80R14185 TAD-D
 
  By: Straus, Anchia, Crabb, King of Parker, H.B. No. 3693
      Oliveira, et al.
 
Substitute the following for H.B. No. 3693:
 
  By:  Straus C.S.H.B. No. 3693
 
A BILL TO BE ENTITLED
AN ACT
relating to energy demand, energy load, energy efficiency
incentives, energy programs, and energy performance measures.
       BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
       SECTION 1.  Subchapter Z, Chapter 44, Education Code, is
amended by adding Section 44.902 to read as follows:
       Sec. 44.902.  GOAL TO REDUCE CONSUMPTION OF ELECTRIC ENERGY.  
The board of trustees of a school district shall establish a goal to
reduce the school district's annual electric consumption by five
percent each state fiscal year for six years beginning September 1,
2007.
       SECTION 2.  Subchapter Z, Chapter 44, Education Code, is
amended by adding Section 44.903 to read as follows:
       Sec. 44.903.  ENERGY-EFFICIENT LIGHT BULBS IN INSTRUCTIONAL
FACILITIES. (a) In this section, "instructional facility" has the
meaning assigned by Section 46.001.
       (b)  A school district shall purchase for use in each type of
light fixture in an instructional facility the commercially
available model of light bulb that:
             (1)  uses the fewest watts for the necessary luminous
flux or light output; and
             (2)  is compatible with the light fixture.
       SECTION 3.  Subchapter Z, Chapter 51, Education Code, is
amended by adding Section 51.9271 to read as follows:
       Sec. 51.9271.  ENERGY-EFFICIENT LIGHT BULBS IN EDUCATIONAL
AND HOUSING FACILITIES. (a) In this section, "housing facility"
has the meaning assigned by Section 53.02.
       (b)  An institution of higher education shall purchase for
use in each type of light fixture in an educational or housing
facility the commercially available model of light bulb that:
             (1)  uses the fewest watts for the necessary luminous
flux or light output; and
             (2)  is compatible with the light fixture.
       SECTION 4.  Section 2155.068(d), Government Code, is amended
to read as follows:
       (d)  As part of the standards and specifications program, the
commission shall:
             (1)  review contracts for opportunities to recycle
waste produced at state buildings;
             (2)  develop and update a list of equipment and
appliances that meet the energy efficiency standards provided by
Section 2158.301; and
             (3)  assist state agencies in selecting products under
Section 2158.301, as appropriate.
       SECTION 5.  Chapter 2158, Government Code, is amended by
adding Subchapter F to read as follows:
SUBCHAPTER F. ENERGY AND EFFICIENCY STANDARDS
FOR EQUIPMENT AND APPLIANCES
       Sec. 2158.301.  ENERGY CONSERVATION. If available and
cost-effective, a state agency shall purchase equipment and
appliances for state use that meet or exceed:
             (1)  the federal energy conservation standards under
Section 325, Energy Policy and Conservation Act (42 U.S.C. Section
6295), or a federal regulation adopted under that Act; or
             (2)  the federal Energy Star standards designated by
the United States Environmental Protection Agency and the United
States Department of Energy.
       SECTION 6.  Subchapter A, Chapter 2165, Government Code, is
amended by adding Section 2165.008 to read as follows:
       Sec. 2165.008.  ENERGY-EFFICIENT LIGHT BULBS IN STATE
BUILDINGS.  A state agency or institution of higher education in
charge and control of a state building shall purchase for use in
each type of light fixture in the building the commercially
available model of light bulb that:
             (1)  uses the fewest watts for the necessary luminous
flux or light output; and
             (2)  is compatible with the light fixture.
       SECTION 7.  Subtitle F, Title 10, Government Code, is
amended by adding Chapter 2264 to read as follows:
CHAPTER 2264. REQUIRED PUBLICATION AND REPORTING
BY GOVERNMENTAL ENTITIES
       Sec. 2264.001.  RECORDING AND REPORTING OF ELECTRICITY,
WATER, AND NATURAL GAS CONSUMPTION. (a)  In this section,
"governmental entity" means:
             (1)  a board, commission, or department of the state or
a political subdivision of the state, including a municipality, a
county, or any kind of district; or
             (2)  an institution of higher education as defined by
Section 61.003, Education Code.
