82R7590 YDB/JTS-F

By: Carona S.B. No. 1340

A BILL TO BE ENTITLED

AN ACT

relating to the creation of the Energy Efficiency Council and to statewide energy efficiency; providing penalties.

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

SECTION 1. Subchapter B, Chapter 55, Education Code, is amended by adding Section 55.115 to read as follows:

Sec. 55.115. HIGH-PERFORMANCE, SUSTAINABLE DESIGN, CONSTRUCTION, AND RENOVATION STANDARDS FOR CERTAIN FACILITIES. (a) This section applies to the construction of an institution of higher education building, structure, or other facility, or the renovation of a building, structure, or other facility the cost of which is more than 50 percent of the value of the building, structure, or other facility, any part of the construction or renovation of which is financed by revenue bonds issued under this subchapter.

(b) A building, structure, or other facility to which this section applies must be designed and constructed or renovated so that the building, structure, or other facility complies with high-performance building standards, approved by the board of regents of the institution, that provide minimum requirements for energy use, natural resources use, and indoor air quality. In approving high-performance building standards, a board of regents shall consider the standards approved by the Texas Facilities Commission under Section 2166.409, Government Code, and may solicit and consider recommendations from the advisory committee appointed under that section.

(c) In addition to meeting the requirements of Subsection (b), a building, structure, or other facility to which this section applies must be designed and constructed or renovated to comply with the applicable energy and water conservation design standards established by the State Energy Conservation Office under Section 447.004, Government Code.

SECTION 2. Subtitle E, Title 4, Government Code, is amended by adding Chapter 470 to read as follows:

CHAPTER 470. ENERGY EFFICIENCY COUNCIL

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 470.001. DEFINITIONS. In this chapter:

(1) "Council" means the Energy Efficiency Council.

(2) "Energy efficiency program" means a program designed to:

(A) reduce inefficient energy use;

(B) reduce peak energy demand;

(C) reduce energy consumption;

(D) promote compliance with energy efficient building design standards; or

(E) pay for the implementation of energy cost reduction measures.

(3) "Program administrator" includes any of the following entities that administer an energy efficiency program:

(A) a state agency, including the Public Utility Commission of Texas, the Railroad Commission of Texas, the State Energy Conservation Office, and the Texas Department of Housing and Community Affairs;

(B) a political subdivision of this state;

(C) a private or public utility service provider, including an electric cooperative or municipally owned utility;

(D) a school district; or

(E) an institution of higher education.

Sec. 470.002. PURPOSE. The Energy Efficiency Council is a council established in the comptroller's office to:

(1) monitor energy efficiency programs in this state;

(2) make recommendations for improving energy efficiency programs in this state; and

(3) provide a central repository for information on energy efficiency programs in this state.

Sec. 470.003. ENERGY EFFICIENCY PROGRAM POLICIES. A program administrator shall consider any applicable recommendations of the council when creating or implementing the energy efficiency program.

[Sections 470.004-470.050 reserved for expansion]

SUBCHAPTER B. COUNCIL

Sec. 470.051. COUNCIL MEMBERSHIP. (a) The council is composed of the following 15 members:

(1) 12 ex officio members as follows:

(A) the chairperson of the Texas Commission on Environmental Quality;

(B) the chief executive officer of the Electric Reliability Council of Texas;

(C) the chairperson of the Public Utilities Commission of Texas;

(D) the chairperson of the Railroad Commission of Texas;

(E) the director of the State Energy Conservation Office;

(F) the executive director of the Texas Department of Housing and Community Affairs;

(G) the executive director of the Texas Facilities Commission;

(H) the executive administrator of the Texas Water Development Board;

(I) the presiding officer of the Water Conservation Advisory Council;

(J) the executive director of the Texas Department of Rural Affairs;

(K) the director of the Energy Systems Laboratory at the Texas Engineering Experiment Station of The Texas A&M University System; and

(L) the public counsel of the Office of Public Utility Counsel to represent residential ratepayers; and

(2) three public members as follows:

(A) one member to represent low-income ratepayers;

(B) one member to represent either commercial or industrial ratepayers; and

(C) one member to represent an environmental organization.

(b) The three public members are appointed by the governor with the advice and consent of the senate.

