SRC-AMY S.B. 1039 78(R)   BILL ANALYSIS


Senate Research Center   S.B. 1039
By: Van de Putte
Business & Commerce
4/8/2003
As Filed


DIGEST AND PURPOSE 

Fuel cell technologies generate power through chemical reaction rather
than combustion, creating less of the pollution and ozone emissions
associated with power produced through combustion.  As proposed, S.B. 1039
establishes a series of annual goals for stationary fuel cell deployment,
directs certain utilities to establish deployment programs to achieve
capacity goals, and directs the Public Utility Commission of Texas to
adopt rules to implement incentive programs.  This bill also requires the
state energy conservation office to partner with the United States
Department of Energy to develop research and cooperative programs related
to fuel cells, and provides a tax exemption for the sale, use, or
consumption of fuel cells in Texas. 

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the Public Utility Commission
of Texas in SECTION 2 (Section 39.910, Utilities Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 31.002, Utilities Code, by adding Subdivision
(21) to define "fuel cell." 

SECTION 2.  Amends Chapter 39Z, Utilities Code, by adding Sections
39.910-39.912, as follows: 

Sec. 39.910.  FUEL CELL ELECTRIC GENERATION DEMONSTRATION AND DEPLOYMENT.
(a)  Provides that this section applies only to an electric utility,
electric cooperative, or municipally owned utility that is located in, or
that serves, an area that is in a nonattainment area, as defined by Title
I of the federal Clean Air Act (42 U.S.C. Section 7401 et seq.), or an
area that is an affected county, as defined in Section 386.001(2)
(Definitions), Health and Safety Code. 

(b)  Requires each electric utility, electric cooperative, and municipally
owned utility to establish a demonstration and deployment program to
achieve the generation capacity goals of this subsection by the dates
specified by this subsection.  Authorizes the generation capacity goals to
be met by the installation of fuel cell electric generation capacity on or
off of the electric power grid.  Sets forth the total generation capacity
goals for this state. 

(c) Sets forth an electric utility's, electric cooperative's, or
municipally owned utility's requirements to meet the generation capacity
goals established under this section. 

(d) Requires the incentives under Subsection (c)(2) to be administered in
a market-neutral, nondiscriminatory manner and offered to all customer
classes. 

(e) Requires the Public Utility Commission of Texas (PUC), to provide for
implementation of the incentive programs under this section, to adopt
rules similar to those governing the design and implementation of
efficiency programs established under Section 39.905 (Goal for Energy
Efficiency).  Sets forth the  requirements for the rules. 

(f) Requires PUC to establish goals, by rule, for each electric utility,
electric cooperative, and municipally owned utility that is proportional
to its share of the electric generation load.  Authorizes PUC to exempt
small electric cooperatives or municipally owned utilities from
participation under this section. 

(g) Requires PUC to establish incentive levels, with different incentive
levels for different sizes of fuel cells, that are necessary and
sufficient to meet the generation capacity goals by the appropriate dates. 

Sec. 39.911.  TEXAS COUNCIL ON ENVIRONMENTAL TECHNOLOGY PARTICIPATION IN
FUEL CELL ELECTRIC GENERATION DEMONSTRATION AND DEPLOYMENT.  (a)  Defines
"council."  

(b) Requires the Texas Council on Environmental Technology (council) to
provide coordination and support for the Texas Consortium for Advanced
Fuel Cell Research; monitor and evaluate the status of the fuel cell
industry in this state for both mobile and stationary applications,
including the general market conditions and other factors that may affect
the introduction of fuel cells and related products to the market; and
develop certain legislative recommendations. 

SECTION 3.  Amends Section 39.002, Utilities Code, to include Section
39.910 in the list of sections that apply to a municipality owned utility
and an electric cooperative. 

SECTION 4.  Amends Section 40.004, Utilities Code, to make a conforming
change. 

SECTION 5.  Amends Section 41.001, Utilities Code, to make a conforming
change. 

SECTION 6.  Amends Section 41.004, Utilities Code, to include
administering the fuel cell demonstration and deployment programs under
Section 39.910 in the PUC's jurisdiction over electric cooperatives. 

SECTION 7.  Amends Chapter 447, Government Code, by adding Section
447.012, as follows: 

Sec. 447.012.  FUEL CELL DEVELOPMENT.  Requires the state energy
conservation office to undertake to partner with the United States
Department of Energy and other federal agencies or programs to develop
cooperative programs, related to research on, development of, and
demonstration of fuel cell technology in this state. 

SECTION 8.  Amend Chapter 151H, Tax Code, by adding Section 151.356, as
follows: 

Sec. 151.356.  STATIONARY FUEL CELLS.  (a) Provides that the sale of
stationary fuel cells is exempted from the taxes imposed by this chapter. 

(b) Provides that this section expires January 1, 2011.

SECTION 9.  Requires the council, not later than September 1, 2004, to
present the speaker of the house of representatives, the lieutenant
governor, and the PUC with a report on the status of the fuel cell
industry in this state.  Sets forth the required content of the report. 

SECTION 10.  Requires PUC to adopt rules under Section 39.910, Utilities
Code, as added by this Act, before January 1, 2004. 

SECTION 11.  Effective date:  September 1, 2003.