Amend CSSB 766 (House committee report) as follows:
(1) In the recital to SECTION 5 of the bill (page 5, line
3), strike "382.0519" and substitute "382.05185, 382.0519,".
(2) In SECTION 5 of the bill, immediately following the
recital (page 5, between lines 4 and 5), insert:
Sec. 382.05185. EMISSIONS REDUCTIONS FOR CERTAIN EXEMPT
FACILITIES. (a) In this section, "electric generating facility"
means a facility that generates electric energy for compensation
and is owned or operated by a person in this state, including a
municipal corporation, electric cooperative, or river authority.
(b) This section applies only to an electric generating
facility existing on January 1, 1999, that is not subject to the
requirement to obtain a permit under Section 382.0518(g).
(c) It is the intent of the legislature that, for the
12-month period beginning on May 1, 2003, and for each 12-month
period after the end of that period, the total annual emissions of
nitrogen oxides from facilities subject to this section may not
exceed levels equal to 50 percent of the total emissions of that
pollutant during 1997, as reported to the commission, and the total
annual emissions of sulphur dioxides from coal-fired facilities
subject to this section may not exceed levels equal to 75 percent
of the total emissions of that pollutant during 1997, as reported
to the commission. The limitations prescribed by this subsection
may be met through an emissions allocation and allowance transfer
system described by this section.
(d) A municipal corporation, electric cooperative, or river
authority may exclude any electric generating facility of 25
megawatts or less from the requirements prescribed by this section.
Not later than January 1, 2000, a municipal corporation, electric
cooperative, or river authority must inform the commission of its
intent to exclude those facilities.
(e) The owner or operator of an electric generating facility
shall apply to the commission for a permit for the emission of air
contaminants on or before September 1, 2000. A permit issued by
the commission under this section shall require the facility to
achieve emissions reductions or trading emissions allowances as
provided by this section. If the facility uses coal as a fuel, the
permit must also be conditioned on the facility's emissions meeting
opacity limitations provided by commission rules. Notwithstanding
Section 382.0518(g), a facility that does not obtain a permit as
required by this subsection may not operate after May 1, 2003,
unless the commission finds good cause for an extension.
(f) The commission shall develop rules for the permitting of
electric generating facilities. The rules adopted under this
subsection shall provide, by region, for the allocation of
emissions allowances of sulphur dioxides and nitrogen oxides among
electric generating facilities and for facilities to trade
emissions allowances for those contaminants.
(g) The commission by rule shall establish an East Texas
Region, a West Texas Region, and an El Paso Region for allocation
of air contaminants under the permitting program under Subsection
(f). The East Texas Region must contain all counties traversed by
or east of Interstate Highway 35 or Interstate Highway 37,
including Bosque, Coryell, Hood, Parker, Somervell, and Wise
counties. The West Texas Region includes all of the state not
contained in the East Texas Region or the El Paso Region. The El
Paso Region includes El Paso County.
(h) Not later than January 1, 2000, the commission shall
allocate to each electric generating facility in each region a
number of annual emissions allowances, with each allowance equal to
one ton of sulphur dioxides or of nitrogen oxides emitted in a
year, that permit emissions of the contaminants from the facility
in that year. The commission must allocate to each facility a
number of emissions allowances equal to an emissions rate measured
in pounds per million British thermal units divided by 2,000 and
multiplied by the facility's total heat input in terms of millions
of British thermal units during 1997. For the East Texas Region,
the emissions rate shall be 0.14 pounds per million British thermal
units for nitrogen oxides and 1.38 pounds per million British
thermal units for sulphur dioxides. For the West Texas and El Paso
regions, the emissions rate shall be 0.195 pounds per million
British thermal units for nitrogen oxides. Allowances for sulphur
dioxides may only be allocated among coal-fired facilities.
(i) A person, municipal corporation, electric cooperative,
or river authority that owns and operates an electric generating
facility not covered by this section may elect to designate that
facility to become subject to the requirements of this section and
to receive emissions allowances for the purpose of complying with
the emissions limitations prescribed by Subsection (c). The
commission shall adopt rules governing this election that:
(1) require an owner or operator of an electric
generation facility to designate to the commission in its permit
application under Subsection (e) any facilities that will become
subject to this section;
(2) require the commission, notwithstanding the
allocation mechanism provided by Subsection (h), to allocate
additional allowances to facilities governed by this subsection in
an amount equal to each facility's actual emissions in tons in
1997;
(3) provide that any unit designated under this
subsection may not transfer or bank allowances conserved as a
result of reduced utilization or shutdown, except that the
allowances may be transferred or carried forward for use in
subsequent years to the extent that the reduced utilization or
shutdown results from the replacement of thermal energy from the
unit designated under this subsection with thermal energy generated
by any other unit; and
(4) provide that emissions reductions from electing
facilities designated in this subsection may only be used to
satisfy the emissions reductions for grand fathered facilities
defined in Subsection (c) to the extent that reductions used to
satisfy the limitations in Subsection (c) are beyond the
requirements of any other state or federal standard, or both.
