88R16321 JXC-F

By: Schwertner, King S.B. No. 6

A BILL TO BE ENTITLED

AN ACT

relating to the establishment of the Texas Energy Insurance Program and other funding mechanisms to support the construction and operation of electric generating facilities.

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

ARTICLE 1. TEXAS ENERGY INSURANCE PROGRAM

SECTION 1.01. Section 11.003(16), Utilities Code, is amended to read as follows:

(16) "Rate" includes:

(A) any compensation, tariff, charge, fare, toll, rental, or classification that is directly or indirectly demanded, observed, charged, or collected by a public utility or the Texas Energy Insurance Program for a service, product, or commodity described in the definition of utility in Section 31.002 or 51.002; and

(B) a rule, practice, or contract affecting the compensation, tariff, charge, fare, toll, rental, or classification.

SECTION 1.02. Section 31.002(6), Utilities Code, as amended by Chapters 255 (H.B. 1572) and 389 (S.B. 1202), Acts of the 87th Legislature, Regular Session, 2021, is reenacted and amended to read as follows:

(6) "Electric utility" means a person or river authority that owns or operates for compensation in this state equipment or facilities to produce, generate, transmit, distribute, sell, or furnish electricity in this state. The term includes a lessee, trustee, or receiver of an electric utility and a recreational vehicle park owner who does not comply with Subchapter C, Chapter 184, with regard to the metered sale of electricity at the recreational vehicle park. The term does not include:

(A) a municipal corporation;

(B) a qualifying facility;

(C) a power generation company;

(D) an exempt wholesale generator;

(E) a power marketer;

(F) a corporation described by Section 32.053 to the extent the corporation sells electricity exclusively at wholesale and not to the ultimate consumer;

(G) an electric cooperative;

(H) a retail electric provider;

(I) this state or an agency of this state; [or]

(J) the Texas Energy Insurance Program; or

(K) a person not otherwise an electric utility who:

(i) furnishes an electric service or commodity only to itself, its employees, or its tenants as an incident of employment or tenancy, if that service or commodity is not resold to or used by others;

(ii) owns or operates in this state equipment or facilities to produce, generate, transmit, distribute, sell, or furnish electric energy to an electric utility, if the equipment or facilities are used primarily to produce and generate electric energy for consumption by that person;

(iii) owns or operates in this state a recreational vehicle park that provides metered electric service in accordance with Subchapter C, Chapter 184; [or]

(iv) 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; or

(v) [iv] is an electric generation equipment lessor or operator.

SECTION 1.03. Section 31.002, Utilities Code, is amended by amending Subdivisions (10), (15), (19), and (20) and adding Subdivisions (15-a) and (18-a) to read as follows:

(10) "Power generation company":

(A) means a person, including a person who owns or operates a distributed natural gas generation facility, that:

(i) [(A)] generates electricity 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;

(ii) [(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

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

(B) does not include the Texas Energy Insurance Program.

(15) "Rate" includes:

(A) a compensation, tariff, charge, fare, toll, rental, or classification that is directly or indirectly demanded, observed, charged, or collected by an electric utility for a service, product, or commodity described in the definition of electric utility in this section and a rule, practice, or contract affecting the compensation, tariff, charge, fare, toll, rental, or classification that must be approved by a regulatory authority; or

(B) Texas Energy Insurance Program charges.

(15-a) "Reliability asset" means a weatherized gas turbine generation asset with on-site fuel storage that is located in the ERCOT power region near a major load center, gas pipeline, or electric transmission line, and is owned and operated by an entity certified under Section 39.360 for the purpose of providing power when dispatched under Section 38.079.

(18-a) "Texas Energy Insurance Program" includes all entities certified under Section 39.360.

(19) "Transmission and distribution utility" means a person or river authority that owns or operates for compensation in this state equipment or facilities to transmit or distribute electricity, except for facilities necessary to interconnect a generation facility with the transmission or distribution network, a facility not dedicated to public use, or a facility otherwise excluded from the definition of "electric utility" under this section, in a qualifying power region certified under Section 39.152, but does not include a municipally owned utility, [or] an electric cooperative, or the Texas Energy Insurance Program.

