Bill Text: TX SB6 | 2023-2024 | 88th Legislature | Engrossed

---

Bill Title: Relating to the establishment of the Texas Energy Insurance Program and other funding mechanisms to support the construction and operation of electric generating facilities.

Sponsorship: Partisan Bill (Republican 4)

Status: (Engrossed - Dead) 2023-04-17 - Referred to State Affairs [SB6 Detail]

Download: Texas-2023-SB6-Engrossed.html

---

By: Schwertner, King S.B. No. 6
Kolkhorst

A BILL TO BE ENTITLED
AN ACT
relating to the establishment of the Texas Energy Insurance Program
and other funding mechanisms to support the construction and
operation of electric generating facilities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. TEXAS ENERGY INSURANCE PROGRAM
SECTION 1.01. Section 11.003(16), Utilities Code, is
amended to read as follows:
(16) "Rate" includes:
(A) any compensation, tariff, charge, fare,
toll, rental, or classification that is directly or indirectly
demanded, observed, charged, or collected by a public utility or an
entity operating under Section 39.360 for a service, product, or
commodity described in the definition of utility in Section 31.002
or 51.002; and
(B) a rule, practice, or contract affecting the
compensation, tariff, charge, fare, toll, rental, or
classification.
SECTION 1.02. Section 31.002(6), Utilities Code, as amended
by Chapters 255 (H.B. 1572) and 389 (S.B. 1202), Acts of the 87th
Legislature, Regular Session, 2021, is reenacted and amended to
read as follows:
(6) "Electric utility" means a person or river
authority that owns or operates for compensation in this state
equipment or facilities to produce, generate, transmit,
distribute, sell, or furnish electricity in this state. The term
includes a lessee, trustee, or receiver of an electric utility and a
recreational vehicle park owner who does not comply with Subchapter
C, Chapter 184, with regard to the metered sale of electricity at
the recreational vehicle park. The term does not include:
(A) a municipal corporation;
(B) a qualifying facility;
(C) a power generation company;
(D) an exempt wholesale generator;
(E) a power marketer;
(F) a corporation described by Section 32.053 to
the extent the corporation sells electricity exclusively at
wholesale and not to the ultimate consumer;
(G) an electric cooperative;
(H) a retail electric provider;
(I) this state or an agency of this state; [or]
(J) an entity operating under Section 39.360; or
(K) a person not otherwise an electric utility
who:
(i) furnishes an electric service or
commodity only to itself, its employees, or its tenants as an
incident of employment or tenancy, if that service or commodity is
not resold to or used by others;
(ii) owns or operates in this state
equipment or facilities to produce, generate, transmit,
distribute, sell, or furnish electric energy to an electric
utility, if the equipment or facilities are used primarily to
produce and generate electric energy for consumption by that
person;
(iii) owns or operates in this state a
recreational vehicle park that provides metered electric service in
accordance with Subchapter C, Chapter 184; [or]
(iv) owns or operates equipment used solely
to provide electricity charging service for consumption by an
alternatively fueled vehicle, as defined by Section 502.004,
Transportation Code; or
(v) [(iv)] is an electric generation
equipment lessor or operator.
SECTION 1.03. Section 31.002, Utilities Code, is amended by
amending Subdivisions (10), (15), (19), and (20) and adding
Subdivisions (15-a) and (18-a) to read as follows:
(10) "Power generation company":
(A) means a person, including a person who owns
or operates a distributed natural gas generation facility, that:
(i) [(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;
(ii) [(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
(iii) [(C)] does not have a certificated
service area, although its affiliated electric utility or
transmission and distribution utility may have a certificated
service area; and
(B) does not include an entity operating under
Section 39.360.
(15) "Rate" includes:
(A) a compensation, tariff, charge, fare, toll,
rental, or classification that is directly or indirectly demanded,
observed, charged, or collected by an electric utility for a
service, product, or commodity described in the definition of
electric utility in this section and a rule, practice, or contract
affecting the compensation, tariff, charge, fare, toll, rental, or
classification that must be approved by a regulatory authority; or
(B) Texas Energy Insurance Program charges.
(15-a) "Reliability asset" means a gas-fueled
generation asset with on-site fuel storage that is located in the
ERCOT power region and is owned and operated by an entity certified
under Section 39.360 for the purpose of providing power when
dispatched under Section 38.079.
(18-a) "Texas Energy Insurance Program" means the
program established under Section 39.360.
