BILL ANALYSIS C.S.H.B. 3778 By: Louderback State Affairs Committee Report (Substituted) BACKGROUND AND PURPOSE The bill author has informed the committee that Texas has recently invested tremendous effort in ensuring the expansion of dispatchable energy. The 88th Legislature passed S.B. 2627, which established the Texas Energy Fund in order to target money for dispatchable electric generation facilities in the form of low-interest loans and completion bonuses. The bill author has also informed the committee that one sustainable new source of dispatchable electric generation comes from geothermal energy, which uses the Earth's internal heat to produce energy, and that, even though geothermal energy is dispatchable by its nature, geothermal companies are ineligible for grants under the Texas Energy Fund because geothermal energy generation facilities are not considered to be dispatchable under applicable law. C.S.H.B. 3778 seeks to address this issue by providing for geothermal energy generation facilities and geothermal energy conservation wells to be considered dispatchable for purposes of receiving certain loans and grants and providing energy to the ERCOT power region. CRIMINAL JUSTICE IMPACT It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS C.S.H.B. 3778 amends the Utilities Code to establish the following for purposes of statutory provisions relating to the Texas Energy Fund and relating to power region reliability and dispatchable generation: a generating facility is considered to be dispatchable if the facility's output can be controlled primarily by forces under human control; a geothermal energy generation facility is considered to be dispatchable; and a geothermal energy conservation well is considered to be dispatchable for purposes of provisions relating to power region reliability and dispatchable generation. The bill removes language specifying, with respect to statutory provisions relating to loans for upgrades to and completion bonus grants for the construction of dispatchable power generating facilities in the ERCOT power region, that a generation facility is considered to be non‑dispatchable if the facility's output is controlled primarily by forces outside of human control. C.S.H.B. 3778 makes a geothermal energy conservation well eligible for a loan for upgrades to existing dispatchable electric generating facilities in the ERCOT power region. The bill authorizes the Public Utility Commission of Texas (PUC) to use money in the Texas Energy Fund, without further appropriation, to provide loans to finance the construction of geothermal energy generation facilities and geothermal energy conservation wells in the ERCOT power region that have a generation capacity of at least 10 megawatts. C.S.H.B. 3778 makes a geothermal energy conservation well eligible for a completion bonus grant from the Texas Energy Fund for the construction of dispatchable electric generating facilities in the ERCOT power region. The bill specifies, as a grant eligibility condition for a geothermal energy generation facility or a geothermal energy conservation well, that the facility or well will have a generation capacity of at least 10 megawatts. EFFECTIVE DATE September 1, 2025. COMPARISON OF INTRODUCED AND SUBSTITUTE While C.S.H.B. 3778 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill. Whereas the introduced established that a geothermal generation facility is considered to be dispatchable for purposes of statutory provisions relating to power region reliability and dispatchable generation, the substitute establishes that a geothermal energy generation facility and a geothermal energy conservation well are considered to be dispatchable. The substitute includes the following provisions absent from the introduced: a provision making a geothermal energy conservation well eligible for a specified loan for dispatchable electric generating facilities in the ERCOT power region; an authorization for the PUC to use money in the Texas Energy Fund, without further appropriation, to provide loans to finance the construction of geothermal energy generation facilities and geothermal energy conservation wells in the ERCOT power region that have a generation capacity of at least 10 megawatts; a provision making a geothermal energy conservation well eligible for a completion bonus grant from the Texas Energy Fund; and a specification that, with respect to the conditions in which the PUC may provide a completion bonus grant from the Texas Energy Fund for the construction of a geothermal energy generation facility or geothermal energy conservation well, such a facility or well will have the generation capacity of at least 10 megawatts.
BILL ANALYSIS
# BILL ANALYSIS
C.S.H.B. 3778
By: Louderback
State Affairs
Committee Report (Substituted)
C.S.H.B. 3778
By: Louderback
State Affairs
Committee Report (Substituted)
BACKGROUND AND PURPOSE The bill author has informed the committee that Texas has recently invested tremendous effort in ensuring the expansion of dispatchable energy. The 88th Legislature passed S.B. 2627, which established the Texas Energy Fund in order to target money for dispatchable electric generation facilities in the form of low-interest loans and completion bonuses. The bill author has also informed the committee that one sustainable new source of dispatchable electric generation comes from geothermal energy, which uses the Earth's internal heat to produce energy, and that, even though geothermal energy is dispatchable by its nature, geothermal companies are ineligible for grants under the Texas Energy Fund because geothermal energy generation facilities are not considered to be dispatchable under applicable law. C.S.H.B. 3778 seeks to address this issue by providing for geothermal energy generation facilities and geothermal energy conservation wells to be considered dispatchable for purposes of receiving certain loans and grants and providing energy to the ERCOT power region.
