Bill Text: TX SB2012 | 2023-2024 | 88th Legislature | Comm Sub

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

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Bill Title: Relating to the implementation of a program to meet the reliability needs of the ERCOT power region.

Spectrum: Partisan Bill (Republican 3-0)

Status: (Engrossed - Dead) 2023-05-23 - Postponed 6/1/23 10:00 AM [SB2012 Detail]

Download: Texas-2023-SB2012-Comm_Sub.html

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By: Schwertner, King S.B. No. 2012
(In the Senate - Filed March 9, 2023; March 13, 2023, read
first time and referred to Committee on Business & Commerce;
April 4, 2023, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 11, Nays 0; April 4, 2023,
sent to printer.)
Click here to see the committee vote
COMMITTEE SUBSTITUTE FOR S.B. No. 2012 By: Schwertner

A BILL TO BE ENTITLED
AN ACT
relating to electricity services; increasing an administrative
penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 15.023(b-1) and (f), Utilities Code,
are amended to read as follows:
(b-1) Notwithstanding Subsection (b), the penalty for a
violation of a voluntary mitigation plan entered into under
Subsection (f) or of a provision of Section 35.0021 or 38.075 may be
in an amount not to exceed $1,000,000 for a violation. Each day a
violation continues or occurs is a separate violation for purposes
of imposing a penalty.
(f) The commission and a person may develop and enter into a
voluntary mitigation plan relating to a violation of Section 39.157
or rules adopted by the commission under that section. The
commission may approve the plan only if the commission determines
that the plan is in the public interest. The voluntary mitigation
plan must be reviewed at least once every two years and not later
than the 90th day after the implementation date of a wholesale
market design change. As part of the review, the commission must
determine whether the voluntary mitigation plan remains in the
public interest. If the commission determines that the voluntary
mitigation plan is no longer in the public interest, the commission
and the person must agree to a modification of the plan or the
commission must terminate the plan. Adherence [If the commission
and a person enter into a voluntary mitigation plan, adherence] to
the plan may be considered in determining whether a violation
occurred and, if so, the penalty to be assessed [constitutes an
absolute defense against an alleged violation with respect to
activities covered by the plan].
SECTION 2. The heading to Section 39.159, Utilities Code,
as added by Chapter 426 (S.B. 3), Acts of the 87th Legislature,
Regular Session, 2021, is amended to read as follows:
Sec. 39.159. POWER REGION RELIABILITY AND DISPATCHABLE
GENERATION.
SECTION 3. Section 39.159, Utilities Code, as added by
Chapter 426 (S.B. 3), Acts of the 87th Legislature, Regular
Session, 2021, is amended by amending Subsection (b) and adding
Subsections (b-1) and (b-2) to read as follows:
(b) The commission shall ensure that the independent
organization certified under Section 39.151 for the ERCOT power
region:
(1) establishes requirements to meet the reliability
needs of the power region;
(2) periodically, but at least annually, determines
the quantity and characteristics of ancillary or reliability
services necessary to ensure appropriate reliability during
extreme heat and extreme cold weather conditions and during times
of low non-dispatchable power production in the power region;
(3) procures ancillary or reliability services on a
competitive basis to ensure appropriate reliability during extreme
heat and extreme cold weather conditions and during times of low
non-dispatchable power production in the power region;
(4) develops appropriate qualification and
performance requirements for providing services under Subdivision
(3), including appropriate penalties for failure to provide the
services; [and]
(5) sizes the services procured under Subdivision (3)
to prevent prolonged rotating outages due to net load variability
in high demand and low supply scenarios; and
(6) allocates the cost of providing ancillary services
and reliability services procured under this section on a
semiannual basis among dispatchable generation facilities,
non-dispatchable generation facilities, and load serving entities
in proportion to their contribution to unreliability during the
highest net load hours in the preceding six months, as determined by
the commission based on a number of hours adopted by the commission
for that six-month period, as follows:
(A) for each dispatchable generation facility,
the difference between the forced outage rate of the facility and
the forced outage rate of the facility during the corresponding
season for the three years prior to the current season, multiplied
by the installed capacity of the facility;
(B) for non-dispatchable generation facilities,
the difference between the mean of the lowest quartile generation
for each non-dispatchable generation facility and the mean
generation of the facility; and
(C) for load serving entities, the difference
between the mean of the highest quartile of total load and the mean
of total load in the ERCOT power region, allocated to each load
serving entity on a load ratio share basis.
