By: Rodriguez S.B. No. 1239

(In the Senate - Filed March 6, 2013; March 13, 2013, read first time and referred to Committee on Business and Commerce; May 2, 2013, reported adversely, with favorable Committee Substitute by the following vote: Yeas 6, Nays 0; May 2, 2013, sent to printer.)

COMMITTEE SUBSTITUTE FOR S.B. No. 1239 By: Watson

A BILL TO BE ENTITLED

AN ACT

relating to distributed renewable generation and compensation for excess electricity generated by distributed renewable generation.

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. 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 39.9161 applies to a municipally owned utility. Section 39.9162 applies to an electric cooperative. 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. The heading to Section 39.916, Utilities Code, is amended to read as follows:

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

SECTION 3. Subsection (a), Section 39.916, Utilities Code, is amended by adding Subdivision (4) to read as follows:

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

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

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

(f) On request of a distributed renewable generation owner, a [A] transmission and distribution utility or electric utility shall make available to the [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.

(j) A [For] 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 retail electric customer's [distributed renewable generation owner's] load. 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 must sell the owner's surplus electricity to the electric utility that serves the retail electric customer's load [at a value 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 it may be a credit applied 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 retail electric provider that serves that retail electric customer's [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-1) In areas in which customer choice has been introduced, a retail electric provider shall purchase surplus electricity at a fair market value determined using a price that provides a periodic proxy, using a period of a month or longer, for the load zone real-time market clearing price, unless the provider chooses to use a fair market value determined by a reasonable alternative method, including the load zone real-time market clearing price at the time of day the surplus electricity is made available to the grid or by the simple average, during the period for which the surplus electricity being purchased was generated, of the load zone real-time market clearing price for energy at the time of day specified in the ERCOT protocols for the applicable type of distributed renewable generation for load reduction at locations without interval data meters. A retail electric provider may compensate a distributed renewable generation owner for purchased surplus electricity at a value greater than the fair market value. A distributed renewable generation owner may file a written complaint with the commission for a violation of this subsection or Subsection (l). This section does not apply to a retail electric provider providing service under Section 39.106.

(l) A retail electric provider that purchases surplus electricity from a distributed renewable generation owner under Subsection (k-1) must compensate the distributed renewable generation owner by making a payment not less frequently than once each quarter or by applying a monetary credit to an account the monetary credit balance of which may be carried forward until the monetary credit has been redeemed. The retail electric provider shall inform the distributed renewable generation owner of the amount of surplus electricity purchased, measured in kilowatt hours, and the price paid for the surplus electricity purchased.

(m) In areas in which customer choice has not been introduced, an electric utility shall purchase surplus electricity at a value that is at least equal to the avoided cost of the electric utility as determined by commission rule. A distributed renewable generation owner may file a written complaint with the commission for a violation of this subsection or Subsection (n).

(n) An electric utility that purchases surplus electricity from a distributed renewable generation owner under Subsection (m) must compensate the distributed renewable generation owner by making a payment not less frequently than once each quarter or by applying a monetary credit to an account the monetary credit balance of which may be carried forward until the monetary credit has been redeemed. The electric utility shall inform the distributed renewable generation owner of the amount of surplus electricity purchased, measured in kilowatt hours, and the price paid for the surplus electricity purchased.

(o) A distributed renewable generation owner is qualified to be compensated for surplus electricity purchased under this section only if:

(1) the distributed renewable generation is:

(A) rated to produce an amount of electricity annually 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 annually; and

(B) installed on the customer's side of the meter for a residential retail electric customer or a retail electric customer that is:

(i) a public school; or

(ii) the premises of a religious organization if those premises are exempt from ad valorem taxation under Section 11.20, Tax Code; 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 retail electric customer that is the premises of a religious organization if those premises are exempt from ad valorem taxation under Section 11.20, Tax Code; or

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

(p) Notwithstanding Subsections (k-1) and (o), in areas in which customer choice has been introduced, a distributed renewable generation owner that does not meet the qualifications prescribed by Subsection (o) may be paid or credited for the owner's surplus electricity at a value agreed on by the owner and the retail electric provider that serves the retail electric customer's load.

SECTION 5. Subchapter Z, Chapter 39, Utilities Code, is amended by adding Sections 39.9161 and 39.9162 to read as follows:

Sec. 39.9161. DISTRIBUTED RENEWABLE GENERATION WITH 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) A municipally owned utility shall:

(1) allow interconnection by distributed renewable generation owners and payment for surplus electricity produced by those owners; and

(2) provide the utility's customers access to interconnection of distributed renewable generation and payment for surplus electricity produced.

(c) The governing body of a municipally owned utility shall provide oversight and adopt rates, rules, and procedures to allow interconnection and provide payment for surplus electricity consistent with the goals established by Section 39.916. This subsection does not prevent the governing body of a municipally owned utility from adopting rates, rules, and procedures for interconnection and payment for surplus electricity that are more favorable to a distributed renewable generation owner than those established by any other law or rule of the commission.

(d) 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 payment for surplus electricity; and

(2) by rule shall establish minimum standards and procedures for interconnection and payment for surplus electricity by the municipally owned utility.

(e) A municipally owned utility that had retail sales of 500,000 megawatt hours or more in 2012 shall:

(1) file the utility's interconnection and surplus electricity rates, rules, and procedures with the State Energy Conservation Office not later than January 1, 2015; and

(2) make timely updates to the utility's rates, rules, and procedures filed under Subdivision (1).

(f) A municipally owned utility that has adopted rules and procedures related to interconnection and payment for surplus electricity 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.

(g) The governing body of a municipally owned utility that had retail sales of less than 500,000 megawatt hours in 2012 shall provide oversight and adopt rates, rules, and procedures related to interconnection and payment for surplus electricity of distributed renewable generation systems with a generating capacity considered 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.

Sec. 39.9162. DISTRIBUTED RENEWABLE GENERATION WITH ELECTRIC COOPERATIVES. (a) In this section, "distributed renewable generation," "distributed renewable generation owner," and "interconnection" have the meanings assigned by Section 39.916.

(b) An electric cooperative shall:

(1) allow interconnection by distributed renewable generation owners and payment for surplus electricity produced by those owners; and

(2) provide its members access to interconnection of distributed renewable generation and payment for surplus electricity produced.

(c) An electric cooperative shall allow interconnection if:

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

(2) the rated capacity of the distributed renewable generation does not exceed the electric cooperative's service capacity; and

(3) the distributed renewable generation meets other technical requirements for interconnection that are consistent with commission rules.

(d) The board of directors of an electric cooperative shall provide oversight and adopt rates, rules, and procedures to allow interconnection and provide payment for surplus electricity consistent with the goals established by Section 39.916. This subsection does not prevent the board of directors of an electric cooperative from adopting rates, rules, and procedures for interconnection and payment for surplus electricity that are more favorable to a distributed renewable generation owner than those established by any other law or rule of the commission.

(e) A member may request interconnection by filing an application for interconnection with the electric cooperative. An electric cooperative's procedures for the submission and processing of a member's application for interconnection must be consistent with rules adopted by the commission regarding interconnection.

(f) An electric cooperative may not require a distributed renewable generation owner whose distributed renewable generation meets the standards established under Subsection (c) 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.

(g) An electric cooperative shall compensate the distributed renewable generation owner for surplus electricity at a value that is at least equal to the avoided cost of the cooperative. The electric cooperative may determine the cooperative's avoided cost as either:

(1) the sum of the average wholesale fuel and energy costs, expressed in cents per kilowatt hour, on the wholesale power bill for the applicable billing period; or

(2) the avoided cost of the wholesale power supplier as determined in accordance with the rules and regulations of the Federal Energy Regulatory Commission if the electric cooperative purchases all of its power from a wholesale power supplier regulated by the Federal Energy Regulatory Commission.

(h) If an electric cooperative implements customer choice under Chapter 41, the commission:

(1) has jurisdiction over the electric cooperative's distributed renewable generation interconnection and payment for surplus electricity; and

(2) by rule shall establish minimum standards and procedures for interconnection and payment for surplus electricity by the electric cooperative.

(i) An electric cooperative that had retail sales of 500,000 megawatt hours or more in 2012 shall file the cooperative's interconnection and surplus electricity rates, rules, and procedures with the State Energy Conservation Office not later than January 1, 2015, and shall make timely updates to the cooperative's filed rates, rules, and procedures.

(j) An electric cooperative that has adopted rules and procedures related to interconnection and payment for surplus electricity shall make available, on the cooperative's Internet website or at the customary location for the cooperative's posted notices:

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

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

(k) The board of directors of an electric cooperative that had retail sales of less than 500,000 megawatt hours in 2012 shall provide oversight and adopt rates, rules, and procedures related to interconnection of distributed renewable generation and payment for surplus electricity on or before the 120th day after the date the board of directors 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. 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, on an Internet website maintained by the commission.

SECTION 7. Subsection (h), Section 39.916, Utilities Code, is repealed.

SECTION 8. This Act takes effect January 1, 2014.

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