(c) Appointments to the council shall be made without regard to the race, color, disability, sex, religion, age, or national origin of the appointees.

(d) The ex officio members and the appointed members serve as voting members of the council.

Sec. 470.052. TERMS; VACANCY. (a) Appointed members of the council serve staggered six-year terms, with the terms of one or two members, as applicable, expiring on February 1 of each odd-numbered year.

(b) A vacancy in the office of an appointed member of the council shall be filled for the unexpired term.

Sec. 470.053. ELIGIBILITY OF PUBLIC MEMBERS. A person may not be a public member of the council if the person or the person's spouse:

(1) is registered, certified, or licensed by a regulatory agency as a utility provider or energy efficiency service provider;

(2) is employed by or participates in the management of a business entity or other organization regulated by or receiving money from the council;

(3) owns or controls, directly or indirectly, more than a 10 percent interest in a business entity or other organization regulated by or receiving money from the council; or

(4) uses or receives a substantial amount of tangible goods, services, or money from the council other than compensation or reimbursement authorized by law for council membership, attendance, or expenses.

Sec. 470.054. CONFLICT OF INTEREST. (a) In this section, "Texas trade association" means a cooperative and voluntarily joined statewide association of business or professional competitors in this state designed to assist its members and its industry or profession in dealing with mutual business or professional problems and in promoting their common interest.

(b) A person may not be a public member of the council and may not be a council employee employed in a "bona fide executive, administrative, or professional capacity," as that phrase is used for purposes of establishing an exemption to the overtime provisions of the federal Fair Labor Standards Act of 1938 (29 U.S.C. Section 201 et seq.) if:

(1) the person is an officer, employee, or paid consultant of a Texas trade association of utility providers or energy efficiency service providers; or

(2) the person's spouse is an officer, manager, or paid consultant of a Texas trade association of utility providers or energy efficiency service providers.

(c) A person may not be a member of the council or act as the general counsel to the council if the person is required to register as a lobbyist under Chapter 305 because of the person's activities for compensation on behalf of a profession related to the operation of the council.

Sec. 470.055. GROUNDS FOR REMOVAL. (a) It is a ground for removal from the council that an appointed member:

(1) is ineligible for membership under Section 470.053 or 470.054;

(2) cannot, because of illness or disability, discharge the member's duties for a substantial part of the member's term; or

(3) is absent from more than half of the regularly scheduled council meetings that the member is eligible to attend during a calendar year without an excuse approved by a majority vote of the council.

(b) The validity of an action of the council is not affected by the fact that it is taken when a ground for removal of a council member exists.

(c) If the director has knowledge that a potential ground for removal exists, the director shall notify the presiding officer of the council of the potential ground. The presiding officer shall then notify the governor and the attorney general that a potential ground for removal exists. If the potential ground for removal involves the presiding officer, the director shall notify the next highest ranking officer of the council, who shall then notify the governor and the attorney general that a potential ground for removal exists.

Sec. 470.056. APPOINTED MEMBER TRAINING PROGRAM. (a) A person who is appointed to and qualifies for office as a member of the council may not vote, deliberate, or be counted as a member in attendance at a meeting of the council until the person completes a training program that complies with this section.

(b) The training program must provide the person with information regarding:

(1) this chapter;

(2) the programs, functions, rules, and budget of the council;

(3) the results of the most recent formal audit of the council;

(4) the requirements of laws relating to open meetings, public information, administrative procedure, and conflicts of interest; and

(5) any applicable ethics policies adopted by the council or the Texas Ethics Commission.

(c) A person appointed to the council is entitled to reimbursement, as provided by the General Appropriations Act, for the travel expenses incurred in attending the training program regardless of whether the attendance at the program occurs before or after the person qualifies for office.

Sec. 470.057. PRESIDING OFFICER. The director of the State Energy Conservation Office serves as presiding officer of the council.

Sec. 470.058. MEETINGS. The council shall meet at least two times a year and at other times at the call of the presiding officer.