(b-1) Subsection (b)(6) applies only to a generation
facility or load serving entity that has participated in the ERCOT
market for at least one year, including a load serving entity whose
parent company or affiliate has participated in the ERCOT market
for at least one year.
(b-2) Subsection (b)(6) does not apply to electric energy
storage.
SECTION 4. Subchapter D, Chapter 39, Utilities Code, is
amended by adding Sections 39.1595 and 39.1596 to read as follows:
Sec. 39.1595. RELIABILITY PROGRAM. (a) Under Section
39.159(b), as added by Chapter 426 (S.B. 3), Acts of the 87th
Legislature, Regular Session, 2021, or other law, the commission
may not adopt a reliability program for the ERCOT power region that
requires the purchase of capacity credits earned by generators to
support a reserve margin mandate unless the commission ensures
that:
(1) the cost to the ERCOT market of the credits does
not exceed $500 million annually;
(2) credits are available only for dispatchable
generation, excluding load resources and electric energy storage;
(3) the cost of credits is assigned to generation
facilities and load serving entities according to Section
39.159(b)(6), as added by Chapter 426 (S.B. 3), Acts of the 87th
Legislature, Regular Session, 2021;
(4) the program includes appropriate penalties for a
failure to perform during a reliability event caused by factors
within the reasonable control of the generator, including a
requirement for a generator to buy back credits that the generator
sold but for which the generator did not provide the required
capacity;
(5) the independent organization certified under
Section 39.151 for the ERCOT power region begins implementing real
time co-optimization of energy and ancillary services in the ERCOT
wholesale market before the program is implemented;
(6) all elements of the program are initially
implemented on a single starting date;
(7) the terms of the program and any associated market
rules do not assign costs, credit, or collateral for the program in
a manner that provides a cost advantage to load serving entities who
own, or whose affiliates own, generation facilities;
(8) generators who receive credits may not
self-arrange credit exchanges with any affiliated competitive
retail electric providers;
(9) secured financial credit and collateral
requirements are adopted for the program to ensure that other
market participants do not bear the risk of nonperformance or
nonpayment;
(10) qualifying generators do not receive credits that
exceed the amount of generation bid into the forward market on an
individual resource basis; and
(11) the wholesale electric market monitor has the
authority and necessary resources to investigate potential
instances of market manipulation by program participants,
including financial and physical actions, and recommend penalties
to the commission.
(b) This section does not require the commission to adopt a
reliability program that requires an entity to purchase capacity
credits.
(c) The commission and the independent organization
certified under Section 39.151 for the ERCOT power region shall
consider comments and recommendations from a technical advisory
committee established under the bylaws of the independent
organization that includes market participants when adopting and
implementing a program described by Subsection (a), if any.
(d) If the commission adopts a program described by
Subsection (a), not later than January 1, 2029, the commission
shall require the wholesale electric market monitor to submit to
the commission and the legislature a report on the costs and
benefits of continuing the program. This subsection expires
September 1, 2029.
Sec. 39.1596. GRID RELIABILITY LEGISLATIVE OVERSIGHT
COMMITTEE. (a) In this section, "committee" means the Grid
Reliability Legislative Oversight Committee established under this
section.
(b) The Grid Reliability Legislative Oversight Committee is
created to oversee the commission's implementation of Section
35.004, Sections 39.159 and 39.160, as added by Chapter 426 (S.B.
3), Acts of the 87th Legislature, Regular Session, 2021, and
Section 39.1595.
(c) The committee is composed of eight members as follows:
(1) three members of the senate, appointed by the
lieutenant governor;
(2) three members of the house of representatives,
appointed by the speaker of the house of representatives;
(3) the chair of the committee of the senate having
primary jurisdiction over matters relating to the generation of
electricity; and
(4) the chair of the committee of the house having
primary jurisdiction over matters relating to the generation of
electricity.
(d) An appointed member of the committee serves at the
pleasure of the appointing official.
(e) The committee members described by Subsections (c)(3)
and (4) serve as presiding co-chairs.
(f) A member of the committee may not receive compensation
for serving on the committee but is entitled to reimbursement for
travel expenses incurred by the member while conducting the
business of the committee as provided by the General Appropriations
Act.
(g) The committee shall meet at least twice each year at the
call of either co-chair and shall meet at other times at the call of
either co-chair, as that officer determines appropriate.
(h) Chapter 551, Government Code, applies to the committee.
