	420	qualified applicants not later than the 90th day after the date the
421	421	commission issues the request.
422	422	(d) To ensure efficient distribution of reliability assets,
423	423	the commission may designate regions in the ERCOT power region and
424	424	issue requests for proposals under Subsection (c) for specific
425	425	amounts of generation capacity by region.
426	426	(e) An applicant must submit an application under
427	427	Subsection (c) not later than the 60th day after the date the
428	428	commission issues a request for proposals under that subsection.
429	429	(f) An entity that is prohibited by this title from owning
430	430	or operating a generation asset may apply to be certified to be part
431	431	of the Texas Energy Insurance Program under this section.
432	432	(g) To be certified as part of the Texas Energy Insurance
433	433	Program, an applicant must:
434	434	(1) establish financial stability and expertise by
435	435	demonstrating that:
436	436	(A) the applicant or the applicant's parent
437	437	company or operating partner has an investment grade credit rating;
438	438	and
439	439	(B) the applicant or the applicant's parent
440	440	company or operating partner is able to fund the investment as
441	441	demonstrated by proof of access to adequate financing;
442	442	(2) establish industry expertise by demonstrating
443	443	that the applicant is a river authority that owns or operates
444	444	generation facilities, an electric utility, a municipally owned
445	445	utility, or an electric cooperative, or the applicant or the
446	446	applicant's parent company owns or operates electric generation
447	447	assets totaling at least 2,500 megawatts;
448	448	(3) establish project quality standards by
449	449	demonstrating that:
450	450	(A) the applicant is able to provide a parent
451	451	performance guarantee that the independent organization certified
452	452	under Section 39.151 for the ERCOT power region or the commission
453	453	may draw upon during each season, as defined by the independent
454	454	organization, if a reliability asset does not perform and
455	455	performance is not excused under Subsection (m), in the amount of
456	456	$400 million for every gigawatt of generating capacity for which
457	457	the applicant is applying to be certified; and
458	458	(B) each reliability asset will be weatherized,
459	459	capable of starting up and generating electricity without requiring
460	460	outside power or support from the grid, and in operation not later
461	461	than the last day of the 48th month after certification, unless
462	462	interconnection delays require a later operation date; and
463	463	(4) pledge:
464	464	(A) that any net revenue earned during testing or
465	465	operating would be for the benefit of the ERCOT power region; and
466	466	(B) not to sell any reliability asset over the
467	467	life of the reliability asset while the applicant is certified as
468	468	part of the Texas Energy Insurance Program without prior approval
469	469	of the commission.
470	470	(h) Each applicant must provide in the application a
471	471	statement:
472	472	(1) agreeing to a rate of return on equity the
473	473	applicant will accept while operating as part of the Texas Energy
474	474	Insurance Program, which may not exceed 10 percent;
475	475	(2) of the total cost of reliability assets for which
476	476	the applicant will request recovery under Subchapter K, Chapter 36,
477	477	while operating as part of the Texas Energy Insurance Program,
478	478	which may not exceed $1 billion per gigawatt of installed
479	479	generation capacity operated in the program; and
480	480	(3) agreeing to the rates and revenues authorized
481	481	under Subchapter K, Chapter 36.
482	482	(i) The commission may certify an entity to be part of the
483	483	Texas Energy Insurance Program if the entity submits a qualifying
484	484	application that includes:
485	485	(1) proof that the requirements of Subsection (g) have
486	486	been met;
487	487	(2) a description of the location or proposed location
488	488	of each reliability asset;
489	489	(3) a commitment to construct, own, operate, and
490	490	maintain reliability assets for a time period not less than the
491	491	useful life of the assets;
492	492	(4) a commitment that the reliability assets will
493	493	include at each site resources to allow the provision of generation
494	494	at full load for at least 168 continuous hours or the maximum number
495	495	of continuous hours authorized for continuous operation under
496	496	permits issued under state and federal law;
497	497	(5) an affidavit affirming that the reliability assets
498	498	will be available to dispatch in a manner that provides the
499	499	independent organization certified under Section 39.151 for the
500	500	ERCOT power region, in times of emergency, natural disaster, and
501	501	testing, with access to power at full output for up to seven
502	502	consecutive days, after accounting for ramp up and ramp down times
503	503	required by the independent organization;
504	504	(6) proof of the posting of a parent performance
505	505	guarantee that the independent organization certified under
506	506	Section 39.151 for the ERCOT power region or the commission may draw
507	507	upon during each season, as defined by the independent
508	508	organization, if a reliability asset does not perform and
509	509	performance is not excused under Subsection (m), in the amount of
510	510	$400 million for every gigawatt of generating capacity for which
511	511	the applicant is applying to be certified;
512	512	(7) proof that the applicant or the applicant's parent
513	513	company or operating partner meets the requirements of Subsection
514	514	(g)(1); and
515	515	(8) proof that the applicant can follow telemetry from
516	516	the independent organization certified under Section 39.151 for the
517	517	ERCOT power region.
