Bill Text: TX HB1500 | 2023-2024 | 88th Legislature | Engrossed

NOTE: There are more recent revisions of this legislation. Read Latest Draft

---

Bill Title: Relating to the continuation and functions of the Public Utility Commission of Texas and the Office of Public Utility Counsel, and the functions of the independent organization certified for the ERCOT power region; increasing an administrative penalty.

Spectrum: Moderate Partisan Bill (Republican 5-1)

Status: (Passed) 2023-06-09 - Effective on 9/1/23 [HB1500 Detail]

Download: Texas-2023-HB1500-Engrossed.html

---

By: Holland, Bell of Kaufman, Canales, H.B. No. 1500
Goldman, Clardy

A BILL TO BE ENTITLED
AN ACT
relating to the continuation and functions of the Public Utility
Commission of Texas and the Office of Public Utility Counsel, and
the functions of the independent organization certified for the
ERCOT power region.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 12.005, Utilities Code, is amended to
read as follows:
Sec. 12.005. APPLICATION OF SUNSET ACT. The Public Utility
Commission of Texas is subject to Chapter 325, Government Code
(Texas Sunset Act). Unless continued in existence as provided by
that chapter or by Chapter 39, the commission is abolished [and this
title expires] September 1, 2029 [2023].
SECTION 2. Section 12.059, Utilities Code, is amended to
read as follows:
Sec. 12.059. TRAINING PROGRAM FOR COMMISSIONERS. (a) A
person who is appointed to and qualifies for office as a member of
the commission may not vote, deliberate, or be counted as a member
in attendance at a meeting of the commission until the person
completes a [Before a commissioner may assume the commissioner's
duties and before the commissioner may be confirmed by the senate,
the commissioner must complete at least one course of the] training
program that complies with [established under] this section.
(b) The [A] training program must [established under this
section shall] provide the person with information [to the
commissioner] regarding:
(1) the law governing [enabling legislation that
created the] commission operations [and its policymaking body to
which the commissioner is appointed to serve];
(2) the programs, functions, rules, and budget of
[operated by] the commission;
(3) the scope [role and functions] of and limitations
on the rulemaking authority of the commission;
(4) the results [rules] of the most recent formal
audit of the commission [with an emphasis on the rules that relate
to disciplinary and investigatory authority];
(5) the requirements of:
(A) laws relating to open meetings, public
information, administrative procedure, and disclosing conflicts of
interest; and
(B) other laws applicable to members of a state
policy-making body in performing their duties [current budget for
the commission]; and
(6) [the results of the most recent formal audit of the
commission;
[(7) the requirements of Chapters 551, 552, and 2001,
Government Code;
[(8) the requirements of the conflict of interest laws
and other laws relating to public officials; and
[(9)] any applicable ethics policies adopted by the
commission or the Texas Ethics Commission.
(c) A person [who is] appointed to the commission is
entitled to reimbursement, as provided by the General
Appropriations Act, for the travel expenses incurred in attending
the training program regardless of whether the attendance at the
program occurs before or after the person qualifies for office.
(d) The executive director of the commission shall create a
training manual that includes the information required by
Subsection (b). The executive director shall distribute a copy of
the training manual annually to each member of the commission. Each
member of the commission shall sign and submit to the executive
director a statement acknowledging that the member received and has
reviewed the training manual.
SECTION 3. Section 12.202, Utilities Code, is amended by
adding Subsections (a-1) and (a-2) to read as follows:
(a-1) The policies adopted under this section must require
the agenda for each regular commission meeting to include public
testimony as a meeting agenda item and allow members of the public
to comment on:
(1) each meeting agenda item unrelated to a contested
case; and
(2) other matters under the commission's jurisdiction.
(a-2) The commission may prohibit public comment at a
regular commission meeting on a meeting agenda item related to a
contested case.
SECTION 4. Section 12.203, Utilities Code, is amended to
read as follows:
Sec. 12.203. BIENNIAL REPORT. (a) Not later than January
15 of each odd-numbered year, the commission shall prepare a
written report that includes:
(1) suggestions regarding modification and
improvement of the commission's statutory authority and for the
improvement of utility regulation in general, including the
regulation of water and sewer service under Chapter 13, Water Code,
that the commission considers appropriate for protecting and
furthering the interest of the public;
(2) a report on the scope of competition in the
electric and telecommunications markets that includes:
(A) an assessment of:
(i) the effect of competition and industry
restructuring on customers in both competitive and noncompetitive
electric markets; and