(19) "Transmission and distribution utility" means a
person or river authority that owns or operates for compensation in
this state equipment or facilities to transmit or distribute
electricity, except for facilities necessary to interconnect a
generation facility with the transmission or distribution network,
a facility not dedicated to public use, or a facility otherwise
excluded from the definition of "electric utility" under this
section, in a qualifying power region certified under Section
39.152, but does not include a municipally owned utility, [or] an
electric cooperative, or an entity operating under Section 39.360.
(20) "Transmission service" includes construction or
enlargement of facilities, transmission over distribution
facilities, control area services, scheduling resources,
regulation services, reactive power support, voltage control,
provision of operating reserves, and any other associated
electrical service the commission determines appropriate, except
that, on and after the implementation of customer choice, control
area services, scheduling resources, regulation services,
provision of operating reserves, and reactive power support,
voltage control, [and] other services provided by generation
resources, and services provided by an entity operating under
Section 39.360 are not "transmission service."
SECTION 1.04. Section 33.001, Utilities Code, is amended by
adding Subsection (b) to read as follows:
(b) The governing body of a municipality does not have
jurisdiction over the Texas Energy Insurance Program.
SECTION 1.05. Section 33.008(a), Utilities Code, is amended
to read as follows:
(a) Following the end of the freeze period for a
municipality that has been served by an electric utility, and
following the date a municipally owned utility or an electric
cooperative has implemented customer choice for a municipality that
has been served by that municipally owned utility or electric
cooperative, a municipality may impose on an electric utility,
transmission and distribution utility, municipally owned utility,
or electric cooperative, as appropriate, that provides
distribution service within the municipality a reasonable charge as
specified in Subsection (b) for the use of a municipal street,
alley, or public way to deliver electricity to a retail customer. A
municipality may not impose a charge on:
(1) an electric utility, or transmission and
distribution utility, municipally owned utility, or electric
cooperative for electric service provided outside the
municipality;
(2) a qualifying facility;
(3) an exempt wholesale generator;
(4) a power marketer;
(5) a retail electric provider;
(6) a power generation company;
(7) a person that generates electricity on and after
January 1, 2002; [or]
(8) an aggregator, as that term is defined by Section
39.353; or
(9) an entity operating under Section 39.360.
SECTION 1.06. Section 35.004, Utilities Code, is amended by
amending Subsections (b) and (c) and adding Subsection (i) to read
as follows:
(b) The commission shall ensure that an electric utility or
transmission and distribution utility provides nondiscriminatory
access to wholesale transmission service for qualifying
facilities, exempt wholesale generators, power marketers, power
generation companies, retail electric providers, entities
operating under Section 39.360, and other electric utilities or
transmission and distribution utilities.
(c) When an electric utility, electric cooperative, or
transmission and distribution utility provides wholesale
transmission service within ERCOT at the request of a third party,
the commission shall ensure that the utility recovers the utility's
reasonable costs in providing wholesale transmission services
necessary for the transaction from the entity for which the
transmission is provided so that the utility's other customers do
not bear the costs of the service. An entity operating under
Section 39.360 is not a third party for the purposes of this
subsection.
(i) Services provided by reliability assets when dispatched
under Section 38.079 are not considered to be ancillary services.
SECTION 1.07. Section 35.005, Utilities Code, is amended by
amending Subsection (a) and adding Subsections (d), (e), (f), (g),
and (h) to read as follows:
(a) The commission may require an electric utility to
provide transmission service at wholesale to another electric
utility, a qualifying facility, an exempt wholesale generator, an
entity operating under Section 39.360, or a power marketer and may
determine whether terms for the transmission service are
reasonable.
(d) To ensure customers in the ERCOT power region can
receive promptly the benefits associated with the Texas Energy
Insurance Program, the independent organization certified under
Section 39.151 for the ERCOT power region shall work with electric
utilities to ensure that each reliability asset is fully
interconnected in the ERCOT power region not later than the date the
reliability asset is ready for commercial operation. The
independent organization certified under Section 39.151 for the
ERCOT power region shall give priority to interconnecting each
reliability asset. An electric utility that enters into an
interconnection agreement for a reliability asset shall give
priority to interconnecting the reliability asset and complete
construction of any facilities necessary to interconnect the
reliability asset not later than the date the reliability asset is
ready for commercial operation.
(e) If the commission receives an application under Chapter
37 for a certificate of convenience and necessity related to
facilities necessary to interconnect a reliability asset, as
described by Subsection (d), and does not approve the application
before the 90th day after the date the commission received the
application, the deadline established by Subsection (d) is extended
one day for each day after the 90th day in which the commission does
not approve the application.