[Sections 470.059-470.100 reserved for expansion]

SUBCHAPTER C. GENERAL DUTIES OF COUNCIL

Sec. 470.101. COLLECTION AND SUBMISSION OF ENERGY INFORMATION. (a) The council shall:

(1) collect information regarding energy savings and demand reduction by reviewing energy efficiency programs in this state; and

(2) submit the information collected to:

(A) the Energy Systems Laboratory at the Texas Engineering Experiment Station of The Texas A&M University System;

(B) the State Energy Conservation Office; and

(C) the Electric Reliability Council of Texas.

(b) Each state agency, utility provider, and energy efficiency service provider shall submit information required under this chapter or council rule to the council in an electronic format and within the time required by this chapter or council rule.

(c) The State Energy Conservation Office shall annually submit the following information to the Electric Reliability Council of Texas:

(1) the total energy savings and demand reduction determined by the office from all available sources for use in the reliability council's annual reports; and

(2) the total energy savings and demand reduction potential for use in the reliability council's long-term forecasting.

(d) The Texas Engineering Experiment Station of The Texas A&M University System shall submit information on pollution reduction, including reductions in nitrogen oxides, volatile organic compounds, and carbon dioxide, that results from energy efficiency programs to the Texas Commission on Environmental Quality and the United States Environmental Protection Agency for inclusion in the state's air quality plans.

Sec. 470.102. INTERNET WEBSITE. The council shall create and maintain a public Internet website. The website must meet the state's minimum standards for accessibility and include:

(1) each annual and biennial report produced by the council;

(2) a user-friendly page that allows a consumer to search by the consumer's address energy efficiency programs available in the consumer's service area;

(3) comprehensive information on energy efficiency that allows the website to serve as the state's main resource for all energy efficiency information; and

(4) a list of every energy efficiency program reviewed by the council organized by state agency, public utility, or energy efficiency service provider with appropriate links.

Sec. 470.103. ADMINISTRATIVE SUPPORT. To the extent resources are available, the State Energy Conservation Office shall provide the council with administrative support, including meeting space and staff necessary to assist the council in carrying out the council's duties under this chapter.

Sec. 470.104. ACCEPTANCE OF GIFTS, GRANTS, OR DONATIONS. The council may solicit and the comptroller may accept for the council gifts, grants, and donations from any public or private source for the purposes of this chapter.

Sec. 470.105. ENERGY EFFICIENCY PROGRAM MONITORING AND RECOMMENDATIONS. (a) The council shall monitor energy efficiency programs in this state.

(b) The council may submit to a program administrator recommendations on means to encourage greater energy efficiency on a regular basis.

Sec. 470.106. LIST OF ENERGY EFFICIENCY PROGRAMS. The council shall develop and periodically update a list of currently operating energy efficiency programs in this state. The council shall publish the list on its Internet website.

Sec. 470.107. BIENNIAL PROGRAMS REPORT. (a) The council biennially shall prepare a report on energy efficiency programs in this state. The council shall submit the report to the legislature not later than October 1 of each even-numbered year.

(b) The report must include:

(1) a comprehensive review of the energy efficiency programs on the list required by Section 470.106, including information on the costs and benefits of the programs;

(2) a study comparing energy efficiency programs in this state to similar programs in:

(A) California;

(B) Florida;

(C) New York; and

(D) each other state the council determines to have programs appropriate for the comparisons; and

(3) recommendations for improving energy efficiency programs in this state.

(c) The report may include recommendations for creating new energy efficiency programs in this state.

SECTION 3. Subchapter I, Chapter 2166, Government Code, is amended by adding Section 2166.409 to read as follows:

Sec. 2166.409. HIGH-PERFORMANCE, SUSTAINABLE DESIGN, CONSTRUCTION, AND RENOVATION STANDARDS FOR STATE BUILDINGS. (a) This section applies to the construction of a state building, or the renovation of a state building the cost of which is more than 50 percent of the value of the building, including a building for education, assembly, or office occupancy under the charge and control of the Texas Department of Transportation, the Parks and Wildlife Department, the Texas Department of Housing and Community Affairs, the Texas State Affordable Housing Corporation, or the Veterans' Land Board that is otherwise exempt from this chapter under Section 2166.003. This section does not apply to a facility under the charge and control of the Texas Department of Criminal Justice or the Texas Youth Commission.

