Bill Text: TX SB15 | 2011-2012 | 82nd Legislature | Engrossed
Bill Title: Relating to state energy policy and the planning of energy development and utilization and to certain related electric power generation issues.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Engrossed - Dead) 2011-05-12 - Left pending in committee [SB15 Detail]
Download: Texas-2011-SB15-Engrossed.html
By: Fraser | S.B. No. 15 |
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relating to state energy policy and the planning of energy | ||
development and utilization and to certain related electric power | ||
generation issues. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
ARTICLE 1 | ||
SECTION 1.01. This article may be cited as the Energy Policy | ||
Act. | ||
SECTION 1.02. The Utilities Code is amended by adding Title | ||
6 to read as follows: | ||
TITLE 6. ENERGY POLICY ACT | ||
CHAPTER 300. STRATEGIC ENERGY PLANNING | ||
SUBCHAPTER A. GENERAL PROVISIONS | ||
Sec. 300.001. PURPOSE AND FINDINGS. (a) This title is | ||
enacted to promote, in accordance with the public interest, the | ||
strategic planning of energy development, production, delivery, | ||
commercialization, and utilization in this state. | ||
(b) The purpose of this title is to establish a statewide | ||
energy policy planning entity and process that recognizes: | ||
(1) public health and general welfare as a critical | ||
concern in the development of energy policies; | ||
(2) energy as a valuable and vital commodity in the | ||
state's economy; | ||
(3) protection of the environment as a major | ||
consideration in the production of energy and utilization of | ||
natural resources; | ||
(4) cost-effective, market-based solutions as a | ||
preferred policy for energy planning; | ||
(5) utilization of Texas-based resources to help | ||
provide energy security, stability, and reliability; and | ||
(6) the importance of portfolio diversity in promoting | ||
energy system flexibility, affordability, and efficiency. | ||
Sec. 300.002. DEFINITIONS. In this title: | ||
(1) "Commission" means the Public Utility Commission | ||
of Texas. | ||
(2) "Council" means the Texas Energy Policy Council. | ||
(3) "Plan" means the statewide energy policy plan. | ||
Sec. 300.003. TEXAS ENERGY POLICY COUNCIL. (a) The Texas | ||
Energy Policy Council is created to develop and present a statewide | ||
energy policy plan to the legislature. The plan must include a | ||
20-year planning horizon and be updated to reflect changing | ||
conditions and should be considered a living document. | ||
(b) The council is composed of 13 members as follows: | ||
(1) the chairman of the Public Utility Commission of | ||
Texas; | ||
(2) the chairman of the Railroad Commission of Texas; | ||
(3) the chairman of the Texas Commission on | ||
Environmental Quality; | ||
(4) the president and chief executive officer of the | ||
Electric Reliability Council of Texas; | ||
(5) the commissioner of the General Land Office; | ||
(6) two members of the senate appointed by the | ||
lieutenant governor; | ||
(7) two members of the house of representatives | ||
appointed by the speaker of the house of representatives; | ||
(8) one member of the academic community with | ||
expertise in energy appointed by the governor; | ||
(9) one member of the academic community with | ||
expertise in environmental issues related to energy appointed by | ||
the governor; | ||
(10) the director of the State Energy Conservation | ||
Office; and | ||
(11) one member of the public with expertise in | ||
low-income energy issues, including the needs of low-income and | ||
vulnerable ratepayers, appointed by the governor. | ||
(c) The governor shall designate the presiding officer from | ||
among the members of the council. | ||
(d) An appointed member of the council serves for a full | ||
planning cycle and may be reappointed at the pleasure of the | ||
appointing official. | ||
(e) The council shall meet at least quarterly in | ||
even-numbered years while developing a plan for submission to the | ||
legislature. The council may meet annually in odd-numbered years | ||
after submitting plans to the legislature. | ||
(f) The council shall develop and implement policies and | ||
procedures that provide the public with reasonable opportunity to | ||
appear before the council and to speak on issues under the | ||
jurisdiction of the council. | ||
(g) The commission is designated as the state agency | ||