CRIMINAL JUSTICE IMPACT It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS C.S.H.B. 3778 amends the Utilities Code to establish the following for purposes of statutory provisions relating to the Texas Energy Fund and relating to power region reliability and dispatchable generation: a generating facility is considered to be dispatchable if the facility's output can be controlled primarily by forces under human control; a geothermal energy generation facility is considered to be dispatchable; and a geothermal energy conservation well is considered to be dispatchable for purposes of provisions relating to power region reliability and dispatchable generation. The bill removes language specifying, with respect to statutory provisions relating to loans for upgrades to and completion bonus grants for the construction of dispatchable power generating facilities in the ERCOT power region, that a generation facility is considered to be non‑dispatchable if the facility's output is controlled primarily by forces outside of human control. C.S.H.B. 3778 makes a geothermal energy conservation well eligible for a loan for upgrades to existing dispatchable electric generating facilities in the ERCOT power region. The bill authorizes the Public Utility Commission of Texas (PUC) to use money in the Texas Energy Fund, without further appropriation, to provide loans to finance the construction of geothermal energy generation facilities and geothermal energy conservation wells in the ERCOT power region that have a generation capacity of at least 10 megawatts. C.S.H.B. 3778 makes a geothermal energy conservation well eligible for a completion bonus grant from the Texas Energy Fund for the construction of dispatchable electric generating facilities in the ERCOT power region. The bill specifies, as a grant eligibility condition for a geothermal energy generation facility or a geothermal energy conservation well, that the facility or well will have a generation capacity of at least 10 megawatts.
EFFECTIVE DATE September 1, 2025.
COMPARISON OF INTRODUCED AND SUBSTITUTE While C.S.H.B. 3778 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill. Whereas the introduced established that a geothermal generation facility is considered to be dispatchable for purposes of statutory provisions relating to power region reliability and dispatchable generation, the substitute establishes that a geothermal energy generation facility and a geothermal energy conservation well are considered to be dispatchable. The substitute includes the following provisions absent from the introduced: a provision making a geothermal energy conservation well eligible for a specified loan for dispatchable electric generating facilities in the ERCOT power region; an authorization for the PUC to use money in the Texas Energy Fund, without further appropriation, to provide loans to finance the construction of geothermal energy generation facilities and geothermal energy conservation wells in the ERCOT power region that have a generation capacity of at least 10 megawatts; a provision making a geothermal energy conservation well eligible for a completion bonus grant from the Texas Energy Fund; and a specification that, with respect to the conditions in which the PUC may provide a completion bonus grant from the Texas Energy Fund for the construction of a geothermal energy generation facility or geothermal energy conservation well, such a facility or well will have the generation capacity of at least 10 megawatts.
BACKGROUND AND PURPOSE
The bill author has informed the committee that Texas has recently invested tremendous effort in ensuring the expansion of dispatchable energy. The 88th Legislature passed S.B. 2627, which established the Texas Energy Fund in order to target money for dispatchable electric generation facilities in the form of low-interest loans and completion bonuses. The bill author has also informed the committee that one sustainable new source of dispatchable electric generation comes from geothermal energy, which uses the Earth's internal heat to produce energy, and that, even though geothermal energy is dispatchable by its nature, geothermal companies are ineligible for grants under the Texas Energy Fund because geothermal energy generation facilities are not considered to be dispatchable under applicable law. C.S.H.B. 3778 seeks to address this issue by providing for geothermal energy generation facilities and geothermal energy conservation wells to be considered dispatchable for purposes of receiving certain loans and grants and providing energy to the ERCOT power region.
CRIMINAL JUSTICE IMPACT
It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS
C.S.H.B. 3778 amends the Utilities Code to establish the following for purposes of statutory provisions relating to the Texas Energy Fund and relating to power region reliability and dispatchable generation:
a generating facility is considered to be dispatchable if the facility's output can be controlled primarily by forces under human control;
a geothermal energy generation facility is considered to be dispatchable; and
a geothermal energy conservation well is considered to be dispatchable for purposes of provisions relating to power region reliability and dispatchable generation.
The bill removes language specifying, with respect to statutory provisions relating to loans for upgrades to and completion bonus grants for the construction of dispatchable power generating facilities in the ERCOT power region, that a generation facility is considered to be non‑dispatchable if the facility's output is controlled primarily by forces outside of human control.
C.S.H.B. 3778 makes a geothermal energy conservation well eligible for a loan for upgrades to existing dispatchable electric generating facilities in the ERCOT power region. The bill authorizes the Public Utility Commission of Texas (PUC) to use money in the Texas Energy Fund, without further appropriation, to provide loans to finance the construction of geothermal energy generation facilities and geothermal energy conservation wells in the ERCOT power region that have a generation capacity of at least 10 megawatts.
C.S.H.B. 3778 makes a geothermal energy conservation well eligible for a completion bonus grant from the Texas Energy Fund for the construction of dispatchable electric generating facilities in the ERCOT power region. The bill specifies, as a grant eligibility condition for a geothermal energy generation facility or a geothermal energy conservation well, that the facility or well will have a generation capacity of at least 10 megawatts.
EFFECTIVE DATE
September 1, 2025.
COMPARISON OF INTRODUCED AND SUBSTITUTE
While C.S.H.B. 3778 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.
Whereas the introduced established that a geothermal generation facility is considered to be dispatchable for purposes of statutory provisions relating to power region reliability and dispatchable generation, the substitute establishes that a geothermal energy generation facility and a geothermal energy conservation well are considered to be dispatchable.
The substitute includes the following provisions absent from the introduced:
a provision making a geothermal energy conservation well eligible for a specified loan for dispatchable electric generating facilities in the ERCOT power region;
an authorization for the PUC to use money in the Texas Energy Fund, without further appropriation, to provide loans to finance the construction of geothermal energy generation facilities and geothermal energy conservation wells in the ERCOT power region that have a generation capacity of at least 10 megawatts;
a provision making a geothermal energy conservation well eligible for a completion bonus grant from the Texas Energy Fund; and
a specification that, with respect to the conditions in which the PUC may provide a completion bonus grant from the Texas Energy Fund for the construction of a geothermal energy generation facility or geothermal energy conservation well, such a facility or well will have the generation capacity of at least 10 megawatts.