518	518	(j) The commission shall provide a process to amend a
519	519	certificate to account for the addition of any new reliability
520	520	asset.
521	521	(k) The commission may not revoke a certificate unless after
522	522	notice and an opportunity for hearing before the commission, the
523	523	commission finds that the certified entity:
524	524	(1) failed to dispatch sufficient energy from
525	525	reliability assets when called upon by the independent organization
526	526	certified under Section 39.151 for the ERCOT power region or the
527	527	commission and the failure cannot be excused by factors outside the
528	528	entity's control;
529	529	(2) has not fulfilled commitments made in the entity's
530	530	application or complied with statutory or regulatory requirements
531	531	of being certified, after reasonable notice from the commission; or
532	532	(3) no longer meets the eligibility requirements for
533	533	participating in the Texas Energy Insurance Program, unless the
534	534	entity has presented an actionable plan acceptable to the
535	535	commission to meet the requirements.
536	536	(l) Each certified entity shall comply with the
537	537	commissioning requirements and reliability standards adopted by
538	538	the independent organization certified under Section 39.151 for the
539	539	ERCOT power region to ensure the reliability of the ERCOT region.
540	540	(m) The commission or the independent organization
541	541	certified under Section 39.151 for the ERCOT power region may not
542	542	draw upon a parent performance guarantee provided by a certified
543	543	entity and may not impose a fine or penalty on a certified entity
544	544	for failure to provide service to the extent that the inability to
545	545	provide service is the result of:
546	546	(1) the actions of a transmission service provider
547	547	related to transmission service; or
548	548	(2) the actions of the independent organization
549	549	certified under Section 39.151 for the ERCOT power region,
550	550	including scheduled routine maintenance.
551	551	(n) The commission may not require a bond, letter of credit,
552	552	or other security from a certified entity except for a parent
553	553	performance guarantee described by this section and may not require
554	554	the expansion of a parent performance guarantee. If drawn upon, a
555	555	parent performance guarantee may not be required to be replenished
556	556	or expanded. If the parent performance guarantee for a reliability
557	557	asset is exhausted, the commission may decertify the certified
558	558	entity to operate the asset. The commission may consult with the
559	559	Legislative Budget Board in implementing this subsection.
560	560	(o) A certification issued under this section may be
561	561	transferred only with the prior approval of the commission. Before
562	562	transferring ownership of a reliability asset to another entity, a
563	563	certified entity must apply to the commission for permission to
564	564	transfer the asset. The commission may not approve the transfer of
565	565	a reliability asset that is sold unless the sale is conditioned on
566	566	the purchaser owning, operating, and maintaining the asset for the
567	567	duration of the commitment made under Subsection (i)(3). A
568	568	transfer of a reliability asset under this subsection does not
569	569	affect the participation of the asset in the Texas Energy Insurance
570	570	Program. If the commission does not approve the transfer and the
571	571	entity sells the asset, the commission shall decertify the entity
572	572	to operate that asset as part of the Texas Energy Insurance Program.
573	573	(p) On the request of a certified entity, after the 40th
574	574	anniversary of the commissioning date of a reliability asset, the
575	575	commission shall decertify the entity to operate the asset as a
576	576	reliability asset and allow the entity to apply to operate the asset
577	577	in the competitive market.
578	578	SECTION 1.14. Section 382.05155, Health and Safety Code, is
579	579	amended by adding Subsection (b-1) to read as follows:
580	580	(b-1) A permit for a reliability asset, as defined by
581	581	Section 31.002, Utilities Code, is considered to benefit the
582	582	economy of this state for the purposes of Subsection (b).
583	583	SECTION 1.15. Not later than February 1, 2024, the Public
584	584	Utility Commission of Texas shall issue a request for proposals
585	585	required by Section 39.360(c), Utilities Code, as added by this
586	586	article.
587	587	SECTION 1.16. The Public Utility Commission of Texas shall
588	588	adopt any rules necessary to implement this article not later than
589	589	December 1, 2023.