(20) "Transmission service" includes construction or enlargement of facilities, transmission over distribution facilities, control area services, scheduling resources, regulation services, reactive power support, voltage control, provision of operating reserves, and any other associated electrical service the commission determines appropriate, except that, on and after the implementation of customer choice, control area services, scheduling resources, regulation services, provision of operating reserves, and reactive power support, voltage control, [and] other services provided by generation resources, and services provided by the Texas Energy Insurance Program are not "transmission service."

SECTION 1.04. Section 33.001, Utilities Code, is amended by adding Subsection (b) to read as follows:

(b) The governing body of a municipality does not have jurisdiction over the Texas Energy Insurance Program.

SECTION 1.05. Section 33.008(a), Utilities Code, is amended to read as follows:

(a) Following the end of the freeze period for a municipality that has been served by an electric utility, and following the date a municipally owned utility or an electric cooperative has implemented customer choice for a municipality that has been served by that municipally owned utility or electric cooperative, a municipality may impose on an electric utility, transmission and distribution utility, municipally owned utility, or electric cooperative, as appropriate, that provides distribution service within the municipality a reasonable charge as specified in Subsection (b) for the use of a municipal street, alley, or public way to deliver electricity to a retail customer. A municipality may not impose a charge on:

(1) an electric utility, or transmission and distribution utility, municipally owned utility, or electric cooperative for electric service provided outside the municipality;

(2) a qualifying facility;

(3) an exempt wholesale generator;

(4) a power marketer;

(5) a retail electric provider;

(6) a power generation company;

(7) a person that generates electricity on and after January 1, 2002; [or]

(8) an aggregator, as that term is defined by Section 39.353; or

(9) the Texas Energy Insurance Program.

SECTION 1.06. Section 35.004, Utilities Code, is amended by amending Subsections (b) and (c) and adding Subsections (c-1), (c-2), and (i) to read as follows:

(b) The commission shall ensure that an electric utility or transmission and distribution utility provides nondiscriminatory access to wholesale transmission service for qualifying facilities, exempt wholesale generators, power marketers, power generation companies, retail electric providers, the Texas Energy Insurance Program, and other electric utilities or transmission and distribution utilities.

(c) When an electric utility, electric cooperative, or transmission and distribution utility provides wholesale transmission service within ERCOT at the request of a third party, the commission shall ensure that the utility recovers the utility's reasonable costs in providing wholesale transmission services necessary for the transaction from the entity for which the transmission is provided so that the utility's other customers do not bear the costs of the service. The Texas Energy Insurance Program is not a third party for the purposes of this subsection.

(c-1) The costs of transmission and distribution utility service for the Texas Energy Insurance Program must be allocated to all retail customers in the ERCOT power region.

(c-2) The Texas Energy Insurance Program will not bear costs related to the interconnection of a reliability asset.

(i) Services provided by the Texas Energy Insurance Program when deployed under Section 38.079 are not considered to be ancillary services.

SECTION 1.07. Section 35.005, Utilities Code, is amended by amending Subsection (a) and adding Subsections (d), (e), and (f) to read as follows:

(a) The commission may require an electric utility to provide transmission service at wholesale to another electric utility, a qualifying facility, an exempt wholesale generator, the Texas Energy Insurance Program, or a power marketer and may determine whether terms for the transmission service are reasonable.

(d) To ensure customers in the ERCOT power region can receive promptly the benefits associated with the Texas Energy Insurance Program, the independent organization certified under Section 39.151 for the ERCOT power region shall work with transmission service providers to ensure that each reliability asset is fully interconnected in the ERCOT power region not later than the 270th day after the date the interconnection agreement is executed. An electric utility that enters into an interconnection agreement for a reliability asset shall complete construction of any facilities necessary to interconnect the reliability asset not later than the 270th day after the date the interconnection agreement is executed. The electric utility may not recover its reasonable costs of constructing the facilities during the period that begins on the 271st day after the date the interconnection agreement is executed and ending on the date the construction of the facilities necessary to interconnect the reliability asset is complete.

(e) Notwithstanding Subsection (d), the commission may extend the 270-day deadline established by that subsection after notice, hearing, and a determination on a showing of good cause that fully interconnecting the reliability asset before the 270th day is not feasible.

(f) If the commission receives an application under Chapter 37 for a certificate of convenience and necessity related to facilities necessary to interconnect a reliability asset, as described by Subsection (d), and does not approve the application before the 90th day after the date the commission received the application, the 270-day deadline established by Subsection (d) is extended one day for each day after the 90th day in which the commission does not approve the application.

