By: Gallego, Farabee, Solomons, Swinford, H.B. No. 1243

Coleman, et al.

A BILL TO BE ENTITLED

AN ACT

relating to net metering for retail electric service customers and compensation for excess electricity generated by a retail electric customer's on-site generator.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 31.002(6), Utilities Code, is amended to read as follows:

(6) "Electric utility" means a person or river authority that owns or operates for compensation in this state equipment or facilities to produce, generate, transmit, distribute, sell, or furnish electricity in this state. The term includes a lessee, trustee, or receiver of an electric utility and a recreational vehicle park owner who does not comply with Subchapter C, Chapter 184, with regard to the metered sale of electricity at the recreational vehicle park. The term does not include:

(A) a municipal corporation;

(B) a qualifying facility;

(C) a power generation company;

(D) an exempt wholesale generator;

(E) a power marketer;

(F) a corporation described by Section 32.053 to the extent the corporation sells electricity exclusively at wholesale and not to the ultimate consumer;

(G) an electric cooperative;

(H) a retail electric provider;

(I) this state or an agency of this state; [or]

(J) a person not otherwise an electric utility who:

(i) furnishes an electric service or commodity only to itself, its employees, or its tenants as an incident of employment or tenancy, if that service or commodity is not resold to or used by others;

(ii) owns or operates in this state equipment or facilities to produce, generate, transmit, distribute, sell, or furnish electric energy to an electric utility, if the equipment or facilities are used primarily to produce and generate electric energy for consumption by that person; or

(iii) owns or operates in this state a recreational vehicle park that provides metered electric service in accordance with Subchapter C, Chapter 184; or

(K) a distributed renewable generation owner, as defined by Section 39.916.

SECTION 2. Section 39.002, Utilities Code, is amended to read as follows:

Sec. 39.002. APPLICABILITY. Except as provided by this section, this [This] chapter, other than Sections 39.155, 39.157(e), 39.203, 39.903, 39.904, 39.9051, 39.9052, and 39.914(e), does not apply to a municipally owned utility or to 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. Section 39.916 applies to an electric cooperative. Section 39.9161 applies to a municipally owned utility. 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 3. The heading to Section 39.916, Utilities Code, is amended to read as follows:

Sec. 39.916. [INTERCONNECTION OF] DISTRIBUTED RENEWABLE GENERATION.

SECTION 4. Section 39.916, Utilities Code, is amended by amending Subsections (a), (b), (c), (e), (f), (h), and (j) and adding Subsections (d-1), (k), (l), (m), (n), (o), (p), and (r) to read as follows:

(a) In this section:

(1) "Distributed renewable generation" means electric generation with a capacity of not more than 2,000 kilowatts provided by a renewable energy technology, as defined by Section 39.904, that is installed on a retail electric customer's side of the meter.

(2) "Distributed renewable generation owner" means:

(A) the owner of distributed renewable generation;

(B) a retail electric customer who contracts with another person to finance, install, or maintain distributed renewable generation on the customer's side of the meter, regardless of whether the customer takes ownership of the installed distributed renewable generation; or

(C) a person who by contract is assigned ownership rights to distributed renewable generation located at the premises of a customer on the customer's side of the meter.

(3) "Interconnection" means the right of a distributed renewable generation owner to physically connect distributed renewable generation to an electricity distribution system, and the technical requirements, rules, or processes for the connection.

(b) A transmission and distribution utility, electric cooperative, or electric utility shall allow interconnection if:

(1) the distributed renewable generation to be interconnected has a five-year warranty against breakdown or undue degradation; and

(2) the rated capacity of the distributed renewable generation does not exceed the transmission and distribution utility, electric cooperative, or electric utility service capacity.

(c) A customer may request interconnection by filing an application for interconnection with the transmission and distribution utility, electric cooperative, or electric utility. Procedures of a transmission and distribution utility, electric cooperative, or electric utility for the submission and processing of a customer's application for interconnection shall be consistent with rules adopted by the commission regarding interconnection.

(d-1) If, at the time distributed renewable generation is installed on a retail electric customer's side of the meter, the estimated annual amount of electric energy to be produced by the distributed renewable generation is less than or equal to the customer's estimated annual electric energy consumption, the commission may not consider the distributed renewable generation owner to be a power generation company or require the distributed renewable generation owner to register as a power generation company.

(e) A transmission and distribution utility, electric cooperative, electric utility, or retail electric provider may not require a distributed renewable generation owner whose distributed renewable generation meets the standards established by rule under Subsection (d) to purchase an amount, type, or classification of liability insurance the distributed renewable generation owner would not have in the absence of the distributed renewable generation.

(f) A transmission and distribution utility, electric cooperative, or electric utility shall make available to a distributed renewable generation owner for purposes of this section metering required for services provided under this section, including separate meters that measure the load and generator output or a single meter capable of measuring in-flow and out-flow at the point of common coupling meter point. The distributed renewable generation owner must pay the differential cost of the metering unless the meters are provided at no additional cost. Except as provided by this section, Section 39.107 applies to metering under this section.

