By:  Armbrister                                                   S.B. No. 1381

A BILL TO BE ENTITLED
AN ACT
Relating to the accelerating the commercialization of the fuel cell industry in Texas, through a statewide demonstration incentive program, a temporary tax exemption, leveraging federal funds, coordination of research and development, and market analysis. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Title 3, Utilities Code, is amended by adding Chapter 125 to read as follows: CHAPTER 125. FUEL CELL POWER PLANT DEMONSTRATION Sec. 125.001 Definitions. In this chapter: (1) "Gas utility" means those utilities as defined by Sec. 121.001 engaged in distributing natural gas to end-use customers, except for local distribution companies that distribute to fewer than 100,000 end-use customers, and those municipally owned utilities as defined by Sec. 11.003(11) of the Utilities Code. (2) "Fuel cell power plant" means an integrated system comprised of a fuel cell stack assembly and associated balance of plant components that converts a fuel into electricity using electrochemical means. Sec. 125.002. TEXAS COUNCIL ON ENVIRONMENTAL TECHNOLOGY PARTICIPATION IN FUEL CELL ELECTRIC GENERATION DEMONSTRATION. (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 means of accelerating the commercial availability of stationary fuel cell electric generating capacity in this state in addition to those required by this section; (B) instituting means of fostering the development or manufacture of fuel cells or related products or services in this state; and (C) instituting appropriate measures to prepare this state to accept the early introduction of fuel cell vehicles or other ultra-low-emissions vehicles. Sec. 125.003. (a) Each gas utility shall establish a demonstration program to achieve the fuel cell power plant installation capacity goals of this subsection by the dates specified by this subsection. The fuel cell power plant goals may be met by the installation of fuel cell power plant capacity on or off of the electric power grid on or after September 1, 2003. The installation goal schedule for this state is: (1) 5 megawatts by January 1, 2005; and (2) 50 megawatts by January 1, 2006. (b) To meet the fuel cell power plant installation goals established under this section, a gas utility shall: (1) purchase and own fuel cell power plants, to the extent allowed by law; or (2) provide incentives to its customers through programs that are similar to the standard-offer programs as defined by Chapter 39.905, of Title 2 of the Utilities Code, as implemented by the Public Utility Commission of Texas. (c) The incentives under Subsection (b)(2) must be: (1) administered in a market-neutral and nondiscriminatory manner; and (2) offered to all customer classes. (d) To provide for implementation of the incentive programs under this section, the commission shall adopt rules that: (1) allow for measures or incentives to encourage installation of fuel cell power plant capacity to relieve present or potential transmission congestion or distribution congestion; (2) are technology-neutral with respect to fuel or fuel cell technology; (3) ensure that a percentage of the fuel cell power plant installation goal is achieved by fuel cell power plant units in the categories of: (A) less than 100 kilowatts per unit; and (B) greater than 100 kilowatts per unit; (4) allow backup or intermittent generation systems; (5) allow customers to select appropriate fuel cell power plant technologies and products from their chosen providers to meet a wide variety of potential applications at various scales. (e) The commission by rule shall establish goals for each gas utility that is proportional to its share of the total number of affected gas distribution customers. (f) The commission shall establish incentive levels, including different incentive levels for different sizes of fuel cell power plants, that are necessary and sufficient to meet the generation capacity goals by the appropriate dates. SECTION 2. Section 102.001, Utilities Code, is amended to read as follows: Section 102.001. Railroad Commission Jurisdiction. (a) The railroad commission has exclusive original jurisdiction over the rates and services of a gas utility: (1) that distributes natural gas or synthetic natural gas in: (A) areas outside a municipality; and (B) areas inside a municipality that surrenders its jurisdiction to the railroad commission under Section 103.003; and (2) that transmits, transports, delivers, or sells natural gas or synthetic natural gas to a gas utility that distributes the gas to the public. (b) The railroad commission has exclusive appellate jurisdiction to review an order or ordinance of a municipality exercising exclusive original jurisdiction as provided by this subtitle. (c) The railroad commission has exclusive jurisdiction to administer the fuel cell power plant demonstration and deployment programs under Chapter 125. SECTION 3. The Railroad Commission of Texas shall adopt rules under Chapter 125, Utilities Code, as added by this Act, before January 1, 2004. SECTION 4. 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, use and consumption of stationary fuel cells is exempted from the taxes imposed by this chapter. (b) This section expires January 1, 2011. SECTION 5. 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 6. 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 Railroad 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 125, 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 7. This Act takes effect September 1, 2003.