By: Johnson, Eckhardt	S.B. No. 1212

	A BILL TO BE ENTITLED
	AN ACT
	relating to the interconnection and integration of distributed
	energy resources.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 31.002, Utilities Code, is amended by
	adding Subdivisions (2-a) and (4-c) and amending Subdivision (10)
	to read as follows:
	(2-a)  "Aggregated distributed energy resource" means
	a group of distributed energy resources joined together to be
	operated as a single distributed energy resource, where each
	individual resource in the aggregation produces not more than 1.5
	megawatts of electricity, subject to an increase or decrease by
	commission rule if the commission determines that a different
	capacity size limit is appropriate and does not adversely affect
	the ERCOT power region or distribution system reliability.
	(4-c)  "Distributed energy resource" means a source of
	electricity connected at a voltage less than 60 kilovolts,
	including electric energy storage, distributed generation,
	distributed natural gas generation, or electric vehicles that
	provide electricity onto the distribution system. The term does
	not include a facility that provides temporary emergency electric
	energy under Section 39.918.
	(10)  "Power generation company" means a person[,
	including a person who owns or operates a distributed natural gas
	generation facility,] that:
	(A)  generates electricity that is intended to be
	sold at wholesale, including the owner or operator of electric
	energy storage equipment or facilities to which Subchapter E,
	Chapter 35, applies;
	(B)  does not own a transmission or distribution
	facility in this state other than an essential interconnecting
	facility, a facility not dedicated to public use, or a facility
	otherwise excluded from the definition of "electric utility" under
	this section; and
	(C)  does not have a certificated service area,
	although its affiliated electric utility or transmission and
	distribution utility may have a certificated service area.
	SECTION 2.  Subchapter H, Chapter 39, Utilities Code, is
	amended by adding Section 39.3515 to read as follows:
	Sec. 39.3515.  REGISTRATION OF DISTRIBUTED ENERGY
	RESOURCES. (a) An owner or operator of a distributed energy
	resource may provide energy or ancillary services in the wholesale
	market in the ERCOT power region through generating electricity and
	providing that electricity onto a distribution system only if:
	(1)  the owner or operator is registered with the
	commission as a power generation company under Section 39.351 and
	authorized by the independent organization certified under Section
	39.151 for the ERCOT power region; or
	(2)  the distributed energy resource:
	(A)  is part of an aggregated distributed energy
	resource that is included in the registration of a power generation
	company under Section 39.351 and the independent organization
	certified under Section 39.151 for the ERCOT power region; and
	(B)  has complied with the interconnection
	requirements of the interconnecting transmission and distribution
	utility.
	(b)  The commission may establish simplified filing
	requirements to facilitate the registration of aggregated
	distributed energy resources. The filing requirements must require
	the registrant to disclose the name of the power generation company
	that operates the aggregated distributed energy resource.
	(c)  Notwithstanding any other provision of this chapter, a
	facility described by Section 39.914 or 39.916 may not be
	aggregated unless the facility is interconnected and operated in
	parallel with the distribution system, and:
	(1)  electricity from the facility provides energy or
	ancillary services in the wholesale market in the ERCOT power
	region in a manner described by this section; or
	(2)  the estimated annual amount of electricity to be
	produced by the facility is more than the retail electric
	customer's estimated annual electricity consumption at the time of
	the facility's installation or the actual amount of electricity
	produced by the facility was more than the retail electric
	customer's actual electricity consumption in the year prior to the
	facility's installation.
	(d)  The commission by rule shall:
	(1)  authorize the registrations described by
	Subsection (a); and
	(2)  adopt procedures for the creation of aggregated
	distributed energy resources.
	SECTION 3.  Chapter 39, Utilities Code, is amended by adding
	Subchapter O to read as follows:
	SUBCHAPTER O. INTERCONNECTION OF DISTRIBUTED ENERGY RESOURCES
	Sec. 39.701.  METERING EQUIPMENT AND INFORMATION. An
	interconnecting transmission and distribution utility is not
	required to provide an owner or operator of a distributed energy
	resource access to the utility's meter equipment if essential
	metering information is made available by the utility or
	cooperative.
