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.