By: Watson, et al. S.B. No. 541
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to renewable energy and to incentives for Texas renewable
  energy jobs and manufacturing.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  The purpose of this Act is to continue Texas'
  leadership in installing clean, renewable energy in Texas in a
  market-based manner that drives manufacturing jobs and provides
  price protection for businesses and consumers.
         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 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 39.9041
  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.  Section 39.904, Utilities Code, is amended by
  amending Subsections (a), (b), (c), (d), (n), and (o), and adding
  Subsections (a-1), (c-1), (c-2), (c-3), (n-1), and (p) to read as
  follows:
         (a)  It is the intent of the legislature that by January 1,
  2015, an additional 5,000 megawatts of generating capacity from
  tier 1 renewable energy technologies will have been installed in
  this state. The cumulative installed renewable capacity in this
  state shall total 5,880 megawatts by January 1, 2015, and the
  commission shall establish a target of 10,000 megawatts of
  installed renewable capacity by January 1, 2025. The cumulative
  installed tier 1 renewable capacity in this state shall total 2,280
  megawatts by January 1, 2007, 3,272 megawatts by January 1, 2009,
  4,264 megawatts by January 1, 2011, 5,256 megawatts by January 1,
  2013, and 5,880 megawatts by January 1, 2015. [Of the renewable
  energy technology generating capacity installed to meet the goal of
  this subsection after September 1, 2005, the commission shall
  establish a target of having at least 500 megawatts of capacity from
  a renewable energy technology other than a source using wind
  energy.]
         (a-1)  It is the goal of the legislature that by January 1,
  2020, an additional 1,500 megawatts of tier 2 renewable energy will
  have been installed in this state. Of the renewable energy
  generating capacity installed to meet the goal of this subsection,
  up to 500 megawatts of renewable energy storage may qualify to meet
  the tier 2 goal. The cumulative installed tier 2 renewable energy
  resource capacity in this state shall total 50 megawatts by January
  1, 2011; 100 megawatts by January 1, 2012; 200 megawatts by January
  1, 2013; 350 megawatts by January 1, 2014; 500 megawatts by January
  1, 2015; 750 megawatts by January 1, 2016; 900 megawatts by January
  1, 2017; 1,000 megawatts by January 1, 2018; 1,250 megawatts by
  January 1, 2019; and 1,500 megawatts by January 1, 2020. On January
  1, 2016, if the commission determines the state has not made
  significant progress toward the goals of this subsection, then the
  commission may take action to suspend future obligations under this
  subsection.
         (b)  The commission shall establish a tier 1 renewable energy
  credits trading program and a tier 2 renewable energy credits
  trading program. Any retail electric provider, municipally owned
  utility, or electric cooperative that does not satisfy the
  requirements of Subsection (a) by directly owning or purchasing
  capacity using renewable energy technologies shall purchase
  sufficient renewable energy credits to satisfy the requirements by
  holding renewable energy credits in lieu of capacity from renewable
  energy technologies. In calculating capacity factors for tier 2
  renewable energy credits, the commission shall encourage a diverse
  portfolio of tier 2 renewable energy technologies.
         (c)  Not later than January 1, 2000, the commission shall
  adopt rules necessary to administer and enforce this section. At a
  minimum, the rules shall:
               (1)  establish the minimum annual renewable energy
  requirement for each retail electric provider, municipally owned
  utility, and electric cooperative operating in this state in a
  manner reasonably calculated by the commission to produce, on a
  statewide basis, compliance with the requirement prescribed by
  Subsections (a) and (a-1) [Subsection (a)]; and
               (2)  specify reasonable performance standards that all
  renewable capacity additions must meet to count against the
  requirement prescribed by Subsections (a) and (a-1) [Subsection
  (a)] and that:
                     (A)  are designed and operated so as to maximize
  the energy output from the capacity additions in accordance with
  then-current industry standards; and
                     (B)  encourage the development, construction, and
  operation of new renewable energy projects at those sites in this
  state that have the greatest economic potential for capture and
  development of this state's environmentally beneficial renewable
  resources.
         (c-1)  Not later than January 1, 2011, the commission shall
  adopt rules necessary to provide a "Made in Texas" incentive for
  tier 1 and tier 2 renewable energy credits generated by generation
  equipment that is wholly produced or substantially transformed by a
  Texas workforce, as determined by the commission. The incentive
  under this subsection shall be available for the first three years
  after the renewable energy equipment first produces electricity on
  a commercial basis.
         (c-2)  Not later than January 1, 2010, the commission shall
  adopt rules necessary to track and account for renewable energy
  credits earned from electric generating capacity derived from
  renewable energy storage. The rules shall:
               (1)  allow for the renewable energy storage to be
  located on the same or on a different site as the renewable
  generation being stored;
               (2)  ensure that only one renewable energy credit is
  retired for every megawatt hour of renewable energy generated prior
  to being stored for later release onto the electricity grid; and
               (3)  account for any loss in energy resulting from
  storage for later use.
         (c-3)  Not later than January 1, 2010, the commission shall
  adopt rules necessary to allow generators of tier 2 renewable
  energy installed before September 1, 1999, to qualify annually for
  not more than 40 megawatts of tier 2 renewable energy credits.
         (d)  For purposes of [In] this section:
               (1)  "Tier 1 renewable energy technology" [, "renewable
  energy technology"] means any technology that exclusively relies on
  an energy source that is naturally regenerated over a short time and
  derived directly from the sun, indirectly from the sun, or from
  moving water or other natural movements and mechanisms of the
  environment. Renewable energy technologies include those that rely
  on energy derived directly from the sun, on wind, geothermal,
  hydroelectric, wave, or tidal energy, or on biomass or
  biomass-based waste products, including landfill gas. A renewable
  energy technology does not rely on energy resources derived from
  fossil fuels, waste products from fossil fuels, or waste products
  from inorganic sources.
               (2)  "Tier 2 renewable energy" means tier 1 renewable
  energy technology excluding energy derived from wind with a
  capacity of more than 150 kilowatts.
               (3)  "Renewable energy storage" means energy storage
  technology that stores for later release energy derived from tier 1
  or tier 2 renewable energy.
         (n)  Notwithstanding any other provision of law, the
  commission shall have the authority to cap the price of renewable
  energy credits and may suspend the goal contained in Subsections
  (a) and (a-1) [Subsection (a)] if such suspension is necessary to
  protect the reliability and operation of the grid.
         (n-1)  If the commission determines that complying with the
  goals of Subsection (a-1) and a federal renewable portfolio
  standard that is more stringent than those goals would cause an
  undue burden to ratepayers in this state, the commission may
  suspend any requirement relating to meeting those goals.
         (o)  The commission may establish tier 1 and tier 2 [an]
  alternative compliance payments [payment]. An entity that has a
  renewable energy purchase requirement under this section may elect
  to pay the alternative compliance payment instead of applying
  renewable energy credits toward the satisfaction of the entity's
  obligation under this section. [The commission may establish a
  separate alternative compliance payment for the goal of 500
  megawatts of capacity from renewable energy technologies other than
  wind energy.] The tier 1 alternative compliance payment for a
  renewable energy purchase requirement that could be satisfied with
  a renewable energy credit from wind energy may not be less than
  $2.50 per credit or greater than $20 per credit. Prior to September
  1, 2009, an alternative compliance payment under this subsection
  may not be set above $5 per credit. The tier 2 alternative
  compliance payment that could be satisfied with a tier 2 renewable
  energy credit shall not exceed $90 per renewable energy credit
  before December 31, 2014; $80 per renewable energy credit before
  December 31, 2015; $65 per renewable energy credit before December
  31, 2016; $45 per renewable energy credit before December 31, 2017;
  $40 per renewable energy credit before December 31, 2018; $35 per
  renewable energy credit before December 31, 2019; $30 per renewable
  energy credit before December 31, 2020. In implementing this
  subsection, the commission shall consider:
               (1)  the effect of renewable energy credit prices on
  retail competition;
               (2)  the effect of renewable energy credit prices on
  electric rates;
               (3)  the effect of the alternative compliance payment
  level on the renewable energy credit market; and
               (4)  any other factors necessary to ensure the
  continued development of the renewable energy industry in this
  state while protecting ratepayers from unnecessary rate increases.
         (p)  If the commission suspends the tier 2 renewable energy
  goal under Subsection (a-1), all alternative compliance payment
  funds collected shall be refunded by the retail electric providers
  under the guidance of the commission to the residential and
  commercial electric customers covered by this subchapter. If the
  commission does not suspend the tier 2 renewable energy goal under
  Subsection (a-1), the alternative compliance payment funds
  collected by the commission shall be used for the purpose of a solar
  rebate program established by the commission.
         SECTION 4.  Subchapter Z, Chapter 39, Utilities Code, is
  amended by adding Section 39.9041 to read as follows:
         Sec. 39.9041.  RENEWABLE ENERGY FOR MUNICIPALLY OWNED
  UTILITIES. (a)  It is the goal of the legislature that municipally
  owned utilities:
               (1)  increase the installed capacity in this state from
  tier 2 renewable energy or from renewable energy storage in a
  cost-effective, market neutral, and nondiscriminatory manner; and
               (2)  install capacity from tier 2 renewable energy or
  from renewable energy storage in proportion to and at a level
  consistent with the requirements for electric utilities under
  Section 39.904(a-1).
         (b)  This section applies only to a municipally owned utility
  with retail sales of more than 500,000 megawatt hours for the year
  beginning January 1, 2007.
         (c)  Beginning not later than September 1, 2012, a
  municipally owned utility annually shall report to the State Energy
  Conservation Office, in a form determined by the office,
  information regarding the efforts of the utility under this
  section.
         (d)  This section does not prevent the governing body of a
  municipally owned utility from adopting rules, programs, and
  incentives that encourage or provide for the installation of
  capacity from tier 2 renewable energy or renewable energy storage
  in addition to the goals in Section 39.904(a-1).
         (e)  The commission shall count capacity from tier 2
  renewable energy or renewable energy storage installed on or after
  May 1, 2007, toward a municipally owned utility's compliance with
  this section.
         (f)  A municipally owned utility may satisfy the
  requirements of this section:
               (1)  by owning or purchasing capacity from tier 2
  renewable energy or renewable energy storage; or
               (2)  by purchasing renewable energy credits in lieu of
  capacity from tier 2 renewable energy technologies.
         SECTION 5.  This Act takes effect September 1, 2009.