(h) On the request of a distributed renewable generation owner and in accordance with this section, an [An] electric utility, electric cooperative, or retail electric provider shall [may] contract with a distributed renewable generation owner so that:

(1) surplus electricity produced by distributed renewable generation is made available for sale to the transmission grid and distribution system; and

(2) the fair market [net] value of that surplus electricity is credited to the distributed renewable generation owner.

(j) For a distributed renewable generation owner who chooses to sell the owner's surplus electricity in an area [owners in areas] in which customer choice has been introduced, the distributed renewable generation owner must sell the owner's surplus electricity produced to the retail electric provider that serves the [distributed renewable generation] owner's load. For a distributed renewable generation owner who chooses to sell the owner's surplus electricity in an area in which customer choice has not been introduced, the owner must sell the owner's surplus electricity to the electric utility or electric cooperative that serves the owner's load at a value that is greater than or equal to the avoided cost of the electric utility or electric cooperative, as determined in accordance with commission rules, and, for an electric cooperative, that is at least 4.5 cents per kilowatt hour regardless of the electric cooperative's avoided cost. A distributed generation owner who chooses to sell the owner's surplus electricity in an area in which customer choice has been introduced must sell the owner's surplus electricity at a fair market value, determined in accordance with this section, [agreed to between the distributed renewable generation owner and the provider that serves the owner's load which may include, but is not limited to, an agreed value based on the clearing price of energy at the time of day that the electricity is made available to the grid] or the owner's surplus electricity may be exchanged for [it may be] a credit applied at a fair market value, determined in accordance with this section, to an account during a billing period that may be carried over to subsequent billing periods until the credit has been redeemed. The independent organization identified in Section 39.151 shall develop procedures so that the amount of electricity purchased from a distributed renewable generation owner under this section is accounted for in settling the total load served by the provider that serves that owner's load [by January 1, 2009]. A distributed renewable generation owner requesting [net] metering services for purposes of this section must have metering devices capable of providing measurements consistent with the independent organization's settlement requirements.

(k) In areas in which customer choice has been introduced, the commission by rule shall provide a methodology for determining a fair market value price for surplus electricity generated by distributed renewable generation that provides a monthly or longer periodic proxy for the market clearing price. The methodology must not allow the aggregate fair market value of surplus electricity in any billing period to be less than zero. The commission shall review the methodology periodically. The commission shall post on its Internet website the fair market value prices derived from the methodology provided under this subsection.

(l) In an area in which customer choice has been introduced, a retail electric provider shall pay a distributed renewable generation owner for surplus electricity generated by the owner's distributed renewable generation the local market clearing price for energy at the time of day the surplus electricity is made available to the grid or a price that is not less than the fair market value price determined in accordance with the methodology provided under Subsection (k).

(m) In areas in which customer choice has been introduced, a distributed renewable generation owner is qualified to be paid for surplus electricity under Subsection (h), (j), (k), or (l) only if:

(1) the owner's distributed renewable generation is:

(A) rated to produce an amount of electricity that is less than or equal to the amount of electricity the retail electric customer for whom the distributed renewable generation is installed is reasonably expected to consume; and

(B) installed on the customer's side of the meter for a residential retail electric customer or a retail electric customer who is a public school or a church; and

(2) the generating capacity of the distributed renewable generation does not exceed:

(A) 10 kilowatts for a residential retail electric customer;

(B) 150 kilowatts for a church retail electric customer; or

(C) 250 kilowatts for a public school retail electric customer.

(n) A distributed renewable generation owner who does not meet the qualifications prescribed by Subsection (m) will be paid for the owner's surplus electricity or will have the owner's surplus electricity exchanged for a credit to the owner's electric service account at a value to which the owner and the provider that serves the owner's load agree.

(o) The commission by rule may establish standards distributed renewable generation must meet to be eligible for compensation under this section, including interconnection standards and standards for the generating equipment. The standards must be designed so that small-scale distributed renewable generation at residential addresses is eligible for compensation.

(p) The commission by rule shall require an electric utility, retail electric provider, or electric cooperative that purchases surplus electricity from distributed renewable generation to include on each bill or separate statement to the distributed renewable generation owner line items to inform the owner of:

(1) the amount of surplus electricity from the distributed renewable generation, in terms of kilowatt hours;

(2) the price credited to or the payment made to the owner for each kilowatt hour; and

(3) the amount of any credit for surplus electricity applied or carried forward from the previous billing period.

(r) Until the commission provides the methodology under Subsection (k) for determining a fair market value price in an area open to competition, a retail electric provider shall pay a price for surplus electricity that is not less than five cents per kilowatt hour for electricity generated by a solar energy technology or not less than four cents per kilowatt hour for electricity generated by another renewable energy technology.