(ii) the effect of competition on the rates
and availability of electric services for residential and small
commercial customers;
(B) an assessment of the effect of competition
on:
(i) customers in both competitive and
noncompetitive telecommunications markets, with a specific focus
on rural markets; and
(ii) the rates and availability of
telecommunications services for residential and business
customers, including any effects on universal service; and
(C) a summary of commission action over the
preceding two years that reflects changes in the scope of
competition in regulated electric and telecommunications markets;
and
(3) recommendations for legislation that the
commission determines appropriate to promote the public interest in
the context of partially competitive electric and
telecommunications markets.
(b) A telecommunications utility, as defined by Section
51.002, shall cooperate with the commission as necessary for the
commission to satisfy the requirements of this section.
SECTION 5. Subchapter E, Chapter 12, Utilities Code, is
amended by adding Section 12.205 to read as follows:
Sec. 12.205. STRATEGIC COMMUNICATIONS PLAN. The commission
shall:
(1) develop an agency-wide plan for:
(A) improving the effectiveness of commission
communications with the public, market participants, and other
relevant audiences; and
(B) responding to changing communications needs;
(2) include in the plan required by Subdivision (1)
goals, objectives, and metrics to assess commission efforts; and
(3) update the plan required by Subdivision (1) at
least once every two years.
SECTION 6. Section 13.002, Utilities Code, is amended to
read as follows:
Sec. 13.002. APPLICATION OF SUNSET ACT. The Office of
Public Utility Counsel is subject to Chapter 325, Government Code
(Texas Sunset Act). Unless continued in existence as provided by
that chapter, the office is abolished [and this chapter expires]
September 1, 2029 [2023].
SECTION 7. Section 39.151, Utilities Code, is amended by
amending Subsections (d), (g-1), and (g-6) and adding Subsection
(g-7) to read as follows:
(d) The commission shall adopt and enforce rules relating to
the reliability of the regional electrical network and accounting
for the production and delivery of electricity among generators and
all other market participants, or may delegate those
responsibilities to an independent organization [responsibilities
for adopting or enforcing such rules. Rules adopted by an
independent organization and enforcement actions taken by the
organization under delegated authority from the commission are
subject to commission oversight and review and may not take effect
before receiving commission approval]. An independent organization
certified by the commission is directly responsible and accountable
to the commission. The commission has complete authority to
oversee and investigate the independent organization's finances,
budget, and operations as necessary to ensure the organization's
accountability and to ensure that the organization adequately
performs the organization's functions and duties. The independent
organization shall fully cooperate with the commission in the
commission's oversight and investigatory functions. The
commission may take appropriate action against an independent
organization that does not adequately perform the organization's
functions or duties or does not comply with this section, including
decertifying the organization or assessing an administrative
penalty against the organization. The commission by rule shall
adopt procedures governing decertification of an independent
organization, selecting and certifying a successor organization,
and transferring assets to the successor organization to ensure
continuity of operations in the region. The commission may not
implement, by order or by rule, a requirement that is contrary to an
applicable federal law or rule.
(g-1) The [independent organization's] bylaws of an
independent organization certified for the ERCOT power region [or
protocols] must be approved by [the commission] and [must] reflect
the input of the commission. The bylaws must require that every
member of the governing body be a resident of this state and must
prohibit a legislator from serving as a member. The governing body
must be composed of:
(1) two members [the chairman] of the commission as
[an] ex officio nonvoting members:
(A) one of whom must be the presiding officer of
the commission; and
(B) one of whom must be designated by the
presiding officer of the commission to serve a one-year term on the
governing body [member];
(2) the counsellor as an ex officio voting member
representing residential and small commercial consumer interests;
(3) the chief executive officer of the independent
organization as an ex officio nonvoting member; and
(4) eight members selected by the selection committee
under Section 39.1513 with executive-level experience in any of the
following professions:
(A) finance;
(B) business;
(C) engineering, including electrical
engineering;
(D) trading;
(E) risk management;
(F) law; or
(G) electric market design.
(g-6) In this subsection, a reference to a protocol includes
a rule. Protocols adopted by an independent organization and
enforcement actions taken by the organization under delegated