(f) The commission may extend the deadline established by
Subsection (d) after notice, hearing, and a determination on a
showing of good cause that fully interconnecting the reliability
asset before the deadline is not feasible.
(g) A transmission facility constructed to interconnect a
reliability asset, as described by Subsection (d), is considered to
be necessary for the service, accommodation, convenience, or safety
of the public for the purposes of Chapter 37.
(h) The commission shall permit an electric utility that
constructs and operates interconnecting facilities for a
reliability asset to recover the reasonable and necessary costs
incurred to interconnect the reliability asset.
SECTION 1.08. Section 36.001, Utilities Code, is amended by
adding Subsection (c) to read as follows:
(c) The commission may regulate the rates of certified
entities in the Texas Energy Insurance Program related to each
reliability asset only to the extent provided by Subchapter K. No
other provision of this chapter applies to rates related to a
reliability asset.
SECTION 1.09. Chapter 36, Utilities Code, is amended by
adding Subchapter K to read as follows:
SUBCHAPTER K. TEXAS ENERGY INSURANCE PROGRAM
Sec. 36.501. PROGRAM RATES. (a) If sufficient funding for
the Texas Energy Insurance Program is not available from state
money, the commission shall set a nonbypassable rate that must be
charged by transmission and distribution utilities, municipally
owned utilities, and electric cooperatives in the ERCOT power
region to provide funding for the Texas Energy Insurance Program.
The transmission and distribution utilities, municipally owned
utilities, and electric cooperatives shall:
(1) charge the nonbypassable rate to their respective
customers or, as appropriate, bill the customer's retail electric
provider; and
(2) remit to the independent organization certified
under Section 39.151 for the ERCOT power region each month the rate
revenue received under Subdivision (1).
(b) The independent organization certified under Section
39.151 for the ERCOT power region shall remit the rate revenue
received under Subsection (a)(2) to the comptroller.
(c) The nonbypassable rate required by Subsection (a) must
be based on all reliability asset rates approved under this
section.
(d) The commission shall set just and reasonable rates for
each entity operating under Section 39.360 for constructing,
owning, operating, and maintaining reliability assets. The rates
must:
(1) except as provided by Subdivision (2), be based on
the entity's just and reasonable costs of providing service,
including variable costs, allowance for funds used during
construction, and all costs of constructing, owning, operating, and
maintaining reliability assets, subject to:
(A) the rate of return on equity accepted by the
entity under Section 39.360(h)(1); and
(B) the total cost of reliability assets accepted
by the entity under Section 39.360(h)(2); and
(2) ensure that a certified entity does not receive
more than $100 million per year in revenue per gigawatt of installed
generation capacity operated by the entity in the program.
(e) In addition to the considerations required by
Subsection (d), the commission shall consider the following
parameters when setting reliability asset rates for a certified
entity:
(1) the entity's capital financing structure,
including:
(A) the capital financing structure of any
corporation owned by or affiliated with the entity; and
(B) the entity's debt-to-equity ratio, including
any debt of the corporate parent that is used to fund any part of the
entity's equity;
(2) a 40-year depreciable life;
(3) allowance for funds used during construction;
(4) costs associated with ownership, operations,
maintenance, fuel, and other variable costs;
(5) reasonably incurred attorney's fees; and
(6) the estimated costs of constructing the
reliability asset before construction has begun and, after the
reliability asset is complete, the actual cost of the asset.
(f) Not later than the 185th day after the date a certified
entity submits to the commission a rate request for a reliability
asset, the commission shall set the reliability asset rate. The
commission shall incorporate the approved rate into the
commission's calculations of the nonbypassable rate under
Subsection (a) and require the newly calculated nonbypassable rate
to be collected beginning on the date the reliability asset is
commissioned.
(g) The comptroller shall disburse in monthly amounts
determined by the commission to each certified entity for which the
commission has set a reliability asset rate under this section the
rate revenue to which the certified entity is entitled.
(h) Not later than the 185th day after the commercial
operation date of a reliability asset, the commission shall:
(1) adjust the previously established rates for the
asset to reflect the actual construction costs if the commission
determines those costs were prudently incurred; and
(2) in collaboration with the independent
organization certified under Section 39.151 for the ERCOT power
region, reconcile any over-collections or under-collections.
