By: Harrison H.B. No. 185

A BILL TO BE ENTITLED

AN ACT

relating to allocating the cost of ancillary and reliability services procured in the ERCOT power region.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. The legislature finds that:

(1) the welfare of the residents and the economic security of the state depend on the reliability and resilience of the electric power supply;

(2) the increased deployment of non-dispatchable wind and solar electricity generation has exposed the bulk power system to significant weather dependence and will continue to erode the reliability and resilience of the grid unless reforms are instituted to more adequately value reliability and resilience;

(3) the current system of grid operation and regulatory oversight has failed to ensure the reliability and resilience of the grid for a number of reasons, including:

(A) market rules developed by the Electric Reliability Council of Texas and overseen by the Public Utility Commission of Texas have so far failed to adequately value reliability and resilience of the grid; and

(B) direct and indirect subsidies for wind and solar electricity generation have led to overinvestment in those forms of electricity generation and undervaluation of dispatchable, reliable, and resilient power plants, which has resulted in the retirement of several such plants, inhibited the addition of such plants, and inhibited weatherization expenditures to increase the reliability and resilience of the grid;

(5) several recent federal policy announcements mandating and incentivizing further deployment of significant non-dispatchable electricity sources such as wind and solar without providing sufficient resilient backup power will impose reliability and resilience penalties on the bulk power system relied on by the residents and industries of the state; and

(6) it is essential that the legislature immediately provide further direction to the Public Utility Commission of Texas regrading reliability standards for the ERCOT market and new mechanisms to address the reliability and resilience shortcomings of the grid.

SECTION 2. Chapter 39, Utilities Code, is amended by adding Subchapter M to read as follows:

SUBCHAPTER M. RELIABILITY STANDARD FOR NON-DISPATCHABLE

GENERATORS

Sec. 39.601. DEFINITIONS. In this subchapter:

(1) "Dispatchable generator" means a source of electricity that:

(A) is available for use on demand;

(B) may be dispatched on the request of a power grid operator;

(C) may have its power output adjusted, according to market need; and

(D) does not derive its power output primarily from sources that inherently change from minute to minute, such as those dependent on local weather conditions to be present.

(2) "Expected availability factor" means the average generation of a non-dispatchable generator, divided by its installed capacity, during the highest 100 net load hours each year in an average of two or more immediately preceding calendar years, as determined by the commission.

(3) "Firming requirement" is a requirement for a non-dispatchable generator to ensure that its hourly availability factor during at least 95 hours of the highest 100 net load hours equals or exceeds its expected availability factor by continuing to operate, constructing, or acquiring through a power purchase agreement or other means sufficient resources that are eligible to act as ancillary service reserves according to ERCOT protocols.

(4) "Hourly availability factor" means the hourly average generation of a non-dispatchable generator, divided by its installed capacity.

(5) "Non-dispatchable generator" means a source of electricity that does not meet the definition of a dispatchable generator in Paragraph (1).

Sec. 39.602. FIRMING REQUIREMENT FOR NON-DISPATCHABLE GENERATORS.

(a) Each non-dispatchable generator in the market shall, on an annual basis, acquire the necessary resources to meet its firming requirement.

(b) Beginning on December 1, 2024 and not later than December 1 of every year thereafter, each non-dispatchable generator in the market shall demonstrate to the commission, in a manner provided by the commission, that the non-dispatchable generator has secured sufficient firming capacity for the upcoming calendar year.

(c) The commission shall adopt any rules necessary to implement this section, including rules that establish an ancillary service market or a separate reliability service to implement this section.

SECTION 3. Chapter 39, Utilities Code, is amended by adding Subchapter M to read as follows:

Sec. 39.603. TRANSPARENCY REQUIRED FOR THE COST OF FIRMING AND TRANSMISSION ASSOCIATED WITH NON-DISPATCHABLE GENERATORS.

(a) The commission shall prepare a report by December 1, 2024 and thereafter on an annual basis, that includes the estimated annual firming costs required to be incurred under this subchapter by non-dispatchable generators, as well as the cumulative annual transmission costs that have been incurred in order to facilitate the transmission of non-dispatchable electricity to load.

(b) No later than December 1, 2024, and annually thereafter, the Public Utility Commission shall prepare a report to the Legislature that documents the status of implementation of this subchapter, whether the rules and protocols put in place to implement this Act have materially improved the reliability, resilience, and transparency of the electricity market, and whether any additional measures need to be taken by the legislature to empower the Commission to implement additional market reforms to ensure that market signals are adequate to preserve existing dispatchable generation and incent the construction of new dispatchable generation sufficient to maintain the reliability standard for at least 5 years from the date of the report.

SECTION 4. 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 on the 91st day after the last day of the legislative session.