authority from the commission are subject to commission oversight
and review and may not take effect before receiving commission
approval. To maintain certification as an independent organization
under this section, the organization's governing body must
establish and implement a formal process for adopting new protocols
or revisions to existing protocols. The process must require that
new or revised protocols may not take effect until the commission
approves a market impact statement describing the new or revised
protocols. The commission may approve, reject, or remand with
suggested modifications to the independent organization's
governing body protocols adopted by the organization.
(g-7) The presiding officer of the commission shall
designate commissioners to serve terms on the independent
organization's governing body under Subsection (g-1)(1)(B) in the
order in which the commissioners were first appointed to the
commission. A commissioner may not serve an additional term until
each commissioner has served a term.
SECTION 8. Section 39.1511, Utilities Code, is amended by
amending Subsection (a) and adding Subsection (a-1) to read as
follows:
(a) Meetings of the governing body of an independent
organization certified under Section 39.151 and meetings of a
subcommittee that includes a member of the governing body must be
open to the public. The bylaws of the independent organization and
the rules of the commission may provide for the governing body or
subcommittee to enter into executive session closed to the public
only to address a matter that the independent organization would be
authorized to consider in a closed meeting if the independent
organization were governed under Chapter 551, Government Code
[sensitive matters such as confidential personnel information,
contracts, lawsuits, competitively sensitive information, or other
information related to the security of the regional electrical
network].
(a-1) An independent organization's governing body or a
subcommittee may adopt a policy allowing the governing body or
subcommittee to enter into an executive session closed to the
public and commissioners, including the commissioners serving as ex
officio nonvoting members, only to address a contested case, as
defined by Section 2001.003, Government Code, or a personnel matter
that is unrelated to members of the governing body.
SECTION 9. Subchapter D, Chapter 39, Utilities Code, is
amended by adding Section 39.1514 to read as follows:
Sec. 39.1514. COMMISSION DIRECTIVES TO INDEPENDENT
ORGANIZATION. (a) The commission may not use a verbal directive
to direct an independent organization certified under Section
39.151 to take an official action. The commission may direct the
organization to take an official action only through:
(1) a contested case;
(2) rulemaking;
(3) a memorandum; or
(4) a written order.
(b) The commission by rule shall:
(1) specify the types of directives the commission may
issue through a contested case, rulemaking, memorandum, or written
order;
(2) establish the conditions under which a commission
vote is required before issuing a directive;
(3) require that proposed commission directives be
included as an item on a commission meeting agenda and require the
commission to allow members of the public an opportunity to comment
on the agenda item; and
(4) establish a reasonable timeline for the release
before a commission meeting of discussion materials relevant to
any proposed commission directives included as agenda items for
that meeting.
(c) Notwithstanding another provision of this section, the
commission may use a verbal directive to direct an independent
organization to take an official action in an urgent or emergency
situation that poses an imminent threat to public health, public
safety, or the reliability of the power grid. If the commission
uses a verbal directive, the commission shall provide written
documentation of the directive to the independent organization not
later than 72 hours after the urgent or emergency situation ends.
The commission by rule shall establish criteria for determining
whether a situation is urgent or an emergency under this subsection
and establish a process by which the commission will issue
directives to the independent organization under this subsection.
SECTION 10. Section 39.155(d), Utilities Code, is amended
to read as follows:
(d) In a qualifying power region, the report [reports]
required by Subsection (c) [Subsections (b) and (c)] shall be
submitted by the independent organization or organizations having
authority over the power region or discrete areas thereof.
SECTION 11. Section 39.157(f), Utilities Code, is amended
to read as follows:
(f) Following review of the annual report [reports]
submitted to it under Section 39.155(c) [Sections 39.155(b) and
(c)], the commission shall determine whether specific transmission
or distribution constraints or bottlenecks within this state give
rise to market power in specific geographic markets in the state.
The commission, on a finding that specific transmission or
distribution constraints or bottlenecks within this state give rise
to market power, may order reasonable mitigation of that potential
market power by ordering, under Section 39.203(e), one or more
