BILL ANALYSIS

Senate Research Center	C.S.S.B. 2112
88R22933 JXC-F	By: Johnson
	Business & Commerce
	4/13/2023
	Committee Report (Substituted)

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

All Texas residents, businesses, and communities rely on uninterrupted electrical power. The Texas Power Promise (TPP) fortifies Texas communities against sustained loss of electrical power and the resulting loss of critical and essential services, including, to name only a few: food and fuel, water and wastewater facilities, emergency and non-emergency medical care, senior living centers, police and fire, and other emergency operations. By facilitating and funding the design, procurement, installation, administration, and coordinated management of stand-alone, behind-the-meter, multi-day backup power sources for the facilities upon which communities rely, the TPP will make Texas communities safer and more resilient.

TPP backup power facilities can be used as "islanded" (i.e., stand-alone, disconnected from the grid) operations to support vital community power loads when connected grid service fails; to enable transmission and distribution utilities to de-energize a facility's circuit for a limited time in order to rotate loads and manage outages among customers and communities; and, once the Public Utility Commission (PUC) and ERCOT have established procedures to integrate aggregated distributed energy resources and virtual power plants into grid operation, to support power system reliability under emergency grid conditions, including provision of emergency generation, demand response, voltage support, and even blackstart power.

C.S.S.B. 2112, along with its enabling legislation S.J.R. 82, provides for the creation of a fund to be administered by the State Energy Conservation Office (SECO). This fund, the Texas power resiliency fund, will support the implementation of Texas backup power packages. To qualify as a Texas backup power package, the project must be engineered to minimize operation costs, allow for immediate islanding, be capable of operating for at least 48 continuous hours without refueling or connecting to a separate power source, and provide power from a combination of natural gas or propane with photovoltaic panels and battery storage or battery storage on an electric school bus, among other technical requirements.

TPP grants will award $500/kW toward the cost of procurement and installation of TPP backup power packages, up to a maximum of 2.5 MW. TPP funds may be spent only on TPP-certified power packages and service providers. TPP funds may not be awarded to any facilities associated with commercial energy systems and equipment or non-public schools, nor any for-profit facilities that do not directly serve public safety and human health.

Purpose:

Guide the design and development of standard backup power packages using commercially available equipment and standardized installation.
Clear, simple, and easy processes for qualifying facilities to apply for, receive TPP funding, and deploy TPP backup power packages.
Determine eligibility for facility participation.
Fund and finance the procurement and installation of TPP backup power packages through the Texas Power Resiliency Fund.
Administer applications for and award grants and financing through the Texas Division of Emergency Management (TDEM), and/or its designee.
Authorize TDEM to create a mobile power fleet of geographically dispersed mobile generator or battery systems that can be deployed to communities in emergency conditions.
Authorize and coordinate aggregation of TPP backup power packages to be operated to support regional power grid systems under emergency conditions.
Finance and deploy electric utility equipment that makes possible greater sectionalization of power feeders.
Update outage management strategies to exploit sectionalization technology upgrades and the availability of TPP backup power packages, to enable a more even distribution of and rotation loadshed among affected feeders, with the goal that no electric customers experience an intentional load-shed event longer than four hours at a time.

Key Provisions:

Amends Subchapter C, Chapter 382, of the Health and Safety Code and Subchapter Z, Chapter 39, of the Utilities Code to include the definition of a Texas backup power package and direct the pertinent commission (the Texas Commission on Environmental Quality; PUC) to enable easy integration of these packages.
Adds Subchapter K to the Government Code, which includes definitions for the fund and the entities administering the fund, authorizes TDEM to convene an advisory committee and define the technical specifics of the program, defines the requirements of a Texas backup power package, and instructs SECO and TDEM to collaborate on the administration of loans and grants under this subchapter.
Adds Section 418.406 to the Government Code to authorize TDEM to use money in the fund to procure and deploy mobile sources of backup power.

Committee substitute:

Replaces SECO with TDEM as administrator of the grants and loans program.
Makes technical changes requested by the comptroller regarding assets held by the Texas Treasury Safekeeping Trust Company.
Provides for a PUC study to facilitate implementation of the segmentation provision added to Section 38.076, Utilities Code.

C.S.S.B. 2112 amends current law relating to resources used to ensure the continuous provision of power.

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the Texas Commission on Environmental Quality in SECTION 1 (Section 382.069, Health and Safety Code) and of this bill.

Rulemaking authority is expressly granted to the Texas Division of Emergency Management in SECTION 2 (Section 418.405, Government Code) of this bill.

Rulemaking authority is expressly granted to the Public Utility Commission of Texas in SECTION 5 (Section 39.919, Utilities Code) of this bill.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Subchapter C, Chapter 382, Health and Safety Code, by adding Section 382.069, as follows:

Sec. 382.069. TEXAS BACKUP POWER PACKAGE. (a) Defines "Texas backup power package."

(b) Requires the Texas Commission on Environmental Quality by rule to adopt a process to expedite the permitting of a Texas backup power package for which a permit is required under Chapter 382 (Clean Air Act).

SECTION 2. Amends Chapter 418, Government Code, by adding Subchapter K, as follows:

SUBCHAPTER K. TEXAS POWER PROMISE

Sec. 418.401. DEFINITIONS. Defines "fund," "Texas backup power package," and "trust company."

Sec. 418.402. PURPOSE. Provides that the purpose of this subchapter is to facilitate and provide funding for:

(1) the design, procurement, installation, and use of Texas backup power packages for facilities on which communities rely for health, safety, and well-being; and

(2) the procurement and use of mobile sources of backup power to ensure the health, safety, and well-being of communities.

