Bill Text: TX SB388 | 2025-2026 | 89th Legislature | Engrossed

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Bill Title: Relating to the legislature's goals for electric generation capacity in this state.

Sponsorship: Partisan Bill (Republican 3)

Status: (Engrossed - Dead) 2025-04-22 - Referred to State Affairs [SB388 Detail]

Download: Texas-2025-SB388-Engrossed.html

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By: King, Bettencourt S.B. No. 388
Kolkhorst

A BILL TO BE ENTITLED
AN ACT
relating to the legislature's goals for electric generation
capacity in this state.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 39.9044, Utilities Code, is amended to
read as follows:
Sec. 39.9044. GOAL FOR DISPATCHABLE GENERATION [NATURAL
GAS]. (a) It is the intent of the legislature that 50 percent of
the megawatts of generating capacity installed in the ERCOT power
region [this state] after January 1, 2026 [2000], be sourced from
dispatchable generation other than battery energy storage [use
natural gas]. [To the extent permitted by law, the commission shall
establish a program to encourage utilities to comply with this
section by using natural gas produced in this state as the
preferential fuel. This section does not apply to generating
capacity for renewable energy technologies.]
(b) The commission shall establish a dispatchable
generation [natural gas energy] credits trading program. Any power
generation company, municipally owned utility, or electric
cooperative that does not satisfy the requirements of Subsection
(a) by directly owning or purchasing rights to dispatchable
generation capacity [using natural gas technologies] shall
purchase sufficient dispatchable generation [natural gas energy]
credits, from sources other than battery energy storage capacity,
to satisfy the requirements of this section [by holding natural gas
energy credits in lieu of capacity from natural gas energy
technologies]. A power generation company that exclusively
operates battery energy storage resources is not required to
purchase dispatchable generation credits under this section.
(c) The [Not later than January 1, 2000, the] commission
shall adopt rules necessary to administer and enforce this section
[and to perform any necessary studies in cooperation with the
Railroad Commission of Texas]. At a minimum, the rules must
[shall]:
(1) describe how the commission will calculate
[establish] the [minimum] annual dispatchable [natural gas]
generation requirement for each power generation company,
municipally owned utility, and electric cooperative operating in
the ERCOT power region [this state] in a manner reasonably
calculated by the commission to produce[, on a statewide basis,]
compliance with the requirement prescribed by Subsection (a); and
(2) specify reasonable performance standards that all
dispatchable generation [natural gas] capacity additions must meet
to count against the requirement prescribed by Subsection (a) and
that:
(A) are designed and implemented [operated] so as
to maximize reliability [the energy output from the capacity
additions in accordance with then-current industry standards and
best industry standards]; and
(B) encourage the development, construction, and
operation of new natural gas energy projects at those sites in the
ERCOT power region [this state] that have the greatest economic
potential for capture and development of this state's
environmentally beneficial natural gas resources.
(d) On or before January 1, 2027, the commission shall
activate the dispatchable generation credits trading program
established by this section if the commission determines that
dispatchable generation may provide less than 55 percent of all new
generating capacity installed in the ERCOT power region after
January 1, 2026. Not later than the 180th day after the date of the
program's activation, the commission by rule shall determine the
conditions for compliance and penalties for noncompliance for each
power generation company, municipally owned utility, and electric
cooperative subject to the program. A power generation company
that exclusively operates battery energy storage resources is not
subject to the program. The commission may adopt rules providing
for alternative compliance payments [The commission, with the
assistance of the Railroad Commission of Texas, shall adopt rules
allowing and encouraging retail electric providers and municipally
owned utilities and electric cooperatives that have adopted
customer choice to market electricity generated using natural gas
produced in this state as environmentally beneficial. The rules
shall allow a provider, municipally owned utility, or cooperative
to:
[(1) emphasize that natural gas produced in this state
is the cleanest-burning fossil fuel; and
[(2) label the electricity generated using natural gas
produced in this state as "green" electricity].
(e) In this section, "dispatchable generation" ["natural
gas technology"] means generating technologies other than
technologies considered non-dispatchable under Section 39.159(a)
[any technology that exclusively relies on natural gas as a primary
fuel source].
(f) The independent organization certified under Section
39.151 for the ERCOT power region shall establish a tracking system
to award dispatchable generation credits to new dispatchable
generation facilities that meet eligibility requirements
established by the commission. Each megawatt of installed
dispatchable generation capacity energized after January 1, 2026,
is eligible for one dispatchable generation credit.
(g) For the purposes of this subsection, a compliance
premium is an additional tradable instrument that is equal to one
dispatchable generation credit. The commission shall require the
independent organization certified under Section 39.151 for the
ERCOT power region to award to a nuclear generation facility
energized after January 1, 2026, one compliance premium in addition
to each dispatchable generation credit awarded to the facility.
(h) Not later than September 15 of each year, the
independent organization certified under Section 39.151 for the
ERCOT power region shall file with the commission a report on all
generating facilities energized in the ERCOT power region during
the prior year that includes a calculation of whether the prior
year's installed dispatchable generation capacity is in compliance
with this section.
(i) Not later than January 15 of each year, the commission
shall notify each power generation company, municipally owned
utility, and electric cooperative of the power generation
company's, municipally owned utility's, or electric cooperative's
dispatchable generation credits requirement for the prior year, if
any.
(j) Each power generation company, municipally owned
utility, or electric cooperative shall retire sufficient
dispatchable generation credits to meet the power generation
company's, municipally owned utility's, or electric cooperative's
dispatchable generation credits requirement not later than an
annual deadline established by the commission.
SECTION 2. Section 40.004, Utilities Code, is amended to
read as follows:
Sec. 40.004. JURISDICTION OF COMMISSION. Except as
specifically otherwise provided in this chapter, the commission has
jurisdiction over municipally owned utilities only for the
following purposes:
(1) to regulate wholesale transmission rates and
service, including terms of access, to the extent provided by
Subchapter A, Chapter 35;
(2) to regulate certification of retail service areas
to the extent provided by Chapter 37;
(3) to regulate rates on appeal under Subchapters D
and E, Chapter 33, subject to Section 40.051(c);
(4) to establish a code of conduct as provided by
Section 39.157(e) applicable to anticompetitive activities and to
affiliate activities limited to structurally unbundled affiliates
of municipally owned utilities, subject to Section 40.054;
(5) to establish terms and conditions for open access
to transmission and distribution facilities for municipally owned
utilities providing customer choice, as provided by Section 39.203;
(6) to administer the dispatchable generation
[natural gas energy] credits trading program under Section
39.9044(b);
(7) to require reports of municipally owned utility
operations only to the extent necessary to:
(A) enable the commission to determine the
aggregate load and energy requirements of the state and the
resources available to serve that load; or
(B) enable the commission to determine
information relating to market power as provided by Section 39.155;
and
(8) to evaluate and monitor the cybersecurity
preparedness of a municipally owned utility described by Section
39.1516(a)(3) or (4).
SECTION 3. This Act takes effect September 1, 2025.