electric utilities or transmission and distribution utilities to
construct additional transmission or distribution capacity, or
both, subject to the certification provisions of this title.
SECTION 12. (a) This section takes effect only if the Act
of the 88th Legislature, Regular Session, 2023, relating to
nonsubstantive additions to and corrections in enacted codes
becomes law.
(b) Subchapter D, Chapter 39, Utilities Code, is amended by
adding Sections 39.166 and 39.167 to read as follows:
Sec. 39.166. ELECTRIC INDUSTRY REPORT. (a) Not later than
January 15 of each odd-numbered year, the commission, in
consultation with the independent organization certified under
Section 39.151 for the ERCOT power region, shall prepare and submit
to the legislature an electric industry report.
(b) Each electric industry report submitted under this
section must:
(1) identify existing and potential transmission and
distribution constraints and system needs within the ERCOT power
region, alternatives for meeting system needs, and recommendations
for meeting system needs;
(2) summarize key findings from:
(A) the grid reliability assessment conducted
under Section 39.165; and
(B) the report required by Section 39.904(k);
(3) outline basic information regarding the electric
grid and market in this state, including generation capacity,
customer demand, and transmission capacity currently installed on
the grid and projected in the future; and
(4) be presented in plain language that is readily
understandable by a person with limited knowledge of the electric
industry.
Sec. 39.167. CONFLICTS OF INTEREST REPORT. The commission
and the independent organization certified under Section 39.151 for
the ERCOT power region annually shall review statutes, rules,
protocols, and bylaws that apply to conflicts of interest for
commissioners and for members of the governing body of the
independent organization and submit to the legislature a report on
the effects the statutes, rules, protocols, and bylaws have on the
ability of the commission and the independent organization to
fulfill their duties.
SECTION 13. (a) This section takes effect only if the Act of
the 88th Legislature, Regular Session, 2023, relating to
nonsubstantive additions to and corrections in enacted codes does
not become law.
(b) Subchapter D, Chapter 39, Utilities Code, is amended by
adding Sections 39.166 and 39.167 to read as follows:
Sec. 39.166. ELECTRIC INDUSTRY REPORT. (a) Not later than
January 15 of each odd-numbered year, the commission, in
consultation with the independent organization certified under
Section 39.151 for the ERCOT power region, shall prepare and submit
to the legislature an electric industry report.
(b) Each electric industry report submitted under this
section must:
(1) identify existing and potential transmission and
distribution constraints and system needs within the ERCOT power
region, alternatives for meeting system needs, and recommendations
for meeting system needs;
(2) summarize key findings from:
(A) the grid reliability assessment conducted
under Section 39.159, as added by Chapter 876 (S.B. 1281), Acts of
the 87th Legislature, Regular Session, 2021; and
(B) the report required by Section 39.904(k);
(3) outline basic information regarding the electric
grid and market in this state, including generation capacity,
customer demand, and transmission capacity currently installed on
the grid and projected in the future; and
(4) be presented in plain language that is readily
understandable by a person with limited knowledge of the electric
industry.
Sec. 39.167. CONFLICTS OF INTEREST REPORT. The commission
and the independent organization certified under Section 39.151 for
the ERCOT power region annually shall review statutes, rules,
protocols, and bylaws that apply to conflicts of interest for
commissioners and for members of the governing body of the
independent organization and submit to the legislature a report on
the effects the statutes, rules, protocols, and bylaws have on the
ability of the commission and the independent organization to
fulfill their duties.
SECTION 14. Section 39.203(i), Utilities Code, is amended
to read as follows:
(i) The commission, in cooperation with transmission and
distribution utilities and the ERCOT independent system operator,
shall study whether existing transmission and distribution
planning processes are sufficient to provide adequate
infrastructure for seawater desalination projects. If the
commission determines that statutory changes are needed to ensure
that adequate infrastructure is developed for projects of that
kind, the commission shall include recommendations in the report
required by Section 12.203 [31.003].
SECTION 15. Section 39.206(q), Utilities Code, is amended
to read as follows:
(q) The commission shall, in conjunction with the Nuclear
Regulatory Commission, investigate the development of a mechanism
whereby the State of Texas could ensure that funds for
decommissioning will be obtained when necessary in the same manner
as if the State of Texas were the licensee under federal law. [The
commission shall file legislative recommendations regarding any
changes in law that may be necessary to carry out the purposes of
this subsection prior to January 15, 2009, which may be combined