       (b)  Notwithstanding any other law, a governmental entity
responsible for payments for electric, water, or natural gas
utility services shall record in an electronic repository the
governmental entity's metered amount of electricity, water, or
natural gas consumed for which it is responsible to pay and the
aggregate costs for those utility services. The governmental
entity shall report the recorded information on a publicly
accessible Internet website with an interface designed for ease of
navigation.
       SECTION 8.  Subchapter H, Chapter 2306, Government Code, is
amended by adding Section 2306.187 to read as follows:
       Sec. 2306.187.  ENERGY EFFICIENCY STANDARDS FOR CERTAIN
SINGLE AND MULTIFAMILY DWELLINGS.  (a)  A newly constructed single
or multifamily dwelling that is constructed with assistance awarded
by the department, including state or federal money, housing tax
credits, or multifamily bond financing, must include energy
conservation and efficiency measures specified by the department.  
The department by rule shall establish a minimum level of energy
efficiency measures that must be included in a newly constructed
single or multifamily dwelling as a condition of eligibility to
receive assistance awarded by the department for housing
construction. The measures adopted by the department may include:
             (1)  the installation of Energy Star-labeled ceiling
fans in living areas and bedrooms;
             (2)  the installation of Energy Star-labeled
appliances;
             (3)  the installation of Energy Star-labeled lighting
in all interior units;
             (4)  the installation of Energy Star-labeled
ventilation equipment, including power-vented fans, range hoods,
and bathroom fans;
             (5)  the use of energy efficient alternative
construction material, including structural insulated panel
construction;
             (6)  the installation of central air conditioning or
heat pump equipment with a better Seasonal Energy Efficiency Rating
(SEER) than that required by the energy code adopted under Section
388.003, Health and Safety Code; and
             (7)  the installation of the air ducting system  inside
the conditioned space.
       (b)  A single or multifamily dwelling must include energy
conservation and efficiency measures specified by the department
if:
             (1)  the dwelling is rehabilitated with assistance
awarded by the department, including state or federal money,
housing tax credits, or multifamily bond financing; and
             (2)  any portion of the rehabilitation includes
alterations that will replace items that are identified as required
efficiency measures by the department.
       (c)  The energy conservation and efficiency measures the
department requires under Subsection (b) may not be more stringent
than the measures the department requires under Subsection (a).
       (d)  The department shall review the measures required to
meet the energy efficiency standards at least annually to determine
if additional measures are desirable and to ensure that the most
recent energy efficiency technology is considered.
       (e)  Subsections (a) and (b) do not apply to a single or
multifamily dwelling that receives federal weatherization
assistance money from the department or money provided under the
first-time homebuyer program.
       SECTION 9.  Section 388.003, Health and Safety Code, is
amended by adding Subsections (b-1), (b-2), and (b-3) to read as
follows:
       (b-1)  If the State Energy Conservation Office determines,
based on written recommendations from the laboratory, that the
energy efficiency provisions of the latest published editions of
the International Residential Code or the International Energy
Conservation Code for residential or commercial energy efficiency
and air quality are equivalent to or more stringent than the
provisions of editions adopted under Subsection (a) or (b), the
office by rule may adopt and substitute in the energy code the
equivalent or more stringent provisions for the provisions of the
initial editions described by Subsection (a) or (b). If the State
Energy Conservation Office adopts provisions of the latest
published editions of the International Residential Code or the
International Energy Conservation Code into the energy code, the
office shall establish an effective date for the new provisions
that is not earlier than nine months after the date of adoption.
The laboratory shall submit recommendations concerning the latest
published editions of the International Residential Code or the
International Energy Conservation Code not later than six months
after publication of new editions.
