79R2794 JJT-F
By: Chisum H.B. No. 991
A BILL TO BE ENTITLED
AN ACT
relating to authorizing the Texas Commission on Environmental
Quality to enter into voluntary emissions reduction agreements with
owners of stationary sources or groups of stationary sources.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 382, Health and Safety Code, is amended
by adding Subchapter I to read as follows:
SUBCHAPTER I. VOLUNTARY EMISSIONS REDUCTION AGREEMENTS
Sec. 382.351. DEFINITION. In this subchapter, "voluntary
agreement" means a voluntary emissions reduction agreement.
Sec. 382.352. APPLICABILITY. This subchapter applies only
to an investor-owned electric utility operating solely outside of
the Electric Reliability Council of Texas region.
Sec. 382.353. VOLUNTARY EMISSIONS REDUCTION AGREEMENTS.
(a) The commission may enter into a voluntary emissions reduction
agreement with the owner of a stationary source or group of
stationary sources under which the owner agrees to reduce emissions
or emission rates at the source or group of sources according to an
emissions reduction plan and the commission grants the owner a
regulatory assurance period for the source or group of sources. The
emissions reduction plan and the regulatory assurance period are
part of the agreement. Any stationary source that is part of the
plan must be in the electric utility's regulated rate base.
(b) The commission shall evaluate the regulatory assurance
period according to:
(1) the environmental benefits of the proposed
voluntary agreement and their significance;
(2) the time necessary to achieve the proposed
emissions reductions;
(3) the capital, operating, and other costs associated
with achieving the emissions reductions; and
(4) the proposal's energy and environmental impacts
not associated with air quality.
(c) The commission shall structure a voluntary agreement to
minimize the costs and, to the extent consistent with minimizing
the costs, maximize the flexibility available to the owner of a
stationary source or group of stationary sources who seeks to enter
into the voluntary agreement by using methods that include the use
of:
(1) numeric emissions limits;
(2) annual emissions limits; or
(3) emissions averaging across several stationary
sources or groups of stationary sources.
(d) The commission shall evaluate a proposed voluntary
agreement to ensure that the agreement will:
(1) result in:
(A) reductions in emissions or emission rates;
and
(B) substantially greater emissions reductions
than required by law;
(2) protect human health and the environment; and
(3) result in the selection of the most cost-effective
options after consideration of alternative measures.
(e) The commission shall conduct and shall include as
attachments to an approved voluntary agreement the commission's
analysis of:
(1) the proposed emissions reduction plan;
(2) the agreement's compliance with the requirements
of this section and Sections 382.354 and 382.355; and
(3) the estimated costs of the plan and expected
benefits from executing the plan.
Sec. 382.354. EMISSIONS REDUCTION PLAN. An emissions
reduction plan must include for the stationary source or group of
stationary sources that is the subject of the plan:
(1) each air pollutant emissions of which are to be
reduced under the plan;
(2) a description of planned emissions reduction
projects to be used to implement the plan;
(3) activities and schedules associated with each
project;
(4) the amount of emissions reductions estimated to be
achieved for each pollutant under the plan;
(5) the estimated date on which the source or group of
sources that is the subject of the plan will achieve compliance with
the terms of the plan;
(6) the estimated costs of the plan and expected
benefits from executing the plan; and
(7) any other information the commission by rule may
require.
Sec. 382.355. REGULATORY ASSURANCE PERIOD. (a) The
commission shall grant an owner of a stationary source or group of
stationary sources who enters into a voluntary agreement a
regulatory assurance period as provided by this section. The
period begins on the date that the source or group of sources
achieves compliance with the voluntary agreement and ends not later
than the 15th anniversary of that date.
