Bill Text: TX SB2627 | 2023-2024 | 88th Legislature | Enrolled

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Bill Title: Relating to funding mechanisms to support the construction, maintenance, modernization, and operation of electric generating facilities.

Spectrum: Slight Partisan Bill (Republican 3-1)

Status: (Passed) 2023-06-09 - Effective on adoption of const. amendment [SB2627 Detail]

Download: Texas-2023-SB2627-Enrolled.html

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S.B. No. 2627

AN ACT
relating to funding mechanisms to support the construction,
maintenance, modernization, and operation of electric generating
facilities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. This Act may be cited as the Powering Texas
Forward Act.
SECTION 2. Subtitle B, Title 2, Utilities Code, is amended
by adding Chapter 34 to read as follows:
CHAPTER 34. FACILITY FUNDING
SUBCHAPTER A. TEXAS ENERGY FUND; GRANTS AND LOANS
Sec. 34.0101. DEFINITIONS. In this subchapter:
(1) "Advisory committee" means the Texas Energy Fund
Advisory Committee.
(2) "Fund" means the Texas energy 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. GRANTS FOR FACILITIES OUTSIDE ERCOT POWER
REGION. (a) The commission may use money in the fund without
further appropriation to provide grants to be used for transmission
and distribution infrastructure and electric generating facilities
in this state outside the ERCOT power region for:
(1) facility modernization;
(2) facility weatherization;
(3) reliability and resiliency facility enhancements;
or
(4) vegetation management.
(b) In evaluating an application for a grant under this
section, the commission:
(1) shall evaluate whether the project for which the
grant is requested is reasonable; and
(2) may consider any other appropriate factors.
(c) Information submitted to the commission in an
application for a grant under this section is confidential and not
subject to disclosure under Chapter 552, Government Code.
(d) Proceeds of a grant received under this section may not
be used for:
(1) compliance with weatherization standards adopted
before December 1, 2023; or
(2) debt payments.
Sec. 34.0104. LOANS FOR ERCOT POWER REGION. (a) The
commission may use money in the fund without further appropriation
to provide loans to finance upgrades to existing dispatchable
electric generating facilities providing power for the ERCOT power
region that result in a net increase of at least 100 megawatts of
capacity for each facility or the construction of dispatchable
electric generating facilities providing power for the ERCOT power
region that each have a generation capacity of at least 100
megawatts. 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. An electric
energy storage facility is not eligible for a loan under this
section.
(b) The commission may provide a construction loan under
this section only:
(1) for construction of a facility that will have a
generation capacity of at least 100 megawatts and that does not meet
the planning model requirements necessary to be included in the
Capacity Demand and Reserves Report of the independent organization
certified under Section 39.151 for the ERCOT power region before
June 1, 2023;
(2) in an amount that does not exceed 60 percent of the
estimated cost of the facility to be constructed; and
(3) if the agreement ensures that the loan is to be the
senior debt secured by the facility.
(c) The commission shall evaluate an application for a loan
under this section based on:
(1) the applicant's:
(A) quality of services and management;
(B) efficiency of operations;
(C) history of electricity generation operations
in this state and this country;
(D) resource operation attributes;
(E) ability to address regional and reliability
needs;
(F) access to resources essential for operating
the facility for which the loan is requested, such as land, water,
and reliable infrastructure, as applicable; and
(G) evidence of creditworthiness and ability to
repay the loan on the terms established in the loan agreement,
including the applicant's total assets, total liabilities, net
worth, and credit ratings issued by major credit rating agencies;
(2) the generation capacity and estimated costs of the
project for which the loan is requested; and
(3) any other factors the commission considers
appropriate.
(d) Outstanding loans provided under this section and
grants provided under Section 34.0105, considered together, may not
support the addition or construction of more than 10,000 megawatts
of generation capacity.
(e) An electric utility other than a river authority may not
receive a loan under this section.
(f) A loan provided under this section must:
(1) have a term of 20 years;
(2) be payable ratably starting on the third
anniversary of the estimated commercial operation date of the
facility for which the loan was provided, as stated in the loan
application; and
(3) bear an interest rate of three percent.