	Sec. 39.702.  INTEGRATION AND COST RECOVERY. (a) The
	commission by rule shall establish for the ERCOT power region:
	(1)  requirements for the dispatchability,
	reliability, and other characteristics of each type or
	classification of distributed energy resource;
	(2)  appropriate disclosure requirements and other
	customer protections for residential and small commercial
	customers of providers of aggregated distributed energy services;
	(3)  information an owner or operator of a distributed
	energy resource must provide to the interconnecting transmission
	and distribution utility to ensure the resource will not adversely
	affect the transmission or distribution system;
	(4)  interconnection guidelines that address:
	(A)  the determination of whether a given
	interconnection or combination of interconnections would exceed a
	transmission and distribution utility's system capacity in a
	particular location;
	(B)  considerations for feeder locations related
	to distributed energy resources;
	(C)  considerations of the size or capacity of a
	distributed energy resource;
	(D)  the assessment by the interconnecting
	transmission and distribution utility of potential impacts to other
	customers in the area of the distributed energy resource; and
	(E)  other operating parameters necessary for the
	transmission and distribution utility's reliable operation of its
	transmission and distribution system;
	(5)  a methodology for the appropriate allocation and
	recovery of the transmission and distribution utility's costs to
	interconnect a distributed energy resource; and
	(6)  requirements for the independent organization
	certified under Section 39.151 for the ERCOT power region to report
	to the commission periodically:
	(A)  the categories and generation levels of
	distributed energy resources allowed to participate in the ERCOT
	wholesale market;
	(B)  the categories and megawatt levels of
	aggregated distributed energy resources allowed to participate in
	the ERCOT wholesale market;
	(C)  performance metrics for distributed energy
	resources allowed to participate in the ERCOT wholesale market; and
	(D)  other information the commission may
	require.
	(b)  The commission shall authorize a transmission and
	distribution utility to:
	(1)  defer for recovery in a later ratemaking
	proceeding the incremental operations and maintenance expenses, or
	other expenses, and the return, not otherwise recovered in a rate
	proceeding, associated with the installation, modification,
	upgrade, or maintenance of its transmission or distribution
	facilities required by an interconnection with a distributed energy
	resource; and
	(2)  request recovery of the costs associated with an
	interconnection with a distributed energy resource, including any
	deferred expenses, through a proceeding under Section 35.004 or
	36.210 or in another ratemaking proceeding regardless of whether
	the utility or cooperative first requested recovery in a base-rate
	proceeding.
	(c)  Facilities required by an interconnection with a
	distributed energy resource are considered used and useful in
	providing service to the public and are prudent and includable in
	the rate base, regardless of the extent of the actual use of the
	facilities.
	(d)  This subchapter does not:
	(1)  require or authorize a distribution service
	provider to procure distributed energy resource services to enable
	the operation of the distribution system;
	(2)  require a distribution service provider to
	disclose to any third party, except as required by the independent
	system operator, the provider's system planning information,
	studies, models, critical infrastructure information, or other
	confidential information;
	(3)  diminish a distribution service provider's rights
	or obligations to own or operate its distribution system and
	provide electric delivery service to retail customers in the
	provider's certificated service area;
	(4)  obligate a distribution service provider to
	interconnect a distributed energy resource with a capacity equal to
	or greater than 10 megawatts; or
	(5)  prohibit an interconnecting distribution service
	provider from shedding a distributed energy resource, or otherwise
	obligate an interconnecting distribution service provider to
	provide preferential treatment to feeders with distributed energy
	resources or prevent a transmission and distribution utility from
	fulfilling its load shedding obligations during an involuntary load
	shedding event initiated by the independent system operator or a
	planned or unplanned outage of the distribution system.
	Sec. 39.703.  LIABILITY. An interconnecting transmission
	and distribution utility or retail electric provider providing
	service to a distributed energy resource to which this subchapter
	applies is not liable for:
	(1)  a violation of reliability or service metrics
	caused by distributed energy resource operations that violate its
	interconnection agreement; or
	(2)  a distributed energy resource's inability or
	failure to provide services that violate its interconnection
	agreement or a penalty for such inability or failure.
	SECTION 4.  (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 Z, Chapter 39, Utilities Code, is amended by
	adding Section 39.9166 to read as follows:
	Sec. 39.9166.  DISTRIBUTED ENERGY RESOURCES. (a) A
	customer who purchases or leases a distributed energy resource or
	enters into a power purchase agreement for a distributed energy
	resource in the ERCOT power region is entitled to the information
	and disclosures required under Chapter 115, Business & Commerce
	Code, and is entitled to protection from fraudulent, unfair,
	misleading, or deceptive practices.
	(b)  An owner or operator of a distributed energy resource
	may provide energy or ancillary services in the wholesale market in
	the ERCOT power region.
	(c)  A person who owns or operates a distributed energy
	resource in an area in which customer choice has been introduced and
	is part of an aggregated distributed energy resource, or has not
	individually registered with the commission as its own power
	generation company, must sell the surplus electricity that is
	produced by the distributed energy resource and not consumed by the
	owner's premise to the retail electric provider that serves the
	premise's load at a value agreed to between the distributed energy
	resource owner and the retail electric provider that serves the
	premise's load. The value may be an agreed value based on the
	clearing price of energy or ancillary service at the time of day
	that the electricity is made available to the grid.
	(d)  A person who operates an aggregated distributed energy
	resource in an area in which customer choice has been introduced is
	subject to customer protection rules established by the commission
	under Chapter 17 and this chapter.
	(e)  The independent organization certified under Section
	39.151 for the ERCOT power region shall adopt procedures to ensure
	that the amount of electricity purchased from a distributed energy
	resource owner under this section is accounted for when settling
	the total load served by the retail electric provider that serves
	that premise owner's load.
	(f)  A distributed energy resource owner that requests net
	metering services for purposes of this section must have metering
	devices capable of providing measurements consistent with the
	independent organization's settlement requirements.
	(g)  A transmission and distribution utility may provide to
	customers educational information regarding the technical
	requirements for the interconnection of distributed energy
	resources to the distribution system.  The provision of information
	under this subsection is not considered a competitive energy
	service.
	(h)  This section does not apply to a purchase or agreement
	entered into under Section 39.914 or 39.916.
	SECTION 5.  (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 Z, Chapter 39, Utilities Code, is amended by
	adding Section 39.9166 to read as follows:
	Sec. 39.9166.  DISTRIBUTED ENERGY RESOURCES. (a) A
	customer who purchases or leases a distributed energy resource or
	enters into a power purchase agreement for a distributed energy
	resource in the ERCOT power region is entitled to the information
	and disclosures required under Chapter 113, Business & Commerce
	Code, as added by Chapter 561 (S.B. 398), Acts of the 87th
	Legislature, Regular Session, 2021, and is entitled to protection
	from fraudulent, unfair, misleading, or deceptive practices.
	(b)  An owner or operator of a distributed energy resource
	may provide energy or ancillary services in the wholesale market in
	the ERCOT power region.
	(c)  A person who owns or operates a distributed energy
	resource in an area in which customer choice has been introduced and
	is part of an aggregated distributed energy resource, or has not
	individually registered with the commission as its own power
	generation company, must sell the surplus electricity that is
	produced by the distributed energy resource and not consumed by the
	owner's premise to the retail electric provider that serves the
	premise's load at a value agreed to between the distributed energy
	resource owner and the retail electric provider that serves the
	premise's load. The value may be an agreed value based on the
	clearing price of energy or ancillary service at the time of day
	that the electricity is made available to the grid.
	(d)  A person who operates an aggregated distributed energy
	resource in an area in which customer choice has been introduced is
	subject to customer protection rules established by the commission
	under Chapter 17 and this chapter.
	(e)  The independent organization certified under Section
	39.151 for the ERCOT power region shall adopt procedures to ensure
	that the amount of electricity purchased from a distributed energy
	resource owner under this section is accounted for when settling
	the total load served by the retail electric provider that serves
	that premise owner's load.
	(f)  A distributed energy resource owner that requests net
	metering services for purposes of this section must have metering
	devices capable of providing measurements consistent with the
	independent organization's settlement requirements.
	(g)  A transmission and distribution utility may provide to
	customers educational information regarding the technical
	requirements for the interconnection of distributed energy
	resources to the distribution system.  The provision of information
	under this subsection is not considered a competitive energy
	service.
	(h)  This section does not apply to a purchase or agreement
	entered into under Section 39.914 or 39.916.
	SECTION 6.  For the purposes of Section 39.3515(c)(2),
	Utilities Code, as added by this Act, a facility described by
	Section 39.914 or 39.916, Utilities Code, may be registered as an
	aggregated distributed energy resource with the Public Utility
	Commission of Texas if:
	(1)  the estimated annual amount of electricity to be
	produced by the facility was more than the retail electric
	customer's estimated annual electricity consumption at the time of
	installation, if the facility was installed not more than a year
	before the effective date of this Act; or
	(2)  the actual amount of electricity produced by the
	facility was more than the retail electric customer's actual
	electricity consumption in the year prior to the facility's
	installation, if the facility was installed more than a year before
	the effective date of this Act.
	SECTION 7.  As soon as practicable after the effective date
	of this Act, the Public Utility Commission of Texas shall adopt
	rules necessary to implement the changes in law made by this Act.
	SECTION 8.  This Act takes effect immediately if it receives
	a vote of two-thirds of all the members elected to each house, as
	provided by Section 39, Article III, Texas Constitution. If this
	Act does not receive the vote necessary for immediate effect, this
	Act takes effect September 1, 2023.