BILL ANALYSIS Senate Research Center S.B. 1978 By: Hall Business & Commerce 4/16/2025 As Filed AUTHOR'S / SPONSOR'S STATEMENT OF INTENT Texas faces an ongoing challenge to preserve its independence from federal oversight of our state electrical grid, the Electric Reliability Council of Texas (ERCOT). The state has long valued the flexibility and local control afforded by its independent grid, which allows Texas to tailor its energy policies and responses to its unique geographic, economic, and environmental needs. Integration with other regional grids or federal authorities that would subject the state to external regulations and policies that do not align with Texas' best interests should be outright prohibited. By maintaining control over ERCOT, Texas will safeguard its energy sovereignty, ensuring the state's management of its power infrastructure and its ability to respond dynamically to challenges. This Bill Would: Prohibit actions that would result in the interconnection of an electric facility in the ERCOT power region to a facility that is connected outside of this state, unless the Public Utility Commission of Texas (PUC) determines that the interconnection would be consistent with free market principles and does not bring control of the Texas electric grid under federal jurisdiction. As proposed, S.B. 1978 amends current law relating to the interconnection of a facility in the ERCOT power region to a facility outside the power region. RULEMAKING AUTHORITY This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Transfers Sections 37.051(c-1), (c-2), and (c-3), Utilities Code, to Subchapter D, Chapter 39, Utilities Code, redesignates them as Section 39.169, Utilities Code, and amends them, as follows: Sec. 39.169. INTERCONNECTION OF FACILITY IN ERCOT POWER REGION TO FACILITY IN OTHER REGION OR STATE. (a) Defines "facility." Prohibits a person, including an electric cooperative or a municipally owned utility, from taking an action that would result in the interconnection of a facility in the Electric Reliability Council of Texas (ERCOT) power region to a facility located wholly or partly outside of this state, or the interconnection of a facility in the ERCOT power region to a facility that is connected directly or indirectly with a facility located wholly or partly outside of this state, unless: (1) the Public Utility Commission of Texas (PUC) first determines that the interconnection is consistent with free market principles and does not bring control of the Texas electric grid under federal jurisdiction; and (2) if applicable, the person complies with the requirements of Chapter 37 (Certificates of Convenience and Necessity) and Subsection (b) of this section. (b) Redesignates existing Subsection (c-1) as Subsection (b). Requires a person seeking to make an interconnection described by Subsection (a) to obtain the determination under (a)(1) from the PUC not later than the 180th day before the date the person seeks any order from the Federal Energy Regulatory Commission (FERC) related to the interconnection. Requires the PUC to apply Section 37.056 (Grant or Denial of Certificate) in considering an application for a certificate of convenience and necessity to which this section applies, rather than under this subsection. Deletes existing text prohibiting a person, notwithstanding any other provision of Title 2 (Public Utility Regulatory Act) except Section 11.009 (Construction With Federal Authority), and except as provided by Subsection (c-2), including an electric utility or municipally owned utility, from interconnecting a facility to the ERCOT transmission grid that enables additional power to be imported into or exported out of the ERCOT power grid unless the person obtains a certificate from the PUC stating that public convenience and necessity requires or will require the interconnection. Deletes existing text requiring the person to apply for the certificate not later than the 180th day before the date the person seeks any order from FERC related to the interconnection. Deletes existing text requiring the PUC, in addition, to determine that the application is consistent with the public interest before granting the certificate. Deletes existing text providing that this subsection does not apply to a facility that is in service on December 31, 2014. (c) Redesignates existing Subsection (c-2) as Subsection (c) and makes a nonsubstantive change. (d) Redesignates existing Subsection (c-3) as Subsection (d). Provides that nothing in this section, rather than in Subsection (c-1) or (c-2), is intended to restrict the authority of the PUC or the independent organization certified under Section 39.151 (Essential Organizations) for the ERCOT power region to adopt rules or protocols of general applicability. SECTION 2. Makes application of Section 39.169(a), Utilities Code, as added by this Act, prospective. SECTION 3. Effective date: upon passage or September 1, 2025.