(g) The commission shall require each recipient of a loan
under this section to deposit in an escrow account held by the
comptroller an amount of money equal to three percent of the
estimated cost of the project for which the loan is provided. The
deposit must be made before the initial loan funds are disbursed.
The loan recipient may not withdraw the deposit unless authorized
by the commission.
(h) For money deposited under Subsection (g) for a loan for
the construction of a new facility, the commission:
(1) shall authorize the loan recipient to withdraw the
deposit from the escrow account if the facility for which the loan
was provided is interconnected in the ERCOT power region before the
fourth anniversary of the date the initial loan funds were
disbursed; or
(2) after the fourth anniversary of the date the
initial loan funds were disbursed, may authorize the loan recipient
to withdraw the deposit from the escrow account if the facility for
which the loan was provided is interconnected in the ERCOT power
region not later than the fifth anniversary of the date the initial
loan funds were disbursed and the commission determines that
extenuating circumstances justify the delay in completion.
(i) For money deposited under Subsection (g) for a loan for
an upgrade to an existing facility, the commission:
(1) shall authorize the loan recipient to withdraw the
deposit from the escrow account if the project for which the loan
was provided is completed before the third anniversary of the date
the initial loan funds were disbursed; or
(2) after the third anniversary of the date the
initial loan funds were disbursed, may authorize the loan recipient
to withdraw the deposit from the escrow account if the project for
which the loan was provided is completed not later than the fourth
anniversary of the date the initial loan funds were disbursed and
the commission determines that extenuating circumstances justify
the delay in completion.
(j) The comptroller shall deposit to the credit of the fund
any escrow funds described by Subsection (g) that the commission
may not authorize to be withdrawn by a loan recipient.
(k) Information submitted to the commission in an
application for a loan under this section is confidential and not
subject to disclosure under Chapter 552, Government Code.
(l) The commission may not disburse the initial funds for a
loan under this section after December 31, 2025.
(m) This section expires September 1, 2050.
Sec. 34.0105. COMPLETION BONUS GRANTS. (a) The commission
shall provide, using money available in the fund for the purpose
without further appropriation, a completion bonus grant for the
construction of dispatchable electric generating facilities 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. An
electric energy storage facility is not eligible for a grant under
this section.
(b) The amount of a grant under this section must be based on
the megawatts of capacity provided to the ERCOT power region by the
facility.
(c) The commission may provide a grant under this section
only for construction of a facility that:
(1) will have a generation capacity of at least 100
megawatts; and
(2) does not meet the planning model requirements
necessary to be included in the Capacity Demand and Reserves Report
of the independent organization certified under Section 39.151 for
the ERCOT power region before June 1, 2023.
(d) The commission shall evaluate an application for a grant
under this section based on:
(1) the applicant's:
(A) quality of services and management;
(B) efficiency of operations;
(C) history of electricity generation operations
in this state and this country;
(D) resource operation attributes; and
(E) ability to address regional and reliability
needs;
(2) the generation capacity and estimated
construction costs of the facility for which the grant is
requested; and
(3) any other factors the commission considers
appropriate.
(e) Information submitted to the commission in an
application for a grant under this section is confidential and not
subject to disclosure under Chapter 552, Government Code.
(f) Unless the commission determines that extenuating
circumstances justify extending the deadlines provided by this
subsection, the commission may not provide a grant under this
section of more than:
(1) $120,000 per megawatt of capacity provided by a
facility that is interconnected in the ERCOT power region before
June 1, 2026; or
(2) $80,000 per megawatt of capacity provided by a
facility that is interconnected in the ERCOT power region on or
after June 1, 2026, and before June 1, 2029.
(g) Unless the commission determines that extenuating
circumstances justify extending the deadline provided by this
subsection, the commission may not provide a grant under this
section for a facility that is interconnected in the ERCOT power
region on or after June 1, 2029.
(h) The commission shall provide for the proceeds of each
grant awarded under this section to be disbursed to the grant
recipient by equal annual payments over a 10-year period that
begins on the first anniversary of the commercial operations date
of the facility for which the grant is provided. The annual
payments are subject to being withheld or discounted in accordance
with Subsection (i). The total of the annual disbursements may not
exceed the maximum amount as limited by Subsection (f).