SECTION 1.08. Section 36.001, Utilities Code, is amended by adding Subsection (c) to read as follows:

(c) The commission may regulate the rates of certified entities in the Texas Energy Insurance Program related to each reliability asset only to the extent provided by Subchapter K. No other provision of this chapter applies to rates related to a reliability asset.

SECTION 1.09. Chapter 36, Utilities Code, is amended by adding Subchapter K to read as follows:

SUBCHAPTER K. TEXAS ENERGY INSURANCE PROGRAM

Sec. 36.501. RATES FOR RELIABILITY ASSETS. (a) The commission shall ensure that each entity certified to be part of the Texas Energy Insurance Program under Section 39.360 receives a regulated rate that recognizes the critical service the reserve provides to customers in the ERCOT power region.

(b) The rate must be based on actual costs, including variable costs, allowance for funds used during construction, and all costs of constructing, owning, operating, and maintaining reliability assets. A certified entity is entitled to recover the actual costs associated with each reliability asset operated by the entity.

(c) In determining the rate, the commission shall consider the critical service the Texas Energy Insurance Program provides to customers in the ERCOT power region.

(d) The commission shall allocate each rate to each transmission and distribution utility, municipally owned utility, and electric cooperative in the ERCOT power region, based on the cooperative's or utility's proportionate share of overall annual system load. The rate may not be based on peak demand.

(e) Each retail electric provider, municipally owned utility, and electric cooperative in the ERCOT power region shall allocate the rates to each retail customer based on the customer's annual system demand, not peak demand.

(f) Not later than the 90th day after the date a certified entity submits to the commission a rate request for a reliability asset, the commission shall approve the rates and order each retail electric provider, municipally owned utility, and electric cooperative in the ERCOT power region, beginning on the commercial operation date of each reliability asset, to:

(1) collect the rate from the provider's, utility's, or cooperative's retail customers in the ERCOT power region; and

(2) remit the payment to the independent organization certified under Section 39.151 monthly.

(g) The independent organization certified under Section 39.151 shall remit the rate revenue to certified entities monthly.

(h) The commission shall establish rates for each reliability asset to include:

(1) at least the rate of return on equity stated in the relevant application under Section 39.360(h);

(2) a 50-50 debt to equity ratio;

(3) a 40-year depreciable life;

(4) allowance for funds used during construction;

(5) costs associated with ownership, operations, maintenance, fuel, and other variable costs;

(6) reasonably incurred attorney's fees; and

(7) the estimated costs of constructing the reliability asset before construction has begun and, after the reliability asset is complete, the actual cost of the asset as described by Subsection (b).

(i) Not later than the 90th day after the commercial operation date of a reliability asset, the commission shall:

(1) adjust the previously established rates for the asset to reflect the actual construction costs; and

(2) reconcile any over-collections or under-collections.

(j) The commission shall adjust the rate for each reliability asset annually to reflect changes to the costs of ownership, operations and maintenance, and variable costs, including fuel costs and interest rates, to reflect the actual costs as described by Subsection (b) incurred in the preceding year. The review for a rate adjustment under this subsection is limited to verifying the accuracy of the incurred costs.

Sec. 36.502. STRANDED COST RECOVERY. (a) In this section:

(1) "Net book value of reliability assets" means the generation-related electric plant in service, less accumulated depreciation other than depreciation related to mitigation, plus generation-related construction work in progress, plant held for future use, and fuel inventories, reduced by net mitigation and any public funds received by an entity certified under Section 39.360 through state benefit programs.

(2) "Stranded costs" means:

(A) the actual costs of building, operating, and maintaining reliability assets at the time of disposition incurred by an entity certified under Section 39.360; and

(B) any other costs incurred by an entity certified under Section 39.360 associated with establishing the Texas Energy Insurance Program that have not been previously recovered by that entity from ratepayers.

(b) If the commission revokes a certificate issued under Section 39.360, the entity that formerly held the certificate may recover in the manner provided by this section all of the entity's net, variable, nonmitigable stranded costs incurred in constructing reliability assets, purchasing fuel, and providing electric generation service in the ERCOT power region.