(i) The commission shall adjust the rates for each
reliability asset annually to reflect changes to the costs of
ownership, operations and maintenance, and variable costs,
including fuel costs and interest rates. The adjustment must be
based on an annual filing by the certified entity that shows the
actual costs the entity incurred over the preceding year. The
commission shall apply any market revenues earned by the certified
entity for the operation of the reliability asset under Section
38.079 in the prior year as an offset to the rates. The review for a
rate adjustment under this subsection is limited to verifying the
accuracy of the incurred costs, the reconciliation of any
over-collections or under-collections, and the calculation of the
rates. A certified entity is not entitled to recover more than $10
million per year for a single capital cost unless the commission
approves the cost before the entity incurs the cost.
Sec. 36.502. STRANDED COST RECOVERY. The commission by
rule shall establish a process to allow certified entities in the
Texas Energy Insurance Program to recover stranded costs if the
Texas Energy Insurance Program is repealed or lacks sufficient
funding.
SECTION 1.10. Subchapter D, Chapter 38, Utilities Code, is
amended by adding Section 38.079 to read as follows:
Sec. 38.079. TEXAS ENERGY INSURANCE PROGRAM. (a)
Reliability assets may be dispatched by the independent
organization certified under Section 39.151 for the ERCOT power
region in a manner that minimizes wholesale electric market
effects. Dispatch may occur:
(1) when the independent organization determines that
without generation by a regional reliability asset, an overload of
a transmission system element will result in load shed for that
region;
(2) when the independent organization determines that
the operation of a reliability asset is needed to resolve an actual
or anticipated violation of transmission security criteria;
(3) as a last resort to avoid ordering involuntary
load shedding; and
(4) for not more than 336 hours per year for testing
purposes and as directed by the independent organization.
(b) The commission shall require the independent
organization to:
(1) develop deployment criteria and protocols for
reliability assets, including a maximum notice time for deployment,
minimum run times, and other operational requirements needed to
support reliability; and
(2) allow the state to collect revenue under Section
36.501(b) but ensure that reliability assets do not participate in
the day-ahead or real-time ERCOT markets.
(c) The commission shall address long-term resource
adequacy and investment in the wholesale electric market in
conjunction with implementation of the Texas Energy Insurance
Program.
SECTION 1.11. Section 39.154, Utilities Code, is amended by
adding Subsection (f) to read as follows:
(f) For purposes of this section and Section 39.158, a
reliability asset is not considered to be installed generation
capacity.
SECTION 1.12. Section 39.155, Utilities Code, is amended by
amending Subsections (a) and (b) and adding Subsection (e) to read
as follows:
(a) Each person, municipally owned utility, electric
cooperative, and river authority that owns generation facilities
and offers electricity for sale in this state, other than an entity
operating under Section 39.360, shall report to the commission its
installed generation capacity, the total amount of capacity
available for sale to others, the total amount of capacity under
contract to others, the total amount of capacity dedicated to its
own use, its annual wholesale power sales in the state, its annual
retail power sales in the state, and any other information
necessary for the commission to assess market power or the
development of a competitive retail market in the state. The
commission shall by rule prescribe the nature and detail of the
reporting requirements and shall administer those reporting
requirements in a manner that ensures the confidentiality of
competitively sensitive information.
(b) The ERCOT independent system operator shall submit an
annual report to the commission identifying existing and potential
transmission and distribution constraints and system needs within
ERCOT, alternatives for meeting system needs, and recommendations
for meeting system needs. The first report shall be submitted on or
before October 1, 1999. Subsequent reports shall be submitted by
January 15 of each year or as determined necessary by the
commission. The reports required by this subsection must include a
section identifying existing and potential transmission
constraints that could affect the availability of any reliability
asset and include alternatives for meeting identified needs.
(e) Entities operating under Section 39.360 are not
considered to have market power when dispatched by an order of the
independent organization certified under Section 39.151 for the
ERCOT power region.
SECTION 1.13. Subchapter H, Chapter 39, Utilities Code, is
amended by adding Section 39.360 to read as follows:
Sec. 39.360. CERTIFICATION OF TEXAS ENERGY INSURANCE
PROGRAM. (a) The commission may certify one or more entities to
operate as participants in the Texas Energy Insurance Program by
owning and operating reliability assets. The commission may
certify any number of entities to operate any number of reliability
assets, but may not certify a total of more than 10 gigawatts of
generating capacity for the entire Texas Energy Insurance Program.
(b) An entity may not operate as part of the Texas Energy
Insurance Program unless the entity is certified by the commission
under this section.
(c) The commission shall:
(1) issue at least one request for proposals from
qualified applicants to serve as part of the Texas Energy Insurance
Program; and
(2) if the commission receives at least two
applications from qualified applicants in response to the request
described by Subdivision (1) before the expiration of the period
provided by Subsection (e), select and certify at least two
qualified applicants not later than the 90th day after the date the
commission issues the request.
