By: Harris of Williamson H.B. No. 5190

A BILL TO BE ENTITLED

AN ACT

Designating the Electric Reliability Council of Texas (ERCOT) as the entity responsible for the reliable supply of electricity in its interconnected area of responsibility, establishing a fund under ERCOT's control to fund a net 5,000 MWe of "dispatchable" "peaking unit" generating capacity owned by "Independent Power Producers", establishing the payment structure to such "Independent Power Producers" to fund the 5,000 MWe of "dispatchable" "peaking unit" generating capacity, establishing the criteria of operation and performance of the "peaking unit" generating capacity under ERCOT's direct control, and establishing criteria for review of ERCOT's performance in its duty to assure reliability of electricity supply.

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

PUBLIC UTILITY REGULATORY ACT

TITLE 2 - TEXAS UTILITIES CODE

CHAPTER 35. ENERGY PROVIDERS

SUBCHAPTER A. COMPETITION AND TRANSMISSION ACCESS IN THE WHOLESALE

MARKET

(new subsection)

SEC.35.0022. RELIABILITY OF ELECTRICITY SUPPLY FROM GENERATORS

a) Definitions:

(1) Baseload Unit - A generating unit which operates continuously for lengthy periods of time such as a month operating at or near its maximum output throughout each day and night. Baseload Units are considered Dispatchable Units. Baseload Units often require lengthy startup periods. Baseload Units are generally coal-fired, nuclear, or geothermal steam-cycle plants.

(2) Dispatchable Units - Units which can be commanded to run at a specified time.

(3) Duel Fuel - Generating units which can run equally of two different type fuels such as natural gas or fuel oil.

(4) ERCOT - Electric Reliability Council of Texas

(5) Independent Power Producers - An entity that is not required to supply electricity to a specific set of customers. The entity generally supplies electricity to the ERCOT grid for whomever offers the best price for the electricity.

(6) Intermediate Duty Unit - A generating unit which operates daily to meet increased loads or to replace output from Baseload Units which are out for maintenance. Intermediate Duty Units are considered Dispatchable Units. Intermediate Duty Units are generally natural-gas fired combined-cycle units, oil fired units, hydro powered units, and waste-fired units.

(7) Non-Dispatchable Units - A unit that can not be commanded to run at a specied time. Non-Dispatchable Units are sun powered and wind powered generating units.

(8) Peaking Unit - A generating unit which operates less than 15% of the year and is held in reserve to satisfy electricity demand during periods of extreme weather, during periods of high demand, during maintenance outages of normal generating units, during losses of critical transmission facilities, during sudden loses of generating units, during periods of low wind, during periods of lack of sunshine, and duringother unforeseen circumstances. A peaking up must be able to produce its full output of electricity within 10 minutes of receiving the call for operation. Peaking Units are considered dispatchable units.

b) ERCOT shall have the principal responsibility for assuring reliability of electricity supply.

(1) ERCOT shall control the operational dispatch of up to 5,000 MWe of Peaking Unit capacity operated by Independent Power Producers to assure reliable, cost effective supply of electricity during high demand and emergency periods of time.

(2) The 5,000 MWe of Peaking Unit capacity shall be dispatched to cover electricity generating shortages during weather emergencies, high demand periods, loss of electrical generation caused by the lack of wind and sun, and sudden loss of generating units.

c) ERCOT shall establish an "Electricity Supply Reliability Fund".

(1) The "Electricity Supply Reliability Fund" will commence operation on September 1, 2024.

(2) ERCOT shall add and collect a $2.00 per MWH surcharge to the output charge for all generating sources in the ERCOT area of control as measured at the transmission or distribution grid level starting September 1, 2024.

(3) Such generating sources shall include Independent Power Producers, generating units of Municipal Utilities, generating units of Electric Cooperatives, affiliated wholesale supplier generating units, distributed natural gas generating facilities, or any other type generating source on the ERCOT controlled transmission and distribution grid.

(4) ERCOT shall add and collect an additional $2.00 per MWH surcharge to the output charge for all non-dispatchable units such as wind and solar powered generating units in the ERCOT area of control as measured at the transmission or distribution grid level starting September 1, 2024.

(5) ERCOT will report monthly the accumulation of funds and the sources of the revenue to the Texas Public Utilities Commission.

d) ERCOT shall contract for up to 5,000 MWe of new Peaking Unit generating capacity from Independent Power Producers.

(1) ERCOT shall use the accumulated income from the "Electricity Supply Reliability Fund" to fund the contracting for new Peaking Unit capacity.

(2) Starting September 1, 2023, ERCOT shall start offering a capacity payment of $10.00 per KWe per month ($10,000 per MWe) of net capacity at the transmission or distribution level for a ten year contracted period of supply of new Peaking Unit capacity.

(3) The contracted Independent Power Producer shall retain the Energy Pricing for its new Peaking Unit MWH output at a minimum $150 per MWH.

(4) ERCOT shall guarantee a minimum of $60,000 per net MWe for energy pricing per year because the Peaking Units may only be called to run sporatically during a low-event year.

(5) Capacity payments will start at the end of the month in which output from the generation unit(s) meets ERCOT's operational commands.

(6) ERCOT shall be responsible for meeting the costs of transmission or distribution utilities' requirements at the electrical substation at which the generating units supply their electrical output to the ERCOT grid.

(7) ERCOT shall assist the Independent Power Producer in obtaining firm commitments for fuel to the new Peaking Unit(s).

(8) The contracted Independent Power Producer's new Peaking Unit(s) shall be operated at the sole direction of ERCOT.

e) Operational conditions required by ERCOT for the Independent Pwer Producer to receive monthly capacity payments for the contacted new Peaking Unit(s).

(1) Each Peaking Unit shall respond to ERCOT calls for operation and reach 100% output within 10 minutes.

(2) Each Peaking Unit shall not be called to operate more than 1,000 hours per year except in declared cases of emergency.

(3) Each Peaking Unit shall be capable of responding daily to multiple calls to operate.

(4) ERCOT shall attempt to balance calls across its dedicated fleet of generating capacity related to total hours of operation and total amounts of energy charges received by the Independent Power Producer per installed MWe per year.

(5) Each Peaking Unit shall be allow a two month maintenance period every three years which can occurring during the months of March, April, May, October, and November without receiving an elimination of Capacity Payment for the period of outage.

(6) Each Peaking Unit which is called to operate by ERCOT but does not operate shall be penalized after two failures in a year. The penalty shall depend upon the critical electricity supply situation at the time of failure to run and can result in loss of a monthly capacity payment for such Peaking Unit.

(7) Each Peaking Unit shall operate on two different type fuels such as natural gas and fuel oil with the backup supply being sufficient for 48 hours of operation at full output or shall have a guaranteed fuel supply for 96 hours of operation at full output after an emergency declaration by ERCOT.

(8) An Independent Power Producer which operates one or multiple Peaking Units under ERCOT control may notify ERCOT of a temporary outage of a unit for ERCOT to remove the unit from the call rotation.

f) The Texas Public Utilities Commission shall review ERCOT's performance on establishing Peaking Unit capacity to increase the reliability of electricity supply. Areas of quarterly review which shall include reporting to the Texas Legislature and Governor are:

(1) ERCOT's "Electricity Supply Reliability Fund" income and expenditures,

(2) The amount of ERCOT's new Peaking Unit capacity under contract, the Independent Power Producer ownership, and the status of the capacity,

(3) The operation use of ERCOT's new Peaking Unit capacity.

(4) The operational effect of ERCOT's new Peaking Unit capacity on energy costs.