(c) If the commission determines that a reliability asset is no longer able to serve the purpose described by Section 38.079, the entity that owns the asset may recover in the manner provided by this section the entity's net, variable, nonmitigable stranded costs that were incurred in constructing the reliability asset, purchasing fuel for the asset, and providing electric generation service in the ERCOT power region with the asset.

(d) To recover stranded costs under this section, an entity must submit to the commission an application for recovery of the costs not later than the 30th calendar day after the date the commission issues the order that revokes the certificate under Subsection (b) or the date of the commission's determination described by Subsection (c), as applicable. The application must include a description, supported by the sworn affidavits of a corporate officer of the entity and a stranded cost expert who has at least 10 years of professional experience in the electric industry in the ERCOT power region, of the following:

(1) the actual cost of each relevant reliability asset completed by the entity and each relevant reliability asset under construction by the entity at the time of decertification;

(2) the total net book value of each relevant reliability asset; and

(3) the expected rate of return on the remaining depreciable life of each relevant reliability asset.

(e) Not later than the 20th calendar day after the date an application is submitted to the commission under Subsection (d), commission staff may file a motion with the commission stating the staff's finding that the application is materially deficient. The motion must include a detailed explanation of the claimed material deficiencies. If the presiding officer of the commission determines that the application is materially deficient:

(1) the entity may not recover the stranded costs unless the entity submits corrections to the commission not later than the 30th calendar day after the date the presiding officer makes the determination of deficiency; and

(2) the deadline established by Subsection (f) is extended one day for each day in which:

(A) the application is materially deficient, as determined by the presiding officer of the commission; and

(B) the entity has not yet corrected the deficiency.

(f) The commission shall issue a final order to award recovery of stranded costs to the entity not later than the 90th calendar day after the date the entity files a complete application.

(g) A commission order granting recovery of stranded costs under this section must:

(1) allocate collection of the stranded costs among each transmission and distribution utility, municipally owned utility, and electric cooperative providing service in the ERCOT power region in the manner provided by Section 36.501;

(2) order each transmission and distribution utility, municipally owned utility, and electric cooperative in the ERCOT power region to include a rider on the utility's or cooperative's tariff to allow for collection of the stranded costs from customers in the ERCOT power region allocated based on yearly consumption;

(3) order recovery of the stranded costs from all wholesale or retail customers of transmission and distribution utilities, municipally owned utilities, and electric cooperatives that exist on the date of the order and from any new customers served during the recovery period; and

(4) prohibit a wholesale or retail customer of a transmission and distribution utility, municipally owned utility, or electric cooperative in the ERCOT power region from avoiding the stranded cost recovery charges.

(h) For the purposes of establishing stranded cost recovery rates in the rider under Subsection (g), customers must be classified according to the rate classes established by the most recently completed base-rate proceeding of each transmission and distribution utility, municipally owned utility, or electric cooperative.

(i) A stranded cost recovery rider established under this section may not be in effect for more than eight years and must provide for the recovery of the full amount of stranded costs awarded by the commission during that period. If after five years of collection under the rider the full amount owed to the entity has not been recovered, the commission shall initiate a proceeding to adjust the amount of the rider to ensure full recovery before the expiration of the eight-year period.

SECTION 1.10. Subchapter D, Chapter 38, Utilities Code, is amended by adding Section 38.079 to read as follows:

Sec. 38.079. TEXAS ENERGY INSURANCE PROGRAM. Reliability assets may be dispatched by the independent organization certified under Section 39.151 for the ERCOT power region:

(1) when operating reserves drop below 1,000 megawatts and the independent organization does not expect operating reserves to recover for at least 30 minutes; or

(2) up to 336 hours per year for testing purposes and as directed by the independent organization.

SECTION 1.11. Section 39.154, Utilities Code, is amended by adding Subsection (f) to read as follows:

(f) For purposes of this section and Section 39.158, a reliability asset is not considered to be installed generation capacity.

SECTION 1.12. Section 39.155, Utilities Code, is amended by amending Subsections (a) and (b) and adding Subsection (e) to read as follows:

(a) Each person, municipally owned utility, electric cooperative, and river authority that owns generation facilities and offers electricity for sale in this state, other than the Texas Energy Insurance Program, shall report to the commission its installed generation capacity, the total amount of capacity available for sale to others, the total amount of capacity under contract to others, the total amount of capacity dedicated to its own use, its annual wholesale power sales in the state, its annual retail power sales in the state, and any other information necessary for the commission to assess market power or the development of a competitive retail market in the state. The commission shall by rule prescribe the nature and detail of the reporting requirements and shall administer those reporting requirements in a manner that ensures the confidentiality of competitively sensitive information.