       (b-2)  The State Energy Conservation Office by rule shall
establish a procedure for allowing an opportunity for persons who
have an interest in the adoption of energy efficiency codes under
Subsection (b-1) to comment on a code considered for adoption,
including:
             (1)  commercial and residential builders;
             (2)  architects;
             (3)  engineers;
             (4)  county and other local government authorities; and
             (5)  environmental groups.
       (b-3)  In developing written recommendations under
Subsection (b-1), the laboratory shall consider the comments
submitted under Subsection (b-2).
       SECTION 10.  Section 388.005, Health and Safety Code, is
amended to read as follows:
       Sec. 388.005.  ENERGY EFFICIENCY PROGRAMS IN CERTAIN
GOVERNMENTAL ENTITIES [POLITICAL SUBDIVISIONS]. (a)  In this
section:
             (1)  "Institution of higher education" includes an
institution of higher education as defined by Section 61.003,
Education Code, and a private institution of higher education that
receives funding from the state.
             (2)  "Political[, "political] subdivision" means:
                   (A) [(1)]  an affected county; or
                   (B) [(2)]  any political subdivision in a
nonattainment area or in an affected county other than[:
                   [(A)a school district; or
                   [(B)]  a district as defined by Section 36.001 or
49.001, Water Code, that had a total annual electricity expense of
less than $200,000 in the previous fiscal year of the district.
             (3)  "State agency" means a department, commission,
board, office, council, or other agency in the executive branch of
state government that is created by the constitution or a statute of
this state and has authority not limited to a geographical portion
of the state.
       (b)  Each political subdivision, institution of higher
education, or state agency shall implement all energy efficiency
measures that meet the standards established for a contract for
energy conservation measures under Section 302.004(b), Local
Government Code, in order to reduce electricity consumption by the
existing facilities of the entity [the political subdivision].
       (c)  Each political subdivision, institution of higher
education, or state agency shall establish a goal to reduce the
electric consumption by the entity [political subdivision] by five
percent each state fiscal year for six [five] years, beginning
September 1, 2007 [January 1, 2002].
       (d)  A political subdivision, institution of higher
education, or state agency that does not attain the goals under
Subsection (c) must include in the report required by Subsection
(e) justification that the entity [political subdivision] has
already implemented all available measures.
       (e)  A political subdivision, institution of higher
education, or state agency annually shall report to the State
Energy Conservation Office, on forms provided by that office,
regarding the entity's [political subdivision's] efforts and
progress under this section. The State Energy Conservation Office
shall provide assistance and information to the entity [political
subdivisions] to help the entity [the political subdivisions] meet
the goals set under this section.
       SECTION 11.  Section 388.008, Health and Safety Code, is
amended by amending Subsections (a) and (c) and adding Subsection
(d) to read as follows:
       (a)  The laboratory shall develop a standardized report
format to be used by providers of home energy ratings. The
laboratory may develop different report formats for rating newly
constructed residences from those for existing residences. The form
must be designed to give potential buyers information on a
structure's energy performance, including:
             (1)  insulation;
             (2)  types of windows;
             (3)  heating and cooling equipment;
             (4)  water heating equipment;
             (5)  additional energy conserving features, if any;
             (6)  results of performance measurements of building
tightness and forced air distribution; and
             (7)  an overall rating of probable energy efficiency
relative to the minimum requirements of the International Energy
Conservation Code or the energy efficiency chapter of the
International Residential Code, as appropriate.
       (c)  The laboratory may cooperate with an industry
organization or trade association to:
             (1)  develop guidelines for home energy ratings;
             (2)  provide training for individuals performing home
energy ratings and providers of home energy ratings; and
             (3)  provide a registry of completed ratings for newly
constructed residences and residential improvement projects for
the purpose of computing the energy savings and emissions
reductions benefits of the [The] home energy ratings program [shall
be implemented by September 1, 2002].
       (d)  The laboratory shall include information on the
benefits attained from this program in an annual report to the
commission.
       SECTION 12.  The heading to Section 74.3013, Property Code,
is amended to read as follows:
       Sec. 74.3013.  DELIVERY OF MONEY FOR RURAL SCHOLARSHIP,
[AND] ECONOMIC DEVELOPMENT, AND ENERGY EFFICIENCY ASSISTANCE.