(b) A building to which this section applies must be designed and constructed or renovated so that the building achieves certification under a high-performance building standard approved by the commission that:

(1) is developed and revised through a nationally recognized consensus-based process or by a municipally owned utility in this state;

(2) provides minimum requirements for energy use, natural resources use, and indoor air quality;

(3) requires substantiating documentation for certification;

(4) requires on-site, third-party, post-construction review and verification for certification, or a third-party, post-construction, rigorous review of documentation and verification for certification; and

(5) encourages the use of materials or products manufactured or produced in this state.

(c) The commission shall appoint an advisory committee to advise the commission in determining which high-performance building standards to approve for use under Subsection (b). At least once each year, the advisory committee shall review available high-performance building standards and make recommendations to the commission. The advisory committee consists of:

(1) the director of facilities construction and space management appointed under Section 2152.104, who serves as the presiding officer of the committee;

(2) six individuals with experience and expertise in high-performance buildings or related products, including experience and expertise in energy efficiency, water efficiency, or low-impact site development, with one individual selected from each of the following lists of nominees:

(A) a list submitted by the president of the Texas Society of Architects;

(B) a list submitted by the presidents of the Texas Council of Engineering Companies and Texas Society of Professional Engineers;

(C) a list submitted by the president of the Associated Builders and Contractors of Texas and the presiding officer of the executive committee of the Associated General Contractors, Texas Building Branch;

(D) a list submitted by the president of the Texas chapter of the American Society of Landscape Architects;

(E) a list submitted by the president of the Texas Chemical Council; and

(F) a list submitted by the president of the Texas chapter of the Urban Land Institute;

(3) one individual appointed by the comptroller who represents the State Energy Conservation Office;

(4) one individual representing a state agency that has a substantial ongoing construction program; and

(5) one individual representing the interests of historically underutilized businesses.

(d) In addition to meeting the requirements of Subsection (b), a building to which this section applies must be designed and constructed or renovated so that the building:

(1) meets the American Society of Heating, Refrigerating and Air-Conditioning Engineers energy standards in effect on September 1, 2011, or the International Energy Conservation Code in effect on September 1, 2011, or an updated version of those standards or that code adopted by the State Energy Conservation Office under Subsection (e), if applicable; and

(2) achieves a 15 percent reduction in water use when compared to water use based on plumbing fixtures selected in accordance with the Energy Policy Act of 1992 (Pub. L. No. 102-486).

(e) If the State Energy Conservation Office determines, based on written recommendations from the Energy Systems Laboratory at the Texas Engineering Experiment Station of The Texas A&M University System, that the latest published edition of the American Society of Heating, Refrigerating and Air-Conditioning Engineers energy standards or the International Energy Conservation Code will result in energy efficiency and air quality that is equivalent to or better than the energy efficiency and air quality achievable under the editions described by Subsection (d)(1), the office by rule shall adopt the equivalent or more stringent editions and substitute them for the standards or code described by Subsection (d)(1). The rule, if adopted, must establish an effective date for the new standards or code but not earlier than nine months after the date of adoption. The laboratory shall make its recommendations not later than six months after the date of publication of the new editions.

(f) A contract between the commission and a private design professional relating to services in connection with the construction or renovation of a building to which this section applies must provide that, for billing purposes, any service provided by the private design professional that is necessary to satisfy the requirements of Subsection (b) or (d) is considered an additional service rather than a basic service.

SECTION 4. Section 384.001, Health and Safety Code, is amended by adding Subdivision (2-a) to read as follows:

(2-a) "Laboratory" means the Energy Systems Laboratory at the Texas Engineering Experiment Station of The Texas A&M University System.

SECTION 5. Section 384.002, Health and Safety Code, is amended to read as follows:

Sec. 384.002. PURPOSE. (a) The purpose of an area emission reduction credit organization shall be to promote the coexistence of the improvement of air quality and economic development within the region through the acquisition and distribution of emission reduction credits. Its activities may include the use of emission reduction credits to help meet federal reasonable further progress requirements as well as using emission reduction credits to facilitate the issuance of permits.

(b) An organization may establish an energy efficiency market emission reduction credit program through which a utility, municipal utility, electric cooperative, state or local government, or energy service company that has a program of energy efficiency measures established in a nonattainment or near nonattainment area may register savings from that entity's energy efficiency measures as emission reduction credits and sell or trade the credits in an effort to reduce emissions of air pollutants in urban areas of this state. Emission reduction credits gained through energy efficiency measures must be certified by the laboratory as having achieved the actual emission reduction.

SECTION 6. Section 384.014, Health and Safety Code, is amended to read as follows:

Sec. 384.014. ANNUAL REPORT. By March 1 of each year each area organization shall file with the commission, the laboratory, and the regional council of governments an annual report for the preceding calendar year. The annual report shall contain:

(1) a financial accounting;

(2)[,] an accounting of emission reduction credits;[,] and

(3) a listing of all emission reduction credit transactions entered into by the organization, including any transactions related to the creation of an energy efficiency market emission reduction credit program.

SECTION 7. Section 388.002(4), Health and Safety Code, is amended to read as follows:

(4) "Code-certified inspector" means an inspector who is certified by the International Code Council, the Building Officials and Code Administrators International, Inc., the International Conference of Building Officials, or the Southern Building Code Congress International to have met minimum standards for interpretation and enforcement of requirements of the International Energy Conservation Code [and the energy efficiency chapter of the International Residential Code].

SECTION 8. Section 388.003, Health and Safety Code, is amended by amending Subsections (a), (b-2), (c), (d), (e), and (f) and adding Subsections (a-1) and (c-1) to read as follows:

(a) To achieve energy conservation in the construction of, renovations to, and additions to all [single-family] residential, commercial, and industrial buildings in this state, the State Energy Conservation Office, in consultation with the laboratory, shall adopt the International Energy Conservation Code, as published at the end of each three-year code development cycle, as the minimum requirements for those buildings [construction, the energy efficiency chapter of the International Residential Code, as it existed on May 1, 2001, is adopted as the energy code in this state for single-family residential construction].

(a-1) The State Energy Conservation Office shall set an effective date for an energy code adopted under Subsection (a) that is not later than nine months after publication of a new edition of the code at the end of each three-year code development cycle of the International Energy Conservation Code.

(b-2) The State Energy Conservation Office by rule shall establish a procedure for persons who have an interest in the adoption of energy codes [under Subsection (b-1)] to have an opportunity to comment on the codes under consideration. The office shall consider persons who have an interest in adoption of energy [those] codes to include:

(1) commercial and residential builders, architects, and engineers;

(2) municipal, county, and other local government authorities; [and]

(3) environmental groups; and

(4) the laboratory.

(c) A municipality shall establish procedures:

(1) for the administration and enforcement of the code [codes]; [and]

(2) to ensure that code-certified inspectors shall perform inspections and enforce the code in the inspectors' jurisdictions; and

(3) to track and report to the State Energy Conservation Office on implementation of the code.

(c-1) A report under Subsection (c)(3) must include a description of the measures taken to enforce the most recently adopted version of the International Energy Conservation Code and an assessment of the rate of compliance.

(d) A municipality or county may establish procedures to adopt local amendments to the International Energy Conservation Code [and the energy efficiency chapter of the International Residential Code].

(e) Local amendments may not result in less stringent energy efficiency requirements in nonattainment areas and in affected counties than the requirements of the [energy efficiency chapter of the International Residential Code or] International Energy Conservation Code. Local amendments must comply with the National Appliance Energy Conservation Act of 1987 (42 U.S.C. Sections 6291-6309), as amended. The laboratory, at the request of a municipality or county, shall determine the relative impact of proposed local amendments to an energy code, including whether proposed amendments are substantially equal to or less stringent than the unamended code. For the purpose of establishing uniform requirements throughout a region, and on request of a council of governments, a county, or a municipality, the laboratory may recommend a climatically appropriate modification or a climate zone designation for a county or group of counties that is different from the climate zone designation in the unamended code. The laboratory shall:

(1) provide to counties and municipalities suggestions for modifications to the code to increase the county's or municipality's energy efficiency by 15 percent above the efficiency achieved under the unamended code;

(2) provide technical assistance to a local government considering whether to adopt the suggested modifications described by Subdivision (1);

(3) report its findings to the council, county, or municipality, including an estimate based on suggested local amendments of:

(A) any energy savings potential above the unamended [base] code; and

(B) any resulting reduction in the emission of air pollutants [from local amendments]; [and]

(4) [(2)] annually submit a report to the commission:

(A) identifying the municipalities and counties whose codes are more stringent than the unamended code, and whose codes are equally stringent or less stringent than the unamended code; and

(B) quantifying energy savings and emissions reductions from this program; and

(5) report the results under Subdivision (4)(B) to the commission and the Electric Reliability Council of Texas, and to the United States Environmental Protection Agency for inclusion in the state implementation plan for pollution reduction.