(b) The ERCOT independent system operator shall submit an annual report to the commission identifying existing and potential transmission and distribution constraints and system needs within ERCOT, alternatives for meeting system needs, and recommendations for meeting system needs. The first report shall be submitted on or before October 1, 1999. Subsequent reports shall be submitted by January 15 of each year or as determined necessary by the commission. The reports required by this subsection must include a section identifying existing and potential transmission and distribution constraints that could affect the availability of any reliability asset and include alternatives for meeting identified needs.

(e) The Texas Energy Insurance Program is not considered to have market power when dispatched by an order of the independent organization certified under Section 39.151 for the ERCOT power region.

SECTION 1.13. Subchapter H, Chapter 39, Utilities Code, is amended by adding Section 39.360 to read as follows:

Sec. 39.360. CERTIFICATION OF TEXAS ENERGY INSURANCE PROGRAM. (a) The commission may certify one or more entities to operate as the Texas Energy Insurance Program by owning and operating reliability assets. The commission may certify any number of entities to operate any number of reliability assets, but may not certify a total of more than 10 gigawatts of generating capacity for the entire Texas Energy Insurance Program.

(b) An entity may not operate as part of the Texas Energy Insurance Program unless the entity is certified by the commission under this section.

(c) The commission shall:

(1) issue at least one request for proposals from qualified applicants to serve as part of the Texas Energy Insurance Program; and

(2) if the commission receives at least one application from a qualified applicant in response to the request described by Subdivision (1) before the expiration of the period provided by Subsection (e), select and certify at least one qualified applicant not later than the 28th day after the date the commission issues the request.

(d) To ensure efficient distribution of reliability assets, the commission may designate regions in the ERCOT power region and issue requests for proposals under Subsection (c) for specific amounts of gigawatts of generation capacity by region.

(e) An applicant must submit an application under Subsection (c) not later than the 14th day after the date the commission issues a request for proposals under that subsection.

(f) An entity that is not authorized by this title to operate a generation asset may apply to be certified to be part of the Texas Energy Insurance Program under this section.

(g) To be certified as part of the Texas Energy Insurance Program, an applicant must:

(1) establish financial stability by demonstrating that:

(A) the applicant or the applicant's parent company has total assets of at least $10 billion for every gigawatt of generating capacity for which the applicant is applying to be certified;

(B) the applicant or the applicant's parent company has a credit rating that is acceptable to the commission from a major credit rating agency;

(C) the applicant or the applicant's parent company is able to fund the investment with cash on hand or proof of access to adequate financing; and

(D) the applicant is able to close on any financing not later than the 60th day after the date of securing certification and contract execution;

(2) establish industry expertise by demonstrating that:

(A) the applicant is an electric utility or the applicant or the applicant's parent company owns or operates electric generation assets totaling at least 15,000 megawatts;

(B) the applicant or the applicant's parent company has an Occupational Safety and Health Administration incident rate in the top quartile for electric utilities; and

(C) the certified entity will be International Organization for Standardization 27001 certified;

(3) establish project quality standards by demonstrating that:

(A) the applicant is able to provide a parent performance guarantee that the independent organization certified under Section 39.151 for the ERCOT power region or the commission may draw upon during each season, as defined by the independent organization, if a reliability asset does not perform and performance is not excused under Subsection (m), in the amount of $400 million for every gigawatt of generating capacity for which the applicant is applying to be certified; and

(B) each reliability asset will be in operation not later than the last day of the 42nd month after certification, unless interconnection delays require a later operation date; and

(4) establish customer friendly solutions by committing:

(A) that any net revenue earned during testing or operating would be for the benefit of the ERCOT power region;

(B) not to sell any reliability asset over the life of the reliability asset while the applicant is certified as part of the Texas Energy Insurance Program; and

(C) that the siting of reliability assets will maximize the effectiveness of the new generation capacity.