       SECTION 13.  Sections 74.3013(a), (b), (e), (f), and (g),
Property Code, are amended to read as follows:
       (a)  Notwithstanding and in addition to any other provision
of this chapter or other law, a nonprofit cooperative corporation
may deliver reported money to a scholarship fund for rural
students, [or] to stimulate rural economic development, or to
provide energy efficiency assistance to members of electric
cooperatives, instead of delivering the money to the comptroller as
prescribed in Section 74.301.
       (b)  A nonprofit cooperative corporation may deliver the
money under this section only:
             (1)  to a scholarship fund established by one or more
nonprofit cooperative corporations in this state to enable students
from rural areas to attend college, technical school, or other
postsecondary educational institution; [and]
             (2)  to an economic development fund for the
stimulation and improvement of business and commercial activity for
economic development in rural communities; and
             (3)  to an energy efficiency assistance fund to assist
members of an electric cooperative in reducing their energy
consumption and electricity bills.
       (e)  The comptroller shall prescribe forms and procedures
governing this section, including forms and procedures relating to:
             (1)  notice of presumed abandoned property;
             (2)  delivery of reported money to a scholarship, [or]
economic development fund, or energy efficiency assistance fund;
             (3)  filing of a claim; and
             (4)  procedures to allow equitable opportunity for
participation by each nonprofit cooperative corporation in the
state.
       (f)  [During a state fiscal year the total amount of money
that may be transferred by all nonprofit cooperative corporations
under this section may not exceed $1 million.] No more than 20
percent of each nonprofit cooperative's funds eligible for delivery
under this section shall be used for economic development. The
comptroller shall adopt procedures to record the total amount of
money transferred annually [to allow equitable opportunity for
participation with preference given to corporations already
providing similar scholarship opportunities in other states].
       (g)  Nonprofit cooperative corporations may combine
[economic development] funds from other sources with any [economic
development] funds delivered under this section. In addition, such
cooperatives may engage in other business and commercial
activities, in their own behalf or through such subsidiaries and
affiliates as deemed necessary, in order to provide and promote
educational opportunities and to stimulate rural economic
development.
       SECTION 14.  Subchapter H, Chapter 151, Tax Code, is amended
by adding Section 151.333 to read as follows:
       Sec. 151.333.  ENERGY-EFFICIENT PRODUCTS. (a)  In this
section, "energy-efficient product" means a product that has been
designated as an Energy Star qualified product under the Energy
Star program jointly operated by the United States Environmental
Protection Agency and the United States Department of Energy.
       (b)  The sale of an energy-efficient product is exempted from
the taxes imposed by this chapter if the sale takes place during a
period beginning at 12:01 a.m. on April 16 of each year and ending
at 11:59 p.m. on that day.
       SECTION 15.  Section 31.004, Utilities Code, is amended by
adding Subsection (c) to read as follows:
       (c)  The commission shall provide information to school
districts regarding how a school district may finance the
installation of solar electric generation panels for school
district buildings.
       SECTION 16.  Section 39.002, Utilities Code, is amended to
read as follows:
       Sec. 39.002.  APPLICABILITY. This chapter, other than
Sections 39.155, 39.157(e), 39.203, 39.903, [and] 39.904, 39.9051,
and 39.9052, does not apply to a municipally owned utility or an
electric cooperative. Sections 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 17.  Section 39.107, Utilities Code, is amended by
adding Subsection (i) to read as follows:
       (i)  It is the intent of the legislature that advanced meter
data networks be deployed as rapidly as possible to allow customers
to better manage energy use and control costs, and to facilitate
demand response initiatives.
