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A BILL TO BE ENTITLED
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AN ACT
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relating to establishing a carbon dioxide "cap and trade" program |
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to enable participation in the Regional Greenhouse Gas Initiative. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle C, Title 5, Health and Safety Code, is |
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amended by adding Chapter 391 to read as follows: |
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CHAPTER 391. "CAP AND TRADE" PROGRAM FOR CARBON DIOXIDE |
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EMISSIONS FROM CERTAIN ELECTRIC GENERATING |
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FACILITIES; REGIONAL GREENHOUSE GAS INITIATIVE |
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Sec. 391.001. DEFINITIONS. In this chapter: |
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(1) "Allowance" means an authorization to emit a |
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certain amount of carbon dioxide. |
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(2) "Commission" means the Texas Commission on |
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Environmental Quality. |
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(3) "Regional Greenhouse Gas Initiative" means a |
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memorandum of understanding dated December 20, 2005, as may be |
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amended, and the corresponding model rule, as may be amended, that |
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establishes a "cap and trade" program in the northeast region of the |
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United States. |
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Sec. 391.002. "CAP AND TRADE" PROGRAM. (a) The commission |
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in consultation with the Public Utility Commission of Texas by rule |
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shall establish a carbon dioxide "cap and trade" program that will |
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limit and then reduce the total carbon dioxide emissions released |
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by fossil fuel-fired electric generating facilities in this state. |
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(b) The commission's rules establishing the carbon dioxide |
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"cap and trade" program shall be designed to: |
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(1) fully comply with the Regional Greenhouse Gas |
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Initiative or with another similar initiative as the commission |
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determines is best suited for this state; and |
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(2) permit the holders of carbon dioxide allowances to |
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trade them in a market to be established through the Regional |
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Greenhouse Gas Initiative or other entity as determined by the |
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commission. |
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(c) The commission and any other relevant state agency or |
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official shall take the steps necessary to allow electric |
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generating facilities in this state to participate in a market to |
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trade carbon dioxide allowances allocated under the program. |
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Sec. 391.003. AUCTION OF ALLOWANCES. (a) Rules adopted |
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under the "cap and trade" program must require that in 2010 at least |
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50 percent of all allowances issued under the program be sold |
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through an auction open to any person in this state who wishes to |
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participate. In the years after 2010, the percentage of allowances |
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sold through auction shall be as follows: |
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(1) in 2011, at least 60 percent; |
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(2) in 2012, at least 70 percent; |
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(3) in 2013, at least 80 percent; |
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(4) in 2014, at least 90 percent; and |
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(5) in 2015 and all following years, 100 percent. |
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(b) The proceeds recovered from the allowance auction must |
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be used to benefit consumers, balancing short-term and long-term |
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benefits. The proceeds may be used only for the following purposes, |
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in proportions to be determined by the commission: |
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(1) to promote energy efficiency and conservation; |
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(2) to directly mitigate the adverse effects of the |
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program on consumers of electricity; and |
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(3) to promote renewable energy technologies that do |
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not produce carbon dioxide emissions. |
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(c) The commission shall determine and specify details for |
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implementing the auction of carbon dioxide emission allowances, |
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including: |
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(1) the auction's design; |
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(2) the person to conduct and manage the auction; and |
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(3) the timing of the auction in any year relative to |
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the dates of the compliance period in the Regional Greenhouse Gas |
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Initiative or other market. |
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Sec. 391.004. AUCTION MANAGER. (a) The commission shall: |
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(1) engage a person to serve as auction manager that is |
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experienced in auction design and management; or |
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(2) contract with a person to serve as auction manager |
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that is determined by the commission to be qualified to design, |
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manage, and conduct the auction in a manner that assures the |
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efficiency of the auction. |
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(b) The selection process for choosing an auction manager to |
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design, manage, and conduct the auction shall include an open and |
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public request for proposals. Proposals submitted in response to a |
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request under this subsection must include a summary of |
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qualifications and experience relevant to designing, managing, and |
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conducting the auction. |
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(c) An auction manager selected by the commission may be |
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reimbursed only for reasonable costs incurred by the auction |
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manager in administering the auction as determined by the |
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commission. |
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Sec. 391.005. ALLOWANCES HELD BY AUCTION MANAGER; |
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DISTRIBUTION OF AUCTION PROCEEDS. (a) The auction manager selected |
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under Section 391.004 shall be authorized to receive, hold, and |
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sell carbon dioxide emission allowances. |
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(b) The commission shall convey all allowances to the |
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auction manager, who shall collect the auction proceeds and, |
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without further appropriation, distribute the proceeds in |
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accordance with Section 391.003(b) under commission oversight. |
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(c) The auction manager annually shall submit to the |
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commission, not less than six months before the start of the |
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auction, a draft proposal on how to allocate the proceeds from the |
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auction. The commission shall hold a public hearing, accept public |
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comment, and approve, modify, or reject the draft proposal. If the |
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commission rejects the proposal, the commission shall work with the |
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auction manager to draft an acceptable proposal. |
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(d) The office shall require an annual report from the |
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auction manager describing the auction and its results. The |
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commission shall make the report public and shall submit the report |
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to the appropriate legislative committees. |
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Sec. 391.006. OTHER COMMISSION POWERS AND DUTIES RELATED TO |
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CLIMATE-CHANGING SUBSTANCES. The responsibilities created by |
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establishing a carbon dioxide "cap and trade" program are in |
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addition to all other responsibilities imposed by any other law or |
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rule and do not reduce any authority of the commission, including |
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the authority to adopt standards and regulations necessary for this |
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state to join and participate in a multistate program, at any stage |
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in the development and implementation of the program, intended to |
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control emissions of carbon dioxide or other substances that are |
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determined by the commission to be damaging or altering the |
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climate. |
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SECTION 2. Subchapter Z, Chapter 39, Utilities Code, is |
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amended by adding Section 39.927 to read as follows: |
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Sec. 39.927. CARBON DIOXIDE "CAP AND TRADE" PROGRAM. The |
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commission, in consultation with the Texas Commission on |
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Environmental Quality and the attorney general, through the |
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commission's authority under this chapter, including the authority |
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to review rates, prices, and schedules, shall adopt rules that |
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fully implement the carbon dioxide "cap and trade" program |
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prescribed by Chapter 391, Health and Safety Code. The commission |
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may adopt rules and enter any orders that ensure that the carbon |
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dioxide emissions associated with the generation of electric power |
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serving the customer load of this state are treated on a |
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commercially comparable basis regardless of the location of the |
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power stations operating to serve that load. |
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SECTION 3. Not later than January 1, 2010, the Texas |
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Commission on Environmental Quality and the Public Utility |
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Commission of Texas shall adopt rules to implement Chapter 391, |
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Health and Safety Code, as added by this Act. |
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SECTION 4. This Act takes effect September 1, 2009. |