with the report required by Section 31.003.]
SECTION 16. Section 39.408(g), Utilities Code, is amended
to read as follows:
(g) This section expires September 1, 2029 [2023].
SECTION 17. Section 39.4525(g), Utilities Code, is amended
to read as follows:
(g) This section expires September 1, 2029 [2023].
SECTION 18. Section 39.504(g), Utilities Code, is amended
to read as follows:
(g) This section expires September 1, 2029 [2023].
SECTION 19. Section 39.904(k), Utilities Code, is amended
to read as follows:
(k) The commission and the independent organization
certified under Section 39.151 for the ERCOT power region [for
ERCOT] shall study the need for increased transmission and
generation capacity throughout this state and report to the
legislature the results of the study and any recommendations for
legislation. The report must be filed with the legislature not
later than December 31 of each even-numbered year [and may be filed
as a part of the report required by Subsection (j)].
SECTION 20. Section 39.9055, Utilities Code, is amended to
read as follows:
Sec. 39.9055. EXAMINATION OF DEMAND RESPONSE POTENTIAL OF
SEAWATER DESALINATION PROJECTS. The commission and the ERCOT
independent system operator shall study the potential for seawater
desalination projects to participate in existing demand response
opportunities in the ERCOT market. To the extent feasible, the
study shall determine whether the operational characteristics of
seawater desalination projects enable projects of that kind to
participate in ERCOT-operated ancillary services markets or other
competitively supplied demand response opportunities. The study
shall also determine the potential economic benefit to a seawater
desalination project if the project is able to reduce its demand
during peak pricing periods. The commission shall include the
results of the study in the report required by Section 12.203
[31.003].
SECTION 21. Section 39.908, Utilities Code, is amended to
read as follows:
Sec. 39.908. EFFECT OF SUNSET PROVISION. [(a)] If the
commission is abolished under Section 12.005 or other law, the [and
the other provisions of this title expire as provided by Chapter
325, Government Code (Texas Sunset Act), this subchapter, including
the provisions of this title referred to in this subchapter,
continues in full force and effect and does not expire.
[(b) The] authorities, duties, and functions of the
commission under this chapter shall be performed and carried out by
a successor agency to be designated by the legislature before
abolishment of the commission or, if the legislature does not
designate the successor, by the secretary of state.
SECTION 22. Section 52.060, Utilities Code, is amended to
read as follows:
Sec. 52.060. ADMINISTRATIVE FEE OR ASSESSMENT. The
commission may prescribe and collect a fee or assessment from local
exchange companies necessary to recover the cost to the commission
and to the office of activities carried out and services provided
under this subchapter and Section 12.203 [52.006].
SECTION 23. Section 13.4132, Water Code, is amended by
adding Subsection (b-1) to read as follows:
(b-1) Notwithstanding Section 5.505, the term of an
emergency order issued under this section by the utility commission
or the commission may not exceed 360 days. The emergency order may
be renewed:
(1) once for a period not to exceed 360 days; or
(2) if the utility is undergoing a sale, transfer,
merger, consolidation, or acquisition required to be reported to
the utility commission under Section 13.301, for a reasonable time
until the sale, transfer, merger, consolidation, or acquisition is
complete.
SECTION 24. (a) The following provisions are repealed:
(1) Section 304.201, Business & Commerce Code;
(2) Section 31.003, Utilities Code;
(3) Section 39.155(b), Utilities Code;
(4) Section 39.904(j), Utilities Code; and
(5) Section 52.006, Utilities Code.
(b) Section 34, Chapter 426 (S.B. 3), Acts of the 87th
Legislature, Regular Session, 2021, is repealed.
SECTION 25. The presiding officer of the Public Utility
Commission of Texas shall designate a commissioner to serve a term
on the governing body of the independent organization certified
under Section 39.151, Utilities Code, for the ERCOT power region
that begins January 1, 2024, to comply with Section 39.151(g-1),
Utilities Code, as amended by this Act.
SECTION 26. (a) Except as provided by Subsection (b) of
this section, Section 12.059, Utilities Code, as amended by this
Act, applies to a member of the Public Utility Commission of Texas
appointed before, on, or after the effective date of this Act.
(b) A member of the Public Utility Commission of Texas who,
before the effective date of this Act, completed the training
program required by Section 12.059, Utilities Code, as that law
existed before the effective date of this Act, is only required to
complete additional training on the subjects added by this Act to
the training program required by Section 12.059, Utilities Code. A
commission member described by this subsection may not vote,
deliberate, or be counted as a member in attendance at a meeting of
the commission held on or after December 1, 2023, until the member
completes the additional training.
SECTION 27. This Act takes effect September 1, 2023.