590	590	SECTION 1.17. To the extent of any conflict, this article
591	591	prevails over another Act of the 88th Legislature, Regular Session,
592	592	2023, relating to nonsubstantive additions to and corrections in
593	593	enacted codes.
594	594	SECTION 1.18. This article takes effect September 1, 2023.
595	595	ARTICLE 2. GENERATING FACILITY FUNDING
596	596	SECTION 2.01. Subtitle B, Title 2, Utilities Code, is
597	597	amended by adding Chapter 34 to read as follows:
598	598	CHAPTER 34. GENERATING FACILITY FUNDING
599	599	Sec. 34.0101. DEFINITIONS. In this chapter:
600	600	(1) "Advisory committee" means the Texas Energy
601	601	Insurance Fund Advisory Committee.
602	602	(2) "Fund" means the Texas energy insurance fund
603	603	established by Section 49-q, Article III, Texas Constitution.
604	604	(3) "Trust company" means the Texas Treasury
605	605	Safekeeping Trust Company.
606	606	Sec. 34.0102. FUND. (a) The fund is a special fund in the
607	607	state treasury outside the general revenue fund to be administered
608	608	and used by the commission for the purposes authorized by this
609	609	chapter. The commission may establish separate accounts in the
610	610	fund.
611	611	(b) The fund and the fund's accounts are kept and held by the
612	612	trust company for and in the name of the commission.
613	613	(c) Money deposited to the credit of the fund may be used
614	614	only as provided by this chapter.
615	615	(d) The fund consists of:
616	616	(1) money appropriated, credited, transferred, or
617	617	deposited to the credit of the fund by or as authorized by law,
618	618	including money from any source transferred or deposited to the
619	619	credit of the fund at the commission's discretion;
620	620	(2) revenue that the legislature by statute dedicates
621	621	for deposit to the credit of the fund;
622	622	(3) investment earnings and interest earned on money
623	623	in the fund; and
624	624	(4) gifts, grants, and donations contributed to the
625	625	fund.
626	626	Sec. 34.0103. LOANS FOR MAINTENANCE AND MODERNIZATION. (a)
627	627	The commission may use money in the fund without further
628	628	appropriation to provide loans to finance maintenance or
629	629	modernization of dispatchable electric generating facilities
630	630	operating in the ERCOT power region. For the purposes of this
631	631	section, a generating facility is considered to be dispatchable if
632	632	the facility's output can be controlled primarily by forces under
633	633	human control.
634	634	(b) Each year, the commission shall produce a list of
635	635	dispatchable electric generating facilities operating in the ERCOT
636	636	power region and estimate the potential costs to maintain and
637	637	modernize the facilities during the following five years. The
638	638	commission shall give priority to loan applications under this
639	639	section that the commission determines will provide the highest
640	640	ratio of dispatchable megawatts maintained to project costs.
641	641	(c) The commission shall evaluate an application for a loan
642	642	under this section based on the applicant's:
643	643	(1) efforts and achievements in conserving resources;
644	644	(2) quality of services;
645	645	(3) efficiency of operations;
646	646	(4) quality of management;
647	647	(5) proposed improvement in availability of the
648	648	generation facility for which the loan is requested; and
649	649	(6) previous Texas energy insurance fund loan history,
650	650	with a preference toward entities that have not applied for or been
651	651	granted a loan previously.
652	652	(d) The commission may provide a loan under this section
653	653	only for maintenance or modernization of a facility that is capable
654	654	of operating for at least five years after the date the loan is
655	655	received.
656	656	(e) Proceeds of a loan received under this section may not
657	657	be used for:
658	658	(1) compliance with weatherization standards adopted
659	659	before December 1, 2023;
660	660	(2) debt payments; or
661	661	(3) expenses not related to maintaining or modernizing
662	662	the electric generating facility.
663	663	(f) An electric utility may not receive a loan under this
664	664	section.
665	665	(g) The commission may require immediate repayment of a loan
666	666	issued under this section if the recipient of the loan stops
667	667	operating the facility for which the loan was received before the
668	668	fifth anniversary of the date on which the loan was disbursed.
669	669	(h) A loan provided under this chapter may not bear an
670	670	interest rate of more than zero percent.
671	671	(i) Information submitted to the commission in an
672	672	application for a loan under this chapter is confidential and not
673	673	subject to disclosure under Chapter 552, Government Code.