(h) Each applicant must provide in the application a statement:

(1) of the return on equity the applicant will accept while operating as part of the Texas Energy Insurance Program;

(2) agreeing to a return on equity of not more than 10 percent and an equal debt-to-equity ratio;

(3) of the maximum actual costs described by Section 36.501 for which the applicant will request recovery; and

(4) agreeing to a revenue requirement that is the lesser of the actual costs described by Section 36.501 or $1 billion per gigawatt of installed generation capacity in the program.

(i) The commission may certify an entity to be part of the Texas Energy Insurance Program if the entity submits a qualifying application that includes:

(1) proof that the requirements of Subsection (g) have been met;

(2) a description of the location or proposed location of each reliability asset;

(3) a commitment to construct, own, operate, and maintain reliability assets for a time period not less than the useful life of the assets;

(4) a commitment that the reliability assets will include at each site capacity to provide generation at full load for not less than 168 continuous hours;

(5) an affidavit affirming that the reliability assets will be available to dispatch in a manner that provides the independent organization certified under Section 39.151 for the ERCOT power region, in times of emergency, natural disaster, and testing, with access to power for up to seven consecutive days, after accounting for ramp up and ramp down times required by the independent organization;

(6) proof of the posting of a parent performance guarantee that the independent organization certified under Section 39.151 for the ERCOT power region or the commission may draw upon during each season, as defined by the independent organization, if a reliability asset does not perform and performance is not excused under Subsection (m), in the amount of $400 million for every gigawatt of generating capacity for which the applicant is applying to be certified; and

(7) proof of a credit rating that is acceptable to the commission from a major credit rating agency.

(j) The commission shall provide a process to amend a certificate to account for the addition of any new reliability asset.

(k) The commission may not revoke a certificate unless after notice and an opportunity for hearing before the commission, the commission finds the certified entity wilfully and without excuse failed to dispatch sufficient reliability assets after the determination of a natural disaster or other emergency by the independent organization certified under Section 39.151 for the ERCOT power region or the commission.

(l) The Texas Energy Insurance Program shall comply with the reliability standards adopted by the independent organization certified under Section 39.151 for the ERCOT power region to ensure the reliability of the ERCOT region.

(m) The commission or the independent organization certified under Section 39.151 for the ERCOT power region may not draw upon a parent performance guarantee provided by a certified entity and may not impose a fine or penalty on a certified entity for failure to provide service if the inability to provide service is wholly or partly the result of:

(1) the actions of an electric utility or transmission service provider;

(2) the actions of the independent organization certified under Section 39.151 for the ERCOT power region, including scheduled routine maintenance; or

(3) equipment failure beyond the control of the certified entity, when the equipment failure could not reasonably have been predicted or remedied.

(n) Subsection (m)(3) does not apply to equipment failure:

(1) that results from a failure of a certified entity to exercise good utility practices based on best-in-class industry-based methods; or

(2) that is related to the acquisition, design, or construction of a reliability asset.

(o) The commission may not require a bond, letter of credit, or other security from a certified entity except for a parent performance guarantee described by this section and may not require the expansion of a parent performance guarantee. If drawn upon, a parent performance guarantee may not be required to be replenished or expanded.

(p) A certification issued under this section is nontransferable. If a certified entity transfers ownership of a reliability asset to another entity, the commission shall decertify the entity to operate that asset as part of the Texas Energy Insurance Program.

SECTION 1.14. Not later than March 1, 2024, the Public Utility Commission of Texas shall issue a request for proposals required by Section 39.360(c), Utilities Code, as added by this article.

SECTION 1.15. The Public Utility Commission of Texas shall adopt any rules necessary to implement this article not later than February 1, 2024.

SECTION 1.16. To the extent of any conflict, this article prevails over another Act of the 88th Legislature, Regular Session, 2023, relating to nonsubstantive additions to and corrections in enacted codes.

SECTION 1.17. This article takes effect September 1, 2023.

ARTICLE 2. GENERATING FACILITY FUNDING

SECTION 2.01. Subtitle B, Title 2, Utilities Code, is amended by adding Chapter 34 to read as follows:

CHAPTER 34. GENERATING FACILITY FUNDING

Sec. 34.0101. DEFINITIONS. In this chapter:

(1) "Advisory committee" means the Texas Energy Insurance Fund Advisory Committee.

(2) "Fund" means the Texas energy insurance fund established by Section 49-q, Article III, Texas Constitution.