(d) To ensure efficient distribution of reliability assets,
the commission may designate regions in the ERCOT power region and
issue requests for proposals under Subsection (c) for specific
amounts of generation capacity by region.
(e) An applicant must submit an application under
Subsection (c) not later than the 60th day after the date the
commission issues a request for proposals under that subsection.
(f) An entity that is prohibited by this title from owning
or operating a generation asset may apply to be certified to be part
of the Texas Energy Insurance Program under this section.
(g) To be certified as part of the Texas Energy Insurance
Program, an applicant must:
(1) establish financial stability and expertise by
demonstrating that:
(A) the applicant or the applicant's parent
company or operating partner has an investment grade credit rating;
and
(B) the applicant or the applicant's parent
company or operating partner is able to fund the investment as
demonstrated by proof of access to adequate financing;
(2) establish industry expertise by demonstrating
that the applicant is a river authority that owns or operates
generation facilities, an electric utility, a municipally owned
utility, or an electric cooperative, or the applicant or the
applicant's parent company owns or operates electric generation
assets totaling at least 2,500 megawatts;
(3) establish project quality standards by
demonstrating that:
(A) the applicant is able to provide a parent
performance guarantee that the independent organization certified
under Section 39.151 for the ERCOT power region or the commission
may draw upon during each season, as defined by the independent
organization, if a reliability asset does not perform and
performance is not excused under Subsection (m), in the amount of
$400 million for every gigawatt of generating capacity for which
the applicant is applying to be certified; and
(B) each reliability asset will be weatherized,
capable of starting up and generating electricity without requiring
outside power or support from the grid, and in operation not later
than the last day of the 48th month after certification, unless
interconnection delays require a later operation date; and
(4) pledge:
(A) that any net revenue earned during testing or
operating would be for the benefit of the ERCOT power region; and
(B) not to sell any reliability asset over the
life of the reliability asset while the applicant is certified as
part of the Texas Energy Insurance Program without prior approval
of the commission.
(h) Each applicant must provide in the application a
statement:
(1) agreeing to a rate of return on equity the
applicant will accept while operating as part of the Texas Energy
Insurance Program, which may not exceed 10 percent;
(2) of the total cost of reliability assets for which
the applicant will request recovery under Subchapter K, Chapter 36,
while operating as part of the Texas Energy Insurance Program,
which may not exceed $1 billion per gigawatt of installed
generation capacity operated in the program; and
(3) agreeing to the rates and revenues authorized
under Subchapter K, Chapter 36.
(i) The commission may certify an entity to be part of the
Texas Energy Insurance Program if the entity submits a qualifying
application that includes:
(1) proof that the requirements of Subsection (g) have
been met;
(2) a description of the location or proposed location
of each reliability asset;
(3) a commitment to construct, own, operate, and
maintain reliability assets for a time period not less than the
useful life of the assets;
(4) a commitment that the reliability assets will
include at each site resources to allow the provision of generation
at full load for at least 168 continuous hours or the maximum number
of continuous hours authorized for continuous operation under
permits issued under state and federal law;
(5) an affidavit affirming that the reliability assets
will be available to dispatch in a manner that provides the
independent organization certified under Section 39.151 for the
ERCOT power region, in times of emergency, natural disaster, and
testing, with access to power at full output for up to seven
consecutive days, after accounting for ramp up and ramp down times
required by the independent organization;
(6) proof of the posting of a parent performance
guarantee that the independent organization certified under
Section 39.151 for the ERCOT power region or the commission may draw
upon during each season, as defined by the independent
organization, if a reliability asset does not perform and
performance is not excused under Subsection (m), in the amount of
$400 million for every gigawatt of generating capacity for which
the applicant is applying to be certified;
(7) proof that the applicant or the applicant's parent
company or operating partner meets the requirements of Subsection
(g)(1); and
(8) proof that the applicant can follow telemetry from
the independent organization certified under Section 39.151 for the
ERCOT power region.
(j) The commission shall provide a process to amend a
certificate to account for the addition of any new reliability
asset.
(k) The commission may not revoke a certificate unless after
notice and an opportunity for hearing before the commission, the
commission finds that the certified entity:
(1) failed to dispatch sufficient energy from
reliability assets when called upon by the independent organization
certified under Section 39.151 for the ERCOT power region or the
commission and the failure cannot be excused by factors outside the
entity's control;
(2) has not fulfilled commitments made in the entity's
application or complied with statutory or regulatory requirements
of being certified, after reasonable notice from the commission; or
(3) no longer meets the eligibility requirements for
participating in the Texas Energy Insurance Program, unless the
entity has presented an actionable plan acceptable to the
commission to meet the requirements.