(f) Each municipality, and each county that has established procedures under Subsection (d), shall periodically review and consider revisions made by the International Code Council to the International Energy Conservation Code [and the energy efficiency chapter of the International Residential Code adopted after May 1, 2001].

SECTION 9. Section 388.004(a), Health and Safety Code, is amended to read as follows:

(a) For construction outside of the local jurisdiction of a municipality:

(1) a building certified by a national, state, or local accredited energy efficiency program shall be considered in compliance;

(2) a building with inspections from private code-certified inspectors using the [energy efficiency chapter of the International Residential Code or] International Energy Conservation Code shall be considered in compliance; and

(3) a builder who does not have access to either of the above methods for a building shall certify compliance using a form provided by the laboratory, enumerating the code-compliance features of the building.

SECTION 10. Sections 388.005(c), (d), and (e), Health and Safety Code, are amended to read as follows:

(c) Each political subdivision, institution of higher education, or state agency shall establish a goal to reduce the electric consumption by the entity by at least five percent each state fiscal year for 10 [six] years, beginning September 1, 2011 [2007].

(d) A political subdivision, institution of higher education, or state agency that does not attain the goals established under Subsection (c) must include in the report required by Subsection (e) justification that the entity has already implemented all available measures. [An entity that submits a report under this subsection indicating it has already implemented all available measures is exempt from the annual reporting requirement of Subsection (e) if a subsequent report would indicate no change in status. An entity may be required to provide notice that it is exempt to the State Energy Conservation Office.]

(e) A political subdivision, institution of higher education, or state agency annually shall report to the State Energy Conservation Office, on forms provided by that office, regarding the entity's goal, the entity's efforts to meet the goal, and progress the entity has made under this section. The State Energy Conservation Office shall provide assistance and information to the entity to help the entity meet [the] goals established [set] under this section. The office must develop and make available a standardized form for reporting purposes.

SECTION 11. Section 388.006, Health and Safety Code, is amended to read as follows:

Sec. 388.006. STATE ENERGY CONSERVATION OFFICE EVALUATION. The State Energy Conservation Office annually shall provide the commission and the laboratory with an evaluation of the effectiveness of state and political subdivision energy efficiency programs, including programs under this chapter. The laboratory shall calculate, based on the evaluation and the forms submitted to the office, the amount of energy savings and estimated reduction in pollution achieved as a result of the implementation of programs. The laboratory shall share the information with the commission, the United States Environmental Protection Agency, and the Electric Reliability Council of Texas to help with long-term forecasting and in estimating pollution reduction.

SECTION 12. Sections 388.007(a) and (c), Health and Safety Code, are amended to read as follows:

(a) The laboratory shall make available to builders, designers, engineers, and architects code implementation materials that explain the requirements of the International Energy Conservation Code [and the energy efficiency chapter of the International Residential Code] and that describe methods of compliance acceptable to code officials.

(c) The laboratory may provide local jurisdictions with technical assistance concerning implementation and enforcement of the International Energy Conservation Code [and the energy efficiency chapter of the International Residential Code].

SECTION 13. Section 388.008(a), Health and Safety Code, is amended to read as follows:

(a) The laboratory shall develop a standardized report format to be used by providers of home energy ratings. The laboratory may develop different report formats for rating newly constructed residences from those for existing residences. The form must be designed to give potential buyers information on a structure's energy performance, including:

(1) insulation;

(2) types of windows;

(3) heating and cooling equipment;

(4) water heating equipment;

(5) additional energy conserving features, if any;

(6) results of performance measurements of building tightness and forced air distribution; and

(7) an overall rating of probable energy efficiency relative to the minimum requirements of the International Energy Conservation Code [or the energy efficiency chapter of the International Residential Code, as appropriate].