(3) "Trust company" means the Texas Treasury Safekeeping Trust Company.

Sec. 34.0102. FUND. (a) The fund is a special fund in the state treasury outside the general revenue fund to be administered and used by the commission for the purposes authorized by this chapter. The commission may establish separate accounts in the fund.

(b) The fund and the fund's accounts are kept and held by the trust company for and in the name of the commission. The commission has legal title to money and investments in the fund until money is disbursed from the fund as provided by this chapter and commission rules.

(c) Money deposited to the credit of the fund may be used only as provided by this chapter.

(d) The fund consists of:

(1) money transferred or deposited to the credit of the fund by or as authorized by law, including money from any source transferred or deposited to the credit of the fund at the commission's discretion;

(2) revenue, including the proceeds of any fee, assessment, or tax imposed by this state, that general law dedicates for deposit to the credit of the fund; and

(3) investment earnings and interest earned on money in the fund.

Sec. 34.0103. LOANS FOR MAINTENANCE AND MODERNIZATION. (a) The commission may use money in the fund without further appropriation to provide loans to finance maintenance or modernization of dispatchable electric generating facilities operating in the ERCOT power region. For the purposes of this section, a generating facility is considered to be dispatchable if the facility's output can be controlled primarily by forces under human control.

(b) Each year, the commission shall produce a list of dispatchable electric generating facilities operating in the ERCOT power region and estimate the potential costs to maintain and modernize the facilities during the following five years. The commission shall give priority to loan applications under this section that the commission determines will provide the highest ratio of dispatchable megawatts maintained to project costs.

(c) The commission shall evaluate an application for a loan under this section based on the applicant's:

(1) efforts and achievements in conserving resources;

(2) quality of services;

(3) efficiency of operations; and

(4) quality of management.

(d) The commission may provide a loan under this section only for maintenance or modernization of a facility that is capable of operating for at least five years after the date the loan is received.

(e) Proceeds of a loan received under this section may not be used for:

(1) weatherization;

(2) debt payments; or

(3) expenses not related to maintaining or modernizing the electric generating facility.

(f) An electric utility may not receive a loan under this section.

(g) The commission may require immediate repayment of a loan issued under this section if the recipient of the loan stops operating the facility for which the loan was received before the fifth anniversary of the date on which the loan was disbursed.

(h) The commission may provide a loan under this chapter that bears interest at a rate or rates determined by the commission, including a rate or rates below prevailing market rates.

(i) Information submitted to the commission in an application for a loan under this chapter is confidential and not subject to disclosure under Chapter 552, Government Code.

Sec. 34.0104. SOURCES OF MONEY FOR LOANS FOR TEXAS ENERGY INSURANCE PROGRAM RELIABILITY ASSETS. The commission may use any money appropriated to the commission for the purpose of providing a loan to an entity certified under Section 39.360 to be used to reduce debt associated with constructing or operating a reliability asset. The commission may use without legislative appropriation money from the fund for that purpose.

Sec. 34.0105. MAXIMUM LOAN AMOUNT. If the commission has more than four pending applications for loans to be made from the fund on the date the commission awards a loan, the amount of the loan awarded may not exceed 25 percent of the fund balance on that date.

Sec. 34.0106. MANAGEMENT AND INVESTMENT OF FUND. (a) The trust company shall hold and invest the fund, and any accounts established in the fund, for and in the name of the commission, taking into account the purposes for which money in the fund may be used. The fund may be invested with the state treasury pool.

(b) The overall objective for the investment of the fund is to maintain sufficient liquidity to meet the needs of the fund while striving to preserve the purchasing power of the fund.

(c) The trust company has any power necessary to accomplish the purposes of managing and investing the assets of the fund. In managing the assets of the fund, through procedures and subject to restrictions the trust company considers appropriate, the trust company may acquire, exchange, sell, supervise, manage, or retain any kind of investment that a prudent investor, exercising reasonable care, skill, and caution, would acquire or retain in light of the purposes, terms, distribution requirements, and other circumstances of the fund then prevailing, taking into consideration the investment of all the assets of the fund rather than a single investment.

(d) The trust company may charge fees to cover its costs incurred in managing and investing the fund. The fees must be consistent with the fees the trust company charges other state and local governmental entities for which it provides investment management services. The trust company may recover fees it charges under this subsection only from the earnings of the fund.