(l) Each certified entity shall comply with the
commissioning requirements and reliability standards adopted by
the independent organization certified under Section 39.151 for the
ERCOT power region to ensure the reliability of the ERCOT region.
(m) The commission or the independent organization
certified under Section 39.151 for the ERCOT power region may not
draw upon a parent performance guarantee provided by a certified
entity and may not impose a fine or penalty on a certified entity
for failure to provide service to the extent that the inability to
provide service is the result of:
(1) the actions of a transmission service provider
related to transmission service; or
(2) the actions of the independent organization
certified under Section 39.151 for the ERCOT power region,
including scheduled routine maintenance.
(n) The commission may not require a bond, letter of credit,
or other security from a certified entity except for a parent
performance guarantee described by this section and may not require
the expansion of a parent performance guarantee. If drawn upon, a
parent performance guarantee may not be required to be replenished
or expanded. If the parent performance guarantee for a reliability
asset is exhausted, the commission may decertify the certified
entity to operate the asset. The commission may consult with the
Legislative Budget Board in implementing this subsection.
(o) A certification issued under this section may be
transferred only with the prior approval of the commission. Before
transferring ownership of a reliability asset to another entity, a
certified entity must apply to the commission for permission to
transfer the asset. The commission may not approve the transfer of
a reliability asset that is sold unless the sale is conditioned on
the purchaser owning, operating, and maintaining the asset for the
duration of the commitment made under Subsection (i)(3). A
transfer of a reliability asset under this subsection does not
affect the participation of the asset in the Texas Energy Insurance
Program. If the commission does not approve the transfer and the
entity sells the asset, the commission shall decertify the entity
to operate that asset as part of the Texas Energy Insurance Program.
(p) On the request of a certified entity, after the 40th
anniversary of the commissioning date of a reliability asset, the
commission shall decertify the entity to operate the asset as a
reliability asset and allow the entity to apply to operate the asset
in the competitive market.
SECTION 1.14. Section 382.05155, Health and Safety Code, is
amended by adding Subsection (b-1) to read as follows:
(b-1) A permit for a reliability asset, as defined by
Section 31.002, Utilities Code, is considered to benefit the
economy of this state for the purposes of Subsection (b).
SECTION 1.15. Not later than February 1, 2024, the Public
Utility Commission of Texas shall issue a request for proposals
required by Section 39.360(c), Utilities Code, as added by this
article.
SECTION 1.16. The Public Utility Commission of Texas shall
adopt any rules necessary to implement this article not later than
December 1, 2023.
SECTION 1.17. To the extent of any conflict, this article
prevails over another Act of the 88th Legislature, Regular Session,
2023, relating to nonsubstantive additions to and corrections in
enacted codes.
SECTION 1.18. This article takes effect September 1, 2023.
ARTICLE 2. GENERATING FACILITY FUNDING
SECTION 2.01. Subtitle B, Title 2, Utilities Code, is
amended by adding Chapter 34 to read as follows:
CHAPTER 34. GENERATING FACILITY FUNDING
Sec. 34.0101. DEFINITIONS. In this chapter:
(1) "Advisory committee" means the Texas Energy
Insurance Fund Advisory Committee.
(2) "Fund" means the Texas energy insurance fund
established by Section 49-q, Article III, Texas Constitution.
(3) "Trust company" means the Texas Treasury
Safekeeping Trust Company.
Sec. 34.0102. FUND. (a) The fund is a special fund in the
state treasury outside the general revenue fund to be administered
and used by the commission for the purposes authorized by this
chapter. The commission may establish separate accounts in the
fund.
(b) The fund and the fund's accounts are kept and held by the
trust company for and in the name of the commission.
(c) Money deposited to the credit of the fund may be used
only as provided by this chapter.
(d) The fund consists of:
(1) money appropriated, credited, transferred, or
deposited to the credit of the fund by or as authorized by law,
including money from any source transferred or deposited to the
credit of the fund at the commission's discretion;
(2) revenue that the legislature by statute dedicates
for deposit to the credit of the fund;
(3) investment earnings and interest earned on money
in the fund; and
(4) gifts, grants, and donations contributed to the
fund.
