BILL ANALYSIS
Senate Research Center C.S.S.B. 2236
Committee Report (Substituted)
AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
Texas public policy favors increased reliance on renewable resources to supply the state's electric energy requirements. There is tremendous potential in Texas for development of wind-generated electricity, but wind power is intermittent and dependant on prevailing wind conditions. Electric energy consumers, however, expect energy to be available on demand.
Electric cooperatives and their member-consumers support Texas public policy and are taking steps to increase their ability to make greater use of renewable energy resources such as wind power. However, they can do so only if these intermittent resources can be reinforced with back-up generation sources that can respond rapidly when energy from the renewable resource is reduced or entirely unavailable.
One way to address this reliability challenge is with quick-start gas-fired generators, such as aero-derivative combustion turbine generators. These generators can respond rapidly during low wind conditions to supply the energy needed, are relatively efficient, and have lower emissions than generators powered by other fossil fuels. However, these generators cannot operate without the immediate availability of fuel, posing an operational challenge. Natural gas pipelines typically require day-ahead notice of the quantity of gas that a customer will purchase to allow appropriate arrangements for operation of the gas pipeline system. Absent such prior notice, gas may not be available when called for; one way to address this is for electric cooperatives to maintain a supply of readily available natural gas in an underground gas storage facility that is designed to support the quick-start generation relied on by the electric cooperative to back up intermittent wind generation.
Modern technology quick-start generation is very expensive, as is developing, operating, and maintaining an underground gas storage facility that would be sufficient in size to support this generation. However, these are costs that cannot be avoided if electric cooperatives are to reliably increase the amount of renewable energy included in their resource portfolios. To partially off-set these high costs, and to reduce the costs borne by their member-consumers, it would be prudent for these electric cooperatives to offer short-term gas storage services to other entities at times when the storage facility has capacity that temporarily exceeds the electric cooperative's needs. These negotiated contracts would contain clear provisions stating that these gas storage services are short-term and subject to termination.
Unfortunately, current Texas law does not envision this type of arrangement. If an electric cooperative or an affiliated owner/operator of a gas storage facility were to offer gas storage services to another party, even an affiliated party, it might fall under any number of definitions under current statutes and incur related obligations, such as the obligation to offer or provide gas storage services to others without favoring its own operations and needs. Thus, under Texas law the electric cooperative would not be able to contract with other entities to provide temporary gas storage services while maintaining the assurance that it can rely on the facility to support its own generation needs. Instead, the basic purpose of making a substantial investment in a new quick-start generation and acquisition of underground gas storage facilities to support renewable generation would be frustrated by demands of third parties for access to the gas storage facility.
C.S.S.B. 2236 amends current law relating to the exemption of certain electric cooperatives from certain regulations.
RULEMAKING AUTHORITY
This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 101.003(7), Utilities Code, to redefine "gas utility."
SECTION 2. Amends Subchapter A, Chapter 121, Utilities Code, by adding Section 121.008, as follows:
Sec. 121.008. CERTAIN STORAGE FACILITIES OWNED BY ELECTRIC COOPERATIVES EXCLUDED. Provides that an electric cooperative, as that term is defined by Section 11.003 (Definitions), or its subsidiary, that sells electricity at wholesale is not a gas utility or subject to regulation as a gas utility solely because it provides gas storage services for hire if the gas storage facility is operated wholly or partly to support integration of renewable resources.
SECTION 3. Amends Section 111.001(2), Natural Resources Code, to redefine "public utility."
SECTION 4. Amends Section 111.003, Natural Resources Code, by adding Subsection (c) to provide that the provisions of this chapter, and any common law requirements or limitations applicable to a common carrier, do not apply to an underground storage facility owned or operated by an electric cooperative, as that term is defined by Section 11.003, Utilities Code, or its subsidiary, that sells electricity at wholesale and offers or provides gas storage services to the public for hire if the gas storage facility is operated wholly or partly to support integration of renewable resources.
SECTION 5. Effective date: upon passage or September 1, 2009.