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A BILL TO BE ENTITLED
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AN ACT
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relating to a state goal for competitive zero-carbon electric |
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generation. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 39.002, Utilities Code, is amended to |
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read as follows: |
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Sec. 39.002. APPLICABILITY. This chapter, other than |
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Sections 39.1516, 39.155, 39.157(e), 39.203, 39.904, 39.9051, |
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39.9052, [and] 39.914(e), and 39.918, does not apply to a |
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municipally owned utility or an electric cooperative. Sections |
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39.157(e), 39.203, and 39.904, however, apply only to a municipally |
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owned utility or an electric cooperative that is offering customer |
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choice. If there is a conflict between the specific provisions of |
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this chapter and any other provisions of this title, except for |
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Chapters 40 and 41, the provisions of this chapter control. |
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SECTION 2. Section 39.402(a), Utilities Code, is amended to |
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read as follows: |
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(a) Until the date on which an electric utility subject to |
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this subchapter is authorized by the commission to implement |
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customer choice, the rates of the utility shall be regulated under |
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traditional cost of service regulation and the utility is subject |
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to all applicable regulatory authority prescribed by this subtitle |
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and Subtitle A, including Chapters 14, 32, 33, 36, and 37. Until |
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the date on which an electric utility subject to this subchapter |
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implements customer choice, the provisions of this chapter, other |
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than this subchapter, Sections 39.1516, 39.904, [and] 39.905, and |
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39.918, and the provisions relating to the duty to obtain a permit |
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from the Texas Commission on Environmental Quality for an electric |
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generating facility and to reduce emissions from an electric |
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generating facility, shall not apply to that utility. That portion |
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of any commission order entered before September 1, 2001, to comply |
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with this subchapter shall be null and void. |
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SECTION 3. Section 39.452(d), Utilities Code, is amended to |
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read as follows: |
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(d) Until the date on which an electric utility subject to |
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this subchapter implements customer choice: |
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(1) the provisions of this chapter do not apply to that |
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electric utility, other than this subchapter, Sections 39.1516, |
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39.904, [and] 39.905, and 39.918, the provisions relating to the |
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duty to obtain a permit from the Texas Commission on Environmental |
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Quality for an electric generating facility and to reduce emissions |
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from an electric generating facility, and the provisions of |
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Subchapter G that pertain to the recovery and securitization of |
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hurricane reconstruction costs authorized by Sections |
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39.458-39.463; and |
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(2) the electric utility is not subject to a rate |
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freeze and, subject to the limitation provided by Subsection (b), |
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may file for rate changes under Chapter 36 and for approval of one |
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or more of the rate rider mechanisms authorized by Sections 39.454 |
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and 39.455. |
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SECTION 4. Section 39.502(b), Utilities Code, is amended to |
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read as follows: |
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(b) Until the date on which an electric utility subject to |
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this subchapter implements customer choice, the provisions of this |
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chapter, other than this subchapter and Sections 39.1516, 39.904, |
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[and] 39.905, and 39.918, do not apply to that utility. |
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SECTION 5. Section 39.552(b), Utilities Code, is amended to |
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read as follows: |
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(b) Until the date on which an electric utility subject to |
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this subchapter implements customer choice, the provisions of this |
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chapter, other than this subchapter and Sections 39.1516, 39.904, |
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[and] 39.905, and 39.918, do not apply to that utility. |
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SECTION 6. Subchapter Z, Chapter 39, Utilities Code, is |
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amended by adding Section 39.918 to read as follows: |
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Sec. 39.918. GOAL FOR COMPETITIVE ZERO-CARBON ENERGY. (a) |
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In this section: |
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(1) "Biomass fuel" means fuel developed from organic |
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material, including material derived from plants, crops, wood or |
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forest residues, waste residues, waste from food crops, |
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horticulture, food processing, animal farming, animal waste, |
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landfills, and sewage treatment facilities. |
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(2) "Zero-carbon energy technology" means a |
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technology that relies exclusively on an energy source that does |
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not emit a greenhouse gas in the production of electricity. The |
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term includes a technology that effectively captures and sequesters |
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greenhouse gases before their release into the atmosphere. |
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(b) It is the intent of the legislature that the amount of |
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electric power generated in this state from zero-carbon energy |
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technology for delivery by a retail electric provider, municipally |
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owned utility, or electric cooperative each year will increase to |
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meet the following percentages on or before the specified dates: |
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(1) by January 1, 2025, not less than 65 percent of the |
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annual total; |
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(2) by January 1, 2030, not less than 85 percent of the |
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annual total; and |
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(3) by January 1, 2035, 100 percent of the annual |
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total. |
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(c) The commission by rule shall: |
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(1) establish the minimum annual zero-carbon energy |
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technology generation requirement for each retail electric |
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provider, municipally owned utility, and electric cooperative |
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operating in this state in a manner designed to produce, on a |
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statewide basis, compliance with the requirement prescribed by |
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Subsection (b); and |
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(2) specify reasonable standards that zero-carbon |
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energy generation must meet to count toward compliance with the |
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requirement prescribed by Subsection (b) and that: |
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(A) are designed and operated so as to maximize |
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the use of all resources available to meet electric demand and |
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reliability needs from the capacity additions in accordance with |
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then-current industry standards; and |