       SECTION 18.  Subchapter Z, Chapter 39, Utilities Code, is
amended by adding Section 39.9025 to read as follows:
       Sec. 39.9025.  HOME ELECTRIC ENERGY REPORTS. The commission
may develop and implement a program for delivery of individualized
home electric energy reports to educate consumers about electric
energy use and energy efficiency, to assist consumers to use energy
more efficiently. An electric utility or retail electric provider,
as appropriate, shall cooperate with the commission by providing
any information the commission requests to facilitate the
implementation of this section.  Notwithstanding any other
provision of this title, a utility or retail electric provider, as
appropriate, may release proprietary customer information to the
commission for purposes of this section.
       SECTION 19.  Section 39.905, Utilities Code, is amended by
amending Subsections (a), (b), (d), (e), and (f), and adding
Subsections (b-1), (b-2), (b-3), (b-4), and (g) to read as follows:
       (a)  It is the goal of the legislature that:
             (1)  electric utilities will administer energy
efficiency [savings] incentive programs in a market-neutral,
nondiscriminatory manner but will not offer underlying competitive
services;
             (2)  all customers, in all customer classes, will have
a choice of and access to energy efficiency alternatives and other
choices from the market that allow each customer to reduce energy
consumption, peak demand, or energy costs; [and]
             (3)  each electric utility will provide, through
market-based standard offer programs or limited, targeted,
market-transformation programs, incentives sufficient for retail
electric providers and competitive energy service providers to
acquire additional cost-effective energy efficiency equivalent to
at least:
                   (A)  10 percent of the electric utility's annual
growth in demand by December 31, 2007;
                   (B)  15 percent of the electric utility's annual
growth in demand by December 31, 2008, provided that the electric
utility's program expenditures for 2008 funding may not be greater
than 75 percent above the utility's program budget for 2007, as
included in the April 1, 2006, filing; and
                   (C)  20 percent of the electric utility's annual
growth in demand by December 31, 2009, provided that the electric
utility's program expenditures for 2009 funding may not be greater
than 150 percent of the utility's program budget for 2007, as
included in the April 1, 2006, filing;
             (4)  each electric utility in the ERCOT region shall
use its best efforts to encourage and facilitate the involvement of
the region's retail electric providers in the delivery of
efficiency programs and demand response programs under this
section;
             (5)  retail electric providers in the ERCOT region, and
electric utilities outside of the ERCOT region, shall provide
customers with energy efficiency educational materials; and
             (6)  ERCOT shall incorporate into its long-range demand
forecast the energy and demand savings projected in the annual
report under Subsection (b-3).
       (b)  The commission shall provide oversight and adopt rules
and procedures, as necessary, to ensure that the utilities can
achieve the goal of this section, including:
             (1)  establishing an energy efficiency cost recovery
factor for ensuring timely and reasonable cost recovery for utility
expenditures made to satisfy the goal of this section;
             (2)  establishing a financial incentive or performance
bonus to reward utilities administering programs under this section
that exceed the minimum goals established by this section;
             (3)  providing a utility that is unable to establish an
energy efficiency cost recovery factor in a timely manner due to a
rate freeze with a mechanism to enable the utility to:
                   (A)  defer the costs of complying with this
section; and
                   (B)  recover the deferred costs through an energy
efficiency cost recovery factor on the expiration of the rate
freeze period;
             (4)  ensuring, to the greatest extent possible, that
the costs associated with programs provided under this section are
borne by the customer classes that are eligible to receive the
services under the programs; and
             (5)  ensuring the program rules encourage the value of
the incentives to be passed on to the end-use customer.
       (b-1)  The energy efficiency cost recovery factor under
Subsection (b)(1) shall be adjusted each year to change rates to
enable utilities to match revenues against energy efficiency costs
and any incentives to which they are granted.  The factor shall be
adjusted to reflect any over-collection or under-collection of
energy efficiency cost recovery revenues in previous years.
