88R25766 JXC-D
	By: Schwertner, et al.	S.B. No. 2012
	(Hunter)
	Substitute the following for S.B. No. 2012:  No.

	A BILL TO BE ENTITLED
	AN ACT
	relating to the implementation of a program to meet the reliability
	needs of the ERCOT power region.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Subchapter D, Chapter 39, Utilities Code, is
	amended by adding Section 39.166 to read as follows:
	Sec. 39.166.  RELIABILITY PROGRAM. (a) The commission may
	not require retail customers or load-serving entities in the ERCOT
	power region to purchase credits designed to support a required
	reserve margin or other capacity or reliability requirement until:
	(1)  the independent organization certified under
	Section 39.151 for the ERCOT power region and the wholesale
	electric market monitor complete an updated assessment on the cost
	to and effects on the ERCOT market of the proposed reliability
	program; and
	(2)  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.
	(b)  The assessment required under Subsection (a) must
	include:
	(1)  an evaluation of the cost of new entry and the
	effects of the proposed reliability program on consumer costs and
	the competitive retail market;
	(2)  a compilation of detailed information regarding
	cost offsets realized through a reduction in costs in the energy and
	ancillary services markets and use of reliability unit commitments;
	(3)  a set of metrics to measure the effects of the
	proposed reliability program on system reliability;
	(4)  an evaluation of the cost to retain existing
	dispatchable resources in the ERCOT power region;
	(5)  an evaluation of the planned timeline for
	implementation of real time co-optimization for energy and
	ancillary services in the ERCOT power region; and
	(6)  anticipated market and reliability effects of new
	and updated ancillary service products.
	(c)  The commission may not implement a reliability program
	described by Subsection (a) unless the commission by rule
	establishes the essential features of the program, including
	requirements to meet the reliability needs of the power region, and
	the program:
	(1)  requires the independent organization certified
	under Section 39.151 for the ERCOT power region to procure the
	credits centrally in a manner designed to prevent market
	manipulation by affiliated generation and retail companies;
	(2)  limits participation in the program to
	dispatchable resources with the specific attributes necessary to
	meet operational needs of the ERCOT power region;
	(3)  ensures that a generator cannot receive credits
	that exceed the amount of generation bid into the forward market by
	that generator;
	(4)  ensures that an electric generating unit can
	receive a credit only for being available to perform in real time
	during the tightest intervals of low supply and high demand on the
	grid, as defined by the commission on a seasonal basis;
	(5)  establishes a penalty structure, resulting in a
	net benefit to load, for generators that bid into the forward market
	but do not meet the full obligation;
	(6)  provides the wholesale electric market monitor
	with the authority and resources necessary to investigate potential
	instances of market manipulation by any means, including by
	financial or physical actions;
	(7)  ensures that the net cost imposed on the ERCOT
	market for the credits does not exceed $500 million annually;
	(8)  ensures that any program reliability standard
	reasonably balances the incremental reliability benefits to
	customers against the incremental costs of the program based on an
	evaluation by the wholesale electric market monitor;
	(9)  establishes a single ERCOT-wide clearing price for
	the program and does not differentiate payments or credit values
	based on locational constraints;
	(10)  does 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;
	(11)  requires sufficient secured collateral so that
	other market participants do not bear the risk of non-performance
	or non-payment;
	(12)  ensures that the cost of all credits paid to
	dispatchable resources is allocated to loads based on an hourly
	load ratio share; and
	(13)  removes any market changes implemented as a
	bridge solution for the program not later than the first
	anniversary of the date the program was implemented.
	(d)  The commission and the independent organization
	certified under Section 39.151 for the ERCOT power region may not
	adopt a market rule for the ERCOT power region associated with the
	implementation of a reliability program described by Subsection (a)
	that provides a cost advantage to load-serving entities who own, or
	whose affiliates own, generation facilities.
	(e)  The wholesale electric market monitor biennially shall:
	(1)  evaluate the incremental reliability benefits of
	the program for consumers compared to the costs to consumers of the
	program and the costs in the energy and ancillary services markets;
	and
	(2)  report the results of each evaluation to the
	legislature.
	SECTION 2.  This Act takes effect immediately if it receives
	a vote of two-thirds of all the members elected to each house, as
	provided by Section 39, Article III, Texas Constitution. If this
	Act does not receive the vote necessary for immediate effect, this
	Act takes effect September 1, 2023.