SECTION 5. Subchapter Z, Chapter 39, Utilities Code, is amended by adding Section 39.9161 to read as follows:

Sec. 39.9161. DISTRIBUTED RENEWABLE GENERATION WITHIN MUNICIPALLY OWNED UTILITIES. (a) In this section "distributed renewable generation," "distributed renewable generation owner," and "interconnection" have the meanings assigned by Section 39.916.

(b) It is the goal of the legislature that municipally owned utilities shall allow interconnection and net metering by distributed renewable generation owners.

(c) A municipally owned utility shall provide its customers access to the interconnection and net metering of distributed renewable generation.

(d) The governing body of a municipally owned utility shall provide oversight and adopt rates, rules, and procedures to allow interconnection and provide net metering consistent with the goals of Section 39.916. This section does not prevent the governing body of a municipally owned utility from adopting rates, rules, and procedures for interconnection and net metering that are more favorable to a distributed renewable generation owner than those established by Section 39.916 or rules of the commission.

(e) If a municipally owned utility implements customer choice under Chapter 40, the commission:

(1) has jurisdiction over the municipally owned utility's distributed renewable generation interconnection and net metering; and

(2) by rule shall establish minimum standards and procedures for interconnection and net metering by the municipally owned utility.

(f) A municipally owned utility that had retail sales of 500,000 megawatt hours or greater in 2008 shall file its interconnection and net metering rates, rules, and procedures with the State Energy Conservation Office not later than January 1, 2010, and shall make timely updates to the utility's filed rates, rules, and procedures.

(g) A municipally owned utility that has adopted rules and procedures related to interconnection and net metering shall make available, on a publicly accessible Internet website or at the customary location for publicly posted notices:

(1) information on the purchase price offered per kilowatt hour for surplus electricity produced by distributed renewable generation; and

(2) information instructing customers with distributed renewable generation how to request and obtain the purchase rates offered.

(h) The governing body of a municipally owned utility that had retail sales of less than 500,000 megawatt hours in 2008 shall provide oversight and adopt rules and procedures related to interconnection and net metering of distributed renewable generation systems sized with a generating capacity deemed appropriate by the municipally owned utility on or before the 120th day after the date the governing body receives a bona fide request for interconnection.

SECTION 6. Subchapter Z, Chapter 39, Utilities Code, is amended by adding Section 39.926 to read as follows:

Sec. 39.926. INFORMATION ON INTERNET REGARDING PURCHASE OF SURPLUS ELECTRICITY PRODUCED BY DISTRIBUTED RENEWABLE GENERATION. (a) On the Internet website found at http://www.powertochoose.org, the commission shall provide for access to easily comparable information regarding retail electric providers' offers to residential distributed renewable generation owners for their surplus electricity, including information regarding their contract terms, for each retail electric provider using that website.

(b) On the Internet website found at http://www.powertochoose.org, the commission shall provide for access to easily comparable information regarding offers of renewable energy credit marketers to residential distributed renewable generation owners, for each renewable energy credit marketer using that website.

(c) The commission by rule shall require electric utilities, electric cooperatives, and retail electric providers to provide on publicly accessible Internet websites information on purchase price offers per kilowatt hour for surplus electricity produced by residential distributed renewable generation and information instructing customers with distributed renewable generation on how to request and obtain the purchase rates offered.

SECTION 7. Not later than January 1, 2010, the Public Utility Commission of Texas shall provide the methodology for determining a fair market value price for surplus electricity generated by distributed renewable generation, as required by Section 39.916(k), Utilities Code, as added by this Act.

SECTION 8. (a) Section 39.916, Utilities Code, as amended by this Act, expires September 2, 2011.

(b) The Public Utility Commission of Texas shall conduct a study to determine the effect of the pricing methodology the commission provides under Section 39.916(k), Utilities Code, as added by this Act, and shall report its findings and recommendations to the 82nd Legislature not later than January 15, 2011. The study must include assessments of:

(1) the development of the market in ERCOT for the sale of surplus electricity, including the prices that retail electric providers and electric utilities, municipal electric utilities, and electric cooperatives in areas in which customer choice has not been introduced pay for surplus electricity, and the amount of surplus electricity such entities have purchased;

(2) the rate of adoption by customers in this state of distributed renewable generation, including generation by solar and other on-site renewable technologies, including a comparison of adoption rates in this state compared to the adoption rates in other states, the extent to which adoption rates vary by retail market structure, the amount of direct installation incentives, the pricing for purchasing of surplus electricity, and the extent to which adoption rates are affected by the cost of other electric supplies;

(3) a comparison of the default fair market value price for surplus electricity to:

(A) the local market clearing prices of energy at the time of day surplus electricity has been made available to the grid; and

(B) the avoided costs of electric utilities as determined in accordance with commission rules; and

(4) the extent to which electric service customers with distributed renewable generation help avoid transmission and distribution upgrades and reduce pollution, including an estimation of the value of those benefits regionally.

(c) The study report must include any recommendations for improvements in policies necessary to appropriately encourage the development of distributed renewable generation technologies on customer premises.

SECTION 9. 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, 2009.