(b) During a regulatory assurance period, the commission
may not require the owner of a stationary source or group of
stationary sources that is the subject of the voluntary agreement
to install pollution control equipment or to implement pollution
control strategies at the source or group of sources in addition to
equipment or strategies that are part of the voluntary agreement if
the purpose of the equipment or strategies is to further reduce
emissions of an air pollutant emissions of which are to be reduced
under the voluntary agreement in order to comply with a state
regulatory requirement that:
(1) is based exclusively on state authority; and
(2) directly or indirectly requires reductions in the
air pollutant emissions of which are to be reduced under the
voluntary agreement.
Sec. 382.356. NOTICE AND HEARING. The commission may not
approve a voluntary agreement unless the commission has first
provided the public notice and the opportunity to comment on the
proposed agreement.
Sec. 382.357. DECISION ON AGREEMENT. (a) The commission
shall consider any public comment on the agreement in deciding to
approve or reject a proposed voluntary agreement.
(b) The commission shall approve a negotiated voluntary
agreement unless it determines that the agreement does not meet the
requirements of this subchapter or rules adopted under this
subchapter.
Sec. 382.358. ENFORCEMENT. The commission may enforce a
voluntary agreement in the same manner as it enforces a statute
under its jurisdiction or a rule adopted or an order or permit
issued under such a statute.
Sec. 382.359. RULES. The commission shall adopt rules
necessary to implement this subchapter.
SECTION 2. Subchapter E, Chapter 36, Utilities Code, is
amended by adding Section 36.209 to read as follows:
Sec. 36.209. RECOVERY OF AIR QUALITY IMPROVEMENT COSTS.
(a) In this section, "air quality improvement costs" means the
incremental life cycle costs, including capital, operating,
maintenance, fuel, and financing costs, incurred in implementing a
voluntary emissions reduction agreement approved under Subchapter
I, Chapter 382, Health and Safety Code.
(b) The commission on petition of an electric utility
subject to Subchapter I, Chapter 39, shall provide for a cost
recovery rider to the utility's rates to recover all air quality
improvement costs incurred by the utility in implementing the
voluntary emissions reduction agreement. The commission shall
review all costs to assure that expenditures in implementing the
agreement were prudently made.
(c) A petition to the commission under this section must
include:
(1) a copy of the voluntary emissions reduction
agreement between the electric utility and the Texas Commission on
Environmental Quality;
(2) a description of the planned emissions reduction
projects that will be used to comply with the voluntary agreement;
(3) the activities and schedule associated with the
project;
(4) the proposed cost recovery rider; and
(5) a commitment that any revenues the electric
utility receives from selling allowances under Title IV of the
federal Clean Air Act (42 U.S.C. Sections 7651-7651o) will be
credited to the utility's customers to offset air quality
improvement costs if such revenues result from the voluntary
agreement.
(d) The commission shall approve a proposed cost recovery
rider that:
(1) allows the electric utility to recover all its air
quality improvement costs incurred in implementing an approved
voluntary emissions reduction agreement;
(2) allows an appropriate return on investment
consistent with the level established in the electric utility's
last general rate case;
(3) allocates air quality improvement costs
appropriately between wholesale customers, retail customers in
this state, and retail customers outside of this state; and
(4) ensures that the total of all cost recovery riders
approved under this section does not exceed five percent of the
electric utility's total retail rates including fuel for the
calendar year 2004.
(e) The commission shall apportion pro rata to each type and
class of service provided by the utility the air quality
improvement costs under this section. The cost recovery rider
remains in effect until all air quality improvement costs have been
recovered or are included in base rates in a general rate case or
until the commission alters the rider under Subsection (f).
(f) Each year after the date the original cost recovery
rider takes effect, the commission may review the cost recovery
rider in light of the electric utility's performance in complying
with the voluntary emissions reduction agreement and may alter the
rider as appropriate.
(g) A proceeding under this section is not a rate case under
Subchapter C.
SECTION 3. Not later than the 90th day after the effective
date of this Act, the Texas Commission on Environmental Quality and
the Public Utility Commission of Texas shall adopt rules necessary
to implement this Act.
SECTION 4. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2005.