Sec. 34.0103. LOANS FOR MAINTENANCE AND MODERNIZATION. (a)
The commission may use money in the fund without further
appropriation to provide loans to finance maintenance or
modernization of dispatchable electric generating facilities
operating in the ERCOT power region. For the purposes of this
section, a generating facility is considered to be dispatchable if
the facility's output can be controlled primarily by forces under
human control.
(b) Each year, the commission shall produce a list of
dispatchable electric generating facilities operating in the ERCOT
power region and estimate the potential costs to maintain and
modernize the facilities during the following five years. The
commission shall give priority to loan applications under this
section that the commission determines will provide the highest
ratio of dispatchable megawatts maintained to project costs.
(c) The commission shall evaluate an application for a loan
under this section based on the applicant's:
(1) efforts and achievements in conserving resources;
(2) quality of services;
(3) efficiency of operations;
(4) quality of management;
(5) proposed improvement in availability of the
generation facility for which the loan is requested; and
(6) previous Texas energy insurance fund loan history,
with a preference toward entities that have not applied for or been
granted a loan previously.
(d) The commission may provide a loan under this section
only for maintenance or modernization of a facility that is capable
of operating for at least five years after the date the loan is
received.
(e) Proceeds of a loan received under this section may not
be used for:
(1) compliance with weatherization standards adopted
before December 1, 2023;
(2) debt payments; or
(3) expenses not related to maintaining or modernizing
the electric generating facility.
(f) An electric utility may not receive a loan under this
section.
(g) The commission may require immediate repayment of a loan
issued under this section if the recipient of the loan stops
operating the facility for which the loan was received before the
fifth anniversary of the date on which the loan was disbursed.
(h) A loan provided under this chapter may not bear an
interest rate of more than zero percent.
(i) Information submitted to the commission in an
application for a loan under this chapter is confidential and not
subject to disclosure under Chapter 552, Government Code.
Sec. 34.0104. SOURCES OF MONEY FOR LOANS FOR TEXAS ENERGY
INSURANCE PROGRAM RELIABILITY ASSETS. The commission may use any
money appropriated to the commission for the purpose of providing a
loan, at zero percent interest, to an entity certified under
Section 39.360 to be used to reduce debt associated with
constructing or operating a reliability asset. The commission may
use without legislative appropriation money from the fund for that
purpose.
Sec. 34.0105. MAXIMUM LOAN AMOUNT. If the commission has
more than four pending applications for loans to be made from the
fund on the date the commission awards a loan, the amount of the
loan awarded may not exceed 25 percent of the fund balance on that
date.
Sec. 34.0106. MANAGEMENT AND INVESTMENT OF FUND. (a) The
trust company shall hold the fund, and any accounts established in
the fund, for and in the name of the commission, taking into account
the purposes for which money in the fund may be used. The fund may
be invested with the state treasury pool and comingled with other
investments.
(b) The overall objective for the investment of the fund is
to maintain sufficient liquidity to meet the needs of the fund while
striving to preserve the purchasing power of the fund.
(c) In managing the assets of the fund, the trust company
may acquire, exchange, sell, supervise, manage, or retain any kind
of investment that a prudent investor, exercising reasonable care,
skill, and caution, would acquire or retain in light of the
purposes, terms, distribution requirements, and other
circumstances of the fund then prevailing, taking into
consideration the investment of all the assets of the fund rather
than a single investment.
(d) The reasonable expenses of managing the fund's assets
shall be paid from the fund.
(e) The trust company annually shall provide a written
report to the commission and to the advisory committee with respect
to the investment of the fund.
(f) The trust company shall adopt a written investment
policy that is appropriate for the fund. The trust company shall
present the investment policy to the investment advisory board
established under Section 404.028, Government Code. The investment
advisory board shall submit to the trust company recommendations
regarding the policy.
(g) The commission annually shall provide to the trust
company a forecast of the cash flows into and out of the fund. The
commission shall provide updates to the forecasts as appropriate to
ensure that the trust company is able to achieve the objective
specified by Subsection (b).
(h) The trust company shall disburse money from the fund as
directed by the commission.
Sec. 34.0107. RECEIVERSHIP OF DEFAULT GENERATING FACILITY.
(a) In this section, "default" means:
(1) default in payment of the principal of or interest
on a loan; or
(2) a failure to perform any of the terms of a loan.
(b) The state, including the commission, the advisory
committee, and the trust company, may not retain an ownership
interest in a project or facility for which a loan is provided under
this chapter.
(c) In the event of a default on a loan made under this
chapter, at the request of the commission, the attorney general
shall bring suit in a district court in Travis County for the
appointment of a receiver to collect the assets and carry on the
business of a loan recipient if the action is necessary to cure a
default by the recipient.