BILL ANALYSIS
Senate Research Center S.B. 1978
By: Hall
Business & Commerce
4/16/2025
As Filed
Senate Research Center
S.B. 1978
By: Hall
Business & Commerce
4/16/2025
As Filed
AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
Texas faces an ongoing challenge to preserve its independence from federal oversight of our state electrical grid, the Electric Reliability Council of Texas (ERCOT). The state has long valued the flexibility and local control afforded by its independent grid, which allows Texas to tailor its energy policies and responses to its unique geographic, economic, and environmental needs.
Integration with other regional grids or federal authorities that would subject the state to external regulations and policies that do not align with Texas' best interests should be outright prohibited. By maintaining control over ERCOT, Texas will safeguard its energy sovereignty, ensuring the state's management of its power infrastructure and its ability to respond dynamically to challenges.
This Bill Would:
* Prohibit actions that would result in the interconnection of an electric facility in the ERCOT power region to a facility that is connected outside of this state, unless the Public Utility Commission of Texas (PUC) determines that the interconnection would be consistent with free market principles and does not bring control of the Texas electric grid under federal jurisdiction.
As proposed, S.B. 1978 amends current law relating to the interconnection of a facility in the ERCOT power region to a facility outside the power region.
RULEMAKING AUTHORITY
This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Transfers Sections 37.051(c-1), (c-2), and (c-3), Utilities Code, to Subchapter D, Chapter 39, Utilities Code, redesignates them as Section 39.169, Utilities Code, and amends them, as follows:
Sec. 39.169. INTERCONNECTION OF FACILITY IN ERCOT POWER REGION TO FACILITY IN OTHER REGION OR STATE. (a) Defines "facility." Prohibits a person, including an electric cooperative or a municipally owned utility, from taking an action that would result in the interconnection of a facility in the Electric Reliability Council of Texas (ERCOT) power region to a facility located wholly or partly outside of this state, or the interconnection of a facility in the ERCOT power region to a facility that is connected directly or indirectly with a facility located wholly or partly outside of this state, unless:
(1) the Public Utility Commission of Texas (PUC) first determines that the interconnection is consistent with free market principles and does not bring control of the Texas electric grid under federal jurisdiction; and
(2) if applicable, the person complies with the requirements of Chapter 37 (Certificates of Convenience and Necessity) and Subsection (b) of this section.
(b) Redesignates existing Subsection (c-1) as Subsection (b). Requires a person seeking to make an interconnection described by Subsection (a) to obtain the determination under (a)(1) from the PUC not later than the 180th day before the date the person seeks any order from the Federal Energy Regulatory Commission (FERC) related to the interconnection. Requires the PUC to apply Section 37.056 (Grant or Denial of Certificate) in considering an application for a certificate of convenience and necessity to which this section applies, rather than under this subsection.
Deletes existing text prohibiting a person, notwithstanding any other provision of Title 2 (Public Utility Regulatory Act) except Section 11.009 (Construction With Federal Authority), and except as provided by Subsection (c-2), including an electric utility or municipally owned utility, from interconnecting a facility to the ERCOT transmission grid that enables additional power to be imported into or exported out of the ERCOT power grid unless the person obtains a certificate from the PUC stating that public convenience and necessity requires or will require the interconnection. Deletes existing text requiring the person to apply for the certificate not later than the 180th day before the date the person seeks any order from FERC related to the interconnection. Deletes existing text requiring the PUC, in addition, to determine that the application is consistent with the public interest before granting the certificate. Deletes existing text providing that this subsection does not apply to a facility that is in service on December 31, 2014.
(c) Redesignates existing Subsection (c-2) as Subsection (c) and makes a nonsubstantive change.
(d) Redesignates existing Subsection (c-3) as Subsection (d). Provides that nothing in this section, rather than in Subsection (c-1) or (c-2), is intended to restrict the authority of the PUC or the independent organization certified under Section 39.151 (Essential Organizations) for the ERCOT power region to adopt rules or protocols of general applicability.
SECTION 2. Makes application of Section 39.169(a), Utilities Code, as added by this Act, prospective.
SECTION 3. Effective date: upon passage or September 1, 2025.