By:  Van de Putte                                                 S.B. No. 1039

A BILL TO BE ENTITLED
AN ACT
relating to demonstration and deployment of fuel cells for electric generation. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Section 31.002, Utilities Code, is amended by adding Subdivision (21) to read as follows: (21) "Fuel cell" means an electronic device that uses fuel and oxidant to generate electricity continuously. SECTION 2. Subchapter Z, Chapter 39, Utilities Code, is amended by adding Sections 39.910-39.912 to read as follows: Sec. 39.910. FUEL CELL ELECTRIC GENERATION DEMONSTRATION AND DEPLOYMENT. (a) 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 the Health and Safety Code Sec. 386.001(2). (b) Each electric utility, electric cooperative, and municipally owned utility shall establish a demonstration and deployment program to achieve the generation capacity goals of this subsection by the dates specified by this subsection. The generation capacity goals may be met by the installation of fuel cell electric generation capacity on or off of the electric power grid. The total generation capacity goals for this state are: (1) 35 megawatts by January 1, 2005; (2) 100 megawatts by January 1, 2006; (3) 200 megawatts by January 1, 2007; (4) 325 megawatts by January 1, 2008; (5) 475 megawatts by January 1, 2009; (6) 700 megawatts by January 1, 2010; and (7) 1,000 megawatts by January 1, 2011. (c) To meet the generation capacity goals established under this section, an electric utility, electric cooperative, or municipally owned utility shall: (1) purchase and own fuel cells, to the extent allowed by law; or (2) provide incentives to its customers through standard-offer programs as provided by commission rule. (d) The incentives under Subsection (c)(2) must be: (1) administered in a market-neutral and nondiscriminatory manner; and (2) offered to all customer classes. (e) To provide for implementation of the incentive programs under this section, the commission shall adopt rules similar to those governing the design and implementation of efficiency programs established under Section 39.905. The rules must: (1) allow for measures or incentives to encourage installation of fuel cell electric generation capacity to relieve present or potential transmission congestion or distribution congestion; (2) be technology-neutral with respect to fuel or fuel cell technology; (3) ensure that a percentage of money is designated for generators of categories of: (A) less than 10 kilowatts; (B) 10-100 kilowatts; and (c) greater than 100 kilowatts; (4) allow backup or intermittent generation systems; (5) allow customers to select appropriate fuel cell technologies and products from their chosen providers to meet a wide variety of potential applications at various scales; and (6) establish a project open to all persons to receive: (A) comments on the commission's development of rules under this section; (B) comments on the progress of the incentive programs toward meeting the goals of this section; and (C) recommendations for changes to the rules, incentive programs, or incentive levels. (f) The commission by rule shall establish goals for each electric utility, electric cooperative, and municipally owned utility that is proportional to its share of the electric generation load. The commission may exempt small electric cooperatives or municipally owned utilities from participation under this section. (g) The commission shall 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) In this section, "council" means the Texas Council on Environmental Technology. (b) The council shall: (1) provide coordination and support for the Texas Consortium for Advanced Fuel Cell Research. (2) 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 (3) develop legislative recommendations for: (A) instituting other means of accelerating the commercial availability of stationary fuel cell electric generating capacity in this state; (B) instituting means of fostering the development or manufacture of fuel cells or related products or services in this state; and (C) instituting appropriate means to prepare this state to accept the early introduction of fuel cell vehicles or other ultra-low-emissions vehicles. SECTION 3. Section 39.002, Utilities Code, is amended to read as follows: Section 39.002. APPLICABILITY. This chapter, other than Sections 39.155, 39.157(e), 39.203, 39.903, [and] 39.904, and 39.910, does not apply to a municipality owned utility or an electric cooperative. Section 39.157(e), 39.203, and 39.904, however, apply only to a municipally owned utility or an electric cooperative that is offering customer choice. If there is a conflict between the specific provisions of this chapter and any other provisions of this title, except for Chapters 40 and 41, the provisions of this chapter control. SECTION 4. Section 40.004, Utilities Code, is amended to read as follows: Sec. 40.004. JURISDICTION OF COMMISSION. Except as specifically otherwise provided in this chapter, the commission has jurisdiction over municipally owned utilities only for the following purposes: (1) to regulate wholesale transmission rates and service, including terms of access, to the extent provided by Subchapter A, Chapter 35; (2) to regulate certification of retail service areas to the extent provided by Chapter 37; (3) to regulate rates on appeal under Subchapters D and E, Chapter 33, subject to Section 40.051(c); (4) to establish a code of conduct as provided by Section 39.157(e) applicable to anticompetitive activities and to affiliate activities limited to structurally unbundled affiliates of municipally owned utilities, subject to Section 40.054; (5) to establish terms and conditions for open access to transmission and distribution facilities for municipally owned utilities providing customer choice, as provided by Section 39.203; (6) to require collection of the nonbypassable fee established under Section 39.903(b) and to administer the renewable energy credits program under Section 39.904(b), [and] the natural gas energy credits program under Section 39.9044(b), and the fuel cell incentives under Section 39.910; and (7) to require reports of municipally owned utility operations only to the extent necessary to: (A) enable the commission to determine the aggregate load and energy requirements of the state and the resources available to serve that load; or (B) enable the commission to determine information relating to market power as provided by Section 39.155. SECTION 5. Section 41.001, Utilities Code, is amended to read as follows: Sec. 41.001. APPLICABLE LAW. Notwithstanding any other provision of law, except Sections 39.155, 39.157(e), 39.203, 39.903, [and] 39.904, and 39.910, this chapter governs the transition to and the establishment of a fully competitive electric power industry for electric cooperatives. Regarding the regulation of electric cooperatives, the chapter shall control over any other provision of this title, except for sections in which the term "electric cooperative" is specifically used. SECTION 6. Section 41.004, Utilities Code, is amended to read as follows: Sec. 41.004. JURISDICTION OF COMMISSION. Except as specifically provided otherwise in this chapter, the commission has jurisdiction over electric cooperatives only as follows: (1) to regulate wholesale transmission rates and service, including terms of access, to the extent provided in Subchapter A, Chapter 35; (2) to regulate certification to the extent provided in Chapter 37; (3) to establish a code of conduct as provided in Section 39.157(e) subject to Section 41.054; (4) to establish terms and conditions, but not rates, for open access to distribution facilities for electric cooperatives providing customer choice, as provided in Section 39.203; [and] (5) to require reports of electric cooperative operations only to the extent necessary to: (A) ensure the public safety; (B) enable the commission to satisfy its responsibilities relating to electric cooperatives under this chapter; (C) enable the commission to determine the aggregate electric load and energy requirements in the state and the resources available to serve that load; or (D) enable the commission to determine information relating to market power as provided in Section 39.155; and (6) to administer the fuel cell demonstration and deployment programs under Section 39.910. SECTION 7. Chapter 447, Government Code, as amended by Section 10, Chapter 573, Section 28, Chapter 1158, and Section 1, Chapter 1138, Acts of the 77th Legislature, 2001 is amended by adding Section 447.012 to read as follows: Sec. 447.012. FUEL CELL DEVELOPMENT. The state energy conservation office shall 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. Subchapter H, Chapter 151, Tax Code, is amended by adding Section 151.356 to read as follows: Sec. 151.356. STATIONARY FUEL CELLS. (a) The sale of stationary fuel cells is exempted from the taxes imposed by this chapter. (b) This section expires January 1, 2011. SECTION 9. Not later than September 1, 2004, the Texas Council on Environmental Technology shall present the speaker of the house of representatives, the lieutenant governor, and the Public Utility Commission of Texas with a report on the status of the fuel cell industry in this state. The report must include recommendations: (1) for any changes to the fuel cell demonstration and deployment incentive program under Section 39.910, Utilities Code, as added by this Act; (2) for any other steps this state may take to prepare this state for the introduction of fuel cell vehicles or other ultra-low-emissions vehicles; (3) regarding research and development programs at universities and private research centers in this state to advance fuel cell research and development in this state and to attract federal and industry funding of fuel cell research and development; and (4) regarding training and education necessary for developing professional services required to install and service fuel cells installed in this state. SECTION 10. The Public Utility Commission of Texas shall adopt rules under Section 39.910, Utilities Code, as added by this Act, before January 1, 2004. SECTION 11. This Act takes effect September 1, 2003.