(i) The commission by rule shall establish performance
standards for grant recipients based on reliability metrics,
appropriate for the types of facilities for which grants may be
provided, for performance during the 100 hours with the least
quantity of operating reserves for each year. The commission may
not disburse a grant recipient's annual payment under Subsection
(h) if the performance of the facility for which the grant was
provided is equal to or below the median performance standard
established under this subsection during a test period designated
by the commission for that year. The commission may disburse a
discounted amount of a grant recipient's annual payment under
Subsection (h) if the performance of the facility for which the
grant was provided is above the median performance standard
established under this subsection during a test period designated
by the commission for that year but less than an optimal performance
standard established by the commission. The commission shall by
rule adopt a system for determining the amount by which the
commission will discount an annual payment based on facility
performance under this subsection.
(j) This section expires December 1, 2040.
Sec. 34.0106. LOAN AND GRANT RESTRICTIONS. (a) 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.
(b) The commission may not provide a loan or a grant under
this chapter:
(1) for a facility that will be used primarily to serve
an industrial load or private use network; or
(2) for the construction or operation of a natural gas
transmission pipeline.
(c) The commission shall require each recipient of a loan
under this chapter to enter into a debt covenant that requires the
recipient to meet facility performance standards adopted by the
commission. The commission by rule shall adopt performance
standards for the purposes of this subsection based on reliability
metrics appropriate for the types of facilities for which loans may
be provided.
(d) Each facility for which a loan or grant is provided
under Section 34.0104 or 34.0105 must participate in the ERCOT
wholesale electricity market.
(e) The commission may provide from the fund:
(1) for grants under Section 34.0103, not more than $1
billion;
(2) for loans and grants under Sections 34.0104 and
34.0105, not more than $7.2 billion; and
(3) for grants or loans under Subchapter B, not more
than $1.8 billion.
Sec. 34.0107. MANAGEMENT AND INVESTMENT OF FUND. (a) The
trust company shall hold and invest 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
commingled 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 over a full
economic cycle.
(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. 34.0108. 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. 34.0109. TEXAS ENERGY 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. 34.0110. RULES. (a) The commission by rule may
establish procedures for:
(1) the application for and award of a grant or 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.
SUBCHAPTER B. TEXAS POWER PROMISE: BACKUP POWER PACKAGES
Sec. 34.0201. DEFINITION. In this subchapter, "Texas
backup power package" means a stand-alone, behind-the-meter,
multiday backup power source that can be used for islanding.
Sec. 34.0202. PURPOSE. The purpose of this subchapter is to
facilitate and provide funding for the design, procurement,
installation, and use of Texas backup power packages to ensure the
reliability or adequacy of an electric power grid in this state for
facilities on which communities rely for health, safety, and
well-being.
Sec. 34.0203. COMMISSION DUTIES. (a) The commission shall
convene an advisory committee in the manner provided by Chapter
2110, Government Code.
(b) The advisory committee shall recommend criteria for the
commission to employ in making a grant or loan under this
subchapter.
(c) The commission shall contract with a research entity
that has experience in microgrid design to analyze critical
facility characteristics and requirements in this state and develop
for Texas backup power packages:
(1) sets of specifications for standard backup power
packages of various sizes that can serve most critical facilities
in this state; and
(2) specifications for standard interconnection,
communications, and controls for Texas backup power packages.
Sec. 34.0204. TEXAS BACKUP POWER PACKAGES. The commission
may use money in the Texas energy fund without further
appropriation to provide a grant or loan for the operation of a
Texas backup power package that:
(1) is engineered to minimize operation costs;
(2) uses interconnection technology and controls that
enable immediate islanding from the power grid and stand-alone
operation for the host facility;
(3) is capable of operating for at least 48 continuous
hours without refueling or connecting to a separate power source;
(4) is designed so that one or more Texas backup power
packages can be aggregated on-site to serve not more than 2.5
megawatts of load at the host facility;
(5) provides power sourced from:
(A) a combination of natural gas or propane with
photovoltaic panels and battery storage; or
(B) battery storage on an electric school bus;
and
(6) is not used by the owner or host facility for the
sale of energy or ancillary services.