responsible for administering the council. Staff from the | ||
commission shall be tasked, as necessary, with assisting the | ||
council in carrying out its duties. | ||
Sec. 300.004. POWERS, DUTIES, AND RESPONSIBILITIES OF | ||
COUNCIL. (a) In developing the plan, the council shall: | ||
(1) encourage cooperation and coordination between | ||
public and private entities regarding energy usage, planning, | ||
research and development, and commercialization; | ||
(2) seek policies that promote a diverse portfolio of | ||
clean, reliable, and competitively priced energy sources; | ||
(3) promote research, pilot projects, and | ||
market-based incentives to explore and expand long-term energy | ||
options; | ||
(4) develop policies to prevent supply interruptions | ||
and infrastructure failure; | ||
(5) examine the impact on the environment of energy | ||
exploration, production, and use; | ||
(6) take into account the statewide and regional water | ||
planning process; | ||
(7) make recommendations for increasing public | ||
knowledge of energy use issues and public awareness of the | ||
importance of more efficient consumption of energy; and | ||
(8) take into account the needs of low-income and | ||
vulnerable Texans. | ||
(b) The council shall submit to the legislature the initial | ||
plan by December 1, 2012. Thereafter, the council shall report to | ||
the legislature by December 1 of each even-numbered year the status | ||
of the plan's implementation and make any recommendations for | ||
legislative action as necessary to implement or revise the plan. | ||
The council may update the plan as necessary to reflect evolving | ||
conditions. | ||
Sec. 300.005. FUELS AND TECHNOLOGIES. (a) The council | ||
shall consider the following fuel sources, types of generation, and | ||
innovative technologies associated with these fuels and types of | ||
generation when creating the plan. These fuels, types of | ||
generation, and technologies include: | ||
(1) oil and natural gas; | ||
(2) coal and lignite; | ||
(3) nuclear; | ||
(4) renewable energy technologies; | ||
(5) geothermal; | ||
(6) methane; | ||
(7) distributed generation; | ||
(8) fuel cells and storage; | ||
(9) water conservation technologies that could be | ||
utilized in the exploration, production, and generation of energy | ||
resources; and | ||
(10) any other fuels and technologies as defined in | ||
Section 39.904(d), including solar and wind technologies. | ||
(b) The council shall develop policies that ensure fuel | ||
resources available to the state are utilized in a balanced and | ||
efficient manner. The council shall consider the economic | ||
viability, price stability and volatility, and environmental | ||
impact of types of fuel and technology when making its | ||
recommendations. The council shall also consider all types of | ||
generation technology to identify in its recommendations current or | ||
potential operational or administrative advantages or | ||
disadvantages of each type of technology to which a protocol of the | ||
Electric Reliability Council of Texas applies. | ||
Sec. 300.006. ENERGY EFFICIENT TECHNOLOGY. (a) In order | ||
to reduce the energy demand of customers in this state, the council | ||
shall consider energy-efficient technologies when formulating the | ||
plan and include them in its recommendations. Energy-efficient | ||
technologies shall be considered for the following: | ||
(1) residential, commercial, industrial, and state | ||
and local energy users; and | ||
(2) any other user group or application the council | ||
deems appropriate. | ||
(b) The council shall consider the economic viability and | ||
competitiveness of new technologies when making its | ||
recommendations. | ||
(c) The council shall consider the ability of | ||
energy-efficient technologies to reduce the demand for energy and | ||
the need for additional transmission capacity in the state and | ||
shall consider opportunities for reducing transmission constraints | ||
by using these technologies. | ||
Sec. 300.007. TRANSMISSION. (a) The council shall | ||
consider and recommend strategies to ensure that customers in this | ||
state have access to reliable energy. | ||
(b) The council shall consider transmission constraints, | ||
and make recommendations in the plan to alleviate or prevent those | ||
constraints, for the following sources of energy: | ||
(1) oil and natural gas; | ||
(2) coal and lignite; | ||