SECTION 14. Section 39.905, Utilities Code, is amended by amending Subsections (a) and (b) and adding Subsection (h) to read as follows:

(a) It is the goal of the legislature that:

(1) electric utilities will administer energy efficiency incentive programs in a market-neutral, nondiscriminatory manner but will not offer underlying competitive services;

(2) all customers, in all customer classes, will have a choice of and access to energy efficiency alternatives and other choices from the market that allow each customer to reduce energy consumption, peak demand, or energy costs;

(3) each electric utility annually will provide, through a cost-effective portfolio of market-based standard offer programs or through limited, targeted, market-transformation programs, incentives sufficient for retail electric providers and competitive energy service providers to acquire additional [cost-effective] energy efficiency for the utility's [residential and commercial] customers, other than customers who operate a transmission-level voltage facility, equivalent to at least one-half of one[:

[(A) 10] percent of the electric utility's peak [annual growth in] demand, not including demand from transmission-level industrial facilities, [of residential and commercial customers] by January 1, 2013 [December 31, 2007;

[(B) 15 percent of the electric utility's annual growth in demand of residential and commercial customers by December 31, 2008, provided that the electric utility's program expenditures for 2008 funding may not be greater than 75 percent above the utility's program budget for 2007 for residential and commercial customers, as included in the April 1, 2006, filing; and

[(C) 20 percent of the electric utility's annual growth in demand of residential and commercial customers by December 31, 2009, provided that the electric utility's program expenditures for 2009 funding may not be greater than 150 percent above the utility's program budget for 2007 for residential and commercial customers, as included in the April 1, 2006, filing];

(4) each electric utility in the ERCOT region shall use its best efforts to encourage and facilitate the involvement of the region's retail electric providers in the delivery of efficiency programs and demand response programs under this section;

(5) retail electric providers in the ERCOT region, and electric utilities outside of the ERCOT region, shall provide customers with energy efficiency educational materials; [and]

(6) notwithstanding Subsection (a)(3), electric utilities shall continue to make available, at 2007 funding and participation levels, any load management standard offer programs developed for industrial customers and implemented prior to May 1, 2007; and

(7) electric utilities may communicate with and provide rebate or incentive funds to their customers to promote or facilitate the success of programs implemented under this section.

(b) The commission shall provide oversight and adopt rules and procedures to ensure that the utilities can achieve the goal of this section, including:

(1) establishing an energy efficiency cost recovery factor for ensuring timely and reasonable cost recovery for utility expenditures made to satisfy the goal of this section;

(2) establishing an incentive under Section 36.204 to reward utilities administering programs under this section that exceed the minimum goals established by this section;

(3) providing a utility that is unable to establish an energy efficiency cost recovery factor in a timely manner due to a rate freeze with a mechanism to enable the utility to:

(A) defer the costs of complying with this section; and

(B) recover the deferred costs through an energy efficiency cost recovery factor on the expiration of the rate freeze period;

(4) ensuring that the costs associated with programs provided under this section are borne by the customer classes that receive the services under the programs; [and]

(5) ensuring the program rules encourage the value of the incentives to be passed on to the end-use customer;

(6) ensuring that programs are evaluated, measured, and verified using a framework established by the commission that promotes effective program design and consistent and streamlined reporting; and

(7) ensuring that an independent organization certified under Section 39.151 allows load participation in all energy markets for residential, commercial, and industrial customer classes, either directly or through aggregators of retail customers, to increase market efficiency, competition, and customer benefits.

(h) The commission shall develop a standard disclosure form and require an energy efficiency provider to use the form to help consumers make better informed decisions regarding energy efficiency investments. The form must include disclosures regarding:

(1) the full scope of incentives that are available to the consumer for the energy efficiency measure the consumer is considering, including all utility, city, county, state, and national incentives;

(2) the value of any incentives used to reduce the costs of products or services offered passed on to the energy service provider marketing its energy efficiency program;

(3) other related energy efficiency incentives that are available to the consumer; and

(4) the consumer's estimated energy savings and payback period.