674	674	Sec. 34.0104. SOURCES OF MONEY FOR LOANS FOR TEXAS ENERGY
675	675	INSURANCE PROGRAM RELIABILITY ASSETS. The commission may use any
676	676	money appropriated to the commission for the purpose of providing a
677	677	loan, at zero percent interest, to an entity certified under
678	678	Section 39.360 to be used to reduce debt associated with
679	679	constructing or operating a reliability asset. The commission may
680	680	use without legislative appropriation money from the fund for that
681	681	purpose.
682	682	Sec. 34.0105. MAXIMUM LOAN AMOUNT. If the commission has
683	683	more than four pending applications for loans to be made from the
684	684	fund on the date the commission awards a loan, the amount of the
685	685	loan awarded may not exceed 25 percent of the fund balance on that
686	686	date.
687	687	Sec. 34.0106. MANAGEMENT AND INVESTMENT OF FUND. (a) The
688	688	trust company shall hold the fund, and any accounts established in
689	689	the fund, for and in the name of the commission, taking into account
690	690	the purposes for which money in the fund may be used. The fund may
691	691	be invested with the state treasury pool and comingled with other
692	692	investments.
693	693	(b) The overall objective for the investment of the fund is
694	694	to maintain sufficient liquidity to meet the needs of the fund while
695	695	striving to preserve the purchasing power of the fund.
696	696	(c) In managing the assets of the fund, the trust company
697	697	may acquire, exchange, sell, supervise, manage, or retain any kind
698	698	of investment that a prudent investor, exercising reasonable care,
699	699	skill, and caution, would acquire or retain in light of the
700	700	purposes, terms, distribution requirements, and other
701	701	circumstances of the fund then prevailing, taking into
702	702	consideration the investment of all the assets of the fund rather
703	703	than a single investment.
704	704	(d) The reasonable expenses of managing the fund's assets
705	705	shall be paid from the fund.
706	706	(e) The trust company annually shall provide a written
707	707	report to the commission and to the advisory committee with respect
708	708	to the investment of the fund.
709	709	(f) The trust company shall adopt a written investment
710	710	policy that is appropriate for the fund. The trust company shall
711	711	present the investment policy to the investment advisory board
712	712	established under Section 404.028, Government Code. The investment
713	713	advisory board shall submit to the trust company recommendations
714	714	regarding the policy.
715	715	(g) The commission annually shall provide to the trust
716	716	company a forecast of the cash flows into and out of the fund. The
717	717	commission shall provide updates to the forecasts as appropriate to
718	718	ensure that the trust company is able to achieve the objective
719	719	specified by Subsection (b).
720	720	(h) The trust company shall disburse money from the fund as
721	721	directed by the commission.
722	722	Sec. 34.0107. RECEIVERSHIP OF DEFAULT GENERATING FACILITY.
723	723	(a) In this section, "default" means:
724	724	(1) default in payment of the principal of or interest
725	725	on a loan; or
726	726	(2) a failure to perform any of the terms of a loan.
727	727	(b) The state, including the commission, the advisory
728	728	committee, and the trust company, may not retain an ownership
729	729	interest in a project or facility for which a loan is provided under
730	730	this chapter.
731	731	(c) In the event of a default on a loan made under this
732	732	chapter, at the request of the commission, the attorney general
733	733	shall bring suit in a district court in Travis County for the
734	734	appointment of a receiver to collect the assets and carry on the
735	735	business of a loan recipient if the action is necessary to cure a
736	736	default by the recipient.
737	737	(d) The court shall vest a receiver appointed by the court
738	738	with any power or duty the court finds necessary to cure the
739	739	default, including the power or duty to:
740	740	(1) perform audits;
741	741	(2) direct ongoing operation of the assets;
742	742	(3) fund reserve accounts;
743	743	(4) make payments of the principal of or interest on
744	744	bonds, securities, or other obligations; and
745	745	(5) take any other action necessary to prevent or to
746	746	remedy the default, including the sale of assets.
747	747	(e) The receiver shall execute a bond in an amount to be set
748	748	by the court to ensure the proper performance of the receiver's
749	749	duties.
750	750	(f) After appointment and execution of bond, the receiver
751	751	shall take possession of the books, records, accounts, and assets
752	752	of the defaulting loan recipient specified by the court. Until
753	753	discharged by the court, the receiver shall perform the duties that
754	754	the court directs and shall strictly observe the final order
755	755	involved.
756	756	(g) On a showing of good cause by the defaulting loan
757	757	recipient, the court may dissolve the receivership.