(3) wind and solar; and | ||
(4) electricity. | ||
Sec. 300.008. ALTERNATIVE FUEL VEHICLES. (a) The council | ||
shall consider and make recommendations on strategies and | ||
incentives that promote the use of alternative fuel vehicles such | ||
as natural gas vehicles and plug-in electric vehicles. | ||
(b) The council shall consider the economic feasibility of | ||
alternative fuel vehicles and infrastructure constraints and may | ||
make recommendations on incentives to incorporate and promote these | ||
vehicles as a component of the plan. | ||
Sec. 300.009. ENVIRONMENT. (a) The council, when creating | ||
the plan or in formulating recommendations, shall consider the | ||
effects of energy exploration, production, and consumption on the | ||
environment. | ||
(b) The council shall recommend strategies that protect and | ||
preserve the environment of the state and allow for access to and | ||
the production of safe, economically viable, and reliable sources | ||
of energy. The council shall consider: | ||
(1) air quality; | ||
(2) water quality; | ||
(3) water supply; and | ||
(4) waste disposal. | ||
ARTICLE 2 | ||
SECTION 2.01. Chapter 39, Utilities Code, is amended by | ||
adding Subchapter L to read as follows: | ||
SUBCHAPTER L. REPORT ON RESERVES AND VOLUNTARY EMISSIONS | ||
REDUCTIONS PLAN | ||
Sec. 39.551. STATEMENT OF INTENT. It is not the intent of | ||
this subchapter to: | ||
(1) transfer environmental regulation from the | ||
Railroad Commission of Texas or the Texas Commission on | ||
Environmental Quality to the commission; or | ||
(2) reduce the competitiveness of the existing energy | ||
market in Texas by re-regulating the market or requiring the | ||
decommissioning of any lawfully operating generating plant. | ||
Sec. 39.552. REPORT ON RESERVES. (a) Not later than | ||
December 1, 2011, the Railroad Commission of Texas shall prepare | ||
and submit to the commission a report on coal and gas reserves in | ||
this state that includes information relating to: | ||
(1) natural gas reserves in this state proven and | ||
probable on November 1, 2011; | ||
(2) estimates of the proven and probable natural gas | ||
reserves in this state for each of the next 15 years; | ||
(3) estimates of natural gas prices and potential | ||
price volatility for each of the next 15 years; | ||
(4) coal reserves in this state proven and probable on | ||
November 1, 2011; | ||
(5) estimates of the proven and probable coal reserves | ||
in this state for each of the next 15 years; and | ||
(6) estimates of coal prices and potential price | ||
volatility for each of the next 15 years. | ||
(b) The Railroad Commission of Texas may request financial | ||
information and forecasts from the comptroller to assist the | ||
Railroad Commission of Texas in carrying out its duties under this | ||
section. The comptroller shall provide that information and those | ||
forecasts to the Railroad Commission of Texas as quickly as | ||
possible after receiving such request. | ||
Sec. 39.553. REPORT AND PLAN. (a) The commission shall | ||
prepare a report on electric energy generation in this state. The | ||
report must include an analysis of and policy recommendations for | ||
how to most cost-effectively comply with environmental regulation. | ||
(b) In preparing the report, the commission shall: | ||
(1) analyze information from the reports submitted | ||
under this subchapter by electric generating facilities and the | ||
Railroad Commission of Texas; and | ||
(2) use information already in the possession of | ||
existing regulators by consulting with the Railroad Commission of | ||
Texas, the Texas Commission on Environmental Quality, the Electric | ||
Reliability Council of Texas, the Southwest Power Pool, the | ||
Southeastern Electric Reliability Council, and the Western | ||
Electricity Coordinating Council. | ||
(c) The report must evaluate and consider measures that | ||
will: | ||
(1) maintain electric grid reliability; | ||
(2) ensure the availability of electric energy at | ||
reasonable rates; | ||
(3) reduce air pollution, as defined by Section | ||
382.003, Health and Safety Code; | ||
(4) increase the state's ability to comply with state | ||
and federal clean air standards in nonattainment and | ||
near-nonattainment areas; and | ||
(5) reduce the use of water for electricity generation | ||
in this state. | ||
(d) The report must identify the 10 percent of electric | ||