(e) The trust company annually shall provide a written report to the commission and to the advisory committee with respect to the investment of the fund. The trust company shall contract with a certified public accountant to conduct an independent audit of the fund annually and shall present the results of each annual audit to the commission and to the advisory committee. This subsection does not affect the state auditor's authority to conduct an audit of the fund under Chapter 321, Government Code.

(f) The trust company shall adopt a written investment policy that is appropriate for the fund. The trust company shall present the investment policy to the investment advisory board established under Section 404.028, Government Code. The investment advisory board shall submit to the trust company recommendations regarding the policy.

(g) The commission annually shall provide to the trust company a forecast of the cash flows into and out of the fund. The commission shall provide updates to the forecasts as appropriate to ensure that the trust company is able to achieve the objective specified by Subsection (b).

(h) The trust company shall disburse money from the fund as directed by the commission.

(i) An investment-related contract entered into under this section is not subject to Chapter 2260, Government Code.

Sec. 34.0107. TEXAS ENERGY INSURANCE FUND ADVISORY COMMITTEE. (a) The advisory committee is composed of the following seven members:

(1) the comptroller or a person designated by the comptroller;

(2) three members of the senate appointed by the lieutenant governor, including:

(A) a member of the committee of the senate having primary jurisdiction over matters relating to the generation of electricity; and

(B) a member of the committee of the senate having primary jurisdiction over finance; and

(3) three members of the house of representatives appointed by the speaker of the house of representatives, including:

(A) a member of the committee of the house of representatives having primary jurisdiction over the generation of electricity; and

(B) a member of the committee of the house of representatives having primary jurisdiction over finance.

(b) The commission shall provide staff support for the advisory committee.

(c) An appointed member of the advisory committee serves at the will of the person who appointed the member.

(d) The lieutenant governor shall appoint a co-presiding officer of the advisory committee from among the members appointed by the lieutenant governor. The speaker of the house of representatives shall appoint a co-presiding officer of the advisory committee from among the members appointed by the speaker.

(e) The advisory committee may hold public hearings, formal meetings, and work sessions. Either co-presiding officer of the advisory committee may call a public hearing, formal meeting, or work session of the advisory committee at any time. The advisory committee may not take formal action at a public hearing, formal meeting, or work session unless a quorum of the committee is present.

(f) Except as otherwise provided by this subsection, a member of the advisory committee is not entitled to receive compensation for service on the committee or reimbursement for expenses incurred in the performance of official duties as a member of the committee. Service on the advisory committee by a member of the senate or house of representatives is considered legislative service for which the member is entitled to reimbursement and other benefits in the same manner and to the same extent as for other legislative service.

(g) The advisory committee:

(1) may provide comments and recommendations to the commission for the commission to use in adopting rules regarding the use of the fund or on any other matter; and

(2) shall review the overall operation, function, and structure of the fund at least semiannually.

(h) The advisory committee may adopt rules, procedures, and policies as needed to administer this section and implement its responsibilities.

(i) Chapter 2110, Government Code, does not apply to the size, composition, or duration of the advisory committee.

(j) The advisory committee is subject to Chapter 325, Government Code (Texas Sunset Act). Unless continued in existence as provided by that chapter, the advisory committee is abolished September 1, 2035.

Sec. 34.0108. RULES. (a) The commission by rule may establish procedures for:

(1) the application for and award of a loan under this chapter; and

(2) the administration of the fund.

(b) The commission shall give full consideration to comments and recommendations of the advisory committee before the commission adopts rules under this chapter.

Sec. 34.0109. TEXAS ENERGY INSURANCE PROGRAM CUSTOMER PAYMENTS. The commission may use any money appropriated to the commission for the purpose of providing payments to the independent organization certified under Section 39.151 for the ERCOT power region on behalf of customers of retail electric providers, municipally owned utilities, and electric cooperatives to offset amounts owed to certified entities under Section 36.501. The commission may use without legislative appropriation money from the fund for that purpose.

SECTION 2.02. This article takes effect on the date on which the constitutional amendment proposed by the 88th Legislature, Regular Session, 2023, providing for the creation of the Texas energy insurance fund and the authorization of other funding mechanisms to support the construction and operation of electric generating facilities takes effect. If that amendment is not approved by the voters, this article has no effect.