       (b-2)  The commission shall conduct a study regarding energy
efficiency in this state. Not later than January 15, 2009, the
commission shall submit to the legislature a report regarding the
commission's findings that:
             (1)  considers the technical, economic, and achievable
potential, and natural occurrence of energy efficiency in this
state in terms of kilowatts and kilowatt hours for each element;
             (2)  determines the amount of savings that is
achievable through utility programs in compliance with commission
rules;
             (3)  recommends whether:
                   (A)  utility funding of energy efficiency in areas
of the state with competitive retail electric service should
continue;
                   (B)  energy efficiency in areas with competitive
retail electric service is best provided by the competitive market;
and
                   (C)  utilities should fund education programs to
be conducted by the commission regarding the provision of energy
efficiency service from the competitive market;
             (4)  provides estimates of achievable savings specific
to each utility service area and each customer class;
             (5)  quantifies the costs and rate impacts associated
with meeting energy efficiency goals;
             (6)  determines whether an increase in the goal to 30
percent of the growth in demand for each utility is achievable by
December 31, 2010, and whether an increase in the goal to 50 percent
of the growth in demand for electricity is achievable by December
31, 2015, by each utility in the service area served through the
energy efficiency programs described by this section;
             (7)  recommends policies designed to promote energy
efficiency in the areas of the state that are not served by the
utilities which administer programs under this section; and
             (8)  identifies potential barriers to the increased
participation by retail electric providers in the delivery of
energy efficiency services to ERCOT customers, and to the increased
potential for energy efficiency in ERCOT or in this state
generally, including any recommended regulatory or statutory
changes to eliminate such barriers or facilitate greater
efficiency.
       (b-3)  Beginning not later than January 1, 2008, the
commission, in consultation with the State Energy Conservation
Office, annually for a period of five years shall compute and report
to ERCOT the projected energy savings and demand impacts for each
entity in the ERCOT region that administers standard offer
programs, market transformation programs, combined heating and
power technology, demand response programs, solar incentive
programs, building codes, appliance efficiency standards, energy
efficiency programs in public buildings, and any other relevant
programs that are reasonably anticipated to reduce electricity
energy or peak demand or that serve as substitutes for electric
supply.
       (b-4)  The commission and ERCOT shall develop a method to
account for the projected efficiency impacts under Subsection (b-3)
in ERCOT's annual forecasts of future capacity, demand, and
reserves.
       (d)  The commission shall establish a procedure for
reviewing and evaluating market-transformation program options
described by this subsection and other options. In evaluating
program options, the commission may consider the ability of a
program option to reduce costs to customers through reduced demand,
energy savings, and relief of congestion. Utilities [adopt the
following market-transformation program options that the
utilities] may choose to implement any program option approved by
the commission after its evaluation in order to satisfy the goal in
Subsection (a), including [(a)(3)]:
             (1)  energy-smart schools;
             (2)  appliance retirement and recycling;
             (3)  air conditioning system tune-ups; [and]
             (4)  the use of trees or other landscaping for energy
efficiency;
             (5)  customer energy management and demand response
programs;
             (6)  high performance residential and commercial
buildings that will achieve the levels of energy efficiency
sufficient to qualify those buildings for federal tax incentives;
             (7)  programs for customers who rent or lease their
residence or commercial space;
             (8)  programs providing energy monitoring equipment to
customers that enable a customer to better understand the amount,
price, and time of the customer's energy use;
             (9)  energy audit programs for owners and other
residents of single-family and multifamily residences;
             (10)  net-zero energy new home programs;
             (11)  solar thermal or solar electric programs; and
             (12)  programs for using windows and other glazing
systems, glass doors, and skylights in residential and commercial
buildings that reduce solar gain by at least 30 percent from the
level established for the federal Energy Star windows program.
       (e)  An electric utility may use money approved by the
commission for energy efficiency programs to perform necessary
energy efficiency research and development to foster continuous
improvement and innovation in the application of energy efficiency
technology and energy efficiency program design and
implementation. Money the utility uses under this subsection may
not exceed 10 percent of the greater of:
             (1)  the amount the commission approved for energy
efficiency programs in the utility's most recent full rate
proceeding; or
             (2)  the commission-approved expenditures by the
utility for energy efficiency in the previous year.