generation capacity that will be most impacted by compliance with | ||
environmental regulation. | ||
(e) The report must identify combinations of market | ||
factors, plant operating characteristics, federal and state | ||
environmental regulations promulgated after January 1, 2011, and | ||
other conditions that might make it more economically attractive | ||
for the electric generation capacity identified in the report to be | ||
retired rather than comply with the regulations. The market | ||
factors considered in the analysis must include: | ||
(1) long-term prices and price volatility for fuel | ||
sources used to generate electricity in this state; | ||
(2) price projections for the cost of electricity | ||
going forward and factors that are relevant to determining the | ||
market price of electricity; and | ||
(3) the potential impact of the voluntary | ||
decommissioning of existing units of electric generation capacity | ||
from facilities in this state. | ||
(f) The report must consider plant operating | ||
characteristics including variable and fixed operating costs of | ||
electric generation facilities identified in the report. The | ||
analysis must also incorporate a range of costs projected by | ||
credible sources for complying with the specified federal and state | ||
air pollution regulations. In conducting this analysis, the | ||
commission shall consider electric generation facilities in this | ||
state of various vintages, sizes, fuel types, conversion | ||
efficiencies, and emission characteristics. The analysis must: | ||
(1) estimate the amount of electric generation | ||
capacity that is likely to voluntarily be retired rather than incur | ||
the additional expense of complying with the federal and state air | ||
pollution regulations; | ||
(2) provide an analysis of the cost and the impact on | ||
electric rates, and provide price projections, associated with | ||
voluntarily retiring electric generation facilities included in | ||
the report; | ||
(3) identify any additional barriers to the retirement | ||
of the types of electric generation capacity identified and provide | ||
recommendations on how to most cost-effectively and voluntarily | ||
reduce air pollution, including recommendations to accelerate the | ||
permitting process for certain types of low-polluting generation; | ||
and | ||
(4) identify the types, costs, and effects of | ||
incentives to promote the goals of this section. | ||
(g) Not later than October 1, 2012, the commission shall | ||
make a draft of the report available for public review and comment | ||
for a period of not less than 30 days. | ||
(h) Not later than December 1, 2012, the commission shall | ||
finalize and publish the report. | ||
(i) Implementation of the requirements of this section | ||
shall be contingent upon receiving gifts, grants, or donations | ||
sufficient to cover the expenses incurred by the commission. | ||
SECTION 2.02. Section 31.002, Utilities Code, is amended by | ||
adding Subdivision (4-a) and amending Subdivision (10) to read as | ||
follows: | ||
(4-a) "Distributed natural gas generation facility" | ||
means a facility installed on the customer's side of the meter that | ||
uses natural gas to generate not more than 2,000 kilowatts of | ||
electricity. | ||
(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; | ||
(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 2.03. The heading to Subchapter B, Chapter 35, | ||
Utilities Code, is amended to read as follows: | ||
SUBCHAPTER B. EXEMPT WHOLESALE GENERATORS, DISTRIBUTED NATURAL | ||
GAS GENERATION FACILITIES, AND POWER MARKETERS | ||
SECTION 2.04. Subchapter B, Chapter 35, Utilities Code, is | ||
amended by adding Section 35.036 to read as follows: | ||
Sec. 35.036. DISTRIBUTED NATURAL GAS GENERATION | ||
FACILITIES. (a) A person who owns or operates a distributed | ||
natural gas generation facility may sell electric power generated | ||
by the facility. The electric utility, electric cooperative, or | ||
retail electric provider that provides retail electricity service | ||
to the facility may purchase electric power tendered to it by the | ||
owner or operator of the facility at a value agreed to by the | ||
electric utility, electric cooperative, or retail electric | ||
provider and the owner or operator of the facility. The value of | ||
the electric power may be based wholly or partly on the clearing | ||
price of energy at the time of day and at the location at which the | ||
