88R10513 JXC-F

By: Hernandez H.B. No. 3239

A BILL TO BE ENTITLED

AN ACT

relating to the participation of distributed energy resources in the ERCOT ancillary services and wholesale energy markets.

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

SECTION 1. Section 31.002, Utilities Code, is amended by adding Subdivision (4-c) and amending Subdivisions (10) and (17) to read as follows:

(4-c) "Distributed energy resource" means a resource that:

(A) is capable of providing energy, providing ancillary services, or providing both energy and ancillary services;

(B) is operated in parallel with and is connected to the distribution system at a voltage of less than 60 kilovolts; and

(C) has an installed capacity of more than 100 kilowatts and less than 10 megawatts.

(10) "Power generation company" means a person, including a person who owns or operates a distributed natural gas generation facility, that:

(A) generates electricity:

(i) that is intended to be sold at wholesale, including the owner or operator of electric energy storage equipment or facilities to which Subchapter E, Chapter 35, applies; or

(ii) from a facility that is part of an aggregated distributed energy resource or that is owned by a person who is part of an aggregated distributed energy resource;

(B) does not own a transmission or distribution facility in this state other than an essential interconnecting facility, a facility not dedicated to public use, or a facility otherwise excluded from the definition of "electric utility" under this section; and

(C) does not have a certificated service area, although its affiliated electric utility or transmission and distribution utility may have a certificated service area.

(17) "Retail electric provider" means a person that sells electric energy to retail customers in this state. A retail electric provider may not own or operate generation assets but may aggregate distributed energy resources. The term does not include a person not otherwise a retail electric provider who owns or operates equipment used solely to provide electricity charging service for consumption by an alternatively fueled vehicle, as defined by Section 502.004, Transportation Code.

SECTION 2. Section 39.351, Utilities Code, is amended by amending Subsections (b) and (c) and adding Subsection (d) to read as follows:

(b) A power generation company shall comply with the reliability standards adopted by an independent organization certified by the commission to ensure the reliability of the regional electrical network for a power region in which the power generation company is generating or selling electricity and aggregated distributed energy resources.

(c) The commission may establish simplified filing requirements for distributed natural gas generation facilities and aggregated distributed energy resources.

(d) Notwithstanding Subsection (a):

(1) a facility or owner of a facility that is part of an aggregated distributed energy resource, or a retail electric provider that is involved in aggregating facilities as part of an aggregated distributed energy resource, is not considered to be a power generation company solely as a result of those activities; and

(2) a facility or owner of a facility that is part of an aggregated distributed energy resource is not required to register as a power generation company if the person who aggregates the resources registers as a power generation company.

SECTION 3. Subchapter Z, Chapter 39, Utilities Code, is amended by adding Section 39.9166 to read as follows:

Sec. 39.9166. PARTICIPATION OF DISTRIBUTED ENERGY RESOURCES IN MARKET. (a) The commission may delegate authority to the independent organization certified under Section 39.151 for the ERCOT power region to enforce requirements adopted by the commission under this section.

(b) The commission by rule shall allow a person who owns or operates a distributed energy resource or an aggregation of distributed energy resources to participate in the ancillary services and wholesale energy markets in the ERCOT power region if:

(1) the owner or operator is registered as a power generation company if required under Section 39.351 or is exempt from registration under Section 39.916(k); and

(2) the resource meets all requirements established by the commission and the independent organization, including electric utility specifications applicable under the commission-approved tariff.

(c) The commission by rule shall allow a person to aggregate resources that are geographically linked to the same electric bus or node so that the resources may be considered to be a single distributed energy resource for the purposes of operations, compliance, and participation in the ancillary services and wholesale energy markets in the ERCOT power region. The commission by rule shall direct the independent organization certified under Section 39.151 for the ERCOT power region to enable aggregations broader than a single electric bus or node when technically feasible. In addition to any other applicable requirements, aggregated distributed energy resources must:

(1) demonstrate the ability to deploy energy, ancillary services, or both at the direction of the independent organization certified under Section 39.151 for the ERCOT power region; and

(2) comply with applicable distribution system reliability and market requirements.

(d) In allowing for the participation of a person who owns or operates a distributed energy resource or aggregation of distributed energy resources under this section, the commission shall adopt registration, qualification, interconnection, telemetry, data submission, compliance, cost allocation, and other appropriate requirements. The requirements:

(1) must ensure that:

(A) participation does not unduly affect the security or reliability of the transmission and distribution system; and

(B) the provision of ancillary services by a distributed energy resource or aggregation of distributed energy resources, to the extent technically necessary to the provision of ancillary services, can be measured and verified separately from any associated load;

(2) may differ from requirements for a generation resource that is not a distributed energy resource; and

(3) must provide for energy production and consumption at a single metering point to be accounted for and settled by the independent organization certified under Section 39.151 for the ERCOT power region to the distributed energy provider and the retail electric provider in a manner that prevents double counting.

(e) A retail electric provider may aggregate distributed energy resources or assist in the aggregation of distributed energy resources for a third party. The retail electric provider:

(1) is not:

(A) considered to be a power generation company solely for that reason;

(B) required to register as a power generation company; or

(C) exempt from Chapter 17, this chapter, or commission rules relating to the aggregation; and

(2) is responsible for ensuring the compliance of a subcontractor, an agent, or any other entity compensated by the retail electric provider for aggregation services.

(f) Participation in an aggregated distributed energy resource by a market participant or consumer is subject to the commission's consumer protection rules, jurisdiction, and authority under this title.

SECTION 4. (a) The Public Utility Commission of Texas shall adopt the rules required by Section 39.9166, Utilities Code, as added by this Act, as soon as practicable after the effective date of this Act to ensure that the requirements of Subsection (b) of this section are met.

(b) The Public Utility Commission of Texas shall allow the participation as required by Section 39.9166, Utilities Code, as added by this Act, not later than September 1, 2024.

(c) The Public Utility Commission of Texas:

(1) may operate a pilot program to allow the participation described by Section 39.9166, Utilities Code, as added by this Act, before September 1, 2024; and

(2) before September 1, 2024, is not required to modify a pilot program operated before the effective date of this Act to allow the participation of distributed energy resources in the ancillary services and wholesale energy markets in the ERCOT power region.

SECTION 5. 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.