758	758	Sec. 34.0108. TEXAS ENERGY INSURANCE FUND ADVISORY
759	759	COMMITTEE. (a) The advisory committee is composed of the following
760	760	six members:
761	761	(1) three members of the senate appointed by the
762	762	lieutenant governor, including:
763	763	(A) a member of the committee of the senate
764	764	having primary jurisdiction over matters relating to the generation
765	765	of electricity; and
766	766	(B) a member of the committee of the senate
767	767	having primary jurisdiction over finance; and
768	768	(2) three members of the house of representatives
769	769	appointed by the speaker of the house of representatives,
770	770	including:
771	771	(A) a member of the committee of the house of
772	772	representatives having primary jurisdiction over the generation of
773	773	electricity; and
774	774	(B) a member of the committee of the house of
775	775	representatives having primary jurisdiction over finance.
776	776	(b) A member of the advisory committee serves at the will of
777	777	the person who appointed the member.
778	778	(c) The lieutenant governor shall appoint a co-presiding
779	779	officer of the advisory committee from among the members appointed
780	780	by the lieutenant governor. The speaker of the house of
781	781	representatives shall appoint a co-presiding officer of the
782	782	advisory committee from among the members appointed by the speaker.
783	783	(d) The advisory committee may hold public hearings, formal
784	784	meetings, and work sessions. Either co-presiding officer of the
785	785	advisory committee may call a public hearing, formal meeting, or
786	786	work session of the advisory committee at any time. The advisory
787	787	committee may not take formal action at a public hearing, formal
788	788	meeting, or work session unless a quorum of the committee is
789	789	present.
790	790	(e) Except as otherwise provided by this subsection, a
791	791	member of the advisory committee is not entitled to receive
792	792	compensation for service on the committee or reimbursement for
793	793	expenses incurred in the performance of official duties as a member
794	794	of the committee. Service on the advisory committee by a member of
795	795	the senate or house of representatives is considered legislative
796	796	service for which the member is entitled to reimbursement and other
797	797	benefits in the same manner and to the same extent as for other
798	798	legislative service.
799	799	(f) The advisory committee:
800	800	(1) may provide comments and recommendations to the
801	801	commission for the commission to use in adopting rules regarding
802	802	the use of the fund or on any other matter; and
803	803	(2) shall review the overall operation, function, and
804	804	structure of the fund at least semiannually.
805	805	(g) The advisory committee may adopt rules, procedures, and
806	806	policies as needed to administer this section and implement its
807	807	responsibilities.
808	808	(h) Chapter 2110, Government Code, does not apply to the
809	809	size, composition, or duration of the advisory committee.
810	810	(i) The advisory committee is subject to Chapter 325,
811	811	Government Code (Texas Sunset Act). Unless continued in existence
812	812	as provided by that chapter, the advisory committee is abolished
813	813	September 1, 2035.
814	814	Sec. 34.0109. RULES. (a) The commission by rule may
815	815	establish procedures for:
816	816	(1) the application for and award of a loan under this
817	817	chapter; and
818	818	(2) the administration of the fund.
819	819	(b) The commission shall give full consideration to
820	820	comments and recommendations of the advisory committee before the
821	821	commission adopts rules under this chapter.
822	822	Sec. 34.0110. TEXAS ENERGY INSURANCE PROGRAM CUSTOMER
823	823	PAYMENTS. (a) The commission may use any money appropriated to the
824	824	commission for the purpose of offsetting amounts owed to certified
825	825	entities under Section 36.501 on behalf of customers of
826	826	transmission and distribution utilities, municipally owned
827	827	utilities, and electric cooperatives. The commission may use
828	828	without legislative appropriation money from the fund for that
829	829	purpose.
830	830	(b) The comptroller shall deposit revenue received under
831	831	Section 36.501(b) to the credit of the fund.
832	832	(c) Money obtained by the independent organization
833	833	certified under Section 39.151 for the ERCOT power region or the
834	834	commission through drawing upon a parent performance guarantee as
835	835	described by Section 39.360(g)(3) must be deposited to the credit
836	836	of the fund.
837	837	(d) The comptroller shall make the disbursements required
838	838	by Section 36.501(g) from the fund.
839	839	SECTION 2.02. This article takes effect on the date on which
840	840	the constitutional amendment proposed by the 88th Legislature,
841	841	Regular Session, 2023, providing for the creation of the Texas
842	842	energy insurance fund and the authorization of other funding
843	843	mechanisms to support the construction and operation of electric
844	844	generating facilities takes effect. If that amendment is not
845	845	approved by the voters, this article has no effect.