(i) The committee shall submit a report to the governor,
lieutenant governor, speaker of the house of representatives, and
legislature not later than December 1 of each even-numbered year.
The report must include an update on the progress of and issues
related to the commission's implementation of the laws under the
committee's oversight as provided by Subsection (b).
SECTION 5. Subchapter D, Chapter 39, Utilities Code, is
amended by adding Section 39.166 to read as follows:
Sec. 39.166. RETAIL SALES REPORT. (a) Each retail electric
provider that offers electricity for sale shall report to the
commission:
(1) its annual retail sales in this state;
(2) the annual retail sales of its affiliates by
number of customers, kilowatts per hour sold, and revenue from
kilowatts per hour sold by customer class; and
(3) any other information the commission requires
relating to affiliations between retail electric providers.
(b) The commission by rule shall prescribe the nature and
detail of the reporting requirements. The commission may accept
information reported under other law to satisfy the requirements of
this section. Information reported under this section is
confidential and not subject to disclosure if the information is
competitively sensitive information. The commission shall
administer the reporting requirements in a manner that ensures the
confidentiality of competitively sensitive information.
SECTION 6. Chapter 39, Utilities Code, is amended by adding
Subchapter O to read as follows:
SUBCHAPTER O. CONSTRUCTION OF DISPATCHABLE GENERATION FACILITIES
FOR RELIABILITY
Sec. 39.701. CAPACITY EVALUATION. (a) The commission
annually shall determine whether there is dispatchable generating
capacity sufficient to ensure the reliability and adequacy of the
regional electrical network installed in the ERCOT power region.
(b) If the commission determines that dispatchable
generating capacity sufficient to ensure the reliability and
adequacy of the regional electrical network is not installed in the
ERCOT power region, the commission shall select entities to install
new dispatchable generation capacity under Section 39.702.
(c) If the commission determines in two consecutive years
that dispatchable generating capacity sufficient to ensure the
reliability and adequacy of the regional electrical network is not
installed in the ERCOT power region, the commission shall
discontinue any reliability program described by Section 39.1595 in
operation on the date of the second determination.
Sec. 39.702. CONSTRUCTION OF DISPATCHABLE GENERATION
FACILITIES FOR RELIABILITY. (a) In this section, "entity" means an
electric cooperative, a municipally owned utility, a transmission
and distribution utility or affiliate, or a power generation
company.
(b) Notwithstanding any other law, the commission shall,
after a determination under Section 39.701(b), through a
competitive bid process, select entities to install a sufficient
amount of new dispatchable generation capacity to address the
projected shortfall determined under Section 39.701.
(c) Costs incurred by an entity under this section related
to the provision of additional dispatchable generation must be
allocated to load-serving entities on a load-ratio share basis
through administrative charges assessed by the independent
organization certified under Section 39.151 for the ERCOT power
region on load-serving entities following a cost recovery
proceeding before the commission. The commission by rule shall
adopt procedures for an entity to recover the entity's costs
incurred in installing a dispatchable generation facility that are
similar to procedures used under Section 36.214.
(d) If the commission selects an entity to install new
dispatchable generation capacity under this section, the
commission shall find that the generation facilities are used and
useful to the entity in providing service for purposes of this
section, regardless of the extent of the entity's actual use of the
facilities.
(e) Notwithstanding any other law, a transmission and
distribution utility that installs dispatchable generation
capacity under this section shall register as a power generation
company.
(f) The commission shall waive the requirements of Section
39.154 for a generation facility installed under this section.
SECTION 7. (a) The changes in law made by this Act to
Chapter 15, Utilities Code, apply only to a violation committed on
or after the effective date of this Act. A violation committed
before the effective date of this Act is governed by the law in
effect when the violation was committed, and the former law is
continued in effect for that purpose.
(b) Not later than September 1, 2024, the Public Utility
Commission of Texas shall implement the changes in law made by this
Act to Section 39.159(b), Utilities Code, as added by Chapter 426
(S.B. 3), Acts of the 87th Legislature, Regular Session, 2021.
(c) The Public Utility Commission of Texas shall make the
first determination required by Section 39.701(a), Utilities Code,
as added by this Act, not later than the fourth anniversary of the
date a program described by Section 39.1595, Utilities Code, as
added by this Act, is implemented.
SECTION 8. This Act takes effect September 1, 2023.
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