       (f)  Unless funding is provided under Section 39.903,
[beginning January 1, 2006,] each unbundled transmission and
distribution utility shall include in its energy efficiency plan a
targeted low-income energy efficiency program as described by
Section 39.903(f)(2), and the savings achieved by the program shall
count toward the transmission and distribution utility's energy
efficiency goal. The commission shall determine the appropriate
level of funding to be allocated to both targeted and standard offer
low-income energy efficiency programs in each unbundled
transmission and distribution utility service area. The total
expenditures for both targeted and standard offer low-income energy
efficiency programs will be based on the amount spent by the
transmission and distribution utility on the commission's
hard-to-reach program in calendar year 2003. This level of funding
for low-income energy efficiency programs shall be provided from
money approved by the commission for the transmission and
distribution utility's energy efficiency programs. The state
agency that administers the federal weatherization assistance
program shall provide reports as required by the commission to
provide the most current information available on energy and peak
demand savings achieved in each transmission and distribution
utility service area.
       (g)  The commission may provide for a good cause exemption to
a utility's liability for an administrative penalty or other
sanction if the utility fails to meet a goal for energy efficiency
under this section and the utility's failure to meet the goal is
caused by one or more factors outside of the utility's control,
including:
             (1)  insufficient demand by retail electric providers
and competitive energy service providers for program incentive
funds made available by the utility through its programs;
             (2)  changes in building energy codes; and
             (3)  changes in government-imposed appliance or
equipment efficiency standards.
       SECTION 20.  Subchapter Z, Chapter 39, Utilities Code, is
amended by adding Sections 39.9051, 39.9052, 39.911, 39.912, and
39.913 to read as follows:
       Sec. 39.9051.  ENERGY EFFICIENCY FOR MUNICIPALLY OWNED
UTILITIES.  (a)  In this section, "municipally owned utility" has
the meaning assigned by Section 11.003.
       (b)  This section applies only to a municipally owned utility
that had retail sales of more than 500,000 megawatt hours in 2005.
       (c)  It is the goal of the legislature that:
             (1)  municipally owned utilities will administer
energy savings incentive programs;
             (2)  customers of a municipally owned utility will have
a choice of and access to energy efficiency alternatives that allow
customers to reduce energy consumption, peak demand, or energy
costs; and
             (3)  each municipally owned utility will provide
incentives sufficient for municipally owned utilities to acquire
additional cost-effective energy efficiency.
       (d)  The governing body of a municipally owned utility shall
provide oversight and adopt rules and procedures, as necessary, to
ensure that the utility can achieve the goal of this section.
       (e)  If a municipally owned utility adopts customer choice by
decision of the governing body under Chapter 40, the commission
shall provide oversight and adopt rules and procedures, as
necessary, to ensure that the municipally owned utility can achieve
the goal in this section in a market-neutral, nondiscriminatory
manner. The commission shall, to the extent possible, include
existing energy efficiency programs already adopted by the
municipally owned utility.
       (f)  Not later than September 1, 2009, a municipally owned
utility must report to the State Energy Conservation Office, in a
form and manner determined by the utility in consultation with the
office, information regarding the combined effects of the energy
efficiency activities of the utility.
       Sec. 39.9052.  ENERGY EFFICIENCY FOR ELECTRIC COOPERATIVES.  
(a)  An electric cooperative shall consider adopting and
implementing energy efficiency programs that reduce the
cooperative's annual growth in demand in a manner consistent with
standards established in the state for other utilities.
       (b)  Not later than September 1, 2009, an electric
cooperative that had retail sales of more than 500,000 megawatt
hours in 2005 must report to the State Energy Conservation Office,
in a form and manner determined by the electric cooperative in
consultation with the office, information regarding the combined
effects of the energy efficiency activities of the electric
cooperative.
       Sec. 39.911.  ALTERNATIVE FUNDING FOR ENERGY EFFICIENCY AND
RENEWABLE ENERGY SYSTEMS. The State Energy Conservation Office, in
coordination with the governor, the Department of Agriculture, the
Texas Commission on Environmental Quality, the Texas Education
Agency, the commission, and other appropriate state agencies, shall
solicit gifts, grants, and other financial resources available to
fund energy efficiency improvements and renewable energy systems
for public and private facilities in this state.