electric power is made available to the electric grid. | ||
(b) At the request of the owner or operator of the | ||
distributed natural gas generation facility, the electric utility | ||
or electric cooperative shall allow the owner or operator of the | ||
facility to use transmission and distribution facilities to | ||
transmit the electric power to another entity that is acceptable to | ||
the owner or operator in accordance with commission rules or a | ||
tariff approved by the Federal Energy Regulatory Commission. | ||
(c) Subject to Subsections (e) and (f), if the owner or | ||
operator of a distributed natural gas generation facility requests | ||
to be interconnected to an electric utility or electric cooperative | ||
that does not have a transmission tariff approved by the Federal | ||
Energy Regulatory Commission, the electric utility or electric | ||
cooperative may recover from the owner or operator of the facility | ||
the reasonable costs of interconnecting the facility with the | ||
electric utility or electric cooperative that are necessary for and | ||
directly attributable to the interconnection of the facility. | ||
(d) Subject to Subsections (e) and (f), an electric utility | ||
or electric cooperative may recover from the owner or operator of a | ||
distributed natural gas generation facility the reasonable costs of | ||
electric facility upgrades and improvements if: | ||
(1) the rated capacity of the distributed natural gas | ||
generation facility is greater than the rated capacity of the | ||
electric utility or electric cooperative; and | ||
(2) the costs are necessary for and directly | ||
attributable to accommodating the distributed natural gas | ||
generation facility's capacity. | ||
(e) An electric utility or electric cooperative may recover | ||
costs under Subsection (c) or (d) only if: | ||
(1) the electric utility or electric cooperative | ||
provides a written good-faith cost estimate to the owner or | ||
operator of the distributed natural gas generation facility; and | ||
(2) the owner or operator of the distributed natural | ||
gas generation facility agrees in writing to pay the reasonable and | ||
necessary costs of interconnection or capacity accommodation | ||
requested by the owner or operator and described in the estimate | ||
before the electric utility or electric cooperative incurs the | ||
costs. | ||
(f) If an electric utility or electric cooperative seeks to | ||
recover from the owner or operator of a distributed natural gas | ||
generation facility an amount that exceeds the amount in the | ||
estimate provided under Subsection (e) by more than five percent, | ||
the commission shall resolve the dispute at the request of the owner | ||
or operator of the facility. | ||
(g) A distributed natural gas generation facility must | ||
comply with emissions limitations established by the Texas | ||
Commission on Environmental Quality for a standard emissions permit | ||
for an electric generation facility unit installed after January 1, | ||
1995. | ||
(h) This section does not require an electric cooperative to | ||
transmit electricity to a retail point of delivery in the | ||
certificated service area of the electric cooperative if the | ||
electric cooperative has not adopted customer choice. | ||
SECTION 2.05. Subsection (c), Section 39.351, Utilities | ||
Code, is amended to read as follows: | ||
(c) The commission may establish simplified filing | ||
requirements for distributed natural gas generation facilities [ |
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SECTION 2.06. Section 39.904, Utilities Code, is amended by | ||
adding Subsection (p) to read as follows: | ||
(p) This section is intended to increase the amount of | ||
renewable generating capacity as provided by Subsection (a) and is | ||
not intended, unless specifically stated otherwise in this section, | ||
to provide operational or competitive advantages through Electric | ||
Reliability Council of Texas protocols to renewable energy | ||
generators to the detriment of other generation resources. | ||
ARTICLE 3 | ||
SECTION 3.01. As soon as practicable after the effective | ||
date of this Act, the designated appointing officials shall appoint | ||
the members to the Texas Energy Policy Council established under | ||
Chapter 300, Utilities Code, as added by this Act. | ||
SECTION 3.02. This Act takes effect September 1, 2011. |