SECTION 15. Section 39.9051, Utilities Code, is amended by amending Subsection (f) and adding Subsections (g) and (h) to read as follows:

(f) Beginning April [Not later than September] 1, 2012 [2009], a municipally owned utility must report each year to the State Energy Conservation Office, on [in] a standardized form developed by [and manner determined by the utility in consultation with] the office, information regarding the combined effects of the energy efficiency activities of the utility from the previous calendar year, including the utility's annual goals, programs enacted to achieve those goals, and any achieved energy demand or savings goals.

(g) The State Energy Conservation Office shall provide the reports made under Subsection (f) to the energy systems laboratory. The laboratory shall calculate the energy savings and estimated pollution reductions that resulted from the reported activities.

(h) The energy systems laboratory shall share the results of the analysis with the Public Utility Commission of Texas, ERCOT, the United States Environmental Protection Agency, and the Texas Commission on Environmental Quality.

SECTION 16. Section 39.9052, Utilities Code, is amended by amending Subsection (b) and adding Subsections (c) and (d) to read as follows:

(b) Beginning April [Not later than September] 1, 2012 [2009], an electric cooperative that had retail sales of more than 500,000 megawatt hours in 2005 must report each year to the State Energy Conservation Office, on [in] a standardized form developed by [and manner determined by the electric cooperative in consultation with] the office, information regarding the combined effects of the energy efficiency activities of the electric cooperative from the previous calendar year, including the electric cooperative's annual goals, programs enacted to achieve those goals, and any achieved energy demand or savings goals.

(c) The State Energy Conservation Office shall provide the reports made under Subsection (b) to the energy systems laboratory. The laboratory shall calculate the energy savings and estimated pollution reductions that resulted from the reported activities.

(d) The energy systems laboratory shall share the results of the analysis with the Public Utility Commission of Texas, ERCOT, the United States Environmental Protection Agency, and the Texas Commission on Environmental Quality.

SECTION 17. (a) The following sections of the Health and Safety Code are repealed:

(1) Section 388.002(6);

(2) Sections 388.003(b) and (b-3);

(3) Section 388.003(b-1), as added by Chapter 262 (S.B. 12), Acts of the 80th Legislature, Regular Session, 2007; and

(4) Section 388.003(b-1), as added by Chapter 939 (H.B. 3693), Acts of the 80th Legislature, Regular Session, 2007.

(b) Section 39.905(b-2), Utilities Code, is repealed.

SECTION 18. (a) The Public Utility Commission of Texas shall conduct a study to determine:

(1) the effect of including avoided transmission and distribution capacity costs as a factor included in an analysis used to determine whether programs are cost-effective;

(2) the appropriate cost of energy to be included as a factor included in an analysis used to determine whether programs are cost-effective;

(3) how the reductions in energy demand and energy consumption provided by energy efficiency programs affect the market clearing price in ERCOT for the balancing energy market during peak and nonpeak periods; and

(4) ways to include the associated changes in energy prices due to the effect of energy efficiency programs, as found under Subdivision (3) of this subsection, as a factor included in an analysis used to determine whether a program is cost-effective.

(b) The commission shall report its findings from the study conducted under this section to the legislature not later than September 1, 2012.

SECTION 19. (a) The State Energy Conservation Office shall conduct a study on the feasibility of:

(1) newly constructed residential buildings being designed to consume no more energy on a net annual basis than can be produced on-site from renewable energy sources by January 1, 2030; and

(2) all homes newly constructed in this state being designed to be ready for the installation of solar electric generation and to support electric vehicles by January 1, 2015.

(b) The State Energy Conservation Office shall, not later than January 1, 2013, make recommendations to the legislature on adopting standards to reach the goals described by Subsection (a) of this section.

SECTION 20. Section 55.115, Education Code, as added by this Act, and Section 2166.409, Government Code, as added by this Act, apply only to an institution of higher education building, structure, or other facility or a state building for which the contract for design services is entered into on or after September 1, 2012.

SECTION 21. In appointing the initial appointed members of the Energy Efficiency Council created under Chapter 470, Government Code, as added by this Act, the governor shall appoint one member to a term expiring February 1, 2013, one member to a term expiring February 1, 2015, and one member to a term expiring February 1, 2017.

SECTION 22. 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, 2011.