Sec. 34.0205. GRANTS AND LOANS. (a) The commission by rule
may establish procedures for the application for and award of a
grant or loan under this subchapter.
(b) The amount of a grant provided under this subchapter may
not exceed $500 per kilowatt of capacity.
(c) The commission may provide a loan under this subchapter
for procurement and operating costs.
(d) The commission shall maintain and publish a list of
approved vendors eligible to assist with the sale, installation,
operation, and ongoing maintenance of Texas backup power packages.
(e) The commission may not provide a grant or loan under
this subchapter for:
(1) a commercial energy system, a private school, or a
for-profit entity that does not directly serve public safety and
human health; or
(2) a source of backup power that does not follow the
design and use standards of a Texas backup power package.
SECTION 3. Section 35.005, Utilities Code, is amended by
adding Subsections (d), (e), (f), and (g) to read as follows:
(d) This subsection applies only to a facility in the ERCOT
power region for which a loan or grant is provided under Subchapter
A, Chapter 34. The independent organization certified under
Section 39.151 for the ERCOT power region shall work with electric
utilities to ensure that each facility in the ERCOT power region for
which a loan or grant is provided is fully interconnected in the
region not later than the date the facility is ready for commercial
operation. The independent organization certified under Section
39.151 for the ERCOT power region shall give priority to
interconnecting each facility for which a loan or grant is provided
except that the organization shall prioritize transmission
projects that the organization has formally designated as critical
for reliability over a facility for which a loan or grant is
provided. An electric utility that enters into an interconnection
agreement for a facility for which a loan or grant is provided shall
give priority to interconnecting the facility and complete
construction of any other facilities necessary to interconnect the
facility not later than the date the facility is ready for
commercial operation except that the utility shall prioritize
transmission projects that the independent organization certified
under Section 39.151 for the ERCOT power region has formally
designated as critical for reliability over a facility for which a
loan or grant is provided.
(e) If the commission receives an application under Chapter
37 for a certificate of convenience and necessity related to
facilities necessary to interconnect a facility to which Subsection
(d) applies 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 facility
before the deadline is not feasible.
(g) In this subsection, "Texas backup power package" has the
meaning assigned by Section 34.0201. The commission by rule shall
adopt procedures to expedite an electric utility interconnection
request for a Texas backup power package for which a loan or grant
is awarded under Chapter 34.
SECTION 4. Subchapter C, Chapter 382, Health and Safety
Code, is amended by adding Section 382.069 to read as follows:
Sec. 382.069. TEXAS BACKUP POWER PACKAGE. (a) In this
section, "Texas backup power package" has the meaning assigned by
Section 34.0201, Utilities Code.
(b) The commission by rule shall adopt a process to expedite
the permitting of a Texas backup power package for which a permit is
required under this chapter and for which a loan or grant is awarded
under Chapter 34, Utilities Code.
SECTION 5. Not later than June 1, 2024, the Public Utility
Commission of Texas shall begin accepting loan applications for
loans authorized by Subchapter A, Chapter 34, Utilities Code, as
added by this Act. Not later than December 31, 2025, the Public
Utility Commission of Texas shall approve or deny each loan
application and disburse initial loan funds for each approved
applicant.
SECTION 6. This Act 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 fund
to support the construction, maintenance, modernization, and
operation of electric generating facilities takes effect. If that
amendment is not approved by the voters, this Act has no effect.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 2627 passed the Senate on
May 4, 2023, by the following vote: Yeas 27, Nays 4;
May 25, 2023, Senate refused to concur in House amendments and
requested appointment of Conference Committee; May 26, 2023, House
granted request of the Senate; May 28, 2023, Senate adopted
Conference Committee Report by the following vote: Yeas 30,
Nays 1.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 2627 passed the House, with
amendments, on May 23, 2023, by the following vote: Yeas 118,
Nays 23, one present not voting; May 26, 2023, House granted
request of the Senate for appointment of Conference Committee;
May 28, 2023, House adopted Conference Committee Report by the
following vote: Yeas 114, Nays 20, two present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor