By:  Cain                                             S.B. No. 1725
         Line and page numbers may not match official copy.
         Bill not drafted by TLC or Senate E&E.
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the creation of the Texas Fuel Cell Commercialization
 1-3     Initiative and the redirection of certain federal Oil Overcharge
 1-4     Restitution Funds.
 1-6           SECTION 1.  The heading of Section 2305.032, Government Code,
 1-7     is amended to read as follows:
 1-8           Sec. 2305.032.  LOANSTAR FUND [REVOLVING LOAN PROGRAM].
 1-9           SECTION 2.  Section 2305.032, Government Code, is amended by
1-10     amending Subsection (f) and adding Subsections (g) through (n) as
1-11     follows:
1-12           (f)  The energy office shall allocate at least $95 million,
1-13     including loan commitments and cash on hand, to the loanstar fund,
1-14     which shall be used to provide loanstar loans as authorized by this
1-15     section and for the funding of a Texas Fuel Cell Commercialization
1-16     Initiative. [program and] The energy office shall administer the
1-17     funds under its control, as appropriate, to assure a smooth and
1-18     complete transition from the use of the funds for the loanstar loan
1-19     program to the expenditure of funds for the Texas Fuel Cell
1-20     Commercialization Initiative over no more than a two year period
1-21     [in a manner that assures that funds available to the loanstar
1-22     program equal or exceed $95 million at all times].
1-23           (g)  The State Energy Conservation Office shall form a fuel
 2-1     cell advisory committee to help the Office determine the most cost
 2-2     effective means to foster the accelerated commercial development
 2-3     and availability of clean small-scale fuel cell technology to Texas
 2-4     residents and businesses, and to encourage the growth of the fuel
 2-5     cell industry, and related products and services, in Texas.  The
 2-6     Advisory Committee shall provide guidance to the Office in
 2-7     development of program participation standards, system installation
 2-8     and technical performance standards, and establishment of standards
 2-9     for monitoring and evaluation of systems installed under the
2-10     program.  The advisory committee shall include representatives of
2-11     the fuel cell industry, energy services providers, electric
2-12     transmission and distribution utilities and retail electric
2-13     providers, as well as, small customers.
2-14           (h)  The State Energy Conservation Office is responsible for
2-15     creation, and administration, of a Texas Fuel Cell
2-16     Commercialization Initiative, a program of standard-offer
2-17     incentives, to competitively promote and facilitate the accelerated
2-18     commercialization of clean small-scale fuel cell power generation
2-19     and small combined heat and power fuel cell systems, particularly
2-20     for use in areas the state which are in nonattainment or
2-21     near-nonattainment with the Clean Air Act.
2-22           (i)  Incentives shall be made available to competitive
2-23     companies, which install the systems on customer premises, at the
2-24     customer's request.  Installing companies must demonstrate proper
2-25     installation and system performance in order to claim the
2-26     incentive.  Incentives shall be performance, or production, based,
 3-1     and shall be designed to encourage competitive pricing, as well as,
 3-2     accelerate the adoption of fuel cell technology, to the extent
 3-3     feasible.
 3-4           (j)  The State Energy Conservation Office shall adopt the
 3-5     necessary and appropriate rules to implement the Texas Fuel Cell
 3-6     Commercialization Initiative, in order to launch the Initiative
 3-7     publicly no later than January 1, 2003.  The rules shall provide
 3-8     for the smooth transition from the current use of the Loanstar fund
 3-9     to implementation of the Texas Fuel Cell Commercialization
3-10     Initiative, allowing for completion of existing projects being
3-11     financed, and a diminishing rate of financing of new projects, in
3-12     order to allow for the timely expansion of the new Texas Fuel Cell
3-13     Commercialization Initiative.
3-14           (k)  The State Energy Conservation Office shall amend the
3-15     State Energy Plan to encompass the initiative authorized by this
3-16     section, and shall pursue the approval of the United States
3-17     Department of Energy for use of federally allocated funds as
3-18     necessary to meet the deadline imposed in Subsection (j).
3-19           (l)  The State Energy Conservation Office may use 5% of the
3-20     funds allocated to the Texas Fuel Cell Commercialization Initiative
3-21     for administrative costs and for education-related efforts
3-22     associated with the initiative.  The State Energy Conservation
3-23     Office may use up to 10% (additional 5%) for administration and
3-24     education or development related efforts associated with the
3-25     initiative which the Advisory Committee agrees would enhance the
3-26     overall impact of the program.
 4-1           (m)  The State Energy Conservation Office shall report to the
 4-2     Legislative Budget Board on an annual basis on the progress of the
 4-3     Initiative authorized by this section, or more often if
 4-4     appropriate.  The Office shall also provide the Legislative Budget
 4-5     Board with the modified State Energy Plan, and an accounting for
 4-6     Oil Overcharge Restitution Fund conversion and expenditures.
 4-7           (n)  The State Energy Conservation Office shall endeavor to
 4-8     cooperate with and seek the assistance and support of the Texas
 4-9     Natural Resources and Conservation Commission and the Public
4-10     Utility Commission, and other state or local agencies as
4-11     appropriate, in development of program plans, rules and guidelines
4-12     or operating procedures.
4-13           SECTION 3.  This Act takes effect September 1, 2001.