(j) The commission by rule shall permit a facility to trade
emissions allocations with other electric generating facilities
only in the same region.
(k) The commission by rule shall provide methods for the
commission to determine whether a facility complies with the permit
issued under this section. The rules must provide for:
(1) monitoring and reporting actual emissions of
sulphur dioxides and nitrogen oxides from each facility;
(2) provisions for saving unused allowances for use in
later years; and
(3) a system for tracking traded allowances.
(l) A facility may not trade an unused allowance for a
contaminant for use as a credit for another contaminant.
(m) A person possessing market power may not withhold
emissions allowances from the market in a manner that is
unreasonably discriminatory or tends to unreasonably restrict,
impair, or reduce the level of competition.
(n) The commission shall penalize a facility that emits an
air contaminant that exceeds the facility's allowances for that
contaminant by:
(1) enforcing an administrative penalty, in an amount
determined by commission rules, for each ton of air contaminant
emissions by which the facility exceeds its allocated emissions
allowances; and
(2) reducing the facility's emissions allowances for
the next year by an amount of emissions equal to the excessive
emissions in the year the facility emitted the excessive air
contaminants.
(o) The commission may penalize a facility that emits an air
contaminant that exceeds the facility's allowances for that
contaminant by:
(1) ordering the facility to cease operations; or
(2) taking other enforcement action provided by
commission rules.
(p) The commission by rule shall provide for a facility in
the El Paso Region to meet emissions allowances by using credits
from emissions reductions achieved in Ciudad Juarez, United Mexican
States.
(q) If the commission or the United States Environmental
Protection Agency determines that reductions in nitrogen oxides
emissions in the El Paso Region otherwise required by this section
would result in increased ambient ozone levels in El Paso County,
facilities in the El Paso Region are exempt from the nitrogen
oxides reduction requirements.
(r) An applicant for a permit under Subsection (e) shall
publish notice of intent to obtain the permit in accordance with
Section 382.056. The commission shall provide an opportunity for a
public hearing and the submission of public comment and send notice
of a decision on an application for a permit under Subsection (e)
in the same manner as provided by Sections 382.0561 and 382.0562.
The commission shall review and renew a permit issued under this
section in accordance with Section 382.055.
(s) This section does not limit the authority of the
commission to require additional reductions of nitrogen oxides,
sulphur dioxides, or any other pollutant from generating
facilities subject to this section.
(3) In SECTION 9 of the bill (page 15, line 27), between
"Commission" and "shall" insert "and the Public Utility Commission
of Texas".
(4) Add a new section to the bill, numbered appropriately,
to read:
SECTION ____. Subchapter E, Chapter 36, Utilities Code, is
amended by adding Section 36.209 to read as follows:
Sec. 36.209. ELECTRIC GENERATING FACILITY COST RECOVERY FOR
AIR CONTAMINANT EMISSIONS PERMIT OR EMISSIONS REDUCTION. (a)
Subject to Subsection (b), if an electric utility makes a
reasonable capital investment before May 1, 2003, to comply with
Section 382.05185, Health and Safety Code, the commission, after an
expedited review and approval based on the criteria under
Subsection (b), shall authorize the use of an appropriate mechanism
for full and concurrent recovery of the capital investment and a
return on the investment at a rate of return that includes an
equity return component that is equivalent to that of U.S. Treasury
bonds of similar duration to the expected useful life of the
investment.
(b) An investment described by Subsection (a) and a return
on the investment is the amount eligible for full and concurrent
recovery under that subsection only to the extent that:
(1) the cost is applied to offset or reduce the
emission of air contaminants from an electric generating facility
and:
(A) the offset or reduction is determined by the
Texas Natural Resource Conservation Commission to be an essential
component in achieving compliance with a national ambient air
quality standard; or
(B) the offset or reduction is necessary for an
unpermitted electric generating facility to obtain a permit under
Section 382.05185, Health and Safety Code;
(2) the decision to retrofit a facility is determined
to be the most cost-effective means of achieving the offset or
reduction after consideration of alternative measures, including
the retirement of the electric generating facility, taking into
account the cost of replacement generating capacity and the net
book value of the affected facility, including retirement costs and
offsetting salvage value; and
(3) the amount and location of resulting emission
reductions is consistent with the air quality goals and policies of
the Texas Natural Resource Conservation Commission.
(5) Add a new section to the bill, numbered appropriately,
to read:
SECTION ____. If S.B. No. 7 of the 76th Legislature, Regular
Session, 1999, is enacted and becomes law, Sections 382.05185,
Health and Safety Code, as added by this Act, and Section 36.209,
Utilities Code, as added by this Act, do not take effect.