Sec. 418.403. DIVISION DUTIES. (a) Requires the Texas Division of Emergency Management (TDEM) to convene an advisory committee in the manner provided by Chapter 2110 (State Agency Advisory Committees), Government Code.

(b) Requires the advisory committee to recommend criteria for TDEM to employ in making a grant or loan under this subchapter.

(c) Requires TDEM to 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. 418.404. TEXAS BACKUP POWER PACKAGES. (a) Authorizes a grant or loan made under this subchapter to be provided only 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.

(b) Authorizes Texas backup power packages to be aggregated and operated to support the power grid under emergency conditions if the operation does not compromise a Texas backup power package's capability to provide power to its host facility for at least 24 hours of operation without refueling or connecting to a separate power source.

Sec. 418.405. GRANTS AND LOANS. (a) Authorizes TDEM to provide grants and loans under this subchapter.

(b) Authorizes TDEM by rule to establish procedures for:

(1) the application for and award of a grant or loan under this subchapter; and

(2) the administration of the Texas power resiliency fund (fund).

(d) Authorizes TDEM to provide a loan under this subchapter for procurement and operating costs.

(e) Requires TDEM to maintain and publish a list of approved vendors eligible to assist with the sale, installation, operation, and ongoing maintenance of Texas backup power packages.

(f) Prohibits TDEM from providing 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.

Sec. 418.406. MOBILE BACKUP POWER FLEET. Authorizes TDEM to use money from the fund to procure and deploy mobile sources of backup power to ensure the health, safety, and well-being of communities.

Sec. 418.407. FUND. (a) Provides that the fund is a special fund in the state treasury outside the general revenue fund to be administered and used, without further appropriation, by TDEM.

(b) Provides that the fund and the fund's accounts are kept and held by the Texas Treasury Safekeeping Trust Company (trust company) for and in the name of TDEM.

(d) Provides that the fund consists of:

(1) money credited, appropriated, or transferred to the fund by the legislature;

(2) revenue that the legislature dedicates for deposit to the credit of the fund;

(3) the returns received from the investment of money in the fund; and

(4) gifts, grants, and donations contributed to the fund.

Sec. 418.408. MANAGEMENT AND INVESTMENT OF FUND. (a) Requires the trust company to hold and invest the fund, taking into account the purposes for which money in the fund is authorized to be used. Authorizes the fund to be invested with the state treasury pool or pooled with other state assets for purposes of investment.

(b) Provides that 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) Authorizes the trust company, in managing the assets of the fund, to 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) Requires that the reasonable expenses of managing the fund be paid from the fund.

(e) Requires the trust company annually to provide a written report to TDEM with respect to the investment of the fund.

(f) Requires the trust company to adopt a written investment policy that is appropriate for the fund. Requires the trust company to present the investment policy to the investment advisory board established under Section 404.028 (Investment Advisory Board). Requires the investment advisory board to submit to the trust company recommendations regarding the policy.

(g) Requires TDEM annually to provide to the trust company a forecast of the cash flows into and out of the fund. Requires TDEM to provide updates to the forecasts as appropriate to ensure that the trust company is able to achieve the objective specified by Subsection (b).

(h) Requires the trust company to disburse money from the fund as directed by TDEM.

SECTION 3. Amends Section 38.076, Utilities Code, by adding Subsection (c-1), to require the Public Utility Commission of Texas (PUC) to require transmission and distribution utilities to use good faith efforts to ensure that no distribution feeder is subject to load shedding for more than four consecutive hours in a six-hour period.��

SECTION 4. Amends Subchapter D, Chapter 38, Utilities Code, by adding Section 38.078, as follows:

Sec. 38.078. CIRCUIT SEGMENTATION STUDY AND COST RECOVERY. (a) Requires the PUC, not later than September 15, 2023, to direct each transmission and distribution utility to perform a circuit segmentation study.

(b) Requires that a circuit segmentation study:

(1) use an engineering analysis to examine whether and how the transmission and distribution utility's transmission and distribution systems can be segmented and sectionalized to manage and rotate outages more evenly across all customers and circuits, while maintaining the protections offered to critical facilities;

(2) include an engineering analysis of the feasibility of using sectionalization, automated reclosers, and other technology to break up the circuits that host significant numbers of critical facilities into smaller segments for outage management purposes to enable more granular and flexible outage management;

(3) identify feeders with extensive numbers of critical facilities that, if equipped with facility-specific backup power systems and segmentation, can enhance the utility's outage management flexibility; and

(4) include an estimate of the time, capital cost, and expected improvements to load-shed management associated with the circuit segmentation study.

(c) Requires each transmission and distribution utility to submit a report of the conclusions of the utility's study to the PUC not later than September 1, 2024.

(d) Requires the PUC to review each circuit segmentation study not later than March 15, 2025.

(e) Provides that if the PUC determines that the implementation of circuit segmentation engineering and investments as provided by a transmission and distribution utility's circuit segmentation study report would facilitate better outage management in the ERCOT power region, investments made by the utility for such purposes are required to be presumed just, reasonable, and appropriate for rate-based cost recovery.

SECTION 5. Amends Subchapter Z, Chapter 39, Utilities Code, by adding Section 39.919, as follows:

Sec. 39.919. TEXAS BACKUP POWER PACKAGES. (a) Defines "Texas backup power package."

(b) Requires the PUC by rule to adopt procedures to expedite electric cooperative, municipally owned utility, and electric utility interconnection requests for Texas backup power packages.

SECTION 6. Provides that 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 power resiliency fund to finance backup power sources takes effect. Provides that if that amendment is not approved by the voters, this Act has no effect.