81R34885 TJS-D

By: Fraser, et al. S.B. No. 545

Substitute the following for S.B. No. 545:

By: Crabb C.S.S.B. No. 545

A BILL TO BE ENTITLED

AN ACT

relating to the creation of a distributed and wholesale solar generation incentive program and to encouraging the use of solar energy devices.

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

SECTION 1. 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, 39.904, 39.9051, 39.9052, [and] 39.914(e), and 39.9156, 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 2. Subchapter Z, Chapter 39, Utilities Code, is amended by adding Section 39.9155 to read as follows:

Sec. 39.9155. SOLAR GENERATION INCENTIVE PROGRAM. (a) In this section:

(1) "Distributed solar generation" means distributed renewable generation, as defined by Section 39.916, using solar energy technology.

(2) "Owner of distributed solar generation" includes a retail electric customer who contracts with another person to install or maintain distributed solar generation on the customer's side of the meter, regardless of whether the customer takes ownership of the installed distributed solar generation.

(3) "Surplus electricity" means electricity generated by distributed solar generation that is not consumed at the place the distributed solar generation is installed but flows onto the electric distribution system.

(b) It is the goal of the legislature that electric utilities administer incentive programs for residential and commercial customers to increase the amount of distributed solar generation and wholesale solar generation installed within the state in a cost-effective, market-neutral, and nondiscriminatory manner, with a goal of installing at least 3,000 megawatts of solar generation capacity in this state by 2020, at least 1,000 megawatts of which must be distributed renewable generation. It is the intent of the legislature that the incentive program be developed and administered in a manner that, to the greatest extent practicable, creates employment opportunities for residents of this state.

(c) The commission by rule shall:

(1) establish a solar generation incentive program, to be implemented by electric utilities;

(2) oversee the implementation of the program required by Subdivision (1);

(3) establish procedures to achieve the goal described by Subsection (b); and

(4) provide for:

(A) deferral of the costs of complying with the requirements of this section by a utility that is unable to implement the nonbypassable fees allowed by Subsection (d)(1) because of a rate freeze; and

(B) recovery of the costs on expiration of the rate freeze.

(d) The rules adopted under Subsection (c) must include provisions for:

(1) recovery of the cost of electric utility programs authorized by this section through nonbypassable fees of:

(A) $0.000650 per kilowatt hour for each residential or commercial customer meter; and

(B) $40 per month for each industrial customer meter;

(2) rebates to defray the cost of installing solar generation as provided by Subsection (f);

(3) the wholesale solar provisions described by Subsection (g); and

(4) eliminating the incentives provided by this subsection on the date the goals established by Subsection (b) are achieved.

(e) Except as provided by Subsection (l), electric utilities may not assess the fees authorized by this section after the fifth anniversary of the date the program required by this section is established by commission rule. The commission shall ensure that all fees collected under this section are used for the programs authorized by this section, except that utilities may not use more than 2.5 percent of the fees collected for administrative expenses related to this section, as approved by the commission.

(f) The commission shall set rebate amounts for the installation of solar generation. The commission shall periodically adjust the rebate amounts such that the quantity of solar generation installed under this section is maximized, but shall reduce rebate amounts by not less than five percent per year. To the extent allowed by law, the commission shall set a higher rebate amount for solar generation manufactured wholly or substantially in this state, provided that the higher amount is not more than 20 percent higher than the rebate applicable to all other solar generation. The commission may provide for rebates to be provided directly to customers or to qualified installers of solar generation. Unless otherwise adjusted by the commission, the initial rebate amounts are:

(1) $2.40 per watt for installation of distributed renewable generation with a capacity of not more than 10 kilowatts;

(2) $1.50 per watt for installation of distributed renewable generation with a capacity of more than 10 but not more than 2,000 kilowatts; and

(3) $1 per watt for installation of wholesale or industrial generation.

(g) If the demand for rebates under this section for wholesale generation exceeds the money available for those installations, the commission shall consider the following in determining which projects receive rebates:

(1) projects that require the lowest amount per megawatt installed of subsidy to be commercially viable;

(2) projects that use the transmission capacity built under Section 39.904(g) and require minimal additional transmission facilities;

(3) projects that enhance the reliability of the transmission and distribution grid or defer the need for additional transmission and distribution infrastructure;

(4) projects in development that can use rebates awarded to secure additional financing for that project;

(5) projects that provide maximum output during periods when electricity demand is highest in this state;

(6) projects that can provide ancillary services to the electric grid;

(7) projects with the potential to improve ambient air quality in areas designated by the United States Environmental Protection Agency as nonattainment areas under Section 107(d) of the federal Clean Air Act (42 U.S.C. Section 7407); and

(8) projects with the potential to place this state in a leadership position for emerging solar technology research or development.

(h) For the first 24 months of the program, the commission shall reserve 25 percent of the rebates available for installation of distributed renewable generation for use by public school districts in this state. The interested districts must obtain funding for the balance of the installation cost not later than 90 days after filing an application with the commission. If the 25 percent reservation provided under this subsection is fully used before the expiration of the 24-month period, the commission may continue to reserve for an additional 24 months 25 percent of the available rebates.

(i) Notwithstanding any other provision of this title, a retail electric provider or any other person may own distributed solar generation and enter into a contract with the retail customer on whose property the generation is located to lease the generation or sell the output to the retail customer or to the customer's retail electric provider. The owner of the generation is not an electric utility and is not required to register with the commission as a power generation company or self generator unless the commission determines that such registration is necessary to maintain the reliability of the distribution grid. The commission may establish appropriate reporting requirements for trading renewable energy credits. An area of this state in which a distributed renewable generation owner sells output as provided by this subsection is not for that reason considered an area in which customer choice has been introduced. Not more than 25 percent of the annual program budget may be allocated to rebates awarded to retail electric providers for distributed renewable generation installed on retail customers' property as described by this subsection.

(j) The commission, in consultation with the Electric Reliability Council of Texas, shall prepare and make available a study indicating geographic areas where utility scale non-wind renewable energy can be located with minimal additional transmission facilities.

(k) Selection of projects by the commission under Subsection (g) is not required to be conducted as a contested case proceeding. The commission may appoint an advisory committee to assist the commission in evaluating proposals made under Subsection (g), provided, however, that members of the committee may not have a financial interest in any of the proposals. After conclusion of a process authorized by Subsection (g), the commission shall release a complete record of the proposals and the evaluation of the factors required to be considered under Subsection (g).

(l) The commission may extend the fees and program authorized by this section for an additional five years if the commission finds that a substantial amount of manufacturing of solar generation products has located in Texas after the initial five-year program and that the extension of the fees does not present an undue burden to customers.

(m) Notwithstanding any other law, this section applies to every electric utility in this state.

SECTION 3. Subchapter Z, Chapter 39, Utilities Code, is amended by adding Section 39.9156 to read as follows:

Sec. 39.9156. SOLAR GENERATION INCENTIVE PROGRAMS. (a) It is the goal of the legislature that:

(1) electric cooperatives and municipally owned utilities administer incentive programs that increase the amount of solar generation installed in this state in a cost-effective, market-neutral, and nondiscriminatory manner;

(2) customers of electric cooperatives and municipally owned utilities will have access to incentives for the installation of distributed solar generation; and

(3) electric cooperatives and municipally owned utilities expend funds to increase the amount of solar generation at a total funding level consistent with the requirements for electric utilities in this state under Sections 39.9155(d)(1) and (e).

(b) This section applies only to an electric cooperative or municipally owned utility with retail sales of more than 500,000 megawatt hours in 2007.

(c) Beginning not later than September 1, 2012, a municipally owned utility or electric cooperative must report annually to the state energy conservation office, in a form and manner determined by the office, information regarding the efforts of the municipally owned utility or electric cooperative related to this section.

(d) This section does not prevent the governing body of an electric cooperative or municipally owned utility from adopting rules, programs, and incentives to encourage or provide for the installation of more solar generation capacity than the goals established by Section 39.9155 or rules adopted under that section.

(e) An electric cooperative or municipally owned utility may recover the costs required by this section through a nonbypassable fee consistent with that authorized by the commission for electric utilities under Section 39.9155(d)(1) or another cost recovery mechanism as determined by the governing body of the electric cooperative or municipally owned utility.

SECTION 4. Chapter 202, Property Code, is amended by adding Section 202.010 to read as follows:

Sec. 202.010. REGULATION OF SOLAR ENERGY DEVICES. (a) In this section, "solar energy device" has the meaning assigned by Section 171.107, Tax Code.

(b) Except as otherwise provided by this section, a property owners' association may not include or enforce a provision in a dedicatory instrument that prohibits or restricts a property owner from installing a solar energy device.

(c) A provision that violates Subsection (b) is void.

(d) This section does not prohibit the inclusion or enforcement of a provision in a dedicatory instrument that prohibits a solar energy device that:

(1) threatens the public health or safety;

(2) violates a law;

(3) is located on property owned or maintained by the property owners' association;

(4) is located on property owned in common by the members of the property owners' association;

(5) is located in an area on the property owner's property other than:

(A) on the roof of the home; or

(B) in a fenced yard or patio maintained by the property owner; or

(6) is mounted on a device that is taller or more visually obtrusive than is necessary for the solar energy device to operate at not less than 90 percent of its rated efficiency.

SECTION 5. The heading to Subtitle F, Title 16, Property Code, is amended to read as follows:

SUBTITLE F. REGULATION [INSPECTION] OF [NEW] RESIDENTIAL

CONSTRUCTION GENERALLY

SECTION 6. The heading to Chapter 446, Property Code, is amended to read as follows:

CHAPTER 446. INSPECTION OF RESIDENTIAL CONSTRUCTION IN

UNINCORPORATED AREAS AND OTHER AREAS NOT SUBJECT TO MUNICIPAL

INSPECTIONS

SECTION 7. Subtitle F, Title 16, Property Code, is amended by adding Chapter 447 to read as follows:

CHAPTER 447. REQUIREMENTS FOR NEW CONSTRUCTION CONTRACTS

Sec. 447.001. SOLAR PANEL OPTION REQUIRED IN CERTAIN SUBDIVISIONS. (a) In this section, "solar energy device" means a system or series of mechanisms designed primarily to provide heating or cooling or to produce electrical or mechanical power by collecting and transferring solar-generated energy. The term includes a mechanical or chemical device that has the ability to store solar-generated energy for use in heating or cooling or in the production of power.

(b) This chapter applies only to a contract for construction of a new home in a subdivision that contains more than 50 lots on which the builder has built or is offering to build new homes.

(c) A builder who enters into a contract to which this chapter applies shall offer the homebuyer at least one plan in the subdivision on which the homebuyer may purchase an option to install a solar energy device on the home for heating or cooling or for the production of power.

SECTION 8. Subchapter D, Chapter 2305, Government Code, is amended by adding Section 2305.0321 to read as follows:

Sec. 2305.0321. REVOLVING LOAN PROGRAM FOR SOLAR ENERGY IMPROVEMENTS. (a) The energy office shall establish a revolving loan program patterned after the loanstar revolving loan program to provide loans to pay the costs of installing photovoltaic solar panels on and associated energy efficiency improvements to public school buildings and buildings owned by religious organizations. The energy office shall allocate to the program at least $75 million from money available under the American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-5), subject to federal approval of the use of that money for the purposes of the program.

(b) The energy office by rule shall establish the terms under which a loan may be made under the program, including the interest rate for repayment of program loans. A program loan must be paid over a 15-year term.

(c) Through the program, the energy office shall offer to each school district the opportunity to apply for a loan to pay the cost of installing photovoltaic solar panels on at least one school building of the school district's choice and the cost of associated energy efficiency improvements to that building.

(d) The energy office by rule shall establish a procedure for determining which school district buildings or religious organization buildings qualify for a program loan.

(e) Each school district that receives a program loan shall pay for the principal of and interest on the loan primarily from the amount budgeted for the energy costs of the school at which the improvements are installed. The school district may make additional payments of the principal of or interest on a program loan from money rebated to it as compensation for electric energy generated by the solar panels or money received as a gift or grant for the purpose of paying the loan.

(f) In this section, "religious organization" means a synagogue, mosque, church, or other institution:

(1) the purpose of which is the propagation of religious beliefs; and

(2) that is exempt from federal income tax under Section 501(a) of the Internal Revenue Code of 1986 (26 U.S.C. Section 501(a)) by being listed under Section 501(c) of that code (26 U.S.C. Section 501(c)).

SECTION 9. The Public Utility Commission of Texas shall adopt rules establishing the programs required under Sections 39.9155 and 39.9156, Utilities Code, as added by this Act, as soon as practicable.

SECTION 10. Section 202.010, Property Code, as added by this Act, applies to a deed restriction enacted before, on, or after the effective date of this Act.

SECTION 11. Chapter 447, Property Code, as added by this Act, applies only to a contract for new home construction entered into on or after the effective date of this Act. A contract entered into before the effective date of this Act is governed by the law in effect immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 12. The state energy conservation office shall establish a program under Section 2305.0321, Government Code, as added by this Act, not later than January 1, 2010.

SECTION 13. 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.