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  H.B. No. 2263
  relating to the authority of a natural gas local distribution
  company to offer energy conservation programs.
         SECTION 1.  Chapter 104, Utilities Code, is amended by
  adding Subchapter J to read as follows:
         Sec. 104.401.  DEFINITIONS. In this subchapter:
               (1)  "Energy conservation program" means a program that
  promotes energy conservation or energy efficiency.
               (2)  "Local distribution company" means a gas utility
  that operates a retail gas distribution system.
  A local distribution company may offer to customers and prospective
  customers and provide to customers an energy conservation program
  in the manner provided by this subchapter.
         (b)  The railroad commission has exclusive original
  jurisdiction over energy conservation programs implemented by
  local distribution companies.
         (c)  A political subdivision served by a local distribution
  company that implements an energy conservation program approved by
  the railroad commission under this subchapter may not limit,
  restrict, or otherwise prevent an eligible customer from
  participating in the energy conservation program based on the type
  or source of energy delivered to the customer.
  (a)  A local distribution company may recover costs of energy
  conservation programs implemented under this subchapter if
  approved by the railroad commission in the manner provided by this
  subchapter. A local distribution company seeking to recover the
  costs must apply to the railroad commission before beginning
  recovery of the costs and at least once every three years after the
  date the company first applies for the cost recovery.
         (b)  If the railroad commission approves the local
  distribution company's application or approves the application
  with modifications, the company may recover costs prudently
  incurred to implement the energy conservation programs, including
  costs incurred to design, market, implement, administer, and
  deliver an energy conservation program.
         (c)  If the local distribution company provides an earnings
  monitoring report for the preceding calendar year demonstrating
  that the company did not earn above the rate of return established
  in the latest effective rates approved by the railroad commission
  for the company, the railroad commission may allow the company to
  recover an amount equal to the reduction in the company's marginal
  revenues due to lower sales or demand resulting from the energy
  conservation program.
         (d)  The railroad commission by rule shall require a local
  distribution company that implements an energy conservation
  program under this subchapter to submit to the railroad commission
  an annual report on:
               (1)  the performance of the company's energy
  conservation programs for the preceding year; and
               (2)  the company's planned energy conservation programs
  for the upcoming year.
         (e)  An application for cost recovery under Subsection (a)
  must include:
               (1)  a summary of and objectives for the local
  distribution company's energy conservation programs;
               (2)  a description of each program;
               (3)  a proposed budget for each program;
               (4)  the projected consumption reduction or cost
  savings for each program; and
               (5)  any public input compiled by the local
  distribution company on the proposed programs as required by the
  railroad commission.
         (f)  The railroad commission by rule may:
               (1)  determine a cost recovery mechanism for timely
  recovery of costs described by Subsection (a); and
               (2)  ensure that costs described by Subsection (a) are
  allocated to the customer classes eligible for participation in the
  energy conservation program.
         (g)  Energy conservation programs proposed under this
  section may be combined in a portfolio to provide incentives and
  services to encourage energy conservation. The portfolio:
               (1)  must be designed to overcome barriers to the
  adoption of energy-efficient equipment, technologies, and
  processes and be designed to change customer behavior as necessary;
               (2)  may include measures such as:
                     (A)  direct financial incentives;
                     (B)  technical assistance and information,
  including building energy performance analyses performed by the
  local distribution company or a third party approved by the
                     (C)  discounts or rebates for products; and
                     (D)  weatherization for low-income customers.
         (h)  A proceeding filed under this section is not a
  ratemaking proceeding for the purposes of Section 103.022.
         (i)  A local distribution company implementing an energy
  conservation program under this subchapter shall reimburse the
  railroad commission for the utility's proportionate share of the
  railroad commission's costs related to administration of reviewing
  and approving or denying cost recovery applications under this
         SECTION 2.  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, 2023.
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
         I certify that H.B. No. 2263 was passed by the House on May 4,
  2023, by the following vote:  Yeas 140, Nays 4, 1 present, not
  voting; and that the House concurred in Senate amendments to H.B.
  No. 2263 on May 25, 2023, by the following vote:  Yeas 120, Nays 19,
  1 present, not voting.
  Chief Clerk of the House   
         I certify that H.B. No. 2263 was passed by the Senate, with
  amendments, on May 22, 2023, by the following vote:  Yeas 27, Nays
  Secretary of the Senate   
  APPROVED: __________________