Bill not drafted by TLC or Senate E&E.

      Line and page numbers may not match official copy.

      By Gallego                                      H.B. No. 3165

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to the appropriateness and reliability of the mix of

 1-3     resources by electric utilities.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  The legislature finds that a diverse portfolio of

 1-6     sources of electricity is critical to assure the reliability of our

 1-7     supply of electricity, prevent unpredictable cost increases, and to

 1-8     develop new industries that can benefit Texans.  As the electric

 1-9     industry moves to full cost competition, it may be difficult to

1-10     maintain a diverse portfolio of generating resources in a

1-11     competitive market when emphasis is on cost.  If left unchecked,

1-12     the competitive market may put Texas consumers in a situation where

1-13     electric utilities are overly relevant on one resource and

1-14     dangerously vulnerable to any rise in the price of the resource.

1-15           S.E.D.C. found that Texas finds itself as rich in renewable

1-16     energy as it was in fossil fuels at the beginning of the 20th

1-17     century.  Renewable energy resources coupled with energy efficiency

1-18     measures will sustain the state indefinitely, provide both

1-19     environmental and economic benefits, and maintain for Texas its

1-20     position as a world energy leader.  Ensuring a secure and cost

1-21     effective energy future for the state of Texas is an important

1-22     goal.

1-23           SECTION 2.  Subtitle B, Title II, The Public Utility

1-24     Regulatory Act of 1995 (Article 1446c-0 Vernon's Texas Civil

 2-1     Statutes), section 2.051(a)(3) is amended as follows:

 2-2           (a)  The commission by rule shall develop an integrated

 2-3     resource planning process to provide reliable energy service at the

 2-4     lowest reasonable system cost.  In determining the lowest

 2-5     reasonable system cost of an electric utility's plan, the

 2-6     commission shall consider in addition to direct costs the

 2-7     following:

 2-8                 (1)  the effect on the rates and bills of various types

 2-9     of customers;

2-10                 (2)  minimization of the risks of future fuel costs and

2-11     regulations;

2-12                 (3)  the appropriateness and reliability of a mix of

2-13     resources; and appropriate and reliable mix of resources  shall

2-14     [may] include a portfolio of cost effective resources of power

2-15     including but not limited to resources that are fueled and non

2-16     fueled, such as renewable resources and conservation measures and a

2-17     mixture of long and short term contracts[;] By the year 2001 each

2-18     utility shall either generate or purchase at least 1% of the power

2-19     they sell from renewable resources.  This renewable portfolio

2-20     requirement shall increase to 5% of power purchased or generated by

2-21     2005 and 10% by 2010.  Any utility or power marketer who generates

2-22     an excess power may sell renewable generation credits to other

2-23     utilities.

2-24           SECTION 3.  This Act takes effect September 1, 1997.

2-25           SECTION 4.  The importance of this legislation and the

2-26     crowded condition of the calendars in both houses create an

2-27     emergency and an imperative public necessity that the

2-28     constitutional rule requiring bills to be read on three several

2-29     days in each house be suspended, and this rule is hereby suspended.