       Sec. 39.912.  REPORT ON COMBINED HEATING AND POWER
TECHNOLOGY. The commission shall study the installation and use of
combined heating and power technology in this state, and shall
submit a report regarding the commission's findings to the 81st
Legislature. The report shall include:
             (1)  an explanation describing combined heating and
power technology and its use; and
             (2)  an explanation of how combined heating and power
technology can be implemented in this state to meet energy
efficiency goals.
       Sec. 39.913.  COMBINING CERTAIN REPORTS.  The commission may
combine the reports required under Sections 39.905(b-2) and 39.912.
       SECTION 21.  Section 40.055(a), Utilities Code, is amended
to read as follows:
       (a)  The municipal governing body or a body vested with the
power to manage and operate a municipally owned utility has
exclusive jurisdiction to:
             (1)  set all terms of access, conditions, and rates
applicable to services provided by the municipally owned utility,
subject to Sections 40.054 and 40.056, including nondiscriminatory
and comparable rates for distribution but excluding wholesale
transmission rates, terms of access, and conditions for wholesale
transmission service set by the commission under this subtitle,
provided that the rates for distribution access established by the
municipal governing body shall be comparable to the distribution
access rates that apply to the municipally owned utility and the
municipally owned utility's affiliates;
             (2)  determine whether to unbundle any energy-related
activities and, if the municipally owned utility chooses to
unbundle, whether to do so structurally or functionally;
             (3)  reasonably determine the amount of the municipally
owned utility's stranded investment;
             (4)  establish nondiscriminatory transition charges
reasonably designed to recover the stranded investment over an
appropriate period of time, provided that recovery of retail
stranded costs shall be from all existing or future retail
customers, including the facilities, premises, and loads of those
retail customers, within the utility's geographical certificated
service area as it existed on May 1, 1999;
             (5)  determine the extent to which the municipally
owned utility will provide various customer services at the
distribution level, including other services that the municipally
owned utility is legally authorized to provide, or will accept the
services from other providers;
             (6)  manage and operate the municipality's electric
utility systems, including exercise of control over resource
acquisition and any related expansion programs;
             (7)  establish and enforce service quality and
reliability standards and consumer safeguards designed to protect
retail electric customers, including safeguards that will
accomplish the objectives of Sections 39.101(a) and (b), consistent
with this chapter;
             (8)  determine whether a base rate reduction is
appropriate for the municipally owned utility;
             (9)  determine any other utility matters that the
municipal governing body or body vested with power to manage and
operate the municipally owned utility believes should be included;
[and]
             (10)  make any other decisions affecting the
municipally owned utility's participation in customer choice that
are not inconsistent with this chapter;
             (11)  determine the extent to which the municipally
owned utility offers energy efficiency programs and how the
programs are administered by the utility, except as provided by
Section 39.9051(e); and
             (12)  determine the extent to which the electric
cooperative offers energy efficiency programs and how the programs
are administered by the electric cooperative.
       SECTION 22.  (a)  The State Energy Conservation Office shall
adopt rules implementing a procedure for stakeholder participation
as required under Section 388.003(b-2), Health and Safety Code, as
added by this Act, as soon as practicable after the effective date
of this Act.
       (b)  The State Energy Conservation Office shall adopt rules
as necessary to implement Section 44.902, Education Code, as added
by this Act, as soon as practicable after the effective date of this
Act.
       SECTION 23.  (a)  The energy conservation standards for
equipment and appliances under Section 2158.301, Government Code,
as added by this Act, apply to a purchase by a state agency on or
after the effective date of this Act.
       (b)  The Texas Building and Procurement Commission shall
develop a list of equipment and appliances under Section 2155.068,
Government Code, as amended by this Act, as soon as practicable
after the effective date of this Act.
       SECTION 24.  The change in law made by this Act does not
affect taxes imposed before the effective date of this Act, and the
law in effect before the effective date of this Act is continued in
effect for purposes of the liability for and collection of those
taxes.
       SECTION 25.  This Act takes effect September 1, 2007.