(d) The court shall vest a receiver appointed by the court
with any power or duty the court finds necessary to cure the
default, including the power or duty to:
(1) perform audits;
(2) direct ongoing operation of the assets;
(3) fund reserve accounts;
(4) make payments of the principal of or interest on
bonds, securities, or other obligations; and
(5) take any other action necessary to prevent or to
remedy the default, including the sale of assets.
(e) The receiver shall execute a bond in an amount to be set
by the court to ensure the proper performance of the receiver's
duties.
(f) After appointment and execution of bond, the receiver
shall take possession of the books, records, accounts, and assets
of the defaulting loan recipient specified by the court. Until
discharged by the court, the receiver shall perform the duties that
the court directs and shall strictly observe the final order
involved.
(g) On a showing of good cause by the defaulting loan
recipient, the court may dissolve the receivership.
Sec. 34.0108. TEXAS ENERGY INSURANCE FUND ADVISORY
COMMITTEE. (a) The advisory committee is composed of the following
six members:
(1) three members of the senate appointed by the
lieutenant governor, including:
(A) a member of the committee of the senate
having primary jurisdiction over matters relating to the generation
of electricity; and
(B) a member of the committee of the senate
having primary jurisdiction over finance; and
(2) three members of the house of representatives
appointed by the speaker of the house of representatives,
including:
(A) a member of the committee of the house of
representatives having primary jurisdiction over the generation of
electricity; and
(B) a member of the committee of the house of
representatives having primary jurisdiction over finance.
(b) A member of the advisory committee serves at the will of
the person who appointed the member.
(c) The lieutenant governor shall appoint a co-presiding
officer of the advisory committee from among the members appointed
by the lieutenant governor. The speaker of the house of
representatives shall appoint a co-presiding officer of the
advisory committee from among the members appointed by the speaker.
(d) The advisory committee may hold public hearings, formal
meetings, and work sessions. Either co-presiding officer of the
advisory committee may call a public hearing, formal meeting, or
work session of the advisory committee at any time. The advisory
committee may not take formal action at a public hearing, formal
meeting, or work session unless a quorum of the committee is
present.
(e) Except as otherwise provided by this subsection, a
member of the advisory committee is not entitled to receive
compensation for service on the committee or reimbursement for
expenses incurred in the performance of official duties as a member
of the committee. Service on the advisory committee by a member of
the senate or house of representatives is considered legislative
service for which the member is entitled to reimbursement and other
benefits in the same manner and to the same extent as for other
legislative service.
(f) The advisory committee:
(1) may provide comments and recommendations to the
commission for the commission to use in adopting rules regarding
the use of the fund or on any other matter; and
(2) shall review the overall operation, function, and
structure of the fund at least semiannually.
(g) The advisory committee may adopt rules, procedures, and
policies as needed to administer this section and implement its
responsibilities.
(h) Chapter 2110, Government Code, does not apply to the
size, composition, or duration of the advisory committee.
(i) The advisory committee is subject to Chapter 325,
Government Code (Texas Sunset Act). Unless continued in existence
as provided by that chapter, the advisory committee is abolished
September 1, 2035.
Sec. 34.0109. RULES. (a) The commission by rule may
establish procedures for:
(1) the application for and award of a loan under this
chapter; and
(2) the administration of the fund.
(b) The commission shall give full consideration to
comments and recommendations of the advisory committee before the
commission adopts rules under this chapter.
Sec. 34.0110. TEXAS ENERGY INSURANCE PROGRAM CUSTOMER
PAYMENTS. (a) The commission may use any money appropriated to the
commission for the purpose of offsetting amounts owed to certified
entities under Section 36.501 on behalf of customers of
transmission and distribution utilities, municipally owned
utilities, and electric cooperatives. The commission may use
without legislative appropriation money from the fund for that
purpose.
(b) The comptroller shall deposit revenue received under
Section 36.501(b) to the credit of the fund.
(c) Money obtained by the independent organization
certified under Section 39.151 for the ERCOT power region or the
commission through drawing upon a parent performance guarantee as
described by Section 39.360(g)(3) must be deposited to the credit
of the fund.
(d) The comptroller shall make the disbursements required
by Section 36.501(g) from the fund.
SECTION 2.02. This article takes effect on the date on which
the constitutional amendment proposed by the 88th Legislature,
Regular Session, 2023, providing for the creation of the Texas
energy insurance fund and the authorization of other funding
mechanisms to support the construction and operation of electric
generating facilities takes effect. If that amendment is not
approved by the voters, this article has no effect.