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(B) encourage the development, construction, and |
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operation of new zero-carbon energy technology projects at sites in |
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this state that have the greatest economic potential for capture |
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and development of resources for zero-carbon energy technology. |
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(d) The commission by rule shall establish a zero-carbon |
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energy generation credits trading program. A retail electric |
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provider, municipally owned utility, or electric cooperative that |
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does not satisfy the requirements of Subsection (b) by directly |
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owning or purchasing energy generated using zero-carbon energy |
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technologies shall purchase sufficient zero-carbon energy |
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generation credits to satisfy the requirements by holding |
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zero-carbon energy generation credits in lieu of energy generated |
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from zero-carbon energy technologies. |
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(e) The commission by rule shall establish a means for a |
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retail electric provider, municipally owned utility, or electric |
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cooperative to satisfy the requirements of Subsection (b) by |
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generating electricity using biomass fuel instead of directly |
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owning or purchasing energy generated using zero-carbon energy |
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technologies. |
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(f) The commission may cap the price of zero-carbon energy |
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credits and may suspend the goal established by Subsection (b) as |
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necessary to protect the reliability and operation of the grid. A |
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price cap established under this subsection must equal or exceed |
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the social cost of carbon as determined by the United States |
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Environmental Protection Agency. |
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(g) The commission by rule shall establish a carbon offset |
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alternative payment program. An entity required by this section to |
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purchase a zero-carbon energy generation credit may choose to |
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purchase and apply a carbon capture and sequestration credit |
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instead of a zero-carbon energy generation credit toward the |
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satisfaction of the entity's obligation under this section. A |
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carbon capture and sequestration credit must be purchased through a |
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marketplace certified by the commission to offset the same amount |
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of carbon as is produced by the entity's carbon energy generation. |
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The offset payment must equal or exceed the social cost of carbon as |
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determined by the United States Environmental Protection Agency. |
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In implementing this subsection, the commission shall consider: |
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(1) the effects of zero-carbon energy credit prices on |
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electric rates; and |
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(2) the effects of the carbon offset alternative |
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payments on the zero-carbon energy credit market. |
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SECTION 7. Section 40.001(a), Utilities Code, is amended to |
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read as follows: |
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(a) Notwithstanding any other provision of law, except |
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Sections 39.155, 39.157(e), 39.203, [and] 39.904, and 39.918, this |
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chapter governs the transition to and the establishment of a fully |
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competitive electric power industry for municipally owned |
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utilities. With respect to the regulation of municipally owned |
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utilities, this chapter controls over any other provision of this |
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title, except for sections in which the term "municipally owned |
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utility" is specifically used. |
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SECTION 8. Section 40.004, Utilities Code, is amended to |
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read as follows: |
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Sec. 40.004. JURISDICTION OF COMMISSION. Except as |
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specifically otherwise provided in this chapter, the commission has |
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jurisdiction over municipally owned utilities only for the |
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following purposes: |
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(1) to regulate wholesale transmission rates and |
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service, including terms of access, to the extent provided by |
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Subchapter A, Chapter 35; |
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(2) to regulate certification of retail service areas |
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to the extent provided by Chapter 37; |
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(3) to regulate rates on appeal under Subchapters D |
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and E, Chapter 33, subject to Section 40.051(c); |
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(4) to establish a code of conduct as provided by |
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Section 39.157(e) applicable to anticompetitive activities and to |
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affiliate activities limited to structurally unbundled affiliates |
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of municipally owned utilities, subject to Section 40.054; |
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(5) to establish terms and conditions for open access |
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to transmission and distribution facilities for municipally owned |
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utilities providing customer choice, as provided by Section 39.203; |
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(6) to administer the renewable energy credits program |
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under Section 39.904(b), [and] the natural gas energy credits |
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program under Section 39.9044(b), and the zero-carbon energy |
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generation credits trading program under Section 39.918(d); |
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(7) to require reports of municipally owned utility |
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operations only to the extent necessary to: |
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(A) enable the commission to determine the |
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aggregate load and energy requirements of the state and the |
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resources available to serve that load; or |
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(B) enable the commission to determine |
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information relating to market power as provided by Section 39.155; |
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and |
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(8) to evaluate and monitor the cybersecurity |
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preparedness of a municipally owned utility described by Section |
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39.1516(a)(3) or (4). |
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SECTION 9. Section 41.001, Utilities Code, is amended to |
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read as follows: |
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Sec. 41.001. APPLICABLE LAW. Notwithstanding any other |
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provision of law, except Sections 39.155, 39.157(e), 39.203, [and] |
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39.904, and 39.918, this chapter governs the transition to and the |
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establishment of a fully competitive electric power industry for |
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electric cooperatives. Regarding the regulation of electric |
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cooperatives, this chapter shall control over any other provision |
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of this title, except for sections in which the term "electric |
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cooperative" is specifically used. |
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SECTION 10. The Public Utility Commission of Texas shall |
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adopt rules required by Section 39.918, Utilities Code, as added by |
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this Act, not later than January 1, 2022. |
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